Bankruptcy Headlines

Warren, Cummings Grill Banks on Change to Dodd-Frank Swaps Rules

U.S. Senator Elizabeth Warren (D-Mass.) and Representative Elijah Cummings (D-Md.) are asking Wall Street banks how a recent repeal of a Dodd-Frank derivatives provision affects their business, as Democrats try to shine a spotlight on efforts to weaken the financial-regulation law, Bloomberg News reported yesterday. The lawmakers sent letters yesterday to the chief executive officers of Citigroup Inc., JPMorgan Chase & Co., Bank of America Corp. and Goldman Sachs Group Inc. seeking information on how the change impacts their swaps trading, the size of their derivative books and the value of swaps they would have had to push out if Dodd-Frank hadn’t been altered. A goal of the repealed provision “was to ensure that taxpayers were not put at risk when large banks or financial entities engaged in risky swaps trades,” the lawmakers wrote. The change Congress approved in December “gutted” a section of Dodd-Frank, they wrote.

Judge to Approve Atlantic City Tax Deal with Revel Casino

Bankruptcy Judge Gloria Burns yesterday said that she will approve a deal that allows bankrupt Revel Casino Hotel to pay far less in property taxes to Atlantic City this year, Reuters reported yesterday. The cash-strapped city agreed to lower its 2015 valuation of Revel, the city's newest casino property. Revel opened in 2012 to much fanfare but has never turned a profit, went bankrupt twice and closed last year. Under the agreement, Revel's 2015 tax assessment is just $225 million, less than a tenth of the $2.4 billion it cost to build. Over the course of negotiations in bankruptcy court, the 2015 assessed value of the property dropped to $1.15 billion and then $625 million before the latest agreement was reached. At the current tax rate of 3.348 percent, Revel's next quarterly property tax payment will be about $1.9 million, down from the $9.8 million it would have been prior to the settlement. The city's 2015 tax rate has yet to be determined.

Sweeney Slams Christie's Atlantic City Plan, Says Governor Plans Bankruptcy for City

New Jersey State Senate President Stephen Sweeney yesterday slammed Gov. Chris Christie for appointing an emergency manager in Atlantic City as a sign that his administration wants the resort to declare bankruptcy, and pledged a "big fight" against such a move, NJ.com reported yesterday. Christie last week appointed attorney Kevin Lavin as the city's emergency manager and Kevyn Orr, who just presided over Detroit's bankruptcy, as an adviser. Reeling from the closure of four of its 12 casinos, Atlantic City is suffering from high unemployment and a collapsing property tax base. And while the governor did not say he intends bankruptcy for the city, Sweeney said that's what his move portends. "We will go to court, we will do whatever is necessary to stop this," Sweeney said.

“Revolving Door” Between Fed and Banks Spins Faster

Mark Imhof joined the Federal Reserve Bank of New York as a bank examiner in September 2010 as it went on a hiring binge following the worst financial crisis in generations, but, in his new role as a consultant, he helps companies navigate anti-money-laundering regulations, Bloomberg News reported today. Imhof is part of the latest rotation in what Fed critics call a “revolving door” between the regulator and the firms it oversees. It’s a spin that the central bank inadvertently greased by boosting supervisory staff by 46 percent between 2008 and 2013. Back then, regulators needed experienced professionals like Imhof, a certified public accountant, to help clean up the banking system and implement new regulations. By 2013, the extra staff wasn’t necessary and Imhof and some colleagues began to return to the private sector as banks and other financial services firms expanded their compliance departments. The movement is likely to accelerate as private firms become the dominant source of employment growth for financial examiners. Industry headcount at financial firms is expected to rise 11 percent by 2022 from 2012 levels, while federal government employment of examiners will fall 3 percent, according to Bureau of Labor Statistics projections.

MF Global Seeks Deadline to Repay Hard-to-Locate Customers

The trustee unwinding MF Global Inc. wants to establish procedures to pay back more than $10 million to about 1,400 former customers, the only ones yet to be fully repaid, Dow Jones Daily Bankruptcy Review reported today. In a Wednesday filing with U.S. Bankruptcy Court in Manhattan, lawyers for trustee James W. Giddens said that some customers at issue haven't returned the necessary forms. In other cases, checks sent either were returned as undeliverable or expired without being cashed.