FED'S LACKER SAYS GOVERNMENT RESCUES OF FINANCIAL FIRMS MUST STOP
While speaking at ABI's luncheon on Friday at the 88th annual NCBJ conference, Richmond Federal Reserve Bank President Jeffrey Lacker said that U.S. regulators need to complete a comprehensive bankruptcy program implementation to allow large financial institutions to unwind in the event they fail, rather than depend on government interventions. He said that policymakers continue to feel compelled to handle large bank failures outside of bankruptcy, a belief with which Lacker strongly disagrees. Lacker, who is a voting member on the Fed's policy-setting committee next year, said in his speech that even though the Fed is making progress with its efforts to get large banks to complete resolution plans, the so-called living wills, a lot more work needs to be done. "As long as regulators retain discretion to intervene with government funding, the credibility of resolution plans will be at risk," Lacker said. Read more.
To read Lacker's full speech, "Rethinking the Unthinkable: Bankruptcy for Large Financial Institutions," please click here.
USTP UPDATES MEDIAN FAMILY INCOME DATA FOR CASES FILED ON OR AFTER NOV. 1
The U.S. Trustee Program (USTP) has updated the Census Bureau's Median Family Income Data and will apply the updated data to cases filed on or after Nov. 1. For the latest data required for completing Form 22A and Form 22C, please click here.
ANALYSIS: AMERICANS FACE POST-FORECLOSURE NIGHTMARES AS WAGES GARNISHED, ASSETS SEIZED
Many thousands of Americans who lost their homes in the housing bust, but have since begun to rebuild their finances, are suddenly facing a new foreclosure nightmare: debt collectors are chasing them down for the money they still owe by freezing bank accounts, garnishing wages and seizing assets, according to a Reuters analysis published today. Even though banks will have usually sold the houses already, the proceeds of those sales were often not enough to cover the amount of the loan, plus penalties, legal bills and fees. The two big government-controlled housing finance companies, Fannie Mae and Freddie Mac, as well as other mortgage players, are increasingly pressing borrowers to pay whatever they still owe on defaulted mortgages from years ago. Under the terms of a deficiency judgment, lenders can ensure that borrowers are haunted by these zombie-like debts for years, and sometimes decades, to come. Before the housing bubble, banks often refrained from seeking deficiency judgments, which were seen as costly and an invitation for bad publicity. But the housing crisis saddled lenders with more than $1 trillion of foreclosed loans, leading to unprecedented losses. Now, at least some large lenders want their money back, and they figure it's the perfect time to pursue borrowers: many of those who went through foreclosure have gotten new jobs, paid off old debts and even, in some cases, bought new homes. Read the full analysis.
HOUSEHOLD FINANCES MAY CURB HOLIDAY SPENDING
Retail forecasters warn that businesses could ultimately struggle to persuade households to spend more this holiday season, the New York Times reported today. Stagnant wage growth, coupled with the rising costs of health care, child care, housing and other essentials, means that many Americans simply have less money left at the end of the year for presents, experts say. PricewaterhouseCoopers projects that average holiday season spending per household will fall to $684 this year, from $735 in 2013, primarily because of sluggish salaries and rising costs of living. Households that earn less than $50,000 annually are expected to spend an average of $377 on holiday shopping, compared with $978 for households that earn more than $50,000, according to the report, based on a survey of 2,200 American consumers. In a survey to be published this week by the personal finance website Bankrate.com, two-thirds of respondents said they would limit how much they spend each month. Read more.
NEXT FREE COMMITTEE TELECONFERENCE WILL BE ON THURSDAY WITH ABI'S LITIGATION COMMITTEE EXPLORING CASH MANAGEMENT SYSTEMS
Members are encouraged to dial-in and listen to or participate in upcoming ABI Committee conference calls. While committee membership is encouraged, it is not required to join the free teleconferences. Upcoming Committee teleconferences include:
- Bankruptcy Litigation Committee: Thursday, Oct. 16; 4 p.m. ET
Topic: "Cash Management Systems"
Speakers: Steven S. Flores, Anthony F. Pirraglia and Scott E. Ratner of Togut, Segal & Segal LLP (New York)
- Unsecured Trade Creditors Committee: Thursday, Oct. 23; 4 pm ET
Topic: "Tricks of the Trade: New Issues and Strategies in Preference Cases"
Speakers: Eric J. Haber of Cooley LLP (New York)
- Unsecured Trade Creditors Committee: Tuesday, Nov. 4; 3 pm ET
Topic: "Bank Secrecy Act and Anti-Money Laundering"
Speakers: Mark Gittelman of PNC Bank and Brent Weisenberg
All committee teleconferences are free to ABI members and registration is not required. Simply utilize the following dial-in information:
Call in: (712) 432-1500
Participant code: 692933
WE WANT TO HEAR FROM YOU: MAKE SURE TO FILL OUT ABI'S ANNUAL MEMBER SURVEY!
ABI's Annual Member Survey was sent via e-mail a few weeks ago. Please take the time to fill out the survey so that we can better tailor our products, events and services to your needs. If you did not receive an e-mail containing the Annual Member Survey, please contact ABI Membership Director Chris Thackston at [email protected]
NEW CASE SUMMARY ON VOLO: CHAN V. DRM ENTERPRISES LLC (IN RE CHAN; 9TH CIR.)
Summarized by Kevin Baum of Baum & Bailey P.C.
Affirming the bankruptcy court, the Bankruptcy Appellate Panel of the Ninth Circuit held that a debt arising from the advances that the creditor made to the debtor's corporation was non-dischargeable under §523(a)(2)(A) of the Bankruptcy Code because the debtor falsely represented that her company had the ability to repay the advances. In addition, the B.A.P. also held that the bankruptcy court did not abuse its discretion when it permitted the creditor's expert to testify that the debtor's company lacked the ability to repay the advances at issue.
There are nearly 1,500 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: REGULATORS SHOULD TAKE A HOLISTIC VIEW OF RISK
A recent blog post argued that regulators need to reconsider the parameters used to assess the threat of systemic risk before they require the country's largest banks to take on more burdensome regulations.
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 §547(c)(2) ordinary course preference defense should be repealed.
Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
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