Finance & Business World

The developers of Salpare Bay, the failed luxury condominium project on Hayden Island, expect to file for bankruptcy by June 4.

The bankruptcy plan, disclosed in a federal lawsuit against the lenders on the $100 million project, would occur in time to stop a sheriff’s auction of the property to satisfy a $4.4 million judgment won by builder J.E. Dunn Northwest Inc. for its work on the project in 2007.

Attorney Christine Kosydar, who has represented majority owner Michael DeFrees and minority owner George Killian, revealed plans to file for bankruptcy on or before June 4 in papers disclosing a conflict between the pair. Kosydar sought court permission to withdraw as Killian’s legal counsel because of the dispute.

The document did not disclose whether the bankruptcy petition would be filed under Chapter 7 (liquidation) or Chapter 11 (reorganization) of the U.S. Bankruptcy code.

DeFrees and Killian are seeking $390 million from 40 lenders who brought the project to a halt when they declined to fund a $63.6 million loan.

A bankruptcy petition would add another legal wrinkle to a vast case that already has spawned what’s thought to be the largest legal negligence case ever filed in Oregon. The 40 lenders have sued law firm Sussman Shank LLP in Multnomah County Circuit Court for $447 million, saying its counsel led them to decline to fund the loan and exposed them to liability to DeFrees and Killian.

Sussman Shank counters that it represented the one bank that is not part of the case.

The Multnomah County Sheriff’s Department auction, which covers both the condominium property and associated marina, is currently scheduled for 10 a.m. June 4 on the courthouse steps.

Also pending on the Salpare Bay calendar: U.S. District Court Judge Michael Hogan has scheduled a mediation session in the developer-lender cases for 9 a.m. June 2 in his chambers.

Salpare Bay, 449 N.E. Tomahawk Island Drive, offered buyers the chance to live next to the Columbia River in luxurious condominiums and first-class marina accommodations. The 204-unit project has languished since mid-2007.

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Consumer prices fell in April for the first time in 13 months, giving the Federal Reserve more room to keep interest rates at historic lows to aid the economy. That’s good news for borrowers, but not for savers.

Record-low rates help borrowers who qualify for loans and want to take on more debt. The prime lending rate, used to set rates on some credit cards and consumer loans, is at its lowest point in decades.

But low rates hurt savers. They’re especially hard for people on fixed incomes who earn scant returns on their savings.

The 0.1 percent decrease in overall prices last month was pulled down by gas prices, which are expected to drop further this summer.

Core inflation, which excludes volatile food and energy prices, was flat in April, according to the Labor Department report Wednesday. Over the past 12 months, core inflation has risen just 0.9 percent — the smallest increase in 44 years.

The recession in 2007 and 2008 has kept inflation so low that some economists worry about the possibility of deflation — a destabilizing period of falling prices and wages.

"With the unemployment rate so close to 10 percent, it is entirely understandable that the Fed wants to stick with its commitment to leave rates at near-zero," said Paul Ashworth, senior U.S. economist at Capital Economics.

Ashworth said he thought the Fed wouldn’t start raising rates until late next year — and potentially not until 2012.

Economists had expected overall prices and core prices to edge up 0.1 percent in April. The drop in overall prices was the first decline since a similar dip in March 2009.

Energy prices fell 1.4 percent, the biggest one-month decline since March 2009. Gasoline prices dropped 2.4 percent. Analysts said they expect further declines in coming months as crude oil prices are down nearly 20 percent since April.

Food costs rose 0.2 percent, the same increase posted in March. Economists had expected a bigger increase because of a winter freeze on Florida vegetable and citrus crops.

Clothing costs dropped by 0.7 percent in April. The cost of new vehicles was unchanged. Airline tickets rose by 2.2 percent, one of the few areas to show price pressures last month.

Joel Naroff, president of Naroff Economic Advisors, said stable prices had allowed consumers to spend more freely despite slow growth in income and high unemployment. He said most businesses were "dealing with a sluggish economy and that means they have very little pricing power."

Inflation at such low levels raises concerns of deflation. But most economists believe that threat remains remote. The overall economy has begun growing again, and hiring is starting to pick up.

The U.S. has not had to battle deflation since the 1930s.

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Student loans offer an invaluable avenue to help cover the cost of higher education. But they can also impose a financial burden on graduates.

One method for recent graduates to deal with student loans is through loan consolidation. Several college and university financial aid offices offer information about student loan consolidation. But you might find quicker answers regarding loan consolidation on the Web.

Here are a few websites that provide useful general and specific information on the subject:

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Two San Antonio Housing Authority leaders have been named to the boards of two national housing organizations.

Lourdes Castro Ramirez, president and chief executive officer of the housing authority, will serve on the Council of Large Public Housing Authorities, an organization which includes the 60 largest public housing authorities in the country.

Meanwhile, Yolanda Hotman, a commissioner in the SAHA, was chosen to serve a two-year term on the board of governors for the National Association of Housing and Redevelopment Officials. The organization focuses on creating affordable housing.

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The Big 12 Conference — which includes the University of Colorado at Boulder — and the Pacific-10 Conference have had preliminary talks about a TV alliance and football scheduling partnerships, according to news reports.

