More than 323K Disabled Borrowers to Receive Automatic Student Loan Forgiveness​​​​​​

The Biden administration announced today that it would line up more than 323,000 borrowers with a total and permanent disability (TPD) for $5.8 billion in automatic federal student loan forgiveness, The Hill reported. The Education Department announced that it would no longer make those classified as totally and permanently disabled by the Social Security Administration (SSA) apply for their federal student loans to be discharged. Instead, borrowers with TPDs will be able to receive automatic forgiveness thanks to a new rule allowing student loan servicers to match customer data with the SSA. “Today's action removes a major barrier that prevented far too many borrowers with disabilities from receiving the total and permanent disability discharges they are entitled to under the law," Secretary of Education Miguel Cardona said in a statement. Federal law allows student borrowers with TPDs to seek forgiveness of their federal student loans on the grounds that they would not be able to make enough to pay them off. Those with TPDs may receive Social Security Disability Insurance (SSDI) or Supplemental Security Income (SSI), meaning the SSA would likely have the necessary information to determine whether they qualify for student loan forgiveness. The Education Department previously arranged a similar automatic loan forgiveness regime with the Department of Veterans Affairs, but the new rule announced today will allow nonveterans with TPDs to avoid the application process.​​

U.S. Weekly Jobless Claims Hit 17-Month Low​​​​​​

The number of Americans filing new claims for unemployment benefits fell to a 17-month low last week, pointing to another month of robust job growth, though surging COVID-19 infections pose a risk to the labor market recovery, Reuters reported. The weekly unemployment claims report from the Labor Department on Thursday, the most timely data on the economy's health, also showed that the number of people on state jobless rolls dropped in early August to levels last seen in mid-March 2020, when the economy almost ground to a halt amid mandatory business closures aimed at slowing the first wave of COVID-19 cases. The labor market’s prospects were boosted by other data showing that a measure of manufacturing employment in the mid-Atlantic region rose to a record high this month and factories increased hours for workers. But the pace of growth in factory output slowed for a fourth straight month amid scarce raw materials and a shift in spending to services from goods. Initial claims for state unemployment benefits fell 29,000 to a seasonally adjusted 348,000 for the week ended Aug. 14. The fourth straight weekly decline pushed claims to their lowest level since mid-March 2020. The four-week moving average of initial claims, considered a better measure of labor market trends as it irons out week-to-week volatility, dropped 19,000 to 377,750, also a 17-month low. Claims have declined from a record 6.149 million in early April 2020. They, however, remain above the 200,000-250,000 range that is seen as being consistent with healthy labor market conditions. Claims have been grinding lower, with employers hanging on to their workers amid a labor shortage as vaccinations allow the economy to fully reopen. More than half of the population has been fully immunized against COVID-19.​​

President Biden Encourages Some States to Further Extend Unemployment Benefits​​​​​​

President Biden is encouraging states with stubbornly high jobless rates to use federal aid dollars to extend benefits for unemployed workers after they are set to expire in early September, administration officials said today, in an effort to cushion a potential shock to some local economies as the Delta variant rattles the country, the New York Times reported. Enhanced benefits for unemployed workers will run through Sept. 6 under the $1.9 trillion economic aid bill enacted in March. Those benefits include a $300 weekly supplement for traditional benefits paid by states, additional weeks of benefits for the long-term unemployed, and a special pandemic program meant to help so-called gig-economy workers who do not qualify for normal unemployment benefits. Those benefits are administered by states but paid for by the federal government. The bill also included $350 billion in relief funds for state, local and tribal governments. Biden still believes it is appropriate for the $300 benefit to expire on schedule, as it was “always intended to be temporary,” the secretaries of the Treasury and Labor said in a letter today to Democratic committee chairmen in the House and Senate. But they also reiterated that the stimulus bill allows states to use their relief funds to prolong other parts of the expanded benefits, like the additional weeks for the long-term unemployed, and they called on states to do so if their economies still need the help. That group could include California, New York and Nevada, where unemployment rates remain well above the national average and governors have not moved to pare back benefits in response to concerns that they may be making it more difficult for businesses to hire.​​

Start-Up Boom in the Pandemic Is Growing Stronger​​​​​​

The coronavirus pandemic appears to have unleashed a tidal wave of entrepreneurial activity, breaking the United States — at least temporarily — out of a decades-long start-up slump, the New York Times reported. Americans filed paperwork to start 4.3 million businesses last year, according to data from the Census Bureau, a 24 percent increase from the year before and by far the most in the decade and a half that the government has kept track. Applications are on a pace to be even higher this year. The surge is a striking and unexpected turnaround after a 40-year decline in U.S. entrepreneurship. In 1980, 12 percent of employers were new businesses; by 2018, the most recent year for which data is available, that share had fallen to 8 percent. So far, however, the entrepreneurial boom has proved broader and more durable than early skeptics expected. Many of the biggest gains have been in industries heavily affected by the pandemic, such as retailing, food service and logistics, but there have also been significant increases in manufacturing, finance, construction and other sectors. And so far, at least, the economy’s reopening doesn’t seem to be pulling people away from entrepreneurship — the share of workers reporting they were self-employed hit an eight-year high in July.​​

