Home » 2008 » November

Archive for November, 2008

« Older Entries
Wednesday, November 26th, 2008

Feds Buy $600 Billion in Mortgage-Related Assets

In another attempt to quell the growing financial crisis, the Federal Reserve announced Tuesday it will buy up to $600 billion in mortgage-backed assets.

The Fed will purchase $100 billion of Freddie Mac, Fannie Mae and the Federal Home Loan Bank's direct obligations, as well as $500 billion in mortgage-backed securities.

This deal came at the same time as their new program to unfreeze credit lines was announced.

The hope is that this move will help bring down mortgage rates across the country.

Although details are still being worked out, the plan could provide guarantees for up to 3 million at-risk mortgages, according to a confidential Reuters source.

The Treasury Department confirmed that it's working with policymakers on foreclosure-prevention measures but didn't to get into specifics.

--Get the bankruptcy information you're looking for at Total Bankruptcy.

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google

Tags: , ,
Posted in Bankruptcy and the Economy | No Comments »

Monday, November 24th, 2008

Bailout, Not Bankruptcy, for Citigroup

Late Sunday night, federal regulators announced they approved a plan to try to stabilize Citigroup.

The plan involves the government investing $20 billion in the company and backing about $306 billion in loans and securities.

This emergency plan comes after the massive U.S. bank lost half of its value in the stock market last week.

Last year at this time, Citigroup was trading at about $30 a share; on Friday they closed at $3.77 a share.

Citigroup executives have repeatedly publicly said that the bank is “sound”; however, investors worry that it needs more capital.

What the Government is Doing:

--Government regulators will back $306 billion of mostly residential and commercial real estate loans and other assets, which will stay on Citigroup's balance sheet. Citigroup will also have to take the losses on the first $29 billion of that portfolio.

--Remaining losses will be split between the government and the bank. The bank will absorb 10 percent and the government will absorb 90 percent. The Treasury Department will use the bailout fund to assume up to $5 billion of losses and the F.D.I.C. will bear the next $10 billion in losses, if needed. After that, the Federal Reserve will guarantee possible additional losses.

--The government is buying $20 billion of preferred stock in the bank. Those shares will pay an 8 percent dividend, which will slightly cut down the value of investor’s shares

Citibank’s plan:

--It will give government regulators $7 billion of preferred stock.

--It will stop dividend payments for the next three years.

--It will establish certain executive compensation restrictions, which the feds will review.

--It will put in place F.D.I.C.’s loan modification plan.

Can Bank Benefit From Bailout?

This is the government’s third plan in three months to stave off a greater economic crisis.

Investors regained confidence after previous bailouts, but many are staying weary after seeing more and more financial institutions crack.

With more than $2 trillion in assets and such a wide international presence, Citigroup is seen as one of those institutions that are just too big to fail.

---Stay tuned to The Bankruptcy Blog for more economic news as it developes.

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google

Tags: ,
Posted in Bankruptcy and the Economy | 1 Comment »

Thursday, November 20th, 2008

Third Quarter Layoffs at Highest Level Since 2001

U.S. employers initiated 1,330 mass layoff events in the third quarter of this year.

This is the highest level for the third quarter since 2001, according to preliminary figures released by the Bureau of Labor Statistics.

The mass layoffs accounted for more than 218,158 people being separated from their jobs for at least 31 days.

With more job layoffs, there will likely be more people filing bankruptcy.

--Read about the stories behind the mass layoffs

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google

Tags: ,
Posted in Bankruptcy and the Economy | No Comments »

Tuesday, November 18th, 2008

If Cars Industry Goes, So Will Millions of Jobs

Moody’s Economy.com chief economist Mark Zandi estimates that 2.6 million people will lose their jobs if GM, Chrysler and Ford collapse and that the economy is too weak to handle such a big blow.

That number includes 250,000 people who are directly tied to the big three automakers and another 2.3 million people whose jobs are indirectly dependent on the big three.

Those indirectly affected workers come from the advertising, steel, glass, fabric, tire and electronic industries, including all those workers who have businesses near the auto plants.

Obviously the big three automakers are having a tough time. Without federal aid or a huge sales turnaround--(which is highly unlikely)--one or more of the big players will have to file bankruptcy.

Stay tuned to Total Bankruptcy blog for the news as it develops.

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google

Tags: , , ,
Posted in Bankruptcy and the Economy | No Comments »

Tuesday, November 18th, 2008

Citigroup, Inc. to Slash 52,000 Jobs

Citigroup Inc. just revealed plans to cut 52,000 jobs—15 percent of its workforce—by early 2009.

This mass layoff is in addition to the 23,000 jobs that were cut between January and September 2008.

Expenses will also be cut by as much as 20 percent.

This drastic move is hoped to revive the bank as it fights off the global economic crisis and mounting debt. The bank lost $20.3 billion in the past year and it’s not expected to make money before 2010.

These cuts are the most made by any U.S. company since the global credit crisis began last year.

Want more? Read Total Bankruptcy’s recent article, Mass Layoffs Cause Unemployment Rate to Spike.

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google

Tags: , , ,
Posted in Bankruptcy and the Economy | No Comments »

Thursday, November 13th, 2008

Bush & Obama Front Line: What to Do About the Car Industry?

In his first press conference since he was declared the 44th president, Obama said that the U.S. auto industry is “the backbone of American manufacturing” and that the Bush administration should “do everything it can to accelerate the retooling assistance”.

At their Nov. 11 White House meeting, Obama stayed on this track and urged Bush to set aside $25 billion of the existing $700 billion bailout package for the limp auto industry.

