Consumer Debt

Report Student Borrowers Retreat from Home Buying

ABI Bankruptcy Brief | April 18 2013
 
  

April 18, 2013

 
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  NEWS AND ANALYSIS   

REPORT: STUDENT BORROWERS RETREAT FROM HOME BUYING

The Federal Reserve Bank of New York issued a report yesterday saying that Americans who borrowed to pay for school are now less likely to have a home mortgage at age 30 than those who never had student debt, a reversal of past trends, the Wall Street Journal reported today. As of late last year, roughly 22 percent of 30-year-olds with a history of student debt—either currently or in the past—owed money on a mortgage, the Fed said. That compares with 24 percent of 30-year-olds who never took out student loans. Similarly, young people with a history of student debt are less likely to have a car loan than those who did not have student loans, the report said. This marks a significant turnabout from recent history. For most of the past decade, student borrowers were much more likely to own a home or car, relative to those without student loans, because they typically were college graduates with higher incomes. But now, student debt could be among the factors holding them back, at least temporarily, the Fed report suggests. The report shows that credit scores for student borrowers have fallen sharply since the recession, likely due to higher average student-debt levels and a rise in delinquencies. Read more. (Subscription required.)

MORTGAGE RELIEF CHECKS GO OUT, ONLY TO BOUNCE

Many struggling homeowners received checks stemming from a $3.6 billion settlement with the nation’s largest banks over wrongful evictions and other abuses, only to find that the checks were bouncing, the New York Times DealBook Blog reported yesterday. It is unclear how many of the 1.4 million homeowners who were mailed the first round of payments covered under the foreclosure settlement have had problems with their checks. But housing advocates from California to New York and even regulators say that in recent days frustrated homeowners have bombarded them with complaints and questions. The mishap is just the latest setback to troubled homeowners. It took more than two years to resolve a federal investigation into foreclosure abuses, and even after the settlement was reached in January, the checks were delayed for weeks. Read more.

RISING BANK PROFITS TEMPT A PUSH FOR TOUGHER RULES

Banks have been reporting steady growth in earnings since the financial crisis, but their ballooning bottom lines could embolden lawmakers and regulators who want to introduce additional measures to overhaul the banking system, the New York Times DealBook blog reported yesterday. After the financial crisis, many officials involved in the regulatory revamping feared that tougher rules, like caps on bank assets, could destabilize the financial system and harm economic growth. It is a view that prominent bankers and lobbyists have also voiced. Despite industry opposition to the new rules, the buoyant bank profits could add to the ammunition that influential figures in Washington, D.C., are using to advocate for more radical ideas to overhaul the banks. "I hope the regulators move forward with tougher regulations," said Sheila C. Bair, a former chairwoman of the Federal Deposit Insurance Corp. and now a senior adviser at the Pew Charitable Trusts. "This wouldn’t endanger the economic recovery." Read more.

SEC TO MOVE PAST FINANCIAL CRISIS CASES UNDER CHAIRMAN WHITE

Mary Jo White, the first former prosecutor to serve as chairman of the U.S. Securities and Exchange Commission, has pledged to run a "bold and unrelenting" enforcement program at the agency charged with regulating Wall Street, Bloomberg News reported today. With financial crisis cases mostly done and some of the biggest insider-trading cases in history closed, White will have to chart a course into new areas to keep that pledge. White, who was sworn in last week, has already provided a few signals about what that cause might be. During her Senate confirmation hearing, she said that she intends to focus on high-frequency and automated trading. She has also raised questions about a drop in the number of accounting fraud cases the agency has brought in recent years. Read more.

BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: EASTERBROOK TURNS THE TIDE ON STUDENT LOANS

Why and when U.S.-managed hedge funds can go bankrupt in the Caribbean, but not in the U.S., is the first item discussed on the new bankruptcy video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. The video ends with discussion of an opinion by U.S. Circuit Judge Frank Easterbrook, who's turning the tide against recent decisions that have left former students virtually incapable of shedding education loans in bankruptcy. Click here to watch the video.

