SENATORS LOOK TO EASE VOLCKER RULE WORRIES AS DEADLINE APPROACHES
A bipartisan group of senators has introduced legislation that would make clear that financial institutions would not have to comply with a key piece of the Dodd-Frank financial reform law if regulators have not finishing putting it in place, The Hill reported today. Sen. Mike Crapo (R-Idaho) announced at a Senate Banking Committee hearing today that he and four other senators had drafted a bill that would prevent the "Volcker Rule" from taking effect until one year after regulators finish implementing it. Sens. Mark Warner (D-Va.), Bob Corker (R-Tenn.), Pat Toomey (R-Pa.), Tom Carper (D-Del.) and Sen. Kay Hagan (D-N.C.) are co-sponsoring it. The Volcker Rule, a cornerstone of the financial overhaul and one of its more contentious elements, attempts to prevent banks from taking on too much risk by curbing trading by banks done purely for bank profit. However, Republicans and the financial industry have bombarded regulators with comments warning that too-restrictive requirements could limit the effectiveness of financial markets. Regulators are currently poring over the roughly 17,000 comments that have been filed on the rule, and are already warning Congress that the July 21 deadline for the rule to take effect laid out in the law looks to be a long shot. Read more.
Click here to read the prepared witness testimony from today's hearing.
FED'S FISHER URGES BREAKUP OF BIG U.S. BANKS
Federal Reserve Bank of Dallas President Richard Fisher urged that large U.S. banks be split apart because a highly concentrated financial system is hindering economic expansion, Bloomberg News reported yesterday. The "institutions that amplified and prolonged the recent financial crisis remain a hindrance to full economic recovery and to the very ideal of American capitalism," Fisher said in an essay in the Dallas Fed's 2011 annual report. Fisher said that the Dodd-Frank Act, passed in part to end bailouts, has led to a "dangerous trend" of greater banking concentration. He also reiterated that "the lackluster nature of the recovery" is due to uncertainty around U.S. fiscal and regulatory policies. Read more.
STUDENT LOAN DEBT TOPS $1 TRILLION
Total student debt outstanding appears to have surpassed $1 trillion late last year, said officials at the Consumer Financial Protection Bureau (CFPB), an estimate that is roughly 16 percent higher than the one made earlier this year by the Federal Reserve Bank of New York, the Wall Street Journal reported today. Bureau officials said that the estimate is based on a survey of private lenders, as opposed to other estimates that rely on a sampling of consumer credit reports. CFPB officials say that student debt is rising for several reasons, including a surge of Americans going to college in recent years to escape the weak labor market. Also, tuition increases—which many colleges say are needed to offset big cuts in state funding—have many students taking out bigger loans. In addition, the interest costs on older loans are climbing as borrowers fall behind on payments, reflecting mounting financial strains, bureau officials said. New York Fed data show that as many as one in four student borrowers who have begun repaying their education debts are behind on payments. Read more. (Subscription required.)
NEW PROPOSAL WOULD REQUIRE FUTURES-FIRM PRINCIPALS TO SIGN OFF ON FUND TRANSFERS
Exchange operators and a futures-industry regulator are working on new rules that would restrict what brokerage firms can do with customer money in the wake of MF Global Holdings Ltd.'s bankruptcy last year, the Wall Street Journal reported yesterday. One proposal, which some regulators have dubbed the "Corzine rule" after former MF Global Chairman and Chief Executive Jon S. Corzine, is gaining momentum as more drastic ideas, such as setting up a new customer-insurance program, have run into resistance. The new plan, outlined earlier this month by the National Futures Association and discussed at an industry conference last week, would require a futures-firm principal to sign off before certain large transfers of customer funds are made. MF Global filed for bankruptcy Oct. 31, after customers and trading partners became nervous about the firm's exposure to European debt and fled. Regulators are still looking for an estimated $1.6 billion missing from customer accounts. Read more. (Subscription required.)
DETROIT TEETERS ON BRINK OF BANKRUPTCY AS STATE TAKEOVER LOOMS
A state-appointed commission yesterday declared that Detroit is in the midst of a "severe financial emergency," as city and state officials scramble to find a way to keep the city from bankruptcy, the Christian Science Monitor reported today. Facing a budget deficit of $200 million, Detroit is burning up cash reserves for basic services. The 10-member financial commission, appointed by Gov. Rick Snyder (R), has until Monday to deliver an action plan, which could include a takeover by state government. Governor Snyder will have 10 days to make a decision. Although the city has long been under financial duress, the crisis escalated Tuesday after Moody's Investors Service issued two separate downgrades of the city’s bond rating. Moody's noted that key parts of Detroit's rescue plan "are yet to be secured,” including reliance on debt financing to stabilize city operations and ongoing labor-concession negotiations. Read more.
LATEST ABI PODCAST FEATURES SINGLE ASSET REAL ESTATE BOOK AUTHOR
The latest ABI podcast features ABI Resident Scholar David Epstein talking with David Kuney of Sidley Austin LLP (Washington, D.C.), the author of the recently released the Single Asset Real Estate Case: Basic Principles and Strategies. In addition to discussing the new book, Kuney talks about some of the history of single-asset real estate cases and recent case trends. Click here to listen.
MAKE SURE TO REGISTER FOR THE ABI "HOT TOPICS IN CONFIRMATION" LIVE WEBCAST ON APRIL 3 PROVIDED BY WEST LEGALEDCENTER - 1.5 CLE CREDITS AVAILABLE!
ABI's "Hot Topics in Confirmation" live webcast on April 3 at 11 a.m. ET will discuss applying section 1129(a)(10) to a joint chapter 11 plan for multiple debtors, credit-bidding before the Supreme Court, equitable disallowance of claims and the gifting doctrine after DBSD North America. Those purchasing the live webcast, provided through West LegalEdCenter, will receive complimentary access to the on-demand version for 180 days once it becomes available. Please note that the on-demand and podcast versions may or may not be accredited in your state. Click here to register.
LATEST CASE SUMMARY ON VOLO: BENSON V. JPMORGAN CHASE BANK, N.A. (9TH CIR.)
Summarized by Jeremy Ficarola of the University of Miami Judge Jay Cristol Bankruptcy Pro Bono Assistance Clinic
The Ninth Circuit Court of Appeals held that plaintiffs' conclusory allegations regarding JPMorgan fell short of stating a claim for relief that is free from the Financial Institutions Reform, Recovery, and Enforcement Act of 1989’s (FIRREA) exhaustion requirements. Although the court held that a claim—or a portion of a claim—based on JPMorgan's independent, post-purchase conduct would not be subject to FIRREA’s jurisdictional bar, the plaintiffs' complaints did not include such a claim. Accordingly, the district court’s order dismissing the complaints are proper.
More than 400 appellate opinions are summarized on Volo. Click here regularly to view the latest case summaries on ABI’s Volo website.
NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: IN-DEPTH LOOK AT THE FINANCIAL CRISIS
The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines a Reuters analysis of the financial crisis in 2008 and explores more of the myths and facts that led to the crisis.
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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