BoneYard's  Instablog

Ford Motor Co. hourly employees at four more factories rejected union contract concessions, dimming the automaker’s prospects for winning the givebacks granted to U.S. competitors.

Workers at the pickup plant in Dearborn, Michigan, voted 93 percent against concessions, Gary Walkowicz, an official with the United Auto Workers union Local 600, said in an e-mail.

The results mean that workers at 12 plants representing 18,600 UAW members have turned down the deal, compared with approvals at 4 facilities with 6,100 employees. Ford has 41,000 workers represented by the union, whose leaders negotiated the accord.

CIT Financial Ltd., a wholly owned subsidiary of CIT Group Inc., has reached an agreement to amend its $3 billion securities-based financing facility with Goldman Sachs International. Pursuant to the amendment, the commitment amount of the GSI Facility has been reduced to $2.125 billion, effectively eliminating the currently unused portion of the facility, and CFL has agreed to post additional collateral to secure amounts due to GSI under the GSI Facility. In connection with the reduction of the commitment amount of the GSI Facility, CFL made a payment of approximately $285 million representing the proportional termination fee payment to GSI as required for any such reduction under the original terms of the GSI Facility. CFL has initially posted additional collateral in the amount of $250 million, which amount will fluctuate over time pursuant to the terms of the amendment.

The new Expansion Credit Facility term loans mature in January 2012, with an option to extend maturity until January 2013, and bear interest at LIBOR plus 7.5%, with a 2% LIBOR floor, payable monthly. The Expansion Credit Facility provides for (i) commitment fees of 2.5% of the commitment amount, payable upon signing, and 2.5% of the drawn amount, payable upon the funding date, and (ii) a 2% call premium during the first year of the facility. The Expansion Credit Facility is subject to a fair value coverage covenant of 2.5x the outstanding loan balance tested quarterly and upon the financing, disposition or release of certain collateral.

Investor appetite for U.S. junk bond mutual funds hit fresh record highs this week as a recovering economy and easy monetary policy kept investors comfortable with risk.
Cashing in on a relentless rally, investors poured a net $207 million into junk bond funds in the week ended Wednesday, pushing year-to-date inflows to $27.8 billion, the most ever, AMG Data Services reported on Thursday.
The previous inflow record was $26.96 billion for the full year 2003, according to AMG.

Legislation overhauling U.S. health care includes $10 billion to pay some of the most expensive medical costs for millions of autoworkers, steelworkers, schoolteachers and other early retirees with coverage.   The provision, embedded in legislation passed in July by House and Senate committees, may help offset health-care concessions made earlier this year by the United Auto Workers as part of a government rescue of General Motors Co. and Chrysler Group LLC and related cost-cutting at Ford Motor Co.

The UAW cited the provision in an e-mail this week urging its members to support a health-care overhaul, President Barack Obama’s top domestic priority.
 

The Gramm-Leach-Bliley Act (the GLB Act) became effective on March 11, 2000. The GLB Act authorized affiliations among banks, securities firms, insurance firms, and other financial companies. To further this goal, the GLB Act amended section 4 of the BHC Act to allow a bank holding company (BHC) or foreign bank that qualifies as a financial holding company (FHC) to engage in a broad range of activities that (1) the GLB Act defines as financial in nature or incidental to a financial activity, or (2) the Board, in consultation with the Secretary of the Treasury, determines to be financial in nature or incidental to a financial activity. Furthermore, section 4 of the BHC Act authorizes an FHC to engage in designated financial activities, including insurance and securities underwriting and agency activities, merchant banking, and insurance company portfolio investment activities.

The Gramm-Leach-Bliley Act (GLB Act) amended the Bank Holding Company Act (BHC Act) to allow a BHC or foreign bank that qualifies as a financial holding company (FHC) to engage in a broad range of activities that the GLB Act defines as ‘‘financial in nature.’’ Section 4(k)(4)(A)–(E) of the BHC Act defines the following activities as financial in nature: 1. lending, exchanging, transferring, investing for others, or safeguarding money or securities 2. insuring, guaranteeing, or indemnifying against loss, harm, damage, illness, disability, or death, or providing and issuing annuities, and acting as principal, agent, or broker for purposes of the foregoing, in any state 3. providing financial, investment, or economic advisory services, including advising an investment company (as defined in section 3 of the Investment Company Act of 1940) 4. issuing or selling instruments representing interests in pools of assets permissible for a bank to hold directly 5. underwriting, dealing in, or making a market in securities

“I had the luxury to say to the government, I’m not going to rush to do this..." “I’m appalled at how much pressure has been put on all of you to just sell it no matter what, because the Fed wants out, or the Treasury wants out. If they want out in a hurry, they shouldn’t have come in in the first place.”

     “It’s time the people in Congress stopped talking about you as the problem, because you’re the solution,” he said. “It’s not your fault, it’s their fault, it’s the regulators’ fault.”
 

     “I don’t liquidate things, I build them,” Benmosche said during an Aug. 4 town hall-style meeting for employees, according to a recording obtained by Bloomberg. “When we get the fair value for those businesses, that’s when we’re going to sell them; it’s not going to be before.”