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Connecticut Lawmakers Approve Budget That Rescues Hartford

ABI Bankruptcy Brief
ABI Bankruptcy Brief
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October 26, 2017

ABI Bankruptcy Brief

Connecticut Lawmakers Approve Budget That Rescues Hartford

Connecticut lawmakers ended a four-month impasse over the budget by approving steps to close the state’s $3.5 billion deficit and provide nearly $50 million to keep Hartford from collapsing into bankruptcy, Bloomberg News reported today. The House of Representatives and the Senate both passed the spending bill today with enough support to ensure it won’t be struck down by Governor Dannel Malloy (D). The plan closes the deficit in part by eliminating sales-tax transfers to a municipal aid fund, raising hospital taxes and reducing earned income tax credits for the poor. It also extends a financial rescue to the state capital, Hartford, whose mayor has said it could be forced to seek bankruptcy as soon as next month if the state didn’t provide such help. The budget would give the city as much as $48 million a year, enough to cover almost all of its deficit. The rescue plan, which was cobbled together last week, has pushed up the price of Hartford bonds, with securities due in 2023 rising to an average of 83 cents on the dollar over the last two days from as little as 67 cents earlier this month.
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In related news, Hartford Mayor Luke Bronin declined to say today whether the money is enough for him to back away from a threat to file for bankruptcy, the Hartford Courant reported. Bronin has said the city would seek chapter 9 protection if Hartford didn’t get the state aid it needs by early November. He told Gov. Dannel Malloy and lawmakers last month that the city would be unable to pay its bills by Nov. 6. The mayor said today that the newest budget, adopted by the House and Senate, would alleviate that concern, but that more work is needed to right the city’s troubled finances. Negotiations between the city and its unions are ongoing. Bronin is seeking at least $4 million in employee concessions to balance his budget this year. He has also said that the city’s bondholders must play a role in the solution.
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Analysis: Supersized Family Farms Are Gobbling Up American Agriculture

Big farm operations are prospering despite the deepest farm slump since the 1980s, the Wall Street Journal reported on Tuesday. Years of low prices for corn, wheat and other commodities brought on by a worldwide glut of grains are driving smaller American farmers out of business. Farms with $1 million or more in annual sales — only 4 percent of the total — now produce two-thirds of the country’s agricultural output, the largest portion since the U.S. Agriculture Department’s census began tracking the statistic in the ’80s. The shift means food production is being increasingly handled by larger farms, which can be more financially secure. It also fuels a cycle in which size begets size, further transforming the rural economy. Smaller-scale farmers struggle to expand their operations to become profitable. Farm-supply retailers and grain companies are also pressured, since larger farms use their size to wrangle better deals. Owners say the big operations — which are still almost entirely run by private farmers and not companies — use machinery and technology more efficiently, get better prices on bulk supplies and manage to keep more of the profits by cutting out middlemen. Three-quarters of America’s farmed cropland is controlled by 12 percent of farms, USDA data show. The number of million-dollar-plus-revenue farms more than doubled between 1992 and 2015, while the ranks of smaller farms, with revenues of between $350,000 and $999,999, fell by 5 percent due to aging farmers who have a harder time making consistent profits. In a December report, USDA researchers said that consolidation is likely to continue.
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Auto Lenders Brace for Losses from Harvey, Irma and Maria

U.S. auto lenders are starting to tally the financial damage from the late-summer hurricanes, which have destroyed an estimated 500,000 to 1 million vehicles, American Banker reported yesterday. So far, the impact on lenders has been relatively small, since many of them are offering forbearance to car owners who are struggling to rebuild their lives. Moreover, the biggest U.S. auto lenders have less than 10 percent market share, so hurricane-related losses will be spread widely across the sector, hitting credit unions and the financing arms of automakers in addition to banks. Still, the industry’s eventual losses seem likely to run into the hundreds of millions of dollars across Texas, Florida and Puerto Rico. During the quarter, major auto lenders such as Ally Financial, Wells Fargo and Capital One significantly boosted their loan-loss reserves in anticipation of higher default rates.
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This year’s hurricane season has become one of the most destructive in recent memory. To provide assistance to those affected and direct others in how you can help, ABI encourages you to visit our Hurricane Relief webpage.

Commentary: 10 Years After the Financial Crisis Began, Banks Have Fully Recovered

Nearly 10 years after Wall Street institutions sank into the throes of the financial crisis, those banks are all the way back, according to a commentary yesterday in Crain's New York Business. On Tuesday the KBW Bank Index, which tracks the largest institutions' share prices, finally returned to levels last seen in October 2007. The current rally may still have room to run because markets are now betting that Trump will appoint John Taylor to chair the Federal Reserve, according to the commentary. The Stanford economist is thought to favor raising interest rates, which in the short term would benefit banks by making lending more profitable.
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DEADLINE TOMORROW: Next Consumer Commission Open Meeting to Take Place Nov. 10 at ABI’s Seventh Circuit Consumer Bankruptcy Conference

ABI's Commission on Consumer Bankruptcy will hold a public meeting during the Hon. Eugene R. Wedoff Seventh Circuit Consumer Bankruptcy Conference on November 10, 2017, from 12:00-1:30 PM at Jenner & Block’s Conference Center in Chicago. The Consumer Commission invites attendees to request time to make an oral statement at this public meeting, and in addition (or alternatively) to submit a written statement to the Commission. To request a time for a public statement or to send a written statement for the Nov. 10 meeting, please email the Commission by tomorrow, Oct. 27, to the Commission’s public email address:

To access the list of topics under consideration by the Commission’s committees and previous hearing statements, please click here.

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New on ABI’s Bankruptcy Blog Exchange: Will SCOTUS Ruling in Midland Funding Survive?

A recent blog post examined the Supreme Court's 5-4 ruling this year in Midland Funding, LLC v. Johnson and explored whether the decision is likely to survive intact..

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

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