LEGISLATION AIMS TO HOLD UNIVERSITIES ACCOUNTABLE FOR LOAN DEFAULTS
U.S. senators are attempting to tackle the nation's student loan debt crisis with a newly proposed bill that would place the burden of repayment responsibility on universities' shoulders, the Daily Cougar reported yesterday. Sens. Richard Durbin (D-Ill.), Elizabeth Warren (D-Mass.) and Jack Reed (D-R.I.) introduced S. 1873, the "Protect Student Borrowers Act of 2013," in December, emphasizing the urgent need for colleges to respond to rising student debt. The senators devised the Student Loan Borrower Bill of Rights to establish rules of fairness and transparency between borrowers and loan providers. Durbin said that these rights will ensure that students know exactly which options they have available to them when it becomes hard to keep up with their debt. Read more.
NEW LOAN SAFEGUARDS CLEAR PATH FOR HIGHER-RISK BORROWERS
As regulators tighten mortgage rules and big banks resist lending to riskier middle-income Americans, state housing finance agencies (HFAs) across the U.S. are rapidly expanding to help restore the fading dream of homeownership, Bloomberg News reported yesterday. The state agencies got a boost from the Consumer Financial Protection Bureau, which exempted them from stricter mortgage regulations that it rolled out this month. Some groups like MassHousing buy mortgages from lenders and send them to government-sponsored Fannie Mae to package into securities that the HFAs then sell to investors. The Boston-based group more than doubled its mortgage volume to an all-time high of $1.25 billion in the year ending in June, fueled by the introduction of mortgages that require no insurance. HFAs in states that include California, Idaho, Illinois, Minnesota, New Jersey, Texas and Virginia also are expanding. The Illinois Housing Development Authority funded more than 3,000 mortgages in 2013, a record, up 60 percent from the prior year. In California, loans with down payment assistance increased 29 percent to a record 6,311 in fiscal 2013 from a year earlier. Read more.
BANKS SIT OUT RISKIER DEALS
Regulatory pressures are pushing many of the biggest banks to pass on financing lucrative deals as the government targets excessive borrowing, the Wall Street Journal reported yesterday. Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. are among lenders that have in recent months decided against financing some corporate takeovers partly out of concern that the deals will run afoul of new guidelines. Those guidelines are designed to keep banks away from deals that regulators feel are too laden with debt. Starting late last summer, the Office of the Comptroller of the Currency and the Federal Reserve sent letters to about a dozen big banks saying that they need to comply with the guidance -- regulators' latest effort to reduce risk in the banking industry following the financial crisis. The new push could make deals more costly for private-equity firms, which rely on banks to lend much of the borrowed money that helps fuel their corporate takeovers. It could also create opportunity for other firms, such as some securities dealers, that aren't regulated like banks and thus aren't subject to the same strict regimen of regulation over lending. Read more. (Subscription required.)
MOODY'S: UNCERTAIN HEALTH CARE LANDSCAPE LEADS TO NEGATIVE OUTLOOK FOR U.S. HEALTH INSURERS
Moody's changed the outlook for U.S. health insurers to "negative" from "stable," as implementation of the Affordable Care Act (ACA) continues to create uncertainty for the industry, says Moody's Investors Service in a new report yesterday The ACA -- signed into law in March 2010 -- seeks to increase the affordability of health insurance and expand both public and private insurance coverage through a number of mechanisms including exchanges, mandates and subsidies. Uncertainty over the demographics of those enrolling in individual products through the exchanges is a key factor in Moody's outlook change. Enrollment statistics show that only 24 percent of enrollees so far are aged 18-34, a critical group in ensuring that lower claim costs subsidize the higher claim costs of less healthy, older individuals. This is well short of the original 40 percent target based on the proportion of eligible people in this cohort, says Moody's. In addition, the impact of the industry assessment tax that begins in 2014 is unclear, says Moody's. The rating agency notes that while some insurers built this tax into their premium calculations, the amounts received may still be insufficient to cover their share of the assessment. Read more.
STUDY: ECONOMIC MOBILITY FOR AMERICANS HAS NOT CHANGED IN 50 YEARS
A group of economists led by Harvard's Raj Chetty released a study showing that children growing up in America today are just as likely to climb the economic ladder as children born more than a half-century ago, the Washington Post reported today. The study suggests that any advances in opportunity provided by expanded social programs have been offset by other changes in economic conditions. Increased trade and advanced technology, for instance, have closed off traditional sources of middle-income jobs. The paper suggests that "it is not true that mobility itself is getting lower," said Lawrence F. Katz, a Harvard economist and mobility scholar who was not one of the paper's authors but who has reviewed its findings. "What's really changed is the consequences of it. Because there's so much inequality, people born near the bottom tend to stay near the bottom, and that's much more consequential than it was 50 years ago." Read more.
