House Judiciary Subcommittee Considers Trustee Compensation Legislation

The House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law will hold a hearing on Wednesday at 10 a.m. EDT to consider H.R. 3553, the “Bankruptcy Administration Improvement Act of 2017.” The bill was introduced last year by House Judiciary Subcommittee Chair Tom Marino (R-Pa.) and aims to increase the amount of compensation paid to chapter 7 bankruptcy trustees for services rendered. Ariane Holtschlag of the Law Office of William J. Factor, Ltd. (Chicago) and a member of ABI’s Commission on Consumer Bankruptcy will testify to provide Commission recommendations on trustee compensation. While the Commission is working on a report of recommendations for improving the overall consumer bankruptcy system, to be presented at ABI’s 2019 Annual Spring Meeting, it has completed its deliberations on the issue of chapter 7 trustee compensation. Others scheduled to testify include Bankruptcy Judge Alan C. Stout (W.D. Ky.; Louisville); Clifford J. White III, director of the U.S. Trustee Program (Washington, D.C.); N. Neville Reid of Fox Swibel Levin & Carroll LLP; and John Rao of the National Consumer Law Center (Boston). Click here for more information about the hearing.

Commentary: Small Investors Are Prey, Again, for the Wolves of Wall Street*

Ten years after the collapse of Lehman Brothers, and despite Congress’s efforts to protect Mom-and-Pop businesses with the 2010 Dodd-Frank Act, the small investor is increasingly vulnerable to shady practices on Wall Street, according to a commentary in the New York Times on Friday. Dodd-Frank was passed to rein in too-big-to-fail banks and establish new protections for consumers and investors. That included marching orders for the Securities and Exchange Commission to look into reforms meant to level the playing field between everyday investors and the sales agents who try to separate them from their money. In the years since then, instead of enacting more rigorous requirements for the nation’s 629,032 stockbrokers, the agency has proposed a code that isn’t much stricter than the rules we already have, according to the commentary. The SEC has also chosen to do nothing with the authority it received with Dodd-Frank to unshackle investors from contracts that prevent them from taking brokers to court when things go off the rails.
 

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

U.S. Household Net Worth Almost $107 Trillion in 2Q 2018

The Federal Reserve said that U.S. households added nearly $2.2 trillion to their wealth from April to June this year, Reuters reported. U.S. household wealth totaled $106.9 trillion in the second quarter, the report showed. The figures reflect the strength of an economy in which the unemployment rate has fallen to 3.9 percent and U.S. stock prices have risen to record levels. Household borrowing rose at a 2.9 percent annual rate in the April-June period, according to the Fed’s report, down from a revised 3.2 percent growth rate in the first quarter of the year. The value of corporate equities held by households rose by $800 billion during the second quarter, while the value of real estate rose by $600 billion, the central bank said.

Commentary: There Have Never Been So Many Bonds that Are Almost Junk*

Investors often turn to corporate-bond markets for early warnings of trouble, and they currently find reassurance that all is well. But look closer, and the real message is that hidden risks are building, according to a commentary in today's Wall Street Journal. The next downturn could be more painful than usual for creditors, with knock-on effects for shareholders. This summer, for the first time, more than 40 percent of the value of U.S. corporate bonds was rated BBB, just eking over the line into investment grade, and an even higher proportion was rated BBB in Europe, according to the commentary. Back in 2007, bond spreads were a little lower than today, but a smaller slice of bonds was on the bottom rung of investment grade and therefore at risk of being downgraded to junk; only 26 percent of U.S. bonds were rated BBB, and only 20 percent of eurozone bonds were, according to Intercontinental Exchange data. (Subscription required.)


*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

Millions of Carolina Homes Are at Risk of Flooding, but Only 335,000 Have Flood Insurance

Millions of people in the Carolinas are at risk of their homes flooding because of Hurricane Florence, but only about 335,000 homes in the two states have flood insurance, the New York Times reported. The math is simple, and the result is ugly: Many people affected by the storm are going to have to pay for repairs to their damaged homes out of their own pockets. Standard homeowners’ insurance does not cover flooding, but coverage is available from the federal government. Anybody can buy it, but not many do. If the National Flood Insurance Program worked as intended, more people would have coverage. The enforcement mechanism — requiring people in flood zones to buy insurance — is supposed to be the mortgage industry. Anytime a house on a federally designated flood plain changes hands, the lender is supposed to make the buyer purchase a flood-insurance policy. “But there are lots of holes and gaps, and people just don’t get coverage,” said Howard Mills, a former New York State insurance superintendent who now works at the consulting firm Deloitte. Last year, a research team recalculated flood exposures around the country, using newer, sharper methods than the ones the flood program uses. It found that about 41 million Americans live on 100-year flood plains (areas that have a 1 percent chance of flooding in any given year) — more than three times the number enrolled in the National Flood Insurance Program.

Notice to All ABI Members

UNITE HERE Local 11 is a labor union based in southern California. They represent more than 20,000 workers in the hotel and restaurant industry. The union has been attempting to organize employees at the Terranea Resort, site of ABI’s 2019 Winter Leadership Conference (WLC). The union has repeatedly contacted ABI leadership, including members of the board and committee leaders, to urge ABI to cancel or move the WLC. ABI has no plans to move or cancel the event, which would result in substantial legal exposure. If you are contacted by phone or email by representatives of the union, ABI encourages you to ignore rather than engage or respond. ABI regrets this development and will continue to closely follow events at the property. This has no effect on the ABI’s 2018 WLC, set for Scottsdale, Ariz., this December.

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