Credit Card Borrowers Still Paying Their Bills on Time

Credit Card Borrowers Still Paying Their Bills on Time

ABI Bankruptcy Brief | August 16, 2012
 
  

August 16, 2012

 
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CREDIT CARD BORROWERS STILL PAYING THEIR BILLS ON TIME

Customers of the largest credit card issuers predominantly continued to pay their bills on time in July, Dow Jones Newswires reported yesterday. Credit card lending in particular has been a bright spot for big banks since the recession ended because consumers have made paying their monthly bills a priority and been more hesitant to carry large balances. That has allowed lenders to boost earnings by setting aside less money to cover potential loan losses, and it more recently led some banks to loosen their loan criteria, according to the financial services unit of credit bureau TransUnion. On Tuesday, TransUnion said that the national credit card delinquency rate fell to 0.63 percent in the second quarter from 0.73 percent in the first quarter. Major credit card issuers including Discover Financial Services, Bank of America Corp. and Capital One Financial Corp. said yesterday that their portfolios continued to improve in July, with delinquency rates and net charge-offs falling for most. Read more.

WEEKLY UNEMPLOYMENT CLAIMS RISE

The number of U.S. workers filing applications for jobless benefits rose last week, though the overall trend suggests that the labor market has improved slightly since early this summer, the Wall Street Journal reported today. Initial jobless claims increased by 2,000 to a seasonally adjusted 366,000 in the week ended Aug. 11, the Labor Department said today. Claims for the week ending Aug. 4 were revised up to 364,000 from an initially reported 361,000. The four-week moving average of claims fell by 5,500 to 363,750, the lowest level since the end of March. Read more. (Subscription required.)

NO CRIMINAL CASE IS LIKELY IN LOSS AT MF GLOBAL

A criminal investigation into the collapse of the brokerage firm MF Global and the disappearance of about $1 billion in customer money is now heading into its final stage without charges expected against any top executives, the New York Times DealBook blog reported yesterday. After 10 months of stitching together evidence on the firm's demise, criminal investigators are concluding that chaos and porous risk controls at the firm, rather than fraud, allowed the money to disappear. The hurdles to building a criminal case were always high with MF Global, which filed for bankruptcy in October after a huge bet on European debt unnerved the market. This week James Giddens, the MF Global liquidating trustee, said he would assist plaintiffs attorneys in civil suits against Jon Corzine and other top executives. But a lack of charges in the largest Wall Street blowup since 2008 is likely to fuel frustration with the government's struggle to charge financial executives. Just a few individuals – none of them top Wall Street players – have been prosecuted for the risky acts that led to recent failures and billions of dollars in losses. Read more.

REPORT: MUNICIPAL BONDS NOT AS SAFE AS ONCE THOUGHT

The Federal Reserve Bank of New York released a report yesterday saying that municipal bonds, widely seen as one of the safest investments, actually default more often than most people realize, the New York Times reported today. The economists said that the widely held belief that municipal bonds almost never default is based on only a narrow slice of the market — the safest part, consisting of bonds that are graded by the main ratings agencies when brought to market. When the researchers looked at a much broader sample, which included unrated bonds, they found there have been about 36 times as many municipal defaults over the past 40 years as conventional wisdom suggests. For example, Moody’s Investors Service has reported that from 1970 to 2011, there were only 71 municipal bond defaults. However, the Fed report counted 2,521 defaults in that time. Read more.

Click here to read the Federal Reserve Bank of New York's report.

In related news, barely half of U.S. states allow their local governments to file for bankruptcy, but Fitch Ratings said that it will continue to factor in the probability of a chapter 9 filing for all tax-supported local debt it rates, Reuters reported yesterday. Fitch added a new section on the legal and structural framework of debt in its criteria for rating U.S. local government bonds supported by taxes, highlighting growing concerns for municipal bankruptcies and explaining its views of the ties between local and state governments. Only 24 out of 50 states currently allow local governments to file for bankruptcy, "but Fitch believes that in an extreme case..the state would make the legal provisions necessary to file," it said. For decades, bankruptcies in the $3.7 trillion municipal bond market were rare. There have been nine chapter 9 municipal bankruptcy filings so far this year, compared with 13 in all of 2011. Read more.

