Government Urges Supreme Court to Review Constitutionality of the 2018 Increase in U.S. Trustee Fees

Government Urges Supreme Court to Review Constitutionality of the 2018 Increase in U.S. Trustee Fees

December 9, 2021

ABI Bankruptcy Brief

Government Urges Supreme Court to Review Constitutionality of the 2018 Increase in U.S. Trustee Fees​​​​​​

Late yesterday, the U.S. Solicitor General urged the Supreme Court to grant certiorari, resolve a circuit split and decide whether the increase in fees payable to the U.S. Trustee system in 2018 violated the uniformity aspect of the Bankruptcy Clause of the Constitution because it was not immediately applicable in the two states that have bankruptcy administrators rather than U.S. Trustees. (Siegel v. Fitzgerald, 21-441 (Sup. Ct.) (cert. pending), according to a special edition of Rochelle’s Daily Wire. The Solicitor General was responding to the petition for certiorari filed in September by the liquidating trustee of Circuit City Stores Inc., who is seeking to overturn the decision by the Fourth Circuit finding no constitutional violation. (See Siegel v. Fitzgerald (In re Circuit City Stores Inc. ), 996 F.3d 156 (4th Cir. April 29, 2021). Naturally, the Solicitor General believes that the Fourth Circuit was correct in finding no constitutional infirmity. The Fifth Circuit reached the same conclusion in Hobbs v. Buffets LLC (In re Buffets LLC), 979 F.3d 366 (5th Cir. Nov. 3, 2020). The Solicitor General said that Siegel was an “appropriate vehicle” for review because a federal statute has been held unconstitutional in two circuits, and the circuit split is “unlikely to be resolved without review by this Court.” In addition, the government’s advocate in the Supreme Court said that the constitutional question was “unobstructed by threshold issues or factual complications that could prevent the Court from reaching the question presented.”​​

Analysis: Why Washington Won’t Fix Student Debt Plans that Overload Families​​​​​​

U.S. lawmakers know the federal Plus student loan programs have plunged millions of families into debt — and they aren’t eager to fix the problem, according to a Wall Street Journal analysis. Congress in the 1990s created a way for parents to borrow essentially unlimited amounts to send their children to college. It did the same for graduate students roughly a decade later. For undergraduate debt, the government imposes a dollar limit. The Parent Plus and Grad Plus programs let people borrow the total cost of attendance — room and board, books and personal expenses on top of tuition — for as many years as it takes to get the degree. Lawmakers and administration officials in both parties acknowledge that the programs have left many borrowers with balances they will struggle to repay, yet Congress has repeatedly punted on changing the programs. Among the reasons: resistance to restricting disadvantaged students’ access to funds, fear of angering universities, and the fact that the programs — on paper, at least — have historically made money for the government. “You’ve got the universities and colleges who want free-flowing capital through these loan programs. For students and parents who want to go to school or want their offspring to go to school, it’s a means to an end,” said former Rep. Rob Andrews (D-N.J.), who first introduced a bill proposing the direct student loan program three decades ago. “It’s only later that people observe those negative consequences.” The Plus programs combined have become the fastest-growing portion of student loans, miring 3.6 million parents and 1.5 million graduate students in debt. Plus loans made up about 12% of the outstanding $1.6 trillion in federal student loans as of June 30, but roughly 26% of the $78 billion in new loans in the academic year that ended then, a Wall Street Journal analysis shows. Their interest rates, at 6.28% for new loans this year, are significantly higher than for other federal student loans. In 2018 and 2019, graduate students who were supposed to begin repaying Plus loans a decade prior collectively owed 70% of what they borrowed, just shy of the 74% that undergraduates from the same period still owed, a Journal analysis of new Education Department figures found. Parents had 60% of their debt outstanding at the end of that decade, the most recent data available show. (Subscription required.)​​

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Weekly Jobless Claims Hit Lowest Level in 52 Years​​​​​​

New claims for unemployment insurance dropped to 184,000 last week, according to data released Thursday by the Labor Department, falling to the lowest level in more than 52 years, The Hill reported. Last week’s total was the lowest since September 1969 and breaks the previous record for the lowest number of weekly jobless claims since the emergence of the pandemic. In the week ending Dec. 4, seasonally adjusted initial claims for jobless aid fell by 43,000 from the previous week’s revised level of 227,000. While the plunge in jobless claims appeared to show a strengthening labor market, economists said that the scale of the drop could be skewed by seasonal adjustments based on pre-pandemic hiring patterns. Non-seasonally adjusted claims totaled 280,665 last week, rising 29.3 percent from the previous week. The Bureau of Labor Statistics (BLS) said it was expecting a seasonal increase of 106,047 claims last week. ​​

COVID-19 Spurs Biggest Rise in Life-Insurance Payouts in a Century​​​​​​

The COVID-19 pandemic last year drove the biggest increase in death benefits paid by U.S. life insurers since the 1918 influenza epidemic, an industry trade group said, the Wall Street Journal reported. Death-benefit payments rose 15.4% in 2020 to $90.43 billion, mostly due to the pandemic, according to the American Council of Life Insurers (ACLI). In 1918, payments surged 41%. The hit to the insurance industry was less than expected early in the pandemic because many of the victims were older people who typically have smaller policies. The industry paid out $78.36 billion in 2019, and payouts have typically increased modestly each year. COVID-19 also spurred the fastest rise in sales of insurance policies in 25 years, an industry research group said. Combined with good returns on some of insurers’ investments, industry assets increased 7.7% to $8.2 trillion in 2020, ACLI’s figures show. (Subscription required.)​​

Major U.S. Retailers Urge Action by Congress on Online Stolen, Counterfeit Goods Sales​​​​​​

The chief executives of major U.S. retailers including Target, Home Depot, Kroger, CVS Health, Autozone and Best Buy today urged Congress to take action to address the online selling of stolen, counterfeit and dangerous consumer products, Reuters reported. The group called on Congress to crack down on anonymous online sales, citing the growing impact of organized retail crime. "Retail establishments of all kinds have seen a significant uptick in organized crime in communities across the nation," the letter said. "Criminals are capitalizing on the anonymity of the Internet and the failure of certain marketplaces to verify their sellers. This trend has made retail businesses a target for increasing theft." On Friday, the White House said that it has been in contact with federal law enforcement officials over a string of flash-mob "smash and grab" robberies of U.S. retail stores. A wave of smash-and-grab crimes is plaguing upscale stores in major U.S. cities, with mobs of thieves making off with expensive goods in brazen raids. The cities of San Francisco and Los Angeles have seen several high-profile robberies. The letter calls on Congress to pass legislation to make it "easier for consumers to identify exactly who they are buying from, and make it harder for criminal elements to hide behind fake screennames and false business information." The bill, introduced in 2020, would require verification of third-party sellers on online retail marketplaces. It would also order online platforms that allow third-party sellers of consumer products "to authenticate the identity of high-volume third-party sellers" to "prevent organized retail crime.”​​

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New on ABI’s Bankruptcy Blog Exchange: Libor Fix Wins House Support in Drive to Avert Transition Chaos

The U.S. House approved legislation designed to protect trillions of dollars of assets from chaos when the London interbank offered rate expires, in one of the final key steps aimed at guaranteeing an orderly transition from the discredited benchmark, according to a recent blog post.

To read more on this blog and all others on the ABI Blog Exchange, please click here.

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