Attending ASM? Don't miss Bloomberg's Bill Rochelle moderating the "BK 360 Revisited: ABI Past-Presidents Panel" session at lunch on Saturday from 12:30-2 p.m. ET.

 

ATTENDING ABI'S ANNUAL SPRING MEETING? MAKE SURE TO DOWNLOAD THE MOBILE APP FOR SMARTPHONES AND TABLETS!

The official Annual Spring Meeting mobile web app, sponsored by Diamond McCarthy LLP, is now available for iOS, Android and Blackberry devices! Utilize the app during ASM this week to view your personal schedule, browse what programs are taking place or search for information related to the meeting. The mobile web app stores the schedule data locally on your phone for offline access, too.

To take advantage of the ASM web app, bookmark the following address on your device’s browser: http://31stannualspringmeeting2013.sched.org/mobile

LIVE WEBSTREAMS OF THE GREAT DEBATES AND ABI'S CHAPTER 11 REFORM COMMISSION HEARING AVAILABLE TOMORROW FROM THE ANNUAL SPRING MEETING!

17TH ANNUAL GREAT DEBATES

Starting at 8:30 a.m. EST, the 17th Annual Great Debates will be streamed live at the following address: http://www.abiworld.org/debate13/

There will be three debates moderated by Jeffrey N. Pomerantz, ABI VP-Education, of Pachulski Stang Ziehl & Jones LLP (Los Angeles):

I. Past Presidents’ Debate
Resolved: The Bankruptcy Code should be revised to eliminate a debtor in possession's and trustee's ability to recover preferential transfers.

Pro: John D. Penn
Haynes and Boone LLP; Fort Worth

Con: Andrew W. Caine
Pachulski Stang Ziehl & Jones LLP; Los Angeles

II. Judicial Debate
Resolved: A claim against the debtor’s estate, transferred to a third party, should be treated the same as if in the hands of the original holder.

Pro: Hon. Arthur J. Gonzalez
New York University School of Law; New York

Con: Hon. Kevin J. Carey
U.S. Bankruptcy Court (D. Del.); Wilmington

III. Consumer Debate
Resolved: An attorney in a consumer case should be able to limit the scope of her employment.

Pro: Brian Michael Shockley
Clark & Washington, PC; Atlanta

Con: Pamela J. Griffith
Office of the U.S. Trustee; Washington, D.C.

ABI's CHAPTER 11 REFORM COMMMISSION HEARING AT 1 P.M. EST

There will also be a live webstream available on the ABI Chapter 11 Reform Commission's site (http://commission.abi.org) of the hearing tomorrow starting at 1 p.m. EST. Prepared witness testimony will also be linked to the site at that time.

Witnesses set to testify at the hearing include:

Panel I:

Wilbur L. Ross of WL Ross & Co. (New York)

Panel II (Bankruptcy Judges’ Panel):

Hon. Dennis R. Dow (W.D. Mo.)
Hon. Barbara J. Houser (N.D. Texas)
Hon. Pamela Pepper (W.D. Wis.)

Panel III:

Holly Felder Etlin of AlixPartners LLC (New York)
Daniel F. Dooley of MorrisAnderson (Chicago)
John M. Haggerty of Argus Management (Grafton, Mass.)


ABI IN-DEPTH

NEW ABI LIVE WEBINAR ON MAY 29 WILL FOCUS ON CONSUMER CLASS ACTIONS

Class action lawsuits in chapter 13 cases are becoming more prevalent. Are you wondering whether your client's claims would be better pursued in a class action? If your client is a defendant in a consumer class action, do you know what your client's best defenses are against class certification? ABI's panel of experts on May 29 from 1-2:15 p.m. ET will explore the potential benefits and pitfalls of class actions by debtors/trustees against creditors in chapter 13 cases by highlighting two recent appeals court decisions. Special ABI member rate available! Click here to register.

