FED STILL OWES CONGRESS A BLUEPRINT ON ITS EMERGENCY LENDING
After the Federal Reserve lent more than $1 trillion to big banks during the 2008 financial crisis, Congress required the central bank to devise specific ways of protecting taxpayers when doling out emergency loans to financial institutions, the New York Times DealBook blog reported yesterday. But nearly three years after that overhaul became law, the Fed still has not established these regulations. The delay involves a crucial but little-noticed part of the Dodd-Frank Act, the sweeping financial sector overhaul that Congress passed in July 2010. One part of the legislation focused on the Fed. While the government used many different tools to shore up the financial system during the crisis, Congress was well aware that the Fed played a decisive role. The central bank made huge loans to scores of domestic and foreign banks as markets seized up, dwarfing bailouts like the Troubled Asset Relief Program. But the identities of the borrowers were not disclosed at first, stoking concerns that the Fed had carried out a vast stealth bailout of Wall Street. Against that backdrop, Dodd-Frank required the Fed to develop policies and procedures to safeguard taxpayers when making emergency loans "as soon as is practicable." Even without freshly written rules from the Fed, the Dodd-Frank legislation immediately introduced measures to make the central bank more accountable. For example, the Fed must now file regular and detailed reports to Congress if it undertakes any emergency lending. Read more.
WALL STREET BETTING BILLIONS ON SINGLE-FAMILY HOMES IN DISTRESSED MARKETS
Big investors are pouring unprecedented amounts of money into real estate hard hit by the housing crash, bringing those moribund markets back to life but raising the prospect of another Wall Street-fueled bubble that will not be sustainable, the Washington Post reported today. Drawn by the prospect of double-figure profit margins on rents and the resale of homes whose prices plummeted in the crash, hedge funds, Wall Street investors and other institutions are crowding out individual home buyers. If the chain of easy credit and dangerous leverage that started on Wall Street fanned the housing bubble and eventual crash, some analysts find it disturbing that major investors are the ones snapping up the bargains — and eventual big profits — left in its wake. Read more.
SURVEY: FIRMS STILL RELUCTANT TO MAKE ACQUISITIONS
A survey released yesterday found that companies around the world are still reluctant to go on the acquisition trail even though they are becoming more confident about the global economy, the Associated Press reported yesterday. In its half-yearly assessment of the intentions of big companies, accounting and consultancy firm Ernst & Young said that the growing optimism has yet to be translated into more investment or corporate deal-making. The survey was based on responses from 1,600 senior executives in 50 countries, 85 percent of which had annual revenues of more than $500 million. Read more.
PRO BONO MANDATE GAINS STEAM
It has been nearly a year since the New York State court system announced its first-of-its-kind 50-hour pro bono requirement for new attorneys, and while no state has followed suit yet, that may soon change, the National Law Journal reported yesterday. Leaders of the State Bar of California are poised this fall to adopt a similar rule, while a task force of judges, legal educators and attorneys in New Jersey is weighing the merits. Any move by California could well have a ripple effect throughout the country. New York Chief Judge Jonathan Lippman announced New York's pro bono requirement in May 2012. Many applauded the move as a way to improve access to legal services for the poor and instill a sense of professional responsibility in new lawyers, but some criticized the rule for heaping additional responsibilities on already busy and financially strapped law students, and for placing a new training burden on legal service organizations. Effective in 2015, every applicant to the New York State Bar Association must have completed 50 hours of pro bono legal work. Supervised work done in law school clinics and for nonprofit organizations, plus court clerkships or externships, will count toward the requirement. Read more.
WANT TO CATCH A FEW SESSION RECAPS FROM ASM? HEAD TO ABI'S NEWSROOM!
A few select speakers from ABI’s Annual Spring Meeting provide their perspectives of their sessions in videos posted to the ABI Newsroom. Speakers include:
– Andrew W. Caine of Pachulski Stang Ziehl & Jones LLP (Los Angeles) recaps his debate at ABI's 17th Annual Great Debates.
