MBIA Inc. booked its third consecutive quarterly loss, as the country’s largest bond insurer was hurt by a $3.58 billion loss on contracts the company has written to insure complicated securities often backed by mortgages against default, Dow Jones Newswires reported today. The quarter also showed the damage done to MBIA’s business by concerns about its exposure to troubled securities, as net premiums written fell 41 percent. MBIA posted a net loss of $2.41 billion compared with net income of $198.6 million a year earlier. The company reported negative revenue of $2.96 billion due to the loss on insured derivatives, compared with a profit of $729.9 million. MBIA’s paper losses on insured derivatives would have been $7.1 billion, except for an offsetting $3.6 billion gain on the declining value of its own credit guarantees.

The Federal Reserve yesterday auctioned $28.77 billion in safe Treasury securities to big investment firms, part of an ongoing effort to ease credit problems, the Associated Press reported. In exchange for the 28-day loan of Treasury securities, bidding firms can put up more risky investments, including risky mortgage-backed securities and bonds backed by federally guaranteed student loans, as collateral. Bidders’ identities are not made public. To help shore up the shaky student loan market, the Fed agreed last week to let financial institutions put up bonds backed by federally guaranteed student loans as collateral. Yesterday’s auction was the first where that option was available. Spreading credit problems have forced more than 60 lenders to stop making federally guaranteed student loans, either temporarily or permanently.

Delphi Corp. won court permission to pay executives as much as $39 million in bonuses over six months and give creditors the right to review its business decisions if it doesn’t exit bankruptcy by Aug. 15, Bloomberg News reported yesterday. Bankruptcy Judge Robert Drain yesterday approved the incentive program for executives, which will pay between $21.2 million and $39.1 million, depending on how close Delphi comes to its $1.3 billion pretax earnings target for the first half of 2008. The bankrupt former parts unit of General Motors Corp. requested the additional incentive pay as its exit from court protection remained stalled by tight credit markets.

Investor Wilbur Ross announced Monday that his investment firm, WL Ross & Co., would buy the mortgage-servicing business of tax-preparation firm H&R Block Inc. for nearly $1.1 billion, Dow Jones Daily Bankruptcy Review reported today. Ross previously bought the mortgage-servicing rights of subprime lender American Home Mortgage Investment Corp. for nearly $500 million. Together, the two units will handle nearly $100 billion of loans, the second-largest servicing business for subprime loans after mortgage lender Countrywide Financial Corp., Ross said.

A French appeals court ruled Tuesday that Jérôme Kerviel, the former trader that Société Générale has blamed for nearly $7.7 billion in losses, should be released from jail while the investigation into his alleged fraud continues, the New York Times reported today. Kerviel was to be placed under judicial supervision and was forbidden to leave France for the duration of the inquiry. The Paris prosecutor’s office had opposed his release on the grounds that he could flee or otherwise interfere with important witnesses or evidence in the case. Legal experts said the court’s decision was a recognition that Kerviel, who has already admitted to fabricating trades and forging documents to hid his activities, could only harm his chances for leniency if he failed to cooperate with the inquiry.

Carmakers expect 2008 to be challenging, at best, but hundreds of automotive parts suppliers are anticipating the year ahead to be one of the ugliest ever, the New York Times said today. Overall sales in the United States are projected to fall below 16 million vehicles next year, the lowest level in a decade, as a housing slump, high oil prices and weak consumer confidence deter car shoppers. Slow sales will mean less demand for parts at a time when many suppliers are already suffering from years of heavy losses or eroding profit margins. The outlook for suppliers, the nation’s largest manufacturing sector, worsened recently when Detroit automakers said that they did not plan to counter the softening market with bigger discounts, even if the country slipped into a recession.

Soaring fuel prices and slowing economic growth are likely to wipe out much of the airline industry’s profits next year, despite steady increases in global demand for air travel, the International Air Transport Association, a leading trade group said yesterday according to the New York Times. Analysts said that the expected slowdown could increase pressure on less-profitable carriers, particularly in the United States, to merge. North American carriers were likely to see the biggest drop in profit, down nearly 19 percent in 2008, to $2.2 billion, from a forecast of $2.7 billion in 2007.

The Securities and Exchange Commission filed a civil fraud complaint against the former auditor of San Diego on Monday, a rare step that reflects the agency’s concern about the quality of the information that governments provide to municipal bond markets, the New York Times reported today. The commission settled the complaint at the same time, imposing a $15,000 fine on the auditor, Thomas J. Saiz, and enjoining him and his firm from violating securities laws in the future. The SEC accused Saiz of issuing clean audit reports on San Diego’s finances in 2001 and 2002, when in fact the city was shortchanging its pension fund and covering up the shortfall with fraudulent accounting. Regulators said that Saiz had not only approved of San Diego’s statements but helped to draft footnotes that included false claims about the steps the city was taking to protect its pension.

Despite one creditor’s lingering reservations, diamond jewelry wholesaler M. Fabrikant & Sons Inc. finally got court approval of its disclosure statement on Wednesday, paving the way for a vote on the chapter 11 plan it jointly filed with creditors. Bankruptcy Law360 reported yesterday. Judge Stuart Bernstein handed down his order after postponing a decision several times in the last week so that plan proponents could make revisions to the statement. Bernstein set a number of filing deadlines and sketched out voting procedures with his following order. The debtors must send out ballots and copies of the statement and plan by today. Votes, administrative claims and objections to the plan must be cast by Dec. 7, responses must be filed by Dec. 13 and a confirmation hearing is set for Dec. 19.
See Also:  Bankruptcy Phoenix

The San Diego Catholic diocese’s eight-month-old bankruptcy case drew to a close yesterday as Bankruptcy Judge Louise DeCarl Adler dismissed the case and scolded the church for being “disingenuous” in reporting its finances to parishioners as part of a campaign to fund a $198 million settlement with victims of sexual abuse, the San Diego Union-Tribune reported today. “Chapter 11 is not supposed to be a vehicle, a method, to hammer down the claims of those abused,” she said. Judge Adler had planned to grant the diocese’s request to dismiss the bankruptcy without comment, but she said she recieved a packet in the mail from her former parish asking to help pay the settlement that she thought was less than candid about the diocese finances. Judge Adler said that there is ample property the church could sell or mortgage to fund the settlement, citing parking lots, houses and other holdings listed in court documents.