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EPA Chief: Philadelphia Refinery Bankruptcy Shows Need for Biofuel Reform

ABI Bankruptcy Brief
ABI Bankruptcy Brief
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February 1, 2018

 
ABI Bankruptcy Brief
 
 
 
 
NEWS AND ANALYSIS

EPA Chief: Philadelphia Refinery Bankruptcy Shows Need for Biofuel Reform

The head of the U.S. Environmental Protection Agency said today that the recent bankruptcy of Pennsylvania oil refiner Philadelphia Energy Solutions (PES) was evidence that the nation's biofuel policy needs an overhaul, Reuters reported. PES, the largest oil refiner on the East Coast, filed for bankruptcy last month. It blamed the cost of complying with the U.S. Renewable Fuel Standard (RFS), which requires refiners to blend corn-based ethanol and other biofuels into their gasoline and diesel. EPA chief Scott Pruitt agreed that the bankruptcy largely stemmed from the RFS. He cited the program's requirement that refiners earn or purchase biofuel blending credits called RINs to prove to the EPA that they were meeting their obligations. In response to a question about whether an overhaul would upset the Midwest corn lobby, he said, "This isn't getting rid of the ethanol requirement. This is about the accounting mechanism to ensure that a certain percentage of our fuel actually has ethanol. We need to get reform around that." PES owes the EPA about $185 million worth of RINs. Other refiners, including Texas' Valero Energy Corp., have also complained about high RIN costs.
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Consumer Spending Rises in December as Incomes Improve

Soaring stock prices and improving job prospects have set Americans off on a spending splurge that is cutting into how much they sock away for retirement and rainy days, the Wall Street Journal reported. U.S. household net worth has risen from $56 trillion in 2008 to $97 trillion in the third quarter of 2017. The U.S. household saving rate dropped in December to its lowest level since the height of the 2000s housing boom. The saving rate was 2.4 percent of disposable household income in December, the Commerce Department said on Monday. That was the lowest rate since September 2005, not long after then-Federal Reserve Chairman Alan Greenspan began warning about froth in housing markets. The saving rate had risen to 6.6 percent when the recession ended in June 2009.
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Trump Administration Strips CFPB Office of Enforcement Powers in Lending Discrimination Cases

The Trump administration has stripped enforcement powers away from the Consumer Financial Protection Bureau office that specializes in pursuing cases against financial firms for breaking discrimination laws, the Washington Post reported. The move comes about two months after President Trump installed his budget chief, Mick Mulvaney, at the head of an agency that has long been in the crosshairs of Republicans. The Office of Fair Lending and Equal Opportunity had imposed penalties on lenders that it said had systematically imposed higher interest rates on minorities than whites. Now that office, which had been part of a powerful CFPB division, will move inside the office of director, where staffers will be focused on "advocacy, coordination and education," according to an email Mulvaney sent them this week. They will no longer have responsibility for enforcement and day-to-day oversight of companies, he said. Instead, those responsibilities will remain with the division of Supervision, Enforcement, and Fair Lending, which conducts oversight and enforcement actions in a wide range of cases of financial wrongdoing. The Office of Fair Lending had previously been part of this division.
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Worries Growing that the Price of Bitcoin Is Being Propped Up

A growing number of virtual currency investors are worried that the prices of Bitcoin and other digital tokens have been artificially propped up by a widely used exchange called Bitfinex, which has a checkered history of hacks and opaque business practices, New York Times reported. In December, Bitfinex was subpoenaed by the U.S. Commodity Futures Trading Commission. The people behind Bitfinex issue a virtual currency called Tether. Unlike most digitals tokens, every Tether is supposed to be backed by traditional money - the U.S. dollar. New Tether tokens are issued when investors give them dollars. One dollar is worth one token. Because of the credibility that comes with that tie to the dollar, Tether are often used to buy other virtual currencies like Bitcoin. In recent months, however, many investors have been raising alarm bells about Tether. Hundreds of millions of dollars worth of new Tether were created, almost always when the prices of other virtual currencies were heading down. The Tether were used on the Bitfinex exchange to make big purchases of Bitcoin and other tokens, helping push their prices back up, according to multiple analyses of data from Bitfinex.
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Cryptocurrencies and fraudulent transfers are the topic of an article in the February edition of the ABI Journal and a forthcoming ABI Podcast.

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New on ABI’s Bankruptcy Blog Exchange: CFPB Seeks Input on Overhaul of Internal Legal Proceedings

The Consumer Financial Protection Bureau is seeking comment on how it sues companies via an internal process rather than the traditional court system, according to a recent blog post.

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