CFPB PROPOSES RULE TO SUPERVISE LARGE AUTO FINANCE COMPANIES
The Consumer Financial Protection Bureau yesterday proposed bringing the financing units of the big automakers under federal supervision for the first time, a move that would ultimately let the agency examine the lending arms of Toyota, Ford and Honda, the Washington Post reported today. The proposed rule would extend the bureau's current oversight of bank auto lenders to cover 38 auto finance companies that make, acquire or refinance 10,000 or more loans or leases a year. These firms provided financing to about 6.8 million consumers last year, according to the CFPB. The bureau has grown concerned that some car buyers are being steered into expensive loans when they qualify for cheaper ones and also being misled about the terms and benefits of add-on products. The CFPB and the Justice Department have ongoing investigations into whether auto lenders and dealers are tacking on extra interest rate charges on loans made to minority borrowers. As a part of the probe, the pair reached a $98 million settlement with Ally Financial last year. Read more.
DOJ PREPARING CRIMINAL CHARGES AGAINST WALL STREET EXECUTIVES
Attorney General Eric H. Holder Jr. said that the Justice Department has launched criminal fraud investigations into certain individuals at Wall Street firms, with the hopes of filing formal charges in the coming months, the Washington Post reported today. "We are making good progress in these cases, which involve conduct that has undermined the integrity of our markets," Holder said. The nation's top prosecutor did not go into detail about the inquiries, but the probes likely involve the possible manipulation of the $5.3 trillion global foreign-exchange markets. At least seven banks, including JPMorgan Chase, Citigroup and Barclays, disclosed in regulatory filings last year that "various government authorities" had requested information about their trading activities. Bank employees have reportedly turned over information to U.S. authorities about the trading scheme. Read more.
RATES GO UP AFTER TOMORROW!
ANALYSIS: THE NEW RULES OF BORROWING MEAN LENDERS COMPETE FOR BEST CUSTOMERS
At 3 years old, the controversial Consumer Financial Protection Bureau (CFPB) has survived opponents' attempts to dismantle it and is busy rolling out new regulations and doling out punishment to companies accused of bilking consumers, according to an analysis in McClatchyDC.com on Tuesday. But the Bureau also is wrestling with some embarrassing problems, including an inspector general report that criticized $216 million in renovations of rented office space as improper and an investigative report by I that revealed that the Bureau's white employees were twice as likely as minorities to receive positive performance reviews. Data collection by the Bureau for research and as part of a database of consumer complaints has also drawn the ire of critics, who complain that it's both misleading and an invasion of privacy. The Bureau counters that it doesn't collect any personally identifiable information. The growing pains have attracted negative attention in Congress and could cause further headaches for the Bureau. Renewed fire is likely if Republicans take over the Senate after the November elections. A Republican Senate could schedule votes for a long list of bills to reform the CFPB passed by the House of Representatives over the past few years, said Rep. Patrick McHenry (R-N.C.). McHenry added that a political power shift also would focus increased scrutiny on what he sees as the Bureau's mismanagement. Read the full analysis.
COURT TEST NEARS ON WHETHER BANKRUPTCY SHIELDS RENT-STABILIZED LEASES
New York City and state officials are urging the Court of Appeals to protect rent-stabilized leases in bankruptcy proceedings, in a case in which a landlord agreed in bankruptcy court to buy the rights of a 79-year-old woman's lease to her East Village apartment, the Wall Street Journal reported today. "New York State and New York City have an important interest in ensuring that rent stabilization rights are not treated as property to be disposed of by a bankruptcy trustee," according to a joint brief filed on Monday by Mayor Bill de Blasio's corporation counsel and State Attorney General Eric Schneiderman. A brief was also filed on behalf of 18 state legislators, who wrote that they were concerned "because of their shared commitment to affordable housing for New York residents and the preservation of its distinct and diverse neighborhoods." The issue arose in 2011 as Mary Santiago, who has lived in the same apartment for nearly half a century, filed for bankruptcy protection from about $23,000 in credit card debt following the death of her husband. The bankruptcy trustee made a deal with the investor who owns her apartment to terminate her lease in exchange for more than $140,000 from the investor who owned her apartment in order to cover her debt and bankruptcy costs. Santiago would be allowed to live out her life in the apartment at her current rent of less than $800 a month, but she wouldn't be able to turn the apartment over to her son when she dies. The decision was appealed to the U.S. Circuit Court of Appeals for the Second Circuit by Santiago's lawyer, Kathleen G. Cully. The circuit court then referred the case to the state court of appeals because it involved an interpretation of state law. Oral arguments are scheduled for Oct. 14. Read more. (Subscription required.)
