The Senate today confirmed (66-34) Richard Cordray's nomination to become the director of the Consumer Financial Protection Bureau, the Washington Post reported. The vote effectively ends a two-year long process during which Republicans blocked Cordray's nomination over disagreements about the bureau's setup. Cordray was appointed to the Consumer Financial Protection Bureau position during a congressional recess in January 2012 and had been awaiting confirmation. Cordray's recess appointment would expire in January 2014. The vote came as Senate leaders struck a deal to avert Democrats' move to change Senate rules on filibusters of certain nominees. Read more.
COMMENTARY: THE FINANCIAL INSTABILITY COUNCIL
There's finally a healthy discussion in Washington, D.C., about how to end too-big-to-fail banks, but before the government can start getting rid of taxpayer-backed behemoths, it first has to stop creating them, according to an editorial in today's Wall Street Journal. The Dodd-Frank Act classified all banks with more than $50 billion in assets as systemically important, and the federal Financial Stability Oversight Council (FSOC) is considering which non-banks should also be deemed too big to fail. Last year the board of regulators slapped the systemic tag on eight "financial market utilities," including clearinghouses, which means taxpayers now stand behind derivatives trading. Last week the council, chaired by Treasury Secretary Jack Lew, declared that GE Capital, the finance arm of General Electric, and AIG are also officially important. Now the council is trying to designate insurer Prudential as systemic, and perhaps MetLife too. GE Capital was rescued in the 2008 panic and thus deserves the systemic label, according to the editorial. AIG seems to welcome the designation, according to the editorial, perhaps because its current mix of businesses means that it will face a lighter regulatory burden than some competitors. However, Prudential and MetLife are resisting membership in the too-big-to-fail club, according to the editorial, as it would be a giant and counterproductive leap to conclude that the insurance business presents a systemic risk to the financial system. Read more. (Subscription required.)
SUBPRIME BORROWERS WITH BEST CREDIT SCORE STILL DENIED HELP
President Obama to date has failed to win Congressional backing for his proposal to expand eligibility for government-backed refinancing nationally to include subprime mortgages, Bloomberg News reported today. Expanding eligibility for the government's Home Affordable Refinance Program (HARP) is still at the top of the White House's agenda for housing. The effort is dubbed "Where's my refi?" The Treasury Department, which funds the nation's anti-foreclosure efforts, supports the program. Four years after the peak of the foreclosure crisis, Treasury has spent only a fifth of the $38.5 billion of funds from the Troubled Asset Relief Program (TARP) set aside for housing. "This is where you get to the heart of the subprime lending problem -- these expensive private loans where people kept paying," said Diane Swonk, chief economist at Chicago-based Mesirow Financial Inc. "It's easy to forget they are still out there." Borrowers who refinanced through HARP in the first quarter had an average interest-rate reduction of 2.1 percentage points and will save about $4,300 in the first 12 months of the new loan, according to mortgage financier Freddie Mac. But while expanding HARP would benefit homeowners, it wouldn't benefit investors, said Walt Schmidt, a mortgage strategist at FTN Financial. Bondholders in private-label securities would lose a paying loan, and potential buyers of government-backed securities would fear another mid-stream change in eligibility standards, he said. Read more.
COMMENTARY: BANKS DODGE A BULLET WITH DEAL ON SWAPS
A deal between American and European regulators on derivatives has helped banks dodge a bullet, according to a commentary yesterday on the New York Times DealBook blog. Before reaching a compromise on July 11, the Commodity Futures Trading Commission intended to force swaps involving U.S.' counterparties to be cleared in this country. That would have frozen cross-border flows and hammered volumes by creating separate regulatory jurisdictions. For global banks, that situation has been averted as banks will now have the choice of trading and clearing trans-Atlantic swaps in either Europe or the United States. To satisfy the Dodd-Frank Act reforms, the regulatory framework on swaps will be judged as "essentially identical" in each jurisdiction -- although in reality they are nothing of the sort. The two regimes differ in that Europe's swaps reforms are taking longer to implement than America's, but are more stringent on most of the main issues. The European Securities and Markets Authority reckons it will take at least a year, possibly two, before they are in place. The U.S., meanwhile, is ready to implement its rules. Europeans are tougher on data transparency, margin posting and trade reporting, and they also cover foreign-exchange swaps. Read more.
DID YOU MISS MONDAY'S abiLIVE WEBINAR DISCUSSING § 1111(b) ELECTION, PLAN FEASIBILITY AND CRAMDOWN ISSUES? RECORDING IS NOW AVAILABLE!
If you were not able to join Monday's well-attended abiLIVE webinar examining § 1111(b) elections, plan feasibility and voting, a recording of the program is now available for downloading! Utilizing a case study, ABI's panel of experts explored the issues surrounding a lender's decision on whether or not to make an election under § 1111(b), plan feasibility and voting. The abiLIVE panel also walked attendees through the necessary mathematical analyses used to examine these issues. The 90-minute recording is available for the special price of $75 and can be purchased here.
