House Tees Up Vote Next Week on Bid to Undo CFPB Arbitration Rule

House Majority Leader Kevin McCarthy (R-Calif.) said today that the House will vote next week on a resolution that would block the Consumer Financial Protection Bureau’s new rule that bars banks from requiring arbitration clauses in consumer contracts, MorningConsult.com reported. The resolution, H.J. Res. 111, was introduced by Rep. Keith Rothfus (R-Pa.) with the backing of every Republican member of the House Financial Services Committee. Sarah Rozier, a spokeswoman for the panel, told MorningConsult.com today that the resolution will bypass the committee consideration process and move straight to the House floor. The House’s quick action on the resolution comes alongside a separate but related effort in the Senate to block the rule. On Thursday, Senate Banking Committee Chairman Michael Crapo (R-Idaho) introduced a companion resolution with the backing of 22 other senators, including Sens. Tom Cotton (R-Ark.), Dean Heller (R-Nev.) and Finance Committee Chairman Orrin Hatch (R-Utah).

Analysis: Auto Defaults Continue to Increase

A decade after the mortgage debacle, the financial industry has embraced another type of subprime debt: auto loans, Bloomberg News reported on Monday. While subprime car loans have been around for ages, experts are not suggesting they’ll cause the next crisis. But since the Great Recession, business has exploded: Subprime auto bonds grew from $2.5 billion sold in 2009 to $26 billion in 2016, according to Wells Fargo & Co. In recent years, lending practices in the subprime auto industry have come under increased scrutiny. Regulators and consumer advocates say it takes advantage of people with nowhere else to turn. For instance, Santander recently vetted incomes on fewer than one out of every 10 loans packaged into $1 billion of bonds, according to Moody’s Investors Service.

 

Report: Fiscal Plan for Puerto Rico “Cannot Lead to an Economic Recovery”

A new paper released on Tuesday from the Center for Economic and Policy Research (CEPR), a left-leaning think tank, examines Puerto Rico’s economy and ongoing debt problems and finds that an Oversight Board-approved fiscal plan not only does not satisfy creditors, it cannot lead to an economic recovery. This is also the case with the current bankruptcy-like legal proceedings, which introduce additional problems, including the threat of privatizing public assets. The Oversight Board’s plan does not adequately address the underlying causes and consequences of Puerto Rico’s crisis, some of which are unique to the island due to its special political status. The paper notes that a number of the negative economic shocks experienced by Puerto Rico since the 1990s resulted from decisions made in Washington, D.C. and outside of its control. These include the signing of NAFTA and China’s entry into the WTO, which created more competition for its manufacturing sector, and the phasing out of tax incentives for companies operating in Puerto Rico. U.S. laws on shipping that prevent foreign vessels from docking at two U.S. ports have also constrained the island’s commerce and therefore its economic development.


For updated news and analysis of Puerto Rico's debt crisis, along with current docket filings in Puerto Rico's case, be sure to visit ABI's "Puerto Rico in Distress" webpage.

Investing in Malls, Despite Store Closings

Malls and shopping centers that host fading retailers are scurrying to find replacements, and there are some signs of success, the New York Times reported on Saturday. The Natick Mall, west of Boston, lost one of its anchor tenants in J.C. Penney but has found a replacement for most of that space in Wegmans, an upscale supermarket. Wegmans could eventually produce 10 times the revenue of the departed J.C. Penney, estimates Russ Devlin, a research director with AEW Capital Management. Still, problems for brick-and-mortar stores could worsen in the near future. Garrick Brown, director of retail research for the Americas at Cushman & Wakefield, expects 9,000 retailer closures this year. Next year, there could be as many as 13,000, he estimates. Apparel stores in particular have been hit hard by online competition so far, but Amazon’s $13.4 billion proposed acquisition of Whole Foods could put food outlets — until now mostly resistant to online incursions — into play.

Analysis: Workers and Companies Grapple with a New Reality of Deferred Retirement

The percentage of Americans working past the traditional retirement age hit new highs in the most recent jobs numbers, according to recent reports, with 19 percent of those 65 and older working at least part-time, the Washington Post reported today. And it's only expected to increase: The over-65 set is expected to be the fastest-growing demographic in the workplace by 2024, according to the U.S. Bureau of Labor Statistics. Meanwhile, growth of “phased retirement” programs, a benefit begun 15 years ago or so to help employees gradually step away from their jobs, has stalled over the past six years. The Society of Human Resources Management, whose surveys include more small and midsize companies, found that the use of formal phased retirement programs is just 6 percent — roughly the same as in recent years — while informal use of the idea has ticked up to just 13 percent.

Participate in Next Consumer Commission Meeting on Sept. 15 at NABT

The Commission’s next public meeting will be September 15 during the National Association of Bankruptcy Trustees conference. Additional information will be forthcoming soon. A list of topics under consideration by the Commission is available on the Commission’s website at https://consumercommission.abi.org/. To submit any comments or suggestions for the Commission, please e-mail [email protected].

Read available written testimony from the 7/15 open meeting at NACTT’s annual seminar by clicking at the bottom of this page (linked by name).

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