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.

LATEST CASE SUMMARY ON VOLO: THOMAS V. BENDER (IN RE THOMAS; 11TH CIR.)

Summarized by Melissa Youngman of McCalla Raymer LLC

The Eleventh Circuit found no reversible error in the lower court's holding that proceeds from a post-petition real estate deal arising from a pre-petition option contract constituted property of the debtor's bankruptcy estate, pursuant to 11 U.S.C. § 541.

There are more than 800 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: SMALL BANKS WOULD BENEFIT FROM BIG-BANK BREAKUPS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Taking on the size of firms that put our financial system at risk is the only way to eliminate unfair competitive advantages, unleash free markets and allow community banks to thrive, according to a recent blog post.

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.

TEE OFF ON THE NEW ABI GOLF TOUR!

ABI offers conference registrants the option to participate in the ABI Golf Tour. The Tour will take place concurrently with all conference golf tournaments. The Tour, which kicked off this morning at ABI’s Annual Spring Meeting, is designed to enhance the golfing experience for serious golfers while still offering a fun networking opportunity for players of any ability. As opposed to the format used at ABI’s regular conference events, Tour participants will "play their own ball." They will be grouped on the golf course separately from other conference golf participants and will typically play ahead of the other participants, expediting Tour play. Tour participants will be randomly grouped in foursomes, unless otherwise requested of the Commissioner in advance of each tournament. Prizes will be awarded for each individual Tour event, which are sponsored by Great American Group. The grand prize is the "Great American Cup," also sponsored by Great American Group, which will be awarded to the top player at the end of the Tour season. Registration is free. Click here for more information and a list of 2013 ABI Golf Tour event venues.

ABI Quick Poll

The scope of protection of "financial contracts" in bankruptcy should be rolled back to what it was before BAPCPA expanded it in 2005.

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.

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Join our networks to expand yours.

  

 

TOMORROW:

 

LIVE WEBSTREAMS FROM ABI'S 31ST ANNUAL SPRING MEETING:

 

17TH ANNUAL GREAT DEBATES
Start Time: 8:30 A.M. EST

 

HEARING OF ABI'S COMMISSION TO STUDY THE REFORM OF CHAPTER 11
Start Time: 1 P.M. EST.

 

 

 

COMING UP

 

 

NYCBC 2013
May 15, 2013
Register Today!

 

 

 

 

ASM 2013
May 16, 2013
Register Today!

 

 

 

 

ASM 2013
May 21-24, 2013
Register Today!

 

 

 

ASM 2013
May 29, 2013
Register Today!

 

 

 

 

ASM 2013
June 7, 2013
Register Today!

 

 

 

 

 

ASM 2013
June 13-16, 2013
Register Today!

 

 

 

 

INSOL’s Latin American Regional Seminar in São Paulo, Brazil
June 13, 2013
Register Today!

 

 

 

 

NE 2013
July 11-14, 2013
Register Today!

 

 

 

 

 

ASM 2013
July 18-21, 2013
Register Today!

 

 

 

 

MA 2013
Aug. 8-10, 2013
Register Today!


 
   
  CALENDAR OF EVENTS
 

2013

May
- "Nuts and Bolts" Program at NYCBC
     May 15, 2013 | New York, N.Y.
- ABI Endowment Cocktail Reception
     May 15, 2013 | New York, N.Y.
- New York City Bankruptcy Conference
     May 16, 2013 | New York, N.Y.
- Litigation Skills Symposium
     May 21-24, 2013 | Dallas, Texas
- ABI Live Webinar: Consumer Class Actions
     May 29, 2013

June
- Memphis Consumer Bankruptcy Conference
     June 7, 2013 | Memphis, Tenn.
- Central States Bankruptcy Workshop
     June 13-16, 2013 | Grand Traverse, Mich.
- INSOL’s Latin American Regional Seminar
     June 13, 2013 | São Paulo, Brazil


  

 

July
- Northeast Bankruptcy Conference and Northeast Consumer Forum
     July 11-14, 2013 | Newport, R.I.
- Southeast Bankruptcy Workshop
     July 18-21, 2013 | Amelia Island, Fla.

