General Motors Corp. CFO Ray Young said that the company is open to raising additional financing to weather the auto industry’s current downturn, the Wall Street Journal reported today. Young said that the Detroit-based auto maker remains confident in its liquidity for 2008, but that GM’s North American operations are being pressured by strikes, supplier troubles, a slow U.S. market and high gasoline prices. The company believes its nearly $24 billion in available liquidity it now has is enough to run the business, fund capital projects and cover continuing worker-attrition programs, he said.
Bankrupt auto parts maker Dura Automotive continues to edge closer to emerging from bankruptcy, most recently filing an amended chapter 11 plan that lowers the value of the company from $600 million to $495 million, Bankruptcy Law360 reported on Friday. The biggest change made by the new plan is the satisfaction of the second-lien facility claims in equity rather than in cash. In addition, the new plan also stipulates that Dura will pay all debtor-in-possession facility claims in full and in cash. The bulk of the plan, however, remains the same, with the notable exception of the total enterprise value.
The Federal Reserve and the Federal Trade Commission proposed new rules yesterday that would require lenders to tell consumers when they are being offered less favorable terms based on poorer credit scores, Reuters reported. The rules would require a “risk-based pricing” notice to consumers when they receive more expensive credit terms than those offered to individuals with better credit histories. Credit card issuers would be required to provide risk-based pricing notices to any customers who receive a higher annual percentage rate than the lowest rate that the firm is granting its best-qualified customers, according to the proposal. The rules contain some exceptions, including an option for lenders, in lieu of providing risk-based pricing notices, to provide credit scores to all of their customers along with explanatory information.
Treasury Secretary Henry Paulson said U.S. financial markets are emerging from the credit crunch and that “the worst is likely to be behind us,” marking possibly the most optimistic comments yet from the Bush administration on the financial crisis, the Wall Street Journal reported today. Paulson’s comments reflect Treasury’s view that the administration and the Fed have already taken steps necessary to quell the situation. Bolstering that notion, the White House Tuesday threatened to veto legislation that has become the cornerstone of the Democrats’ response: a rescue plan that would provide government insurance for some $300 billion in troubled mortgages. Paulson was careful to predict that there would be further “bumps along the road,” and that it will take “some months longer” for the market distress to fully dissipate.
