Analysis: Seven Ways the New Congress Is Seeking to Water Down Financial Rules
The House attempted to pass a bill yesterday to roll back or ease nearly a dozen requirements from the 2010 Dodd-Frank financial law and the 2012 Jumpstart Our Business Startups law that aimed to make it easier for smaller companies to raise cash, the Wall Street Journal reported today. The measure failed by a vote of 276-145, six votes short of the two-thirds needed to pass under a special procedure known as "suspension" in which non-controversial legislation can advance with limited debate. House Republicans are almost certain to try again to pass some or all of the bill's measures. Here's what some of the key provisions would have changed:
1. Give banks until 2019 to comply with provisions of the so-called Volcker rule that they divest from their Collateralized Loan Obligations, or CLOs, which are complex securities that bundle together corporate loans as well as bonds.
2. Clarify that farmers, ranchers and small non-financial companies are exempt from margin requirements when they enter into swaps contracts to hedge business risks.
3. Also clarify that end-user businesses that use a financial affiliate to centralize their hedging activities are exempt from clearing and margin requirements.
4. Make it easier for regulators to share information about swaps trades with each other by striking a Dodd-Frank indemnification requirement critics say inhibits global cooperation on monitoring swaps risks.
5. Give companies with revenues under $250 million the option not to apply electronic data tags to their annual reports, easing an SEC requirement that firms use eXtensible Business Reporting Language, or XBRL, to allow investors to easily extract financial details for analysis.
6. Give thrift banks more flexibility to launch initial public offerings — or deregister as a public firm — by extending new shareholder thresholds in the JOBS Act to savings and loan bank holding companies.
7. Allow smaller companies to more quickly conduct a road show to drum up investor support ahead of an IPO.
CONSUMER DELINQUENCIES CONTINUE BROAD-BASED DECLINE IN THIRD QUARTER
Delinquencies continued to decline in last year's third quarter, falling in seven out of 11 categories as the economy improved and consumers responsibly managed their finances, according to results released today from the American Bankers Association's Consumer Credit Delinquency Bulletin. The composite ratio, which tracks delinquencies in eight closed-end installment loan categories, fell 6 basis points to 1.51 percent of all accounts — a record low that is well under the 15-year average of 2.30 percent. Bank card delinquencies ticked up slightly in the third quarter following two consecutive quarters of declines, rising eight basis points to 2.51 percent of all accounts. They remain well below their 15-year average of 3.77 percent. Delinquencies in two of the three home-related categories — property improvement loans and home equity loans — continued their downward trend in the third quarter, falling to 0.82 percent and 3.24 percent, respectively. Delinquencies for home equity lines of credit edged up slightly, rising two basis points to 1.52 percent. Read more.
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OBAMA TO CUT FHA MORTGAGE INSURANCE PREMIUMS TO BOOST HOME OWNERSHIP
In an effort to expand home ownership among lower-income buyers, President Barack Obama will cut mortgage-insurance premiums charged by a government agency, Bloomberg News reported yesterday. The annual fees the Federal Housing Administration charges to guarantee mortgages will be cut by 0.5 percentage point, to 0.85 percent of the loan balance, Julian Castro, secretary of the Department of Housing and Urban Development, said yesterday. Under the new premium structure, FHA estimates that 2 million borrowers will be able to save an average of $900 annually over the next three years if they purchase or refinance homes. The FHA has been increasing premiums since 2011 to offset losses caused by defaults on mortgages it backed after the housing bubble burst. Housing industry participants say the increases in annual fees, which are now at 1.35 percent of the loan balance, are squeezing buyers with modest incomes out of the market. Read more.