August
- Mid-Atlantic Bankruptcy Workshop
    August 8-10, 2013 | Hershey, Pa.


 
 
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Fourth Circuit Rules That Borrower May Sue after Three Years to Rescind Mortgage Loan

ABI Bankruptcy Brief | May 8, 2012

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May 8, 2012
 
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  NEWS AND ANALYSIS   

FOURTH CIRCUIT RULES THAT BORROWER MAY SUE AFTER THREE YEARS TO RESCIND MORTGAGE LOAN

The U.S. Court of Appeals for the Fourth Circuit has held that a lawsuit seeking rescission is timely where the consumer provided notice of rescission to the subservicer within three years of closing but did not file suit until after the three-year deadline had passed, according to a Ballard Spahr Legal Alert today. The May 3, 2012, decision in Gilbert v. Residential Funding LLC is the first by a federal appellate court to hold that a borrower need only send notice of rescission within the three-year period to validly exercise a right to rescind. The majority of courts to consider the question—including the Third and Ninth Circuits—have held that the requirement for the borrower to file suit within the three-year period is consistent with the language of §1635 of the Truth in Lending Act and prior precedent, including the U.S. Supreme Court's decision in Beach v. Ocwen Federal Bank. In its opinion, the Fourth Circuit rejected the subservicer’s reliance on Beach, observing that Beach "did not address the proper method of exercising a right to rescind or the timely exercise of that right" but only addressed whether §1635 was a statute of limitations that operated to extinguish the right after three years. Click here to read the full analysis.

For more on this case, including a full copy of the opinion, make sure to visit ABI’s Volo site.

LAWMAKERS PUSH TO EASE HOME REFINANCING

Senate Democrats today tried to drum up support for a plan that aims to boost the number of struggling homeowners able to refinance by allowing those with government-backed loans to win new loans, Reuters reported. Senator Robert Menendez (D-N.J.) circulated a draft bill outlining proposed changes to the Obama administration's Home Affordable Refinance Program during a Senate Banking Committee hearing today on the topic of home refinancing. The draft bill would provide streamlined financing options for homeowners who are current on their payments and have loans owned or guaranteed by Fannie Mae and Freddie Mac, the two government-controlled companies that have been propped up by more than $150 billion in taxpayer aid. However, it excludes a key piece of the White House plan that would let homeowners refinance into loans backed by the Federal Housing Administration, the U.S. government mortgage-insurer, even if their current loans are not backed by the government. More than 17.5 million borrowers with loans backed by Fannie Mae and Freddie Mac currently pay more than 5 percent interest, according to the draft, while mortgage rates are averaging under 4 percent currently nationwide. Many of those borrowers have been unable to access government initiatives such as HARP. Read more.

LOCKHART: FANNIE MAE REFUSED TO PUNISH COUNTRYWIDE FOR BAD DEBT

James Lockhart, who led the Federal Housing Finance Agency until 2009 and its predecessor, the Office of Federal Housing Enterprise Oversight, said that Fannie Mae refused to seek large amounts of mortgage repurchases from Countrywide Financial Corp. as the housing market began to crash, Bloomberg News reported yesterday. Lockhart said that he spent a lot of time pushing Fannie Mae executives to seek more “putbacks” on Countrywide loans that failed to match their promised quality. "They didn’t want to offend their largest customer," Lockhart, now the vice chairman at investment firm WL Ross & Co., said yesterday. "If people had known how bad the repurchases were going to get, we’d certainly have had a lot more disciplined underwriting," Lockhart said. Read more.