The Pac-10 includes several universities in California, Oregon, Washington and Arizona. It does not want to merge with the Big 12, according to the Dallas Morning News, but an alliance of the two conferences could boost their negotiating power regarding broadcast deals.

The Big 12 has football TV contracts with ABC/ESPN through 2016 and with FSN through 2012, according to the Kansas City Star newspaper. The Pac-10 has deals with ABC/ESPN and FSN through 2012.

The Pacific-10, under new Commissioner Larry Scott, seeks to boost the $96 million it raised last year from broadcast rights and other operations. That trails all but one of the major collegiate conferences.

The Big 12 posted almost $130 million last year from its broadcast and other revenue-generating efforts.

Besides CU-Boulder, the Big 12 includes Baylor University, Iowa State University, Kansas State University, the University of Kansas, the University of Missouri, the University of Nebraska, Oklahoma State University, the University of Oklahoma, Texas A&M, Texas Tech University, and the University of Texas pay day loan lenders.

Pac-10 members are the University of Arizona; Arizona State University; the University of California, Berkeley; the University of California, Los Angeles; the University of Oregon; Oregon State University; the University of Southern California; Stanford University; the University of Washington; and Washington State University.

There have been reports in recent months suggesting the possibility that CU-Boulder and the University of Utah might join the Pac-10, but neither school has publicly indicated any plans to do so.

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Three former football players who made their marks at Triangle universities headline the 2010 class of North Carolina Sports Hall of Fame inductees.

The hall will add a total of seven new members this year, including Jim Donnan, Mike Quick and Don McCauley.

Donnan is a former North Carolina State University quarterback who went on to have a standout coaching career at the University of Georgia. Fellow Wolfpacker Quick starred as a receiver at NCSU before playing for the Philadelphia Eagles in the NFL.

McCauley played for the University of North Carolina at Chapel Hill Tar Heels. He was an All-America running back there before going on to become a pro bowler with the Baltimore Colts.

The class will be enshrined at an induction ceremony held in the North Raleigh Hilton on May 13. The hall, which was established in 1963, has 266 members. The museum is located on the third floor of the North Carolina Museum of History in Raleigh.

The other inductees this year are:

• Karen Shelton, whose UNC-CH field hockey teams have won seven national titles;

•Paul Simson, one of the state’s most accomplished amateur golfers with two British Amateur Senior Open championships among his victories;

• Carla Overbeck, a three-time All America soccer star at UNC-CH who now coaches at Duke University;

• Herb Appenzeller, a Wake Forest Football player in the 1940s and longtime athletic director at Guilford College.

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Morgan Stanley said it swung to a $1.8 billion profit in the first quarter Wednesday, as strong trading revenues boosted the Wall Street firm’s latest results.

The New York City-based investment bank said it earned $1.03 a share during the quarter. Including earnings from discontinued operations, Morgan Stanley posted a profit of $1.4 billion, or 99 cents a share during the quarter. A year ago, Morgan Stanley lost $578 million, or 57 cents a share on that basis.

The results were far better than what analysts were anticipating. Expectations were for the company to report a profit — including discontinued operations — of $938 million, or 57 cents a share, according to Thomson Reuters.

Morgan Stanley CEO James Gorman, who succeeded current chairman John Mack as CEO at the start of the year, praised the firm’s efforts, particularly that of its growing sales and trading division.

Revenue from the company’s debt and currency trading business in particular, more than doubled from a year ago to $2.7 billion in the quarter.

Profits were higher across all three of the company’s divisions — its securities business, long-suffering asset management unit and wealth management division.

The latter unit grew dramatically after announcing plans last year to merge with Citigroup’s Smith Barney business. Client assets grew, while expenses showed signs of moderating from the previous quarter.

"This may be the beginning of the savings that were first promised when it integrated with Citi’s business," said Brad Hintz, senior analyst at Bernstein Research.

Ruth Porat, Morgan Stanley’s chief financial officer, attributed at least part of the company’s results to improvement in the economy, but echoed comments by Gorman, saying the firm still had "more work to do."

Morgan’s investment advisory business has been sluggish as of late due to weakened dealmaking activity. At the same time, real estate funds operated by the company have endured a series of bruising losses on commercial loans recently.

Morgan Stanley’s results however, may signal the firm’s return to consistent profitability. Last year’s performance was uneven, with the company reporting a net loss of $907 million for fiscal year 2009.

All of the nation’s top banks have come roaring back in the latest quarter, not only turning a profit, but also blowing analysts’ estimates out of the water.

Citigroup (C, Fortune 500), which was among the hardest hit banks during the credit crisis, reported a first-quarter profit of $4.4 billion earlier this week, while California-based lender Wells Fargo (WFC, Fortune 500) also scored Wednesday as it reported a first-quarter profit of $2.5 billion. Both banks beat Wall Street’s earnings estimates.

Goldman Sachs (GS, Fortune 500) also recorded an impressive $3.5 billion in profits Tuesday, even as its results were overshadowed by the SEC’s fraud case against the investment bank.

Porat disclosed to analysts Wednesday that Morgan Stanley was not facing any potential federal legal action related to mortgage securities it helped create.

Morgan Stanley (MS, Fortune 500) shares rose nearly 6% in afternoon trading on the news.  

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