COMMENTARY: THE REALITY OF STUDENT DEBT IS DIFFERENT FROM THE CLICHÉS
The deeply indebted college graduate has become a stock character in the national conversation: the art history major with $50,000 in debt, the underemployed barista with $75,000, or the struggling poet with $100,000, according to a New York Times commentary on Tuesday. The anecdotes have created the impression that such high levels of student debt are typical, but they're not, and they're warping our understanding of bigger economic problems, according to the commentary. The Brookings Institution recently reported that only 7 percent of young-adult households with education debt have $50,000 or more of it. By contrast, 58 percent of such households have less than $10,000 in debt, and an additional 18 percent have between $10,000 and $20,000. The bigger problem in the student debt debate, according to the commentary, is the hundreds of thousands of people who emerge from college with a modest amount of debt but no degree. The solutions to the dropout crisis have some overlap with the solutions to the so-called student-debt crisis: more accountability for colleges. For the most part, though, the two issues are different -- and require different answers. Lifting the nation's college graduation rate depends on better, more cost-effective education, rather than merely cheaper education. Read the full commentary. For additional analysis of the Brookings Institute study from Slate.com, please click here.
Miss ABI's Student Debt Symposium on May 30? You can purchase all sessions from the program on ABI's eLearning site! Click here to browse and purchase the sessions.
CHIEF BANKRUPTCY JUDGES REACT TO BELLINGHAM DECISION
On June 16, 2014, ABI presented a panel of chief bankruptcy judges who discussed the new U.S. Supreme Court decision in Bellingham as well as other hot topics. Bankruptcy Judges Dennis R. Dow (W.D. Mo.), C. Ray Mullins (N.D. Ga.), Brendan Linehan Shannon (D. Del.), Cecelia G. Morris (S.D.N.Y), and Barbara J. Houser (N.D. Tex.) reviewed the Bellingham decision and provided commentary on what effect it will have on the bankruptcy courts. You can still hear what these judges had to say by purchasing the program by clicking here.
Amid heightened competition and regulatory uncertainty, the private-equity industry is exhibiting growing confidence and appetite for investment, according to a study jointly released by global valuation and corporation finance advisor Duff & Phelps and international law firm Shearman & Sterling LLP, ABLAdvisor.com reported yesterday. Respondents overall are bullish about an increase in private-equity activity over the next 12 months, with 87 percent expressing confidence in a near-term increase in buyout activity and 72 percent expecting fundraising prospects to improve in the next year. Specific areas of anticipated strength include the cross-border investments (industry-wide), consumer, and integrated telecommunications, media and technology sectors. Read more.
AFTER CRISIS, RISK OFFICERS GAIN MORE CLOUT AT BANKS
Risk officers are gaining power and multiplying in number across the U.S. banking industry as financial institutions bend to pressure from regulators to make their operations safer and simpler following the 2008 financial crisis, the Wall Street Journal reported today. The ultimate goal is to reduce the likelihood of another round of catastrophic losses that could shake the financial system. In a report released yesterday, the Office of the Comptroller of the Currency warned that "credit risk is now building after a period of improving credit quality and problem loan cleanup." Wells Fargo now has 2,300 employees in its core risk-management department, up from 1,700 two years ago, and the department's annual budget has doubled to $500 million in the same period, although the company's overall workforce has remained flat. In February, Goldman Sachs Group Inc. put its chief risk officer on the company's management committee for the first time in Goldman's 145-year history. The 34-person group oversees the entire firm and is traditionally dominated by executives who made their name as traders or investment bankers. Regulators say they don't track the total number of risk-management or risk-control employees at the nation's roughly 6,700 banks, though officials believe that big and small institutions everywhere are turning jobs long seen as ho-hum into front-line commanders. Read more. (Subscription required.)
HEDGE FUND INDUSTRY SURPASSES $3 TRILLION FOR FIRST TIME
The hedge-fund industry exceeded the $3 trillion barrier in May for the first time ever, according to one research firm, as new allocations and performance gains pushed total assets to a new record, the Wall Street Journal reported yesterday. Some $22 billion flowed into hedge funds last month, bringing the year-to-date inflows to $93 billion, according to data provider eVestment. That's the largest five-month total to start a year since 2007. Performance gains also added $37.8 billion in assets last month, leaving the total tally at just above $3 trillion. Read more. (Subscription required.)
FULL VIDEO NOW AVAILABLE: WATCH JAMES MILLSTEIN'S PRESENTATION ON THE ARGENTINIAN DEBT CRISIS AND ITS IMPLICATIONS FOR SOVEREIGN DEBT RESTRUCTURING
Not able to catch James Millstein's presentation on Argentina and the future of sovereign debt restructuring on June 20 at ABI's Cross-Border Symposium? Watch the full presentation in ABI's Newsroom.
NEW CASE SUMMARY ON VOLO: DEBENEDICTS V. BRADY-ZELL (IN RE BRADY-ZELL; 1ST CIR.)
Summarized by Michael Sugar of Lobel, Neue & Till LLP
The First Circuit upheld the bankruptcy court's determination that deBenedicts's claim was dischargeable. The appeals court refused to disturb the bankruptcy court's determination that deBenedicts had not shown by a preponderance of the evidence that the debtor knowingly made false representations to pay deBenedicts's invoices or that the debtor intended to deceive deBenedicts.
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: EXAMINING THE "NEW" LEGISLATIVE PROPOSAL ON STUDENT LOANS AND BANKRUPTCY
A recent post discusses the "Higher Education Affordability Act" introduced this week by Sen. Tom Harkin (D-Iowa), and fact that this is an idea that has been considered by academics for a few years.
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
A special Bankruptcy Code chapter 14 should be created for "TBTF" (too-big-to-fail) financial institutions.
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