GOP Tax Plan Could Hurt Puerto Rico’s Economic Backbone
Puerto Rico’s already-ailing economy was crippled by Hurricane Maria, but the island’s leaders fear that the Republican tax overhaul could deliver another devastating blow. The legislation, passed by the House this month and under debate in the Senate this week, would end provisions that turned Puerto Rico into a medical manufacturing hub, Bloomberg News reported. Drug and device makers have poured billions into the U.S. territory, creating thousands of jobs and powering almost a third of its economic output. Officials worry that the proposal will smother the island as it grapples with as much as $100 billion in storm damage, an exodus of workers and the largest municipal bankruptcy in U.S. history. Much is also at stake for drugmakers, which have spent millions lobbying to protect their tax advantages. Puerto Rico accounts for about 10 percent of U.S. drug manufacturing, including blockbusters like arthritis treatment Humira and cholesterol-fighter Crestor.
New Bankruptcy Rules to Take Effect Tomorrow
The majority of rule amendments to the Federal Rules of Bankruptcy Procedure effective tomorrow involve consumer cases. One notable change should lead to the creation of a national form chapter 13 plan whose use will be required — unless a local form chapter 13 plan has been adopted in its place. All rule changes effective tomorrow will be incorporated into ABI's Interactive Code and Rules website. Be sure to bookmark the site so that you can quickly access the site, which also features recent case summaries from the Collier Bankruptcy Case Updates, provided by LexisNexis.
Analysis: Even Before Court Victory, Trump’s Pick to Lead Consumer Watchdog Began Reshaping Agency
Even before a federal judge on Tuesday refused to block President Trump’s pick of White House budget director Mick Mulvaney to be the temporary leader of the Consumer Financial Protection Bureau, Mulvaney was moving aggressively to reshape an agency he has criticized in the past, the Washington Post reported yesterday. In turning down Leandra English’s request for a temporary restraining order, U.S. District Judge Timothy J. Kelly acknowledged that the case raised constitutional questions, but he ruled that Mulvaney can remain acting CFPB director. On his first day in the office, he announced a 30-day freeze on the issuance of new rules and hiring. The independent structure of the agency, which Democrats fought to keep under Cordray, now gives Mulvaney a freer hand to operate. Instead of having to consult a multi-member board, the acting director can make many changes alone, industry experts and consumer advocates note. While English would have been likely to keep the status quo, experts say, Mulvaney can now make significant changes without much oversight — such as abandoning investigations or shrinking the agency’s budget. The CFPB, for example, has been working on rules for the past few years to address bank overdraft fees and the tactics used by debt collectors. It has also finalized regulations targeting the billions of dollars in fees collected by payday lenders offering high-cost, short-term loans. Those regulations don’t go into effect until 2019, giving Mulvaney time to alter the rules or get rid of them, consumer advocates say.
The Return of the Repo: A Market’s Post-Crisis Comeback
An obscure but vital corner of financial markets that was at the center of the financial crisis is making a comeback, the Wall Street Journal reported. Investors and banks use repurchase agreements, or repos, to borrow large amounts of short-term cash safely, by selling a security and pledging to buy it back at a slightly different price in the near future. On the other side of that trade, it provides cash-rich asset managers with a safe place to put their money. This market played a central role in the crisis, when it froze as investors questioned the safety of the securities being lent. The post-2008 regulations made it more expensive for banks to get involved, further denting a market that relies on these institutions to act as middlemen. Now banks are beginning to return to that role while investors need safe places to store their cash. In the year through October, U.S. outstanding repo volumes were up 6.1 percent to $1.8 trillion, according to recent Federal Reserve figures, which exclude a segment of the market that is estimated to amount to an additional $1.6 trillion. In Europe, the International Capital Market Association estimates that volumes climbed 12 percent in the year through June, bringing the size of the market to €6.5 trillion ($7.6 trillion).
SEC Changes Hiring Process for In-House Judges to Address Legal Concerns
The Securities and Exchange Commission said today that it was changing the way it hires in-house judges who hear some of the enforcement cases the agency brings, after the Justice Department sided with opponents who say their hiring methods are unconstitutional, the Wall Street Journal reported. The SEC, seeking to quell worries about the legitimacy of the judges, said commissioners would appoint them directly, instead of relying on a selection process that is managed by human-resources officials. The commission had previously maintained that its process was valid because the judges were employees, not officers who can be removed from office by the president or his appointees. The Justice Department yesterday abandoned its defense of the SEC’s process, but in a filing said the Supreme Court should hear an appeal on the issue. Raymond Lucia, a California financial adviser who was sued by the SEC in 2012, has challenged his punishment and the legitimacy of the commission’s in-house judges. The government brief offered support for Lucia’s view and said a high-court decision would help resolve the standing of hundreds of other administrative law judges at other federal agencies.
Consumer Commission to Wrap Up 2017 Open-Meeting Schedule Tomorrow at Winter Leadership Conference
ABI's Commission on Consumer Bankruptcy will hold its final open meeting tomorrow at ABI’s Winter Leadership Conference. The Consumer Commission invites WLC attendees to join the public meeting, and written statements are being accepted by the Commission. To send a written statement, please use the Commission’s public email address: [email protected].
To access the list of topics under consideration by the Commission’s committees and previous hearing statements, please click here. To view written statements made at previous open meetings, please click here.
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New on ABI’s Bankruptcy Blog Exchange: Trump Taps Economist Goodfriend for Fed Seat
Marvin Goodfriend, a noted economist and former Richmond, Va., Fed official, has been tapped to fill one of three vacancies on the Fed board, according to a recent blog post.
To read more on this blog and all others on the ABI Blog Exchange, please click here.