– Judge Elizabeth S. Stong (E.D.N.Y.) discusses her session focused on mediation.
– Thomas J. Salerno of Squire Sanders (Phoenix) discusses the differences between sports bankruptcies and a standard business bankruptcy.
– Christian Carl Onsager of Onsager, Staelin & Guyerson, LLC (Denver) provides a few tips on expert witness testimony.
– Allan B. Diamond of Diamond McCarthy LLP (Houston) talks about key issues involved in law firm bankruptcies.
– Bankruptcy Judge Margaret Dee McGarity (E.D. Wis.) discusses the intersection of bankruptcy and divorce.
NEW ABI LIVE WEBINAR ON MAY 29 WILL FOCUS ON CONSUMER CLASS ACTIONS
Class action lawsuits in chapter 13 cases are becoming more prevalent. Are you wondering whether your client's claims would be better pursued in a class action? If your client is a defendant in a consumer class action, do you know what your client's best defenses are against class certification? ABI's panel of experts on May 29 from 1-2:15 p.m. ET will explore the potential benefits and pitfalls of class actions by debtors/trustees against creditors in chapter 13 cases by highlighting two recent appeals court decisions. Special ABI member rate available! Click here to register.
ABI MEMBERS WELCOME TO ATTEND INSOL'S LATIN AMERICAN REGIONAL SEMINAR ON JUNE 13 IN SAO PAULO
ABI members are encouraged to attend INSOL’s Latin American regional seminar in São Paulo, Brazil, on June 13. The one-day seminar has been organized by INSOL in association with TMA Brasil to cover current cross-border insolvency and restructuring topics. The seminar is designed to be interactive and to allow the attendees to discuss and debate about practical issues with speakers who are leading players in the insolvency and restructuring field and with experience in insolvency proceedings involving different countries. The seminar will benefit from simultaneous translation in English, Portuguese and Spanish. For more information and to register, please click here.
LATEST CASE SUMMARY ON VOLO: HEIDE V. JUVE (IN RE JUVE; 8TH CIR.)
Summarized by Michael Tamburini of Polsinelli Shughart, PC
The BAP reversed the bankruptcy court's finding that a $300,000 loan made to the debtor under an oral agreement to allow the debtor to purchase vehicles for resale in his business was made in reliance on a fraudulent misrepresentation made concurrently with the debt, and therefore, the debt was dischargeable. The BAP affirmed the bankrutpcy court's holding that a $50,490 loan made to the debtor to purchase specific vehicles for eventual resale was not dischargeable because the debtor took the money under false pretenses, and the creditor justifiably relied on such pretenses.
There are more than 800 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: FURTHER ANALYSIS OF MUNICIPAL FINANCIAL DISTRESS
The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines current municipalities in distress, as well as a report looking at those that might be headed for financial trouble.
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.
TEE OFF ON THE ABI GOLF TOUR!
ABI offers conference registrants the option to participate in the ABI Golf Tour. The Tour, which kicked off at ABI’s Annual Spring Meeting, will take place concurrently with all conference golf tournaments and is designed to enhance the golfing experience for serious golfers while still offering a fun networking opportunity for players of any ability. As opposed to the format used at ABI’s regular conference events, Tour participants will "play their own ball." They will be grouped on the golf course separately from other conference golf participants and will typically play ahead of the other participants, expediting Tour play. Tour participants will be randomly grouped in foursomes, unless otherwise requested of the Commissioner in advance of each tournament. Prizes will be awarded for each individual Tour event, which are sponsored by Great American Group. The grand prize is the "Great American Cup," also sponsored by Great American Group, which will be awarded to the top player at the end of the Tour season. Registration is free. Click here for more information and a list of 2013 ABI Golf Tour event venues.
ABI Quick Poll
Bankruptcy courts should implement constructive trusts in any case where applicable state law would recognize them.
Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
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.