SEVEN MILLION STUDENTS BRACE FOR SURGE IN LOAN RATES
Interest rates on student loans subsidized by the government will most likely double to 6.8 percent on July 1, CNNMoney.com reported today. Congress and the White House agree that something should be done to prevent that, but they are having a difficult time hammering out an agreement. The Republican-controlled House passed a bill last week that would stop the rates – lowered by Congress six years ago – from doubling now, but through a mechanism that might allow them to rise later. President Obama vowed to veto it, calling it the "wrong approach." Chances are that about 7 million students taking out subsidized loans for the next school year will face bigger balances when they start paying off their loans after graduation. The rate hike will only affect a third of all undergraduate students who have subsidized loans, in which the federal government absorbs some of the interest rate. The president and House Republicans disagree on how to let students "lock in" their rates from year to year. They also disagree on how to spend any extra revenue that they might make through student loans. Senate Democrats have an entirely different approach that would charge students only what it costs the federal government to make the loans. To pay for the program, Democrats say that Congress could get rid of tax breaks for the oil and gas industry. Read more.
REPORT: HOME PRICES POST LARGEST ANNUAL GAIN IN 7 YEARS
Home prices in March rose by 10.9 percent from a year earlier, the largest such gain in seven years, according to an index tracking home prices in 20 U.S. cities, the Wall Street Journal reported today. Standard & Poor's Case-Shiller index, released today, shows that all 20 cities have posted year-over-year growth for a third straight month, the latest sign of how tight inventories and growing housing demand have led to a surge in home prices after several years of declines. Prices increased in March by 1.4 percent from February and by 0.3 percent in February from January, a period in which sales volumes—and, consequently, home-price growth—are typically muted because of winter weather. Home prices during the first quarter of the year have not increased since 2006, and the first quarter gain of 1.8 percent this year has been the largest first quarter jump since 2005. Read more. (Subscription required.)
FANNIE MAE PROFITING AS MARKET MIDDLEMAN ANGERS LENDERS
Fannie Mae is snatching potential profits away from mortgage lenders and posting record earnings that are fueling industry concerns about the government-backed company, Bloomberg News reported yesterday. The company has ramped up its purchases of home loans from lenders for cash, in the process cutting out originators from the more profitable business of creating and selling bonds backed by the debt. About 31 percent of the $305 billion in new Fannie Mae-guaranteed securities in the first four months of this year were tied to so-called cash-window purchases, almost triple the shares from early 2011, according to data compiled by Bloomberg and JPMorgan Chase & Co. analyst estimates. The shift is morphing Fannie Mae into more of a middleman between homeowners and the bond market, a role typically played by originators or the larger banks that buy their loans, such as JPMorgan and Wells Fargo & Co. Read more.
VISA, MASTERCARD SUE INTERCHANGE-FEE SETTLEMENT DROP-OUTS
Visa Inc. and MasterCard Inc. sued trade groups and retailers that rejected a $7.25 billion settlement in a price-fixing suit and asked a court to rule that the card companies’ fee practices were not illegal, Bloomberg News reported on Saturday. The settlement, described by plaintiffs in that case as the largest in an antitrust lawsuit, would end an eight-year legal battle over the swipe, or interchange, fees charged to merchants when customers use credit cards to pay. The plaintiffs accused Visa and MasterCard, the two largest U.S. payment-card firms, of illegally fixing the fees. Visa, MasterCard and several banks said in a complaint filed on Friday in a federal court that their suit is “necessary to prevent the continuation of endless, wasteful litigation.” They seek to bar the trade groups and retailers from seeking antitrust damages for the fee practices. Read more.
TOMORROW’S ABI LIVE WEBINAR WILL FOCUS ON CLASS ACTIONS IN BOTH BUSINESS AND CONSUMER CASES
Class action lawsuits in both chapter 11 and 13 cases are becoming more prevalent. Are you wondering whether your clients’ WARN Act claims would be better pursued against a debtor company in a class action adversary proceeding or in a class proof of claim, or both? If your client has been sued in a debtor’s consumer class action adversary proceeding, do you know the best defenses against class certification? ABI's panel of experts will highlight the case law and explore the potential benefits and pitfalls of class actions by creditors against debtor companies in chapter 11 cases and by debtors/trustees against creditors in chapter 13 cases on May 29 from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.
ASSOCIATES: ABI'S NUTS & BOLTS ONLINE PROGRAMS HELP YOU HONE YOUR SKILLS WHILE SAVING ON CLE!
Associates looking to sharpen their bankruptcy knowledge should take advantage of ABI's special offer of combining general, business or consumer Nuts & Bolts online programs. Each program features an outstanding faculty of judges and practitioners explaining the fundamentals of bankruptcy, offering procedures and strategies tailored for both consumer and business attorneys. Click here to get the CLE you need at a great low price!
ABI GOLF TOUR UNDERWAY; NEXT STOP IS CENTRAL STATES BANKRUPTCY WORKSHOP IN JUNE
Rob Schwartz and Scott Gautier are tied at 34 Stableford Points atop the closely bunched leaderboard after the ABI's Golf Tour's first stop at Lake Presidential Golf Club. Next up for the Tour is the famed Bear course at the Grand Traverse Resort at the Central States Bankruptcy Workshop on June 14. Final scoring to win the Great American Cup—sponsored by Great American Group—is based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! There's no charge to register or participate in the Tour, and women are most welcome.
ABI MEMBERS WELCOME TO ATTEND INSOL'S LATIN AMERICAN REGIONAL SEMINAR ON JUNE 13 IN SAO PAULO
ABI members are encouraged to attend INSOL’s Latin American regional seminar in São Paulo, Brazil, on June 13. The one-day seminar has been organized by INSOL in association with TMA Brasil to cover current cross-border insolvency and restructuring topics. The seminar is designed to be interactive and to allow the attendees to discuss and debate about practical issues with speakers who are leading players in the insolvency and restructuring field and with experience in insolvency proceedings involving different countries. The seminar will benefit from simultaneous translation in English, Portuguese and Spanish. For more information and to register, please click here.
ABI IN-DEPTH
NEW CASE SUMMARY ON VOLO: SMITH V. SA CHALLENGER INC. (IN RE WEST COAST REAL ESTATE & MORTGAGE INC.; 9TH CIR.)
Summarized by Laury Macauley of Lewis and Roca LLP
In an unpublished decision, the Bankruptcy Appellate Panel for the Ninth Circuit vacated and remanded orders of the bankruptcy court granting sanctions against the chapter 11 debtor and certain related individuals for reimbursement of a secured creditor's attorneys' fees, because the court had not indicated on the record how it had determined the sanction amount of $20,000 under the "lodestar approach." The BAP affirmed the bankruptcy court's denial of a request for sanctions to the extent that they were based on "missing rents" that were allegedly never received by the secured creditor after a bad-faith transfer of the subject property by the sanctioned parties. The BAP determined that the bankruptcy court had not abused its discretion and could have reasonably concluded that the secured creditor had not made a strong enough showing to justify the larger sanction award based on the "missing rents."
There are nearly 900 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: MANDATING CEO-CHAIRMAN DIVISION AT TOO-BIG-TO FAIL BANKS
The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post suggests that regulatory proposals to ensure good governance at too-big-to-fail banks include the division of the CEO and chairman positions.
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.
ABI Quick Poll
Bankruptcy courts should implement constructive trusts in any case where applicable state law would recognize them.
Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
INSOL INTERNATIONAL
INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.