It was reported that Bush “balked” at the idea of extending the rescue bailout package to businesses other than the banks and financial institutions.

But Bush reportedly told Obama that he was open to faster implementation of the separate $25 billion car-industry loan package that passed by Congress in September, which was designed to encourage the creation of more fuel-efficient cars.

He said he was hesitant to provide any more money than that.

Meanwhile, the Detroit-based auto industry is begging for help.

Stay tuned to Total Bankruptcy for more information as it develops.

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google

Tags: , ,
Posted in Bankruptcy and the Economy | No Comments »

Wednesday, November 12th, 2008

Credit Card Interest Rates Falling

Good news for consumers: on average, credit card annual interest rates fell for the third-straight week.

Overall, the average APR for variable-rate credit cards is 11.30 percent, which fell from 11.33 the week before.

For low-interest cards, which have rates below the national average and are given to people with strong credit, the average APR fell from 11.52 percent in the previous week to 11.50 percent.

For cash-back cards, which offer reward incentives and are usually offered to people with excellent credit, the average APR dropped from 13.77 percent last week to 13.70 percent this week.

Balance-transfer credit cards, which consolidate outstanding debt from other credit cards and usually offer a low introductory rate, dropped from 13.39 percent APR the week before to now 13.33 percent APR.

For more information, read Total Bankruptcy’s article, Paying Off Credit Card Debt.

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google

Tags: ,
Posted in Credit and Bankruptcy | No Comments »

Monday, November 10th, 2008

China Combats Economic Downturn with $586 Billion in Relief

Throughout the global financial crisis, the Chinese government publicly forecasted that the financial crunch would only minimally impact China.

But it appears that the government now thinks differently.

The Hu Jintao regime has decided to provide $586 billion for an economic stimulus package that will be spent in a wide assortment of economic sectors through the end of 2010.

Money will be set aside for rural infrastructure and housing, which supports China’s goal to develop rural and remote parts of northern and western China. In addition, the government said it would invest in:

  • reforming the value-added tax system (which could save companies $17 billion dollars)
  • encouraging more banks to lend to small and medium enterprises
  • creating more low-income housing and investing more in social welfare
  • creating transportation networks
  • environmental protection
  • technical innovation

The country’s GDP fell to 9 percent in the third quarter, where its growth was at 10.4 percent in the first quarter of 2008. Other efforts to boost the economy have not worked out very well. (The People’s Bank of China has cut interest rates three times since September.)

Stay tuned to Total Bankruptcy for developing news on the global financial crisis.

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google

Tags: , ,
Posted in Bankruptcy and the Economy | No Comments »

Friday, November 7th, 2008

Bankruptcy Lawyer Going to Prison

A bankruptcy lawyer from Jackson, MS is heading to prison after being convicted of defrauding his bankruptcy clients out of thousands of dollars.

John Allen was sentenced to serve 32 months in federal prison after he pleaded guilty to the fraud-related charges.

According to prosecutors, the 61-year-old bankruptcy attorney would get money from his clients and directly deposit it into his trust account.

He then would tell his clients that the money was used to “minimize their debts” and “satisfy creditors". Later he would transfer the funds from his trust account right into his personal account.

Allen practiced law in Mississippi since 1980 until he was disbarred in 2007. Many people seeking to file bankruptcy became unfortunate victims of his manipulations and fraud.

This shocking story of bankruptcy negligence and abuse shows just how important it is to have a bankruptcy lawyer on your side that you can trust.

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google

Tags: , ,
Posted in Bankruptcy Courts | No Comments »

Thursday, November 6th, 2008

Foreclosure and Bankruptcy News: Government’s Mortgage Relief Program Not Popular

The Hope for Homeowners program (H4H) was the federal government’s attempt to quell the rising number of home foreclosures.

It was launched on Oct. 1 and, over the next three years, was expected to help as many as 400,000 homeowners.

The program is designed to allow homeowners who are late on their payments to refinance their mortgage into a more affordable structure.

The loans would be insured by the Federal Housing Administration (FHA).

The goal is to reduce the loan balance (and sometimes the interest rate) to lower the monthly bill by 30 percent and restore equity in the home.

When the home is sold, 50 percent of any increase in its value goes to the government.

But it appears that H4H is turning out to be just one more failed attempt to break the foreclosure crisis, as less than 100 people applied for the program last month. The FHA projects that only 13,300 struggling homeowners will actually use the program in the first year. (Learn more about H4H…)

There are a few reasons why this program isn’t as successful as expected:

1.     Lenders, who’s participation is purely voluntary, are hesitant to participate in H4H because they would lose big money on each home that is refinanced. Also, the FHA won’t back the refinanced mortgage if the borrower misses the first payment—a loophole that leaves banks nervous in agreeing to participate.

2.     Mortgage security investors, who now own most of the troubled loans, would also lose a big chuck of change. Most lenders and investors want to wait and see if new government programs will be created that may benefit them better.

3.     Homeowners don’t like the idea of sharing future appreciation in their home’s value with the government. They also have to pay an annual insurance premium of 1.5 percent of the loan balance, which is more than three times the typical FHA fee.

The H4H program may be able to help some people who are struggling to make their mortgage payments; however, because of lack of lender participation and undesirable fine print rules for homeowners, it looks like it may just be another big government “flop”.

For other ways to possibly save your home from foreclosure, check out this Total Bankruptcy resource:

Share and Enjoy:
  • Digg
  • Sphinn
  • del.icio.us
  • Facebook
  • Mixx
  • Google

Tags: ,
Posted in Mortgage Foreclosure | 2 Comments »

« Older Entries