CONSUMER CREDIT INCREASES BY MOST IN 10 YEARS

Consumer borrowing in the U.S. surged in March by the most in more than a decade on growing demand for educational financing and autos, Bloomberg News reported yesterday. Credit rose by $21.4 billion, the biggest gain since November 2001, to $2.54 trillion, according to Federal Reserve figures released yesterday. The advance was paced by a $16.2 billion jump in non-revolving debt, including student and car loans. Read more.

SENATE BALKS AT TAKING UP STUDENT LOAN BILL

With federal student loan interest rates set to double July 1, the Senate failed yesterday to get enough votes to take up a bill to extend low 3.4 percent rates for another year, CNNMoney.com reported. The vote was 52-45 to take up the bill, 8 fewer than the 60 needed to officially start debating the bill. Senate Republicans and Democrats are still negotiating a compromise, and the Senate could vote again this week. Many lawmakers in both parties agree that they would like to extend the current 3.4 percent rates for another year. They disagree, however, on how to offset the $6 billion it would cost to do so. House Republicans passed a measure that would pay for extending the lower student loan rate by cutting from a health care fund that promotes preventive care. President Obama vowed to veto that bill. President Obama and Senate Democrats want to pay for the measure by eliminating some tax benefits for small business owners. Read more.

In related news, a report found that the U.S. Education Department must step up its oversight of private student-loan debt collectors, improving the tracking of borrower complaints and changing its commission system to reward customer service, the San Francisco Chronicle reported today. Contractors hired by the government to chase defaulted borrowers fail to maintain "fair and efficient" systems to track complaints, according to the report, released yesterday by the National Consumer Law Center, a nonprofit advocacy group. The department weighs collection, rather than complaints, too heavily in awarding contracts, it said. With $67 billion of student loans in default, the Education Department has hired 23 private debt-collection companies to chase borrowers. They include Pioneer Credit Recovery, a unit of SLM Corp., the largest student-loan company, also known as Sallie Mae. In the year ended in September, the department received 1,406 complaints against the debt collectors, up 41 percent from the year before. Read more.

REGULATORS SEEK ALTERNATE PLANS ON MONEY MARKET FUNDS

Federal regulators are increasingly worried that the Securities and Exchange Commission could fail to complete more-stringent rules on money-market mutual funds, forcing officials to confront how else to rein in the $2.6 trillion industry, the Wall Street Journal reported today. While financial regulators would prefer the SEC to act on its own, some officials behind the scenes have started to investigate whether the Financial Stability Oversight Council, a special panel created by the 2010 Dodd-Frank financial overhaul, could act if the SEC can't agree on a proposal to shore up funds or reduce risk. Regulators' consideration of alternatives comes as the SEC has met internal and external snags in its efforts to complete a proposal aimed at reducing both money funds' vulnerability to credit shocks and investor incentives to flee the funds at the first sign of trouble. SEC Chairman Mary Schapiro has directed the campaign, which comes on top of an initial round of rule-tightening for the funds in 2010. Her proposals would limit investors' ability to sell all their funds immediately and change how the funds are priced. Read more. (Subscription required.)

REGISTER FOR THE LABOR & EMPLOYMENT COMMITTEE'S "EVOLVING LABOR ISSUES IN CHAPTER 11" WEBINAR

Make sure to mark your calendars for May 23 from 2-3 p.m. ET for the ABI Labor and Employment Committee's "Evolving Labor Issues in Chapter 11" Webinar. A panel of experts will be discussing recent developments in several large complex bankruptcy cases, including Hostess, Kodak, Nortel and American Airlines. The expert panel includes Babette A. Ceccotti of Cohen, Weiss & Simon LLP (New York), former chief counsel of the PBGC Jeffrey B. Cohen of Bailey & Ehrenberg PLLC (Washington, D.C.), Marc Kieselstein of Kirkland & Ellis LLP (New York) and Ron E. Meisler of Skadden, Arps, Slate, Meagher & Flom LLP. Issues to be discussed include:

• Hostess' efforts to eliminate their multi-employer pension plan contribution liability through motions to reject their labor agreements under Section 1113.
• Kodak's attempt to terminate retiree health benefits.
• The effect of the automatic stay upon efforts by the U.K. Pension Protection Fund and the U.K. Nortel Pension Plan to enforce its powers under the U.K. Pensions Act.
• American Airlines' efforts to reduce legacy costs in bankruptcy.

