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August Total Bankruptcy Filings Increase 10 Percent from Last Month, Commercial Chapter 11 Filings Fall 12 Percent

ABI Bankruptcy Brief

September 6, 2018

 
ABI Bankruptcy Brief
 
 
 
 
NEWS AND ANALYSIS

August Total Bankruptcy Filings Increase 10 Percent from Last Month, Commercial Chapter 11 Filings Fall 12 Percent

Total U.S. bankruptcy filings increased 10 percent in August 2018 from July, according to data provided by Epiq Systems, Inc. Total filings registered 68,499 in August 2018, up from the previous month’s total of 62,223. The 65,335 consumer filings in August also represented an 11 percent increase from July’s consumer total of 59,119. August 2018 business filings increased 2 percent to 3,164 from July’s business total of 3,104. Conversely, the 361 commercial chapter 11 filings recorded in August 2018 were a 12 percent decrease from the 412 commercial chapter 11 filings in July.
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CMBS Delinquencies Decline, but Still Higher than Other Loan Types

Mortgage Bankers Association data showed that delinquencies for loans securing commercial mortgage-backed securities continue to decline, although they are still well above rates for other types of investments, National Mortgage News reported. There was a 3.52 percent delinquency rate for CMBS loans — defined as those 30 days or more late with their payment and REO — in the second quarter, down from 3.93 percent in the first quarter and 4.84 percent in the second quarter of 2017. This is the lowest CMBS delinquency rate since 2008. At year’s end in both 2006 and 2007, the delinquency rate for these loans was at a low point of 0.39 percent.
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SEC’s Stock-Trading Experiment Cost Investors Over $300 Million, Study Finds

A study released today found that a Securities and Exchange Commission experiment designed to stimulate trading in shares of smaller companies has cost investors more than $300 million in the past two years, the Wall Street Journal reported today. The study, by brokerage firm Pragma Securities LLC, adds to a growing body of research that suggests that regulators’ “Tick Size Pilot Program” has added to investors’ costs without doing much for the small and midsize companies it was meant to help. The program was mandated by the SEC after pressure from some members of Congress. New York-based Pragma Securities said that total costs to investors could exceed $350 million by the time the program concludes its two-year run in October. Under the program, the “tick size” for hundreds of companies was changed from 1 to 5 cents. This means that instead of seeing prices such as $20.01, $20.02 and so on for stocks in the program, investors would only see prices that were multiples of a nickel. (Subscription required.)
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Commentary: Fannie and Freddie, Make Way for Ginnie Mae*

Ten years ago today, the federal government took over Fannie Mae and Freddie Mac, the failed government-sponsored housing enterprises that were at the center of the last financial crisis, according to a commentary today by House Financial Services Committee Chair Jeb Hensarling (R-Texas) in today's Wall Street Journal. Leading up to the crisis, Fannie and Freddie were thinly capitalized and bought loans with as little as 3 percent down, according to Rep. Hensarling. They issued mortgage-backed securities encompassing roughly 50 percent of all first-lien mortgages and were embroiled in multiple scandals such as conflicts of interest and over-the-top lobbying. Today, propped up by taxpayers in a conservatorship, they remain thinly capitalized, still securitize half of new mortgages, and are buying high-risk 3-percent-down loans. Rep. Hensarling proposes to permanently repeal the Fannie and Freddie charters, ending their monopoly model. In its place, it proposes using Ginnie Mae, the government corporation that explicitly backs the payment of principal and interest to investors in Federal Housing Administration and other government-insured loans. The proposal would direct the corporation to guarantee qualified privately insured mortgage-backed securities. (Subscription required.)
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*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

Notice to All ABI Members

UNITE HERE Local 11 is a labor union based in southern California. They represent more than 20,000 workers in the hotel and restaurant industry. The union has been attempting to organize employees at the Terranea Resort, site of ABI’s 2019 Winter Leadership Conference (WLC). The union has repeatedly contacted ABI leadership, including members of the board and committee leaders, to urge ABI to cancel or move the WLC. ABI has no plans to move or cancel the event, which would result in substantial legal exposure. If you are contacted by phone or email by representatives of the union, ABI encourages you to ignore rather than engage or respond. ABI regrets this development and will continue to closely follow events at the property. This has no effect on the ABI’s 2018 WLC, set for Scottsdale, Ariz., this December.

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BLOG EXCHANGE

New on ABI's Bankruptcy Blog Exchange: Post-crisis Regulation Only Had 'Modest' Effect on Lending Volume: GAO

A Government Accountability Office (GAO) report said that the economic environment and competition instead have driven trends in small-business lending, according to a recent blog post.

To read more on this blog and all others on the ABI Blog Exchange, please click here.

 
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