SHELBY BANKING BILL ADVANCES IN FACE OF DEMOCRATIC OPPOSITION
Republicans on the U.S. Senate Banking Committee voted unilaterally today to ease regulations for dozens of mid-size lenders and toughen oversight of the Federal Reserve, prompting a clash with Democrats that threatens the legislation, BloombergBusiness reported today. The banking panel voted 12-10 along party lines this morning to advance a bill that could free SunTrust Banks Inc., U.S. Bancorp, PNC Financial Services Group Inc. and other banks from the Dodd-Frank Act's stiff supervision and capital requirements. Under the legislation, the Fed would need to disclose more information to Congress about monetary policy decisions, while the head of the New York Fed would need to be confirmed by the Senate. "Although we were unable to reach an agreement this time around, I believe that there is a great deal of mutual respect on each side and that certainly leaves open the possibility of working together in the future," said Sen. Richard Shelby, the Alabama Republican who leads the banking panel, of his bill's failure to draw Democratic support. Democrats called the legislation a rollback of the Dodd-Frank rules, which were put in place to protect taxpayers after the 2008 financial crisis. Sen. Sherrod Brown, the top Democrat on the banking panel, led an effort to counter Shelby's bill with narrower legislation that would ease regulatory burdens for small, community banks, but that effort was not successful. Republicans need to secure six additional votes to overcome procedural hurdles in the full Senate, so the bill faces long odds to win approval. Click here to read the full article.
In related news, although the proposed bill has drawn fire as a giveaway to Wall Street, the biggest U.S. banks are saying, "No, thanks," BloombergBusiness reported yesterday. Those who work for mega-banks and represent them say that this wish list has nothing they'd ask for, and could instead bring headaches. "The very largest banks are the one group that got nothing in this bill," said Francis Creighton, executive vice president for government affairs at the Financial Services Roundtable, calling the attempt to link the bill to Wall Street "farcical." Click here to read the full article.
COMMENTARY: SAN BERNARDINO BANKRUPTCY LESSON: NO ONE WINS WHEN A CITY GOES BROKE
The bankruptcy exit plan that the San Bernardino City Council adopted Monday is the best that could be expected given the terrible circumstances that led the city to insolvency three years ago, but that doesn't mean that it's great for anyone involved, according to a commentary in yesterday's Los Angeles Times. Every stakeholder loses something of real value. Current employees will lose jobs or colleagues as fire, trash and other services are outsourced. Police officers will lose guaranteed raises that were written right into the city charter 60 years ago. The city's retirees will have to pay for what used to be free lifetime health care as part of a deal with the city to fully fund pension payments. Bondholders lose almost all of their $50-million gamble on San Bernardino. And residents of the poorest big city in the state will continue to feel the ongoing service cuts that have become routine since San Bernardino's leaders declared the city was broke, and may have to pay higher taxes for the pleasure. The city's bankruptcy plan does have a thin silver lining, however: the proposal to fix the underlying cause of the financial distress. Click here to read the full commentary.
ANALYSIS: THE RADIOSHACK BANKRUPTCY SHOWS YOU CAN'T TRUST A COMPANY'S PRIVACY PLEDGE
As many as 117 million RadioShack customers may have taken the gadget chain at its word when it pledged that it would safeguard their personal information forever. Yet in bankruptcy, RadioShack's mailing list and customers' personally identifiable information were put up for sale. Now that hedge fund Standard General was the winning bidder in yesterday's auction of RadioShack's data, the message sent to consumers is that "never" doesn't mean "never" when a merchant promises to keep personal information protected, according to an analysis in Tuesday's Los Angeles Times. The firm's proposal to sell its customers' data in bankruptcy drew objections from the FTC, 22 states and the District of Columbia, led by Texas, complaining generally that the sale violated RadioShack's promise and numerous state laws. In March, Bankruptcy Judge Brendan Linehan Shannon appointed New York lawyer Elise Frejka as privacy ombudsman. Frejka advised that the sale should go through if the company adheres to guidelines that the FTC established in a 2000 settlement with online retailer Toysmart, which had also pledged never to sell customer data to a third party, and also put its database up for sale in bankruptcy. The Toysmart case told us that "a consumer's privacy rights must be balanced with the best interests of a debtor's estate and creditors in a bankruptcy proceeding," according to Frejka. But if that is so, RadioShack didn't condition its pledge to protect customers' information on what might happen in bankruptcy; it made an absolute, unconditional pledge, which the FTC and the court's privacy ombudsman are waving away on behalf of a hedge fund and RadioShack's creditors, according to the analysis. Click here to read the full analysis.