Click here to register.

U.S. TRUSTEE PROGRAM RE-OPENS COMMENT PERIOD ON PROPOSED GUIDELINES FOR ATTORNEY COMPENSATION IN LARGE CHAPTER 11 CASES

The U.S. Trustee Program has re-opened the comment period until May 21, 2012, on proposed guidelines for reviewing applications for attorney compensation in large chapter 11 cases ("fee guidelines"). The USTP also scheduled a public meeting for June 4, 2012, at the U.S. Department of Justice in Washington, D.C. on the proposed fee guidelines. Click here for more information on submitting comments or attending the public hearing.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: GILBERT V. RESIDENTIAL FUNDING LLC (4TH CIR.)

Summarized by ABI Deputy Executive Director Amy Quackenboss

A lawsuit seeking rescission of a mortgage loan is timely under the Truth in Lending Act where the consumer provided notice of rescission to the subservicer within three years of closing but did not file suit until after the three-year deadline under the TILA had passed. The Fourth Circuit rejected the subservicer's reliance on the U.S. Supreme Court's desicion in Beach v. Ocwen Federal Bank, observing that Beach "did not address the proper method of exercising a right to rescind or the timely exercise of that right" but only addressed whether 15 U.S.C. §1635 was a statute of limitations that operated to extinguish the right after three years.

Nearly 500 appellate opinions are summarized on Volo typically 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: CONGRESS ASKING TOO MUCH OF BANK REGULATORS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post discusses whether Congress is piling on too many rules for regulators to enforce without proportionately increasing the number or competence of examiners in the aftermath of the financial 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.

ABI Quick Poll
The debtor-in-possession model has proven too susceptible to abuse; a trustee should be appointed in every chapter 11 case, at least as a check on a DIP with more limited management authority. 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.

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NEXT EVENT

NYCBC 2012
May 9, 2012
Last Chance to Register!

 

COMING UP

 

ABI'S "Evolving Labor Issues in Chapter 11" Webinar
May 23, 2012
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ABI_TMA_LS12
May 15-18, 2012
Register Today!

 

MEMPHIS 12
June 1, 2012
Register Today!

 

CS 2012
June 7-10, 2012
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NE 2012
July 12-15, 2012
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SE 2012
July 25-28, 2012
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MA 2012
August 2-4, 2012
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  CALENDAR OF EVENTS

May
- New York City Bankruptcy Conference
     May 9, 2012 | New York, N.Y.
- ABI Labor and Employment Committee's "Evolving Labor Issues in Chapter 11" Webinar
     May 23, 2012

June
- Memphis Consumer Bankruptcy Conference
     June 1, 2012 | Memphis, Tenn.
- Central States Bankruptcy Workshop
     June 7-10, 2012 | Traverse City, Mich.

  


July
- Northeast Bankruptcy Conference and Northeast Consumer Forum
     July 12-15, 2012 | Bretton Woods, N.H.
- Southeast Bankruptcy Workshop
     July 25-28, 2012 | Amelia Island, Fla.

August
- Mid-Atlantic Bankruptcy Workshop
     August 2-4, 2012 | Cambridge, Md.