Sen. Wyden Unveils Bill Aimed at Making Housing More Affordable​​​​​​

Senate Finance Committee Chairman Ron Wyden (D-Ore.) on Wednesday rolled out legislation aimed at making housing more affordable for Americans, The Hill reported. "It’s time America’s lawmakers get with the program and enact 21st century housing policies that adequately address 21st century challenges,” Wyden said in a statement. According to a summary of the bill from Wyden's office, the legislation seeks to house everyone experiencing homelessness within five years through housing vouchers. The bill would also strengthen the low-income-housing tax credit, which is provided to developers of housing for low-income tenants, and it would create new tax credits for developers who house middle-income tenants and for property owners who rent to low-income tenants. Additionally, it would establish a tax credit for first-time homebuyers. Wyden unveiled his legislation one week after the Senate passed a budget resolution that will allow Democrats to pass a wide-ranging spending bill later this year without any Republican votes. Housing is expected to be one of the areas of focus of that bill, and Wyden will play a key role in crafting the legislation because he leads the Senate committee with jurisdiction over tax policy.​​

Crypto’s ‘DeFi’ Projects Aren’t Immune to Regulation, SEC’s Gensler Says​​​​​​

A new breed of digital asset exchanges is potentially the holy grail for cryptocurrencies: These are online places for people to trade and lend that purportedly involve no middleman setting the rules or taking fees. But these peer-to-peer networks, so far completely unregulated in the U.S., might not be immune from oversight, said Securities and Exchange Commission Chairman Gary Gensler, the Wall Street Journal reported. Some decentralized finance projects, known as DeFi, have features that make them look like the types of entities the SEC oversees, said Gensler. DeFi developers write software that automates transactions and say that they then step away from the project, allowing it to operate with no central entity in charge. They argue that such decentralization defeats the need for oversight by the SEC, which has said that some cryptocurrencies, such as bitcoin and ether, are sufficiently decentralized to avoid regulation. But Gensler, who took over in April, projects that reward participants with valuable digital tokens or similar incentives could cross a line into activity that should be regulated, no matter how “decentralized” they say they are. "There’s still a core group of folks that are not only writing the software, like the open-source software, but they often have governance and fees,” Gensler said. “There’s some incentive structure for those promoters and sponsors in the middle of this.” The SEC under Gensler has doubled down on an effort, started several years ago, to look for cryptocurrency projects that are offering investments that should be regulated. In the past, that strategy has leaned heavily on enforcement actions that target digital-asset-issuers or exchanges on a one-by-one basis. (Subscription required.)​​

Next Week at ABI’s Southwest Bankruptcy Conference: COVID-19 Employment Issues in Bankruptcy, Repurposing or Reimagining Distressed Real Estate, Eight Predictions for a Brave New Bankruptcy World and More!​​​​​​

Next week's 2021 Southwest Bankruptcy Conference presents attendees with both an in-person (held at the Four Seasons Hotel in Las Vegas) and virtual option to join an outstanding faculty of leading judges, noted academics and prominent industry professionals, who will be presenting on a variety of topics for both consumer and business practitioners. The conference will feature the popular “ABI Talks” series with discussions on such divisive topics as the rejection of power purchase agreements, the future of oil and gas, and venue alternatives, and will provide an analytical review of BAP reversals and affirmances. The conference also includes a Judges’ Roundtable featuring Q&A with bankruptcy judges from the Ninth Circuit and across the country. Attendees have the opportunity to earn up to 8/9.5 hours of general CLE/CPE credit, including 1.25/1.5 hours of ethics.

Sessions at the Southwest Bankruptcy Conference include:

•    Judicial Roundtable
•    Complex Confirmation Issues
•    Consumer: Consumer Cases in the Headlines
•    Chapter 11 Cases in the Headlines
•    COVID-19: Infecting Employment Issues in Bankruptcy
•    Consumer: Intersection of Divorce and Bankruptcy
•    Repurposing or Reimagining Distressed Real Estate
•    ABI Talks
•    Nondischargeability, Discharge Injunction Violations and BofA Sanctions
•    First Look at Small Business Reorganization Act Cases
•    Eight COVID-19 Predictions for a Brave New Bankruptcy World: Hits, Misses and the Unforeseen
•    Strategies and Risks of Bankruptcy as a Response to State Court Litigation

Register today!​​

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