NEW abiLIVE WEBINAR ON AUGUST 20: HOW WILL THE NEW U.S. TRUSTEE FEE GUIDELINES IMPACT YOU?
The new U.S. Trustee Fee Guidelines will affect all attorneys and firms who work on larger chapter 11 cases filed on or after November 1st. ABI's Ethics & Professional Compensation Committee will present a panel of experts, including Cliff White, the Director of the U.S. Trustee Program, to discuss some of the ways the new guidelines may change day-to-day operations in firms, issues relating to the new market rate benchmarks, and how these changes might alter insolvency practice. Register today to hear government, attorney and academic perspectives on this important and timely topic.
ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE SOUTHEAST BANKRUPTCY CONFERENCE THIS WEEK
The next stop for the ABI Golf Tour is the famed Golf Club of Amelia Island course on Amelia Island, Fla., in conjunction with the Southeast Bankruptcy Conference this week. Final scoring to win the Great American Cupsponsored by Great American Groupis based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! There's no charge to register or participate in the Tour.
NORTON JUDICIAL EXCELLENCE AWARD NOMINATIONS OPEN
Nominations are now open for the 8th Annual Judge William L. Norton Judicial Excellence Award, to be presented during the ABI luncheon at the annual meeting of the National Conference of Bankruptcy Judges on Nov. 1, 2013. The award is presented by ABI and Thomson Reuters each year to the current or retired bankruptcy judge whose career embodies the same continued dedication and outstanding contributions to the insolvency community as the award’s namesake, Judge Norton. Nominations are considered by a committee made up of representatives from the Norton treatise and past ABI presidents. Nomination forms are available from Clay Mattson at Thomson Reuters ([email protected]) and should be submitted by July 29.
NEW ABI "BANKRUPTCY IN DEPTH" ON-DEMAND CLE PROGRAM LOOKS AT PRINCIPLES OF PROPERTY OF THE ESTATE: DEMYSTIFYING EQUITABLE INTERESTS
In this 90-minute seminar, Profs. Andrew Kull of Boston University School of Law and Scott Pryor of Regent University School of Law provide an in-depth analysis of a legal principle that has become, in their words, "a long-lost area of the law": § 541 of the Bankruptcy Code. Seeking to demystify what is meant by "property of the estate" and, in particular, the distinction between legal or equitable interests of the debtor in property, Kull and Pryor describe the legal entanglements that ensue when legal title belongs to one person but the equitable title belongs to someone else. The cost of the seminar, which includes written materials and qualifies for 1.5 hours of CLE, is $95. To order or to learn more, click here.
ASSOCIATES: ABI'S NUTS & BOLTS ONLINE PROGRAMS HELP YOU HONE YOUR SKILLS WHILE SAVING ON CLE!
Associates looking to sharpen their bankruptcy knowledge should take advantage of ABI's special offer of combining general, business or consumer Nuts & Bolts online programs. Each program features an outstanding faculty of judges and practitioners explaining the fundamentals of bankruptcy, offering procedures and strategies tailored for both consumer and business attorneys. Click here to get the CLE you need at a great low price!
NEW CASE SUMMARY ON VOLO: PALOMAR V. FIRST AMERICAN BANK (7TH CIR.)
Summarized by John Eggum of Foran Glennon Palandech Ponzi & Rudloff
The Seventh Circuit ruled that a chapter 7 debtor cannot strip off a wholly unsecured mortgage. The Seventh Circuit also distinguished the ability to strip off wholly unsecured mortgages in chapter 13 because "[t]he strip-off right in Chapter 13 is a partial offset to the advantages that chapter 13, relative to chapter 7, grants creditors, such as access to a larger pool of assets [created by the commitment of the debtor's disposable income]." Additionally, the strip-off right in chapter 13 is an aspect of a chapter 13 plan, as indicated by § 1322. Nothing in § 506 compelled a different result; chapter 7 debtors cannot rely on § 506 to import a strip-off power into chapter 7.
There are more than 900 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: DELAWARE BANKRUPTCY COURT FINDS NO VALUE IN LITIGATION TRUSTEE'S METHOD OF VALUING GOING CONCERN OF DEBTOR
The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. In a post examining Whyte v. C/R Energy Coinvestment II, L.P. (In re SemCrude, L.P.), the U.S. Bankruptcy Court for the District of Delaware dealt with the familiar scenario of a litigation trustee aggressively pursuing fraudulent-transfer claims. Faced with a fight over valuation theories, the court held that using a balance sheet-based test was inappropriate for valuing a debtor as a going concern, where a third-party had prepared a then-current valuation utilizing the discounted cash flow method, notwithstanding the fact that such valuation failed to take into account certain facts that adversely affected the value of the debtors.
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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