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Wednesday, November 18th, 2009

New Bankruptcy Chapter Proposed by Congress

A new amendment to the U.S. bankruptcy code could help troubled financial institutions reorganize their debts more effectively and eliminate the status of "too big to fail" that has prompted government intervention over the past two years.

H.R. 3310, introduced by Rep. Spencer Bachus (R-AL), is called the Consumer Protection and Regulatory Enhancement Act, and would create a Chapter 14 bankruptcy under which institutions to file bankruptcy without disrupting the nation's financial stability.

The bill is in response to the government's inconsistent reaction to the collapses of financial holding companies such as Lehman Brothers, Bear Stearns and AIG.

At the American Bankruptcy Institute's 2009 Legal Symposium in Washington, D.C., this week, Congressional staffer Daniel Flores spoke on a panel about the need for the new chapter, according to Reuters.

"No one trusts the bankruptcy bar and the courts. That's the problem," said Flores. "We don't need to abandon bankruptcy, we need to abandon government intervention that can seem inconsistent and panicky."

Most importantly for taxpayers, he bill would completely remove the option for government bailouts, leaving troubled businesses with no other safety net besides bankruptcy.

Rep. Bachus' bill, which is currently under committee consideration, would have no effect on consumer bankruptcy laws.

If passed it would be the first amendment to U.S. bankruptcy laws since the Bankruptcy Abuse Prevention & Consumer Protection Act of 2005.

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Posted in Bankruptcy News and Events | 2 Comments »

Wednesday, October 28th, 2009

GMAC May Get Third Bailout

GMAC Financial Services,the former financing arm of General Motors Corp., may be in talks with the U.S. Treasury to receive a third financial lifeline, according to the Wall Street Journal.

GMAC has received $12.5 billion in bailout funds since December, 2008, and could receive an additional $2.8 billion to $5.6 billion in a third injection.

As part of the initial bailout, GMAC, which finances three-fourths of General Motors car loans and provides mortgages, insurance and other services, transformed into a bank holding company, which enabled it to receive Treasury aid. After the May, 2009 bailout, the U.S. government became the majority shareholder in the company.

Because GMAC backs so many new auto loans, it plays a vital role in revitalizing the auto industry, in which the government has already invested $25 billion.

General Motors, which filed bankruptcy this year, began selling off its interest in GMAC in 2006. The automaker maintained a small interest in GMAC before transferring many of its assets to the "new GM" as part is its Chapter 11 filing.

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Posted in Bankruptcy and the Economy | 3 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.

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Posted in Bankruptcy and the Economy | No Comments »

Wednesday, October 22nd, 2008

Another Huge U.S. Bank Making More “Mistakes”

After AIG was bailed out by taxpayers and subsequently had a $440,000 AIG spa retreat, Americans were mad.

I’m sure many of us could have used a shoulder rub and spa treatments too after our taxpayer dollars were ripped out from under us.

As we’re recovering from that wave of outrage—we get a bit more outrageous news that we’re supposed to swallow: Countrywide Home Loans Inc. is refusing to follow an Illinois state ruling.

Last week Illinois bank regulators tried to stop Countrywide (which is now owned by Bank of America) from creating new home loans in the state, according to a Chicago Tribune article.

The regulators said they would only allow the company to restructure loans of its existing clients.

Countrywide blatantly said it will continue to be “open for business” and does not intend to follow the state’s ruling.

Haven’t we been hearing that much of the financial crisis is due to unregulated companies acting in their own self-interest?

---Do you need a bailout? Check out this filing bankruptcy information to see if bankruptcy could help you get out of debt.

Will these corporations ever learn that their rebellious actions not only hurt the people of this nation but they also ultimately come around and bite them in the derriere?

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Posted in Bankruptcy and Predatory Lending | No Comments »

Wednesday, September 17th, 2008

AIG: Taxpayers To The Rescue, As Usual

So, we know that the government’s $85 billion handout to AIG (American International Group, Inc.) had to come from somewhere—the Feds didn’t just turn on the printing press to manufacture more cash.

No—they had to dip into our taxpayer money to bailout the insurance company.

This news comes after the Congressional Budget Office released a report last week that the federal budget deficit will increase by $246 billion over last year, for a grand total of a $407 billion federal deficit.

Last year—when the deficit was “a mere” $161 billion—the government attributed part of the spending increase to it covering “the insured deposits of insolvent financial institutions,” according to the agency.

That $246 billion increase didn’t even cover the recent government bailout of Freddie Mac and Fannie Mae. Although no one knows the exact cost of the Fannie and Freddie bailout, we expect it to be as much as $100 billion.

The Details

Not only is this costing American the taxpayer, but now the U.S. government has a 79.9 percent stake in one of the top insurance companies in the world. This wasn’t just an act to lend a helping hand—this was a government takeover.

AIG said it will fully repay the loan (with an interest rate of about 11.5 percent) by selling some of its assets. It’s up to AIG to determine what gets sold and when it happens.

The government will have veto power in that decision.

According to The Wall Street Journal, AIG’s current CEO, Robert Willumstad, is anticipated to be replaced by the former CEO of Allstate Corp., Edward Liddy, according to an unnamed source close to the deal.

With a 79.9 percent share, the government also has the right to remove senior management.

Looks Like We’re Seeing A Trend

These company fallouts have been the result of the sub-prime loan fiasco and Wall Streeter’s greedy money manipulations.

If the government is in such a deficit, it's no surprise that its citizens are feeling the crunch too. More people are filing bankruptcy and mortgage foreclosures are becoming much more frequent than previous years.

The Fed said the deal was necessary because the company’s failure would threaten the health of the already brittle economy.

AIG’s failure could “lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance,” the Fed said in a statement. The White House said it backs the Fed’s decision.

Many are applauding the move, including New York Governor David Paterson who said “Policy holders will be protected, jobs will be saved.”

As usual, taxpayers aren’t getting much of a say in the matter.

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Posted in Bankruptcy and the Economy | No Comments »

Monday, September 8th, 2008

The Fannie & Freddie Government Bailout

The U.S. government announced yesterday that it will implement tighter control on troubled mortgage titans Freddie Mac and Fannie Mae in an effort to save the companies from financial ruin.

Confidence in the companies has faded as property values plummet and mortgage foreclosures skyrocket.

The Federal Housing Finance Agency (FHFA), which regulated the two companies’ transactions, will now run the companies.

The temporary public ownership plan would be the biggest fiscal bailout in U.S. history.

Together, the companies have lent $5.3 trillion of the total $12 trillion of outstanding mortgage debt in the United States and have lost more than $3 billion alone between April and June.

U.S. Treasure Secretary Henry M. Paulson Jr. said in a press release that the FHFA will operate the companies in a “conservatorship.”

Under this plan, the government will guarantee the companies’ debt, bring in new management and provide fresh liquidity to make them less susceptible to the declining housing market.

The Congressional Budget Office said the move could potentially cost taxpayers $25 billion and it would take at least a year to remedy.

Presidential candidates Sen. Barack Obama and Sen. John McCain were briefed about the move this weekend.

McCain immediately backed the action while Obama said he would reserve judgment until he got more details on the issue saying, "We have to protect taxpayers and not bail out the shareholders and management.”

Are You Looking for a Bailout?

If you're struggling to make it day-to-day and can't pay the bills, you may want to learn more about filing bankruptcy.

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Posted in Mortgage Foreclosure | 1 Comment »