WHAT DOES THE SUPREME COURT'S RULING BELLINGHAM MEAN? LEARN AT THE CHIEF JUDGES ROUNDTABLE NEXT WEEK!
Even a unanimous Supreme Court ruling can leave many questions unanswered: Is the Court signaling a future rejection of jurisdiction by consent? Will the resolution of "Stern claims" be delayed by requiring district courts to weigh in? Will bankruptcy judges expedite Stern claims so that those that aren't settled are quickly ruled upon, then packaged together with other Stern rulings for their respective district court? Will local rules be amended with the new reality that consent won't fly, and that Stern claims must be fast-tracked? What is left for the BAPs? How will bankruptcy courts -- and those practicing before them -- find new and innovative ways to identify and process Stern claims quickly to avoid having them be bottlenecks to case resolution?
For a brief analysis of the Supreme Court's decision in Bellingham, please click here to read a summary by C. R. "Chip" Bowles and James Irving of Bingham Greenebaum Doll LLP (Louisville, Ky.).
Gain critical insights into the Supreme Court's ruling in Bellingham at the ABI Workshop Bankruptcy Roundtable on June 16 at the ABI Conference Center in Alexandria, Va. Hear two panels of prominent chief bankruptcy judges weigh in on the issues; more than 50 chief judges from across the nation will be in attendance. Join them in person or via web stream. A networking reception will follow for in-person registrants. Click here for details and registration.
STUDENT-DEBT BURDEN OF U.S. BORROWERS TAKES CENTER STAGE IN WASHINGTON, D.C.
Sen. Elizabeth Warren is sponsoring legislation, which could reach the Senate floor as soon as tomorrow, that would let borrowers with federal and private loans refinance their balances at lower interest rates, Bloomberg News reported today. Alleviating the burden on student-loan borrowers, who have amassed more than $1.2 trillion in debt, has been a focus this week of Democrats concerned about their drag on the overall economy. President Obama issued an executive order yesterday to expand a program easing student-loan payments. He also endorsed Warren's bill, which would help former graduate students, whose federal loans typically carry higher rates than those of undergraduates; some are as high as 8.5 percent. The bill, co-sponsored by Democratic senators including Al Franken of Minnesota and Dick Durbin of Illinois, would be paid for by imposing new taxes on wealthy individuals. It would let borrowers refinance using the 2013-14 interest rates set for their types of loans. For example, someone who took out an undergraduate Stafford loan in the 2011-12 school year at a 6.8 percent interest rate could refinance at the 2013-14 rate of 3.86 percent. Read more.
The student loan debt crisis was the subject of ABI's Student Debt Symposium, held on May 30 at Georgetown University Law Center. If you were unable to attend, you can purchase all sessions from the program on ABI's eLearning site! This unique day-long symposium, funded in part by a grant from the National Conference of Bankruptcy Judges Endowment for Education, featured academics, consumer bankruptcy practitioners, bankruptcy judges, consumers and policy-makers addressing the causes, consequences and possible reform of the student debt problem. Click here to purchase.
COMMENTARY: THE LATEST STUDENT-LOAN CHARADE
President Obama's recently announced "Pay As You Earn" program is a gift from taxpayers that caps monthly student-loan payments at 10 percent of a borrower's discretionary income, regardless of how much the borrower owes, according to a Wall Street Journal editorial today. Borrowers will then have their debts entirely forgiven after 20 years -- or merely 10 years if they work for government or nonprofits. Those who work outside the profit-making economy don't even have to report the forgiven loans as income, according to the editorial. This deal has been so attractive that enrollment in this and other income-based repayment plans surged nearly 40 percent in the six-month period ending in March. The President also tried to help Democrats struggling to hold the Senate by endorsing still another expansion of student-loan subsidies. Majority Leader Harry Reid plans to hold a vote this week on Sen. Elizabeth Warren's bill to allow borrowers to refinance their old federal or private loans into new government loans at lower rates. The Congressional Budget Office (CBO) says that the Warren bill would increase federal spending by $58 billion over a decade. But as CBO has repeatedly warned, its official scores by law must underrate the risk of defaults in such federal loan programs. Warren's legislation has no chance of passing the House, according to the editorial. Read the full editorial. (Subscription required.)
HOUSE FINANCIAL SERVICES COMMITTEE MARKS UP CFPB, FSOC REFORM LEGISLATION
Among the 14 pieces of legislation considered at today's mark-up hearing, the House Financial Services Committee took up bills to reform the Consumer Financial Consumer Protection Bureau and the Financial Stability Oversight Council. The bills "will add more transparency and more accountability to both the Financial Stability Oversight Council and the CFPB," according to House Financial Services Chair Jeb Hensarling (R-Texas). "The bills that are presented for the CFPB, almost all are practices that are routine for almost every other federal agency." Read the press release from the House Financial Services Committee.
To review the legislation being considered at today's mark-up hearing, please click here.
ANALYSIS: HOW GM'S LAWYERS FAILED IN THEIR DUTIES
For General Motors, the negligence and incompetence that resulted in at least 13 deaths and multiple injuries from a faulty ignition switch is troubling as numerous lawyers were on the scene, but none took responsibility for making sure that their client did not continue to keep defective cars on the road, according to an analysis yesterday on the New York Times DealBook blog. A report issued by Anton R. Valukas describes the failures over a decade in which GM's lawyers were squarely at the center of the ineptitude. They were participants in numerous meetings that produced little tangible action to address a serious problem. The role of the lawyers, at least three of whom have been fired, will be a focus of congressional hearings on the company's failure to recall its vehicles. The company's lawyers appear to have viewed their obligation as solely dealing with the incidents immediately demanding their attention, thereby they failed to notice the pattern of problems. Each piece of litigation was only evaluated on the question of how much the company might have to pay, without any regard to the broader issue of whether there was a systemic failure in one of its products. Read more.
NEW CASE SUMMARY ON VOLO: PETTRY V. PATRIOT COAL CORP. (IN RE PATRIOT COAL CORP.; 8TH CIR.)
Summarized by Michael Cooley of Akin Gump Strauss Hauer & Feld LLP
The BAP affirmed the bankruptcy court's denial of the claimant's motion for reconsideration of an order sustaining the debtor's omnibus objection to claims.
There are more than 1,300 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: SCOTUS CLOSES STATUTORY GAP IN BELLINGHAM
A recent post takes a closer look at the Supreme Court's decision in Executive Benefits Ins. Agency v. Arkison.
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
A special Bankruptcy Code chapter 14 should be created for "TBTF" (too-big-to-fail) financial institutions.
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