FAILED RETAIL BRANDS GET NEW LIVES ON THE WEB
Entrepreneurs and investment firms are snapping up the intellectual property rights to retailers that have fallen on hard times, taking advantage of a built-in audience to launch lower-cost small businesses online without the overhead of maintaining dozens or hundreds of locations, the Wall Street Journal reported yesterday. But capturing enough attention with online- and catalog-only strategies can be difficult, retail analysts say, and longtime customers of a particular brand will be quick to flee if they don't see the kinds of products they grew to love. "I think this can be a viable strategy, particularly if you're correcting what might have been a fundamental flaw in the original business model," said Cathy Leonhardt, a managing director at Peter J. Solomon Co. and co-head of its retail group. "Barriers to entry and execution are fairly low" with e-commerce stores, added David Peress, executive vice president at intellectual property advisory firm Hilco Streambank. Without a physical presence, though, it can be difficult for small businesses to reach potential shoppers. Click here to read the full article (subscription required.)
DON'T MISS NEXT WEDNESDAY'S "TOP OF THE TOWN" D.C. NETWORKING EVENT WITH TMA CHESAPEAKE, ABI, IWIRC GREATER MD & DC AND ARNOLD & PORTER!
Don't miss next Wednesday's Annual "Top of the Town" Networking Event on the rooftop deck of Arnold & Porter LLP in Washington, D.C. The event is co-sponsored by ABI, TMA Chesapeake, IWIRC Greater MD, IWIRC DC and Arnold & Porter. Enjoy this D.C. networking event from 6-8 p.m. ET with a full bar and heavy hors d'oeuvres. For more information to register, please click here.
BLOOMBERG AND ABI'S "EYE ON BANKRUPTCY" WEBINAR ON MAY 28 EXAMINES LEADING BANKRUPTCY OPINIONS FROM APRIL
ABI members are invited to watch the next edition of Bloomberg's complimentary "Eye on Bankruptcy" webinar from 1-2 p.m. ET on May 28 to examine the latest opinions. The program is jointly prepared by ABI and Bloomberg Law, and features Bill Rochelle, editor-at-large and bankruptcy columnist for Bloomberg News, talking with G. Eric Brunstad, Jr. of Dechert LLP and Prof. Charles J. Tabb of the University of Illinois College of Law and an editor of Bloomberg Law: Bankruptcy Treatise.
This webinar is the third in a series of monthly presentations designed to keep you up to date on changes in bankruptcy and restructuring; track recent filings, motions, and decisions; and implement revisions to bankruptcy rules and forms. For your complimentary registration, please register here.
NEXT ABI WORKSHOP TO FEATURE BANKRUPTCY JUDGES EXAMINING COMMISSION RECOMMENDATIONS ON RESOLVING COURT SPLITS
The next ABI Workshop, the 2015 Bankruptcy Judges Roundtable, will take place at ABI headquarters on Aug. 4 to examine the Chapter 11 Reform Commission's recommendations on resolving court splits. The Commission identified more than 30 splits in case law on important bankruptcy issues. Attend the program from 3:00-4:30 p.m. ET in person or via live webstream to hear five bankruptcy judges discuss the recommendations and issues surrounding the court splits. ABI will seek 1.5 hours of general CLE credit in 60-minute-hour states and 1.5 hours of credit in 50-minute-hour states for the program. Networking reception to follow from 5-7 p.m. ET for in-person attendees, and registration for just the reception is also available. Click here to register.
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NEW CASE SUMMARY ON VOLO: 1756 W. LAKE ST. LLC V. AMERICAN CHARTERED BANK AND SCHERSTON REAL ESTATE INVESTMENTS, LLC (7TH CIR.)
Summarized by Kurt Carlson of Carlson Dash LLC
The Seventh Circuit ruled that value derived from several forbearance agreements, and related concessions from a creditor, satisfies the reasonable equivalence test in the face of an avoidance action brought by the debtor where the equity in the property is eaten up by the value of the bank's concessions that had kept debtor in business for four years beyond the time that the property was deeded to the bank, in relation to the financial accommodation.
There are more than 1,700 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: WILL FOREX FINES DETER BAD BEHAVIOR?
A recent blog post A recent blog post examines the "unethical attitudes" that gave rise to the Forex scandal.
To read more on this blog and all others on the ABI Blog Exchange, please click here.
INSOL INTERNATIONAL
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