When Hospitals Merge to Save Money, Patients Often Pay More
The nation’s hospitals have been merging at a rapid pace for a decade, forming powerful organizations that influence nearly every health care decision consumers make. The hospitals have argued that consolidation benefits consumers with cheaper prices from coordinated services and other savings. But an analysis conducted for The New York Times shows the opposite to be true in many cases. The mergers have essentially banished competition and raised prices for hospital admissions in most cases, according to an examination of 25 metropolitan areas with the highest rate of consolidation from 2010 through 2013, a peak period for mergers. The analysis showed that the price of an average hospital stay soared, with prices in most areas going up between 11 percent and 54 percent in the years afterward, according to researchers from the Nicholas C. Petris Center at the University of California, Berkeley.
Sen. Warren Says Leveraged Lending Lapses Invite New Crisis
Sen. Elizabeth Warren (D-Mass.) said that regulators are failing to respond to what she thinks could be a new meltdown in the making: the trillion-dollar market for leveraged loans, American Banker reported. "The large leveraged lending market exhibits many of the characteristics of the pre-2008 subprime mortgage market," Warren wrote to Treasury Secretary Steven Mnuchin, Federal Reserve Chairman Jerome Powell and other regulators in a letter dated Wednesday. "These loans are generally poorly underwritten and include few protections for lenders and investors." Warren, who is widely considered to be a contender for the 2020 presidential race, accused regulators appointed by President Donald Trump of a "lack of appropriate response" to rapid growth and weakening standards in the market for loans to highly indebted companies. She requested a rundown of what's being done by individual agencies and by the Financial Stability Oversight Council, the panel of regulators set up after the 2008 crisis to watch for systemic threats.
Analysis: Inside Carlyle's Billion-Dollar Bet on Supreme
In recent years, many private-equity firms have had bad experiences with retailers, according to an analysis in PitchBook. True Religion, The Limited and Payless Shoesource were among the traditional PE-backed clothing companies to enter bankruptcy in 2017. The collapses of other big-box retailers have also shined a light on the difficulties of marrying private-equity's typical cost-cutting strategies to an industry still adjusting to the rise of the internet and its myriad after-effects. That series of struggles was surely on the collective mind of The Carlyle Group early last October, when the firm reportedly acquired about 50 percent of streetwear supplier Supreme in a deal that valued the brand at around $1 billion — an unusual combination of upstart and financial establishment.
Don't miss "VALCON Talks" at VALCON 2019, featuring a debate about whether private equity is good or bad for retailers. For more information and to register, please click here.
Commentary: After the Retail Apocalypse, Prepare for the Property Tax Meltdown*
Big-box retailers such as Walmart, Target, Meijer, Menards and others are trimming their expenses in a forum where few residents are looking: the property tax assessment process, according to a commentary in City Lab. With one property tax appeal after another, they are compelling small-town assessors and high-court judges to accept the novel argument that their bustling big boxes should be valued like vacant “dark” stores — i.e., the near-worthless properties now peppering America’s shopping plazas, according to the commentary. To hear it from opponents, this emerging legal phenomenon essentially weaponizes an already-grim retail landscape. But it’s not always clear who’s right and wrong — dark-store theory is a battlefield muddied by the cryptic laws and upside-down logic of commercial property valuation, according to the commentary. The potential slam to vulnerable tax bases is tangible, however. If the stores prevail in West Bend, Wis., for example, it would reduce property values by millions of dollars, force the city to refund hundreds of thousands of dollars in back taxes, and set back payments onto the public infrastructure that the town built to lure these retailers in the first place. That could result in higher taxes for residents, fewer police officers, firefighters and teachers, and potentially a mess of public debt.
*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.
Fed Bank Regulator Walks Tightrope on Dodd-Frank
The Federal Reserve's chief of financial regulation defended the central bank's plans to ease strict Dodd-Frank Wall Street banking rules yesterday in the face of bipartisan criticism from the House Financial Services Committee, The Hill reported. Randal Quarles, the Fed vice chairman of supervision, has found himself walking a tightrope over his efforts to loosen critical capital and leverage rules. Republicans are demanding that Quarles push President Trump’s financial deregulatory agenda further along before Democrats who will take control of the House in January try to jam the Fed's gears. Democrats, on the other hand, have fiercely opposed GOP efforts to weaken key banking laws. The hearing, the first by the committee since last week's midterm vote, also previewed the tougher scrutiny regulators can expect from the incoming House Democratic majority.
It’s not just bank loan officers with racial biases who discriminate against black and Latino borrowers. Researchers at the University of California at Berkeley found that algorithmic credit scoring using big data is no better than humans at evening the playing field when it comes to determining home mortgage interest rates, the Washington Post reported. Both online and human lenders earn 11 to 17 percent higher profits off minority borrowers by charging African Americans and Latinos steeper rates, the study said. Black and Latino consumers pay 5.6 to 8.6 basis points higher interest on home purchase loans than their white or Asian counterparts with similar credit profiles — no matter whether they obtained their loans through a face-to-face process or online. The effect is smaller when it comes to refinancing, with black and Latino borrowers paying 3 basis points more.
Experts Provide Insights into Emerging Legal Technology on Latest ABI Podcast
ABI Executive Director Sam Gerdano talks with David Fisher of Integra Ledger (Denver) and Laura Jehl of BakerHostetler (Washington, D.C.). Both Fisher and Jehl will be speaking at ABI's Winter Leadership Conference on panel sessions examining blockchain, cybersecurity and litigating new financial industry issues in bankruptcy. Listen to their podcast discussion of opportunities and challenges in emerging legal technologies. Listen to the podcast here.
To register for ABI's Winter Leadership Conference, set for Dec. 6-8 at the Fairmont Scottsdale Princess in Scottsdale, Ariz., please click here.
Notice to All ABI Members
UNITE HERE Local 11 is a labor union based in southern California. They represent more than 20,000 workers in the hotel and restaurant industry. The union has been attempting to organize employees at the Terranea Resort, site of ABI’s 2019 Winter Leadership Conference (WLC). The union has repeatedly contacted ABI leadership, including members of the board and committee leaders, to urge ABI to cancel or move the WLC. ABI has no plans to move or cancel the event, which would result in substantial legal exposure. If you are contacted by phone or email by representatives of the union, ABI encourages you to ignore rather than engage or respond. ABI regrets this development and will continue to closely follow events at the property. This has no effect on the ABI’s 2018 WLC, set for Scottsdale, Ariz., this December.
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