 
 
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Judges Ruling on Dodd-Frank Act Beefs Up Protection for Whistleblowers

ABI Bankruptcy Brief | July 10, 2012
 
  

July 10, 2012

 
home  |  newsroom  |  chart of the day  |  blogs  |  bankruptcy code and rules  |  statistics  |  legislative news  |  volo
  NEWS AND ANALYSIS   

JUDGE'S RULING ON DODD-FRANK ACT BEEFS UP PROTECTION FOR WHISTLEBLOWERS

U.S. District Judge J. Paul Oetken bolstered protection for corporate whistleblowers yesterday by ruling the Dodd-Frank law gave retroactive protection to employees of subsidiaries, not just people who work directly for the parent companies, Reuters reported yesterday. The decision concerned the Sarbanes-Oxley Act of 2002, adopted in the wake of Enron Corp's collapse the prior year, which helped protect employees of publicly-traded companies against retaliation for whistleblowing. Dodd-Frank amended that law in July 2010, as part of a series of financial reforms, to show that employees of subsidiaries should also be protected from any reprisals by their companies. Judge Oetken yesterday said that the Dodd-Frank amendments should apply retroactively to cases that predated Dodd-Frank, being "a clarification of Congress's intent" concerning whistleblowers. Read more.

In related news, the House Financial Services Capital Markets and Government Sponsored Enterprises held a hearing today titled "The Impact of Dodd-Frank on Customers, Credit, and Job Creators." To view the witness list and prepared witness testimony, please click here.

The House Financial Services Financial Institutions and Consumer Credit Subcommittee will hold a hearing tomorrow at 10 a.m. ET titled "The Impact of Dodd-Frank’s Home Mortgage Reforms: Consumer and Market Perspectives." Click here for more information.

CONSUMER BORROWING INCREASED IN MAY, PROPELLED BY CREDIT CARD BORROWING

Consumer borrowing rose by $17.1 billion in May from April, the Federal Reserve said yesterday, according to the Associated Press. The gain drove total borrowing to a seasonally adjusted $2.57 trillion, nearly matching the all-time high reached in July 2008. Borrowing has increased steadily over the past two years, but most of the gains have been driven by auto and student loans, which rose to a record level of $1.7 trillion in May. Consumers cut back sharply on credit card debt during the recession and immediately after, but that changed in May when the measure of credit card debt jumped by $8 billion. Still, the level of debt for that category increased to only $870 billion, or 2.2 percent above the post-recession low hit in April 2011. The category had totaled more than $1 trillion before and shortly after the recession began. Read more.

ANALYSIS: PRICE OF USING CREDIT CARDS MAY RISE

Merchants may soon begin imposing a surcharge each time a customer pays with a credit card, a practice Visa Inc. and MasterCard Inc. currently prohibit, the Wall Street Journal reported today. Retailers have long pushed for the right to charge extra to customers who pay with plastic versus cash, saying that the practice would help defray their costs for accepting credit and debit cards. Merchants pay transaction fees on each card swipe. But Visa and MasterCard, which operate the world's largest card-payment networks, ban the practice in the U.S. as part of rules they require retailers to follow to accept their cards. That ban is expected to be eliminated or altered, though, under a potential settlement of long-standing lawsuits retailers have brought against the card networks and numerous banks that issue their cards. Read more. (Subscription required.)

COMMENTARY: COMMERCIAL MORTGAGES SHOW DEPTH OF BAD LOAN SECURITIZATIONS

The first of the commercial real estate mortgages that were securitized in 2007 have started to come due, and it is becoming clear just how bad many of the loans were, according to a commentary in Friday's New York Times. The time when investors were most eager to buy, according to the commentary, turns out to have been the worst time to do so. Commercial mortgages — unlike residential ones — are seldom issued for periods of longer than 10 years, and often for as little as five. Many require no principal repayments during that period but call for the entire amount to be repaid in a balloon payment at the end of the loan. "Only 28 percent of the loans from 2007 due to mature in 2012 managed to pay off in full," said Manus Clancy, the senior managing director at Trepp L.L.C., which monitors the commercial mortgage market. Other loans in those securitizations were for seven or 10 years, so new waves of losses may arrive in 2014 and again in 2017. Read more.

CFTC SUES PEREGRINE FINANCIAL GROUP

