Chrysler Liquidation Would End 38,500 Workers’ Jobs

By Tiffany Kary

April 30 (Bloomberg) -- Chrysler LLC, the bankrupt automaker planning to reorganize, is seeking quick court approval of its partnership with Italy’s Fiat SpA to avoid a liquidation that would cost the U.S. thousands of jobs and billions of dollars in pension payments.

If the deal is rejected and Chrysler liquidates, “it will mean the end of an iconic, 83-year-old American car company,” and the loss of jobs for 38,500 workers, said lawyer Corinne Ball of Jones Day in a court filing.
Chrysler employees and retirees would lose $9.8 billion in benefits and $2 billion in pension payments, lawyers said in today’s so-called first-day pleadings that seek to organize Chrysler’s 25 affiliates into a single bankruptcy proceeding.

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Bank of America’s Lewis Says Merrill Deal Had to Be Completed

April 29 (Bloomberg) -- Bank of America Corp. Chief Executive Officer Kenneth Lewis said shareholders weren’t told about losses at Merrill Lynch & Co. because aborting the deal might have destabilized the financial system, and the decision was “not about selfish desire” to keep management jobs.

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GM to Become "Government Motors"

The clock is ticking for GM. If an agreement with the bondholders and the unions is not reached by June 1, GM is headed for bankruptcy court. If the deal is approved as currently on the table, the Treasury department would become GM's largest shareholder.

Bankruptcy looks increasingly likely as GM Bondholder Group Says Offer Isn’t ‘Reasonable’.

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Morgan Stanley Loss Exceeds Analysts’ Estimates

By Christine Harper

April 22 (Bloomberg) -- Morgan Stanley, the fifth-biggest U.S. bank by assets, reported a bigger-than-estimated loss after real estate and debt-related writedowns overwhelmed trading gains. The company cut its dividend to 5 cents a share.

The first-quarter loss was $177 million, or 57 cents a share, New York-based Morgan Stanley said today in a statement. The average estimate of 19 analysts surveyed by Bloomberg was for a loss of 8 cents a share. The company had a loss of $1.3 billion in December before the start of the new fiscal year.

Chief Executive Officer John Mack converted Morgan Stanley, the second-biggest U.S. securities firm, into a bank last year and announced plans in January to take control of Citigroup Inc.’s brokerage as he seeks to restore earnings and limit risks. The company had $1 billion of real estate losses in the first quarter and writedowns of $1.5 billion from an accounting loss related to an improvement in the firm’s debt.

“Residential real estate was last year’s problem and this year’s problem is all the other loan categories, specifically commercial real estate,” said Peter Kovalski, a fund manager at Alpine Woods Capital Investors LLC in Purchase, New York, which oversees about $5 billion. “It’s still going to be a difficult business environment for banks for the remainder of this year,” said Kovalski, who spoke before earnings were released.

Morgan Stanley fell to $22.75 from $24.65 at the close on the New York Stock Exchange yesterday. The shares have climbed 54 percent this year after dropping 70 percent last year.

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Wells Fargo May Need $50 Billion in Capital, KBW Says

By Ari Levy
April 13 (Bloomberg) -- Wells Fargo & Co., the second- biggest U.S. home lender, may need $50 billion to pay back the federal government and cover loan losses as the economic slump deepens, according to KBW Inc.’s Frederick Cannon.

KBW expects $120 billion of “stress” losses at Wells Fargo, assuming the recession continues through the first quarter of 2010 and unemployment reaches 12 percent, Cannon wrote today in a report. The San Francisco-based bank may need to raise $25 billion on top of the $25 billion it owes the U.S. Treasury for the industry bailout plan, he wrote.

First-quarter net income rose 50 percent to about $3 billion, Wells Fargo said last week in announcing preliminary results that topped the most optimistic Wall Street estimates and sparked a 32 percent jump in the stock. The bank attributed the profit to a surge in mortgage originations and revenue from Wachovia Corp., acquired in December. Full results are scheduled for April 22.

“Details were scarce and we believe that much of the positive news in the preliminary results had to do with merger accounting, revised accounting standards and mortgage default moratoriums, rather than underlying trends,” wrote Cannon, who downgraded the shares to “underperform” from “market perform.” “We expect earnings and capital to be under pressure due to continued economic weakness.”

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Modifying loans may not stem foreclosures: Boston Fed

In my home state of Florida we have been hit very hard with un-employment. That has been a large part of our failing economy, along with many other factors of course. Here is an article by Kristina Cooke Kristina Cooke – posted Mon Apr 13, 12:05 pm ET

NEW YORK (Reuters) – Unemployment is a bigger reason for missed mortgage payments than high interest rates,according to a study from the Boston Federal Reserve that raises questions about President Barack Obama's plan to stem foreclosures by modifying loans.

Borrowers are more likely to default on their payments because they have lost their jobs or because the price of their homes has plummeted than because of tough terms on their mortgages, the study found.

Loan modifications are not necessarily a better deal for investors either, wrote Boston Fed economists Christopher Foote and Paul Willen, Atlanta Fed economist Kristopher Gerardi and Lorenz Goette, a professor at the University of Geneva.

Their research found that policies that directly help homeowners overcome setbacks such as losing their jobs may be more effective in combating foreclosures.

"Foreclosure-prevention policy should focus on the most important source of defaults," the economists wrote in a study released on the Boston Fed's website late last week.

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Attorney Network to Redefine Homeownership

There is a lot of help available when it comes to loan modifications. Here is an article I found on an attorney group that is helping the cause. A forensic audit is an awesome tool in negotiating a loan modification. Click here to read about an excellent audit company.

By KELLY CURRAN
April 13, 2009 12:35 PM CST

Wingspan Portfolio Advisors, LLC, a Dallas-based mortgage servicer specializing in delinquent loans, formed a professional network of attorneys to assist in efforts to help borrowers in arrears stay in their homes. Traditionally, law firms are involved in seeing foreclosure actions through to their conclusions, but membership in the Wingspan Professional Attorney Network (WPAN), according to Wingspan, signifies their interest in seeking other ways to help their lender and servicer clients, without reaching default status.

“As an attorney myself, I understand that while law firms provide the legal services associated with foreclosure, they and their clients will benefit more by finding ways to make the assets re-perform and keep people from losing their homes,” says Steven Horne, CEO of Wingspan Portfolio Advisors. “They want to explore all the options before foreclosure becomes inevitable, and that’s where the Wingspan Preferred Attorney Network comes in.”

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Fed Economists Say Mortgage Changes May Not Stem Foreclosures

April 10 (Bloomberg) -- Policies aimed at easing home-loan terms for troubled borrowers may not be as effective in preventing foreclosures as more-direct aid to homeowners, Federal Reserve economists found.

Job losses and falling home prices have a bigger impact on delinquencies than mortgage terms, and modifications aren’t necessarily a better deal for investors than foreclosures, according to a paper by two current and one former economist at the Boston Fed Bank and one Atlanta Fed researcher.

The conclusion poses a challenge to housing advocates and to some extent the prevailing views of President Barack Obama’s administration, Fed officials and other U.S. regulators. Obama announced a $75 billion plan in February that concentrates on refinancing or modifying loans for as many as 9 million homeowners.
“One of the most influential strands of thought contends that the crisis can be attenuated by changing the terms of ‘unaffordable’ mortgages,” the economists said in the paper posted on the Boston Fed’s Web site today. Yet policies aimed at reducing a borrower’s debt-to-income ratio “face important hurdles in addressing the housing crisis,” the authors said.

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