REGISTRATION NOW OPEN FOR THE 24TH ANNUAL WINTER LEADERSHIP CONFERENCE!

Don't miss ABI's 24th Annual Winter Leadership Conference, taking place Nov. 29 - Dec. 1 at the JW Marriott Starr Pass Resort & Spa in Tucson, Ariz. This year's conference will feature insights from some of the top insolvency and restructuring experts on issues confronting the profession in 2013, including four specialized tracks geared toward business, consumer, financial advisor and professional development. The featured keynote speaker at this year's conference will be election analyst and author Larry Sabato. ABI's Great Debates, a field hearing of ABI’s Commission to Study the Reform of Chapter 11 and 10 committee educational sessions will also be taking place at the conference. Panel sessions include:

Business Track:
• Fraudulent Conveyance Litigation from Soup to Nuts
• Pushing the Envelope
• The Role of the Hedge Fund in Corporate Restructurings: White Knight or Villain?
• Social Networking and Bankruptcy Issues

Financial Advisors Track
• Advising the Corporate Entity
• How to Create Value for the Estate from Your First Client Meeting until Entry of a Final Decree

Consumer Track
• From Infants to Toddlers: Bankruptcy Rules 3001 and 3002.1 Experience First-Year Growing Pains
• The National Mortgage Settlement: How Will It Affect Consumer Bankruptcy Cases?

Professional Development Track
• Litigation Skills: Mock Expert Examination
• “I'm Shocked—Shocked!—to Find that Unethical Conduct Is Going On in Here!”: A Tale of Ethics in Bankruptcy

The conference will also include a final night dinner featuring impressionist, comedian and singer Jeff Tracta, and the sounds of ABI's rock-n-roll band, the Indubitable Equivalents. Click here to register!

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: U.S. V. CARVER (6TH CIR.)

Summarized by Nicholas Miller of Neal, Gerber & Eisenberg, LLP

In affirming the lower court's ruling, the Sixth Circult held that (1) convictions for concealing assets and making a false statement under oath in bankruptcy would stand because evidence showed that the defendant (Carver) knowingly failed to disclose to the bankruptcy court a valuable wine collection and knowingly and falsely stated that he had sold the collection before the petition date; (2) Carver's sentence was procedurally reasonable because the district court properly calculated the amount of damage and number of victims caused by his crimes; and (3) his sentence was substantively reasonable because the district court, in fact, gave him a below-Guidelines sentence.

There are more than 600 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: BUSTING THE MYTH OF GLASS STEAGALL

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post argues that restoring Glass-Steagall would be a remedy that is much like the Volcker rule: simple to say, hard to do.

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 Twombly/Iqbal rule for pleading ‘plausible’ claims has been applied too stringently in dismissing avoidance actions for failure to state a claim.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?

Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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  CALENDAR OF EVENTS
 

September
- 7th Annual Golf and Tennis Outing
     September 11, 2012 | Maplewood, N.J.
- Complex Financial Restructuring Program
     September 13-14, 2012 | Las Vegas, Nev.
- Southwest Bankruptcy Conference
     September 13-15, 2012 | Las Vegas, Nev.
- 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
     September 19-20, 2012 | New York, N.Y.
- American College of Bankruptcy's "Bankruptcy: Back to the Future" Program
     September 28, 2012 | Chicago, Ill.

October
- Nuts & Bolts for Young and New Practitioners - KC
     October 4, 2012 | Kansas City, Mo.
- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum
     October 5, 2012 | Kansas City, Mo.

  


- Bankruptcy 2012: Views from the Bench
     October 5, 2012 | Washington, D.C.
- Chicago Consumer Bankruptcy Conference
     October 8, 2012 | Chicago, Ill.
- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar
     October 15, 2012
- International Insolvency and Restructuring Symposium
     October 18, 2012 | Rome, Italy

November
- U.S./Mexico Restructuring Symposium
     November 7, 2012 | Mexico City, Mexico
- Professional Development Program
     November 9, 2012 | New York, N.Y.
- Detroit Consumer Bankruptcy Conference
     November 12, 2012 | Detroit, Mich.
- Winter Leadership Conference
     November 29 - December 1, 2012 | Tucson, Ariz.


 
 
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