ABA: AMERICANS PAYING BILLS ON TIME AT A HISTORICALLY HIGH RATE; PERSONAL BANKRUPTCIES FALL
The American Bankers Association reported today that the share of credit card bills being paid on time is near a two-decade high, the Wall Street Journal reported today. Delinquency rates on bank-issued credit cards fell to 2.44 percent in the first quarter from 2.6 percent at the end of 2013. The first-quarter figure is barely above the year-earlier reading of 2.41 percent, which was the lowest rate since 1990. Bank-card delinquency rates are running 36 percent below their 15-year average. Bank-card delinquency rates ran above 4 percent in 2006 and 2007, before the recession began. Rates peaked near 5 percent in 2008, before trending down. An uptick in the second half of last year coincided with stronger consumer spending, which then dissipated in the first quarter. Click here to read more from the ABA on credit card delinquencies.
As consumers continue to pay off their credit cards and shore up their balance sheets, personal bankruptcy filings have been declining each month this year. Click here to read ABI's most recent press release. Click here for monthly filing statistics.
HOUSE PANEL TO CONSIDER THE "FINANCIAL INSTITUTION BANKRUPTCY ACT OF 2014" ON JULY 15
The House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law will hold a hearing on July 15 at 3:30 p.m. to examine the soon-to-be introduced "Financial Institution Bankruptcy Act of 2014." The legislation aims to deal with resolving systemically important financial institutions (SIFIs). The bill would permit an expedited transfer of all the debtor's assets to a new bridge company on a short-term basis. This "single point of entry" bill, which would create a new subchapter V of chapter 11, is an alternative to the chapter 14 idea (S. 1861), which is also under review. Witnesses at the hearing include:
- Donald S. Bernstein of Davis Polk & Wardwell LLP, a member of ABI's Commission to Study the Reform of Chapter 11
- Prof. Thomas H. Jackson of the William E. Simon School of Business at the University of Rochester
- Stephen E. Hessler of Kirkland & Ellis LLP
- Prof. Stephen J. Lubben of Seton Hall University School of Law
For more information in the hearing, please click here.
Prior to the House hearing, ABI will be holding a 75-minute webinar on July 15 to provide a basic overview of both the new bill and the current chapter 14 proposal providing for the reorganization or liquidation of large financial institutions. Participate on the webinar by registering here.
FEDERAL RESERVE, CONFIDENT IN ECONOMY, DETAILS END OF BOND-BUYING PROGRAM
The Federal Reserve said yesterday that it plans to stop adding to its bond holdings in October, a sign of its confidence that the economy is gaining strength even as the central bank gradually withdraws its support, the New York Times reported today. The decision, described in an account of the Fed's most recent policy-making meeting in June, signals the end of one of the central bank's most aggressive efforts to stimulate the economy. The Fed, which started reducing its monthly purchases in January, said that it planned to add a final $100 billion to its holdings of Treasuries and mortgage-backed securities over the next four months, for a total of $1.5 trillion. But the account underscored that many Fed officials remained guarded in their optimism about the economy. It also suggested that they had not yet decided when to take an even more important step in their retreat: raising short-term interest rates for the first time since December 2008. Read more.
COMMENTARY: OUR FINANCIAL CRISIS AMNESIA
Five years after the end of the most recent U.S. financial crisis of 2007-09, the Federal Reserve has designed its own regulatory accounting so that it will never have to recognize any losses on its $4 trillion portfolio of long-term bonds and mortgage securities, according to a commentary in today's Wall Street Journal. Most concerning, according to the commentary, is that such "special" accounting is exactly what the Federal Home Loan Bank Board designed in the 1980s to hide losses in savings and loans. Since the Federal Home Loan Bank Board was abolished in 1989, many lessons learned during the multiple financial crises of the 1980s are in danger of being forgotten, according to the commentary. Viewing financial crises over several centuries, economic historian Charles Kindleberger once concluded that they occur on average about once a decade. Similarly, former Fed Chairman Paul Volcker observed that "about every 10 years, we have the biggest crisis in 50 years." It seems that is long enough for memories to fade in the human group mind, as they are overlaid with happier recent experiences and replaced with optimistic new theories, according to the commentary. Read more. (Subscription required.)
NEW CASE SUMMARY ON VOLO: SHAFFER V. BIRD, II (IN RE BIRD, II; 8TH CIR.)
Summarized by William Wallo of Weld, Riley Prenn & Ricci SC
The Eighth Circuit Court of Appeals affirmed the lower court's determination that a former bankruptcy trustee's breaches of fiduciary duty to the bankruptcy estate constituted a nondischargeable debt in his own bankruptcy case.
There are more than 1,300 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI's Volo website.
NEW ON ABI'S BANKRUPTCY BLOG EXCHANGE: SMALL FORMALITIES, BIG CONSEQUENCES IN SECURED CREDIT LAW
A recent blog post questions to what extent secured credit law should protect creditors from the consequences of mistaken actions made on their behalf, and looks at recent cases addressing the issue.
Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.
ABI Quick Poll
The § 546(e) safe harbor should be repealed.
Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
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