PURCHASE EITHER THE CONSUMER OR BUSINESS EDITION OF THE BEST OF ABI 2013 AND RECEIVE A FREE ADDITIONAL TITLE!
To make room for new books in 2014, ABI is having a special Bookstore clearance sale. Now, when you buy either Best of ABI 2013: The Year in Business Bankruptcy or The Year in Consumer Bankruptcy, you can choose a free book from a select list of ABI publications. You'll be able to make your selection when you click "Buy Now" on either edition of the Best of ABI 2013. To purchase the Best of ABI 2013: The Year in Business Bankruptcy, please click here.
To purchase the Best of ABI 2013: The Year in Consumer Bankruptcy, please click here.
FINAL ABILIVE "BACK TO BASICS" WEBINAR NEXT WEEK! JOIN FOR A CLOSER LOOK AT HEDGE FUNDS IN BANKRUPTCY
Send your associates to ABI's "Back to Basics" webinar series, hosted by the Young and New Members Committee. Next Tuesday's webinar will look at issues surrounding bankruptcy and hedge funds. The other two webinars in the series, including an examination of financial statements and operating reports and using financial documents as evidence, will be posted to ABI's e-Learning website. Let a trusted CLE provider help get your associates up to speed. Register for next week's webinar today!
ABI'S SIXTH ANNUAL LAW STUDENT WRITING COMPETITION DEADLINE APPROACHES
Law school students are invited to submit a paper between now and March 4, 2014 for ABI's Sixth Annual Bankruptcy Law Student Writing Competition. ABI will extend a complimentary one-year membership to all students who participate in this year's competition. Eligible submissions should focus on current issues regarding bankruptcy jurisdiction, bankruptcy litigation, or evidence issues in bankruptcy cases or proceedings. The first-place winner, sponsored by Invotex Group, Inc., will receive a cash prize of $2,000 and publication of his or her paper in the ABI Journal. The second-place winner, sponsored by Jenner & Block LLP, will receive a cash prize of $1,250 and publication of his or her paper in an ABI committee newsletter. The third-place winner, sponsored by Thompson & Knight LLP, will receive a cash prize of $750 plus publication of his or her paper in an ABI committee newsletter. For competition participation and submission guidelines, please visit http://papers.abi.org.
DETROIT EMERGENCY MANAGER KEVYN ORR TO KEYNOTE ABI'S 32ND ANNUAL SPRING MEETING ON APRIL 25
Kevyn Orr, emergency manager to the city of Detroit, will provide the keynote at the Friday Luncheon at ABI's 32nd Annual Spring Meeting at the JW Marriott in downtown Washington, D.C. The conference, taking place April 24-27, 2014, features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various "tracks," including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. The Annual Spring Meeting offers 18.25/22 hours of CLE/CPE credit, along with ethics credit totaling 3.25/4 hours. In addition, committee sessions will drill down on topics covered in the larger sessions to provide you with the most practical and varied CLE/CPE experience ever. Also featured will be a special half-day optional event sponsored by ABI and the FCBA titled "The Intersection of the FCC and Bankruptcy Law."
Sessions at the 2014 Annual Spring Meeting include:
- 18th Annual Great Debates
- Where the Work Is (and Isn't)
- The Ever-Changing Role of Committees
- Large Complex Trusts: A General Motors Case Study
- Municipal Bankruptcies
- Use of Governmental Assistance Programs in Chapter 13
- The Financial Professional’s Role in Out-of-Court Restructurings and Dissolutions
- Civility in the Restructuring Profession
- Union Contracts
- Student Loan Update
- Social Media: What You Don't Know Can Hurt You
- The § 363 Sale Process from a Transactional Perspective
The conference kicks off with an Opening Reception at the Smithsonian's National Museum of the American Indian, offering a truly D.C. experience. Optional events include a golf tournament at Westfields Golf Club, a Washington Nationals vs. San Diego Padres baseball game and an evening at the Kennedy Center with the National Symphony Orchestra.
NEW CASE SUMMARY ON VOLO: MARSHALL V. PICARD (IN RE BERNARD L. MADOFF INVESTMENT SECURITIES LLC; 2D CIR.)
Summarized by Robert Yan of Farrell Fritz PC
The Second Circuit affirmed the district court's order, which affirmed the bankruptcy court's approval of a settlement agreement and issuance of a permanent injunction that had the effect of enjoining the appellants' state law tort actions. The Second Circuit held that the bankruptcy court did not exceed its authority under the Bankruptcy Code and did not run afoul of Article III of the Constitution.
There are nearly 1,200 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: NINTH CIRCUIT GIVES SOME PROTECTION TO BOTH BLOGGERS AND TRUSTEES
The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A recent post examines how the Ninth Circuit's decision in Cox v. Obsidian Finance Group, No. 12-35238, gives greater First Amendment protection to bloggers than the view taken by the district court, but it also recognizes that trustees are not public figures entitled to less deferential review.
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.
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