Asbestos Exposure Is Hazardous Again

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Asbestos litigation reform is on the tip of the spear with which the Bush administration wishes to punish the nation's trial lawyers in its second term. But it has run into substantial opposition in Congress and in the nation's courtrooms.

This is important to investors because several of last year's best-performing stocks advanced strictly on the strength of conviction that Republicans would succeed in advancing their pro-business agenda. Any developments that would stymie those hopes will therefore sicken the shares of several key industrial companies, as well as other firms on the fringe.

As a measure of how critical Republican legislative firepower is to the success of some of these companies, consider that as the broad market rose 4% in November following the GOP sweep, flooring maker CongoleumCGM rose 14%, packager Crown HoldingsCCK went up 11.8%, container maker Owens-IllinoisOI climbed 16.4%, oilfield services provider McDermott InternationalMDR gained 24.7%, chemical maker W.R. GraceGRA jumped 28%, gypsum wallboard maker USGUSG added 47% and building materials maker Owens-CorningOWENQ, traded on the Bulletin Board while in bankruptcy, rose about 800%, jumping from 54 cents a share to $4.85 between Election Day and Nov. 30.

So far this year, investors' enthusiasm has cooled a bit as combatants failed to show much progress in finalizing a $140 billion settlement formula in their first hearing in Congress and a contentious hearing over the asbestos liability of bankrupt insulation maker Owens-Corning began in Philadelphia. Let's look at where it all stands.