COMMENT DEADLINE TOMORROW: USTP NOTICE OF PROPOSED RULEMAKING ON CHAPTER 11 MONTHLY OPERATING REPORTS
Section 602 of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) authorizes the U.S. Trustee Program (USTP) to issue rules requiring uniform periodic reports by debtors in possession or trustees in non-small business cases under chapter 11. The USTP just published in the Federal Register a notice of proposed rulemaking seeking public comment on the proposed rule and periodic report forms. The proposed rule is published in the Federal Register at 79 FR 66659 (Nov. 10, 2014) (to be codified at 28 C.F.R. pt. 58). The proposed rule, along with the proposed periodic report forms and instructions, may be viewed on the USTP's website. The proposed rule may also be accessed at www.regulations.gov. All public comments must be submitted on or before January 9, 2015, via www.regulations.gov. Please note that the proposed rule and forms only apply in chapter 11 cases filed by debtors that are not small businesses. Small business debtors are already required to use Official Form 25C, "Small Business Monthly Operating Report."
PROGRAMS IN NEW YORK AND WASHINGTON, D.C., TO FOCUS ON FINAL REPORT OF ABI'S CHAPTER 11 REFORM COMMISSION
Two programs, sponsored by Bloomberg BNA in January and the American College of Bankruptcy (ACB) Fourth Circuit in February, will focus on the Final Report of the ABI Commission to Study the Reform of Chapter 11. Both programs will feature an overview of the Report, and members of the Commission will address their recommendations aimed at modernizing chapter 11 of the Bankruptcy Code.
Bloomberg BNA 2015 Outlook: "What's Ahead for Chapter 11 Reform?"
Bloomberg Headquarters, New York. January 29, 2015.
This free half-day program will take place at Bloomberg's headquarters in New York on Jan. 29 from 8:45 a.m. to 12:30 p.m. ET. Bloomberg's Bill Rochelle and members of ABI's Commission to Study the Reform of Chapter 11, including the official reporter, will present three panel discussions analyzing the key recommendations of the 400-page Report. Attendees have the opportunity to earn 3.25 hours of CLE credit. For more information on the program, including speakers and registration, please click here.
Rayburn House Office Building, Washington, D.C. February 13, 2015.
The American College of Bankruptcy Fourth Circuit program, "Considering ABI's Report on Chapter 11 Reform," will be held on Feb. 13 from 9:30 a.m. to 1:00 p.m. ET on Capitol Hill. The free event will take place in Room 226 of the Rayburn House Office Building (House Judiciary Committee) and will feature discussion by ABI commissioners and bankruptcy experts on the Final Report's treatment of small and medium-sized enterprises (SMEs), 363 sales, valuation and more. For more information and to register, please click here.
ORDER YOUR PRINTED COPY OF THE FINAL REPORT OF ABI'S COMMISSION TO STUDY THE REFORM OF CHAPTER 11!
Order your printed copy of the Final Report of ABI's Commission to Study the Reform of Chapter 11! The 402-page Final Report contains more than 200 discrete recommendations of chapter 11 policy reforms. ABI's Commission to Study the Reform of Chapter 11 was established in 2012 with a mission to study and propose reforms to Chapter 11 of the Bankruptcy Code and related statutory provisions. After months of deliberations, the Commission unanimously adopted this report to provide to Congress. For the special price of $40, you will have all the testimony, studies and figures that went into compiling the recommendations at your fingertips! Click here to order.
NEW CASE SUMMARY ON VOLO: DYMON INVESTMENTS, INC. V. WELCH (IN RE WELCH; 9TH CIR.)
Summarized by Emil Khatchatourian, Foley & Lardner LLP
The Bankruptcy Appellate Panel of the Ninth Circuit held that the bankruptcy court did not abuse its discretion when it denied creditors' motion to reopen a closed chapter 7 case in order to conduct an examination under Federal Rule of Bankruptcy Procedure 2004. While there is no specified time period under § 350 of the Bankruptcy Code within which a motion to reopen must be filed, such a request must be made within a reasonable time, and what constitutes reasonableness is determined based on the totality of the circumstances. The longer a party waits to file a motion to reopen a closed bankruptcy case, the more compelling the reason to reopen must be. There was also nothing in the record to establish prima facie proof that the case was not fully administered, and reopening the case would have caused meaningful prejudice to debtors.
There are more than 1,500 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: TOUGH FINANCIAL CLIMATE FOR WOMEN'S APPAREL RETAILERS
A recent blog post examined the tough retail climate currently facing struggling women's apparel retailers. 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.
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