FALL LINE-UP OF FREE ABI COMMITTEE TELECONFERENCES FEATURES TIMELY ISSUES
Members are encouraged to dial-in and listen or participate on upcoming ABI Committee conference calls. While committee membership is encouraged, it is not required to join the free teleconferences. Upcoming Committee teleconferences include:
Business Reorganization Committee: Tuesday, September 23; 4 pm ET.
Topic: "Looking at International Insolvency/Restructurings through the Bankruptcy Code and Beyond"
Speakers: Patrick Mohan (Moderator) of Reorg Research (Columbia, S.C.), Rachel Ehrlich Albanese of Akin Gump Strauss Hauer & Feld LLP (New York), G. Eric Brunstad, Jr. of Dechert LLP (Hartford, Conn.), Nava Hazan of Squire Patton Boggs (New York), Mark Kronfeld of BlueMountain Capital Management, LLC (New York) and Stephen Lerner of Squire Patton Boggs (Cincinnati).
Members outside the U.S. can listen to the conversation online at: http://www.abiworld.org/webinars/2014/INSOL_RESTRUCTURINGS/live.html
Asset Sales Committee: Thursday, Oct. 2; 4 pm ET
Topic: Call to cover "the progeny of Fisker," as well as the practical implications of the decisions.
Speakers: Oscar Pinkas of Dentons (New York) and Justin Paget of Hunton & Williams LLP (Richmond, Va.)
Unsecured Trade Creditors Committee: Wednesday, Oct. 1; 4 pm ET
Topic: "Tricks of the Trade: New Issues and Strategies in Preference Cases"
Speakers: Mark Felger of Cozen O'Connor (Wilmington, Del.) and Travis Powers of Buchanan Ingersoll & Rooney PC (Buffalo, N.Y.)
All committee teleconferences will utilize the same dial-in information:
Call in: (712) 432-1500
Participant code: 692933
NEW CASE SUMMARY ON VOLO: NEW CASE SUMMARY ON VOLO: KDC FOODS V. GARY, PLANT, MOOTY (7TH CIR.)
Summarized by Bonnie Clair of Summers Compton Wells PC
The Seventh Circuit held that causes of action accrued when the debtor should have discovered the facts constituting fraud and had sufficient information to make it aware of the need to investigate further. The court found that the discovery should have occurred in April 2006 when the former counsel initially produced records showing the firm's relationship with the debtor's former CFO and the prior discussions about the possibility of an asset purchase by an entity he controlled.
There are nearly 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: THIRD CIRCUIT SAYS TRANSFEREE'S KNOWLEDGE NOT RELEVANT TO ESTABLISHING FRAUDULENT TRANSFER CLAIMS
A recent blog post examines the U.S. Court of Appeals for the Third Circuit's decision in SB Liquidation Trust v. Preferred Bank, Nos. 13-1373 and 13-1959 (3d Cir. Aug. 11, 2014). The Third Circuit concluded that it was not necessary to plead the transferees' knowledge of the fraudulent transfer in order to maintain a cause of action under § 548(a)(1).
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 debt ceiling for chapter 13 cases should be increased substantially again, perhaps to $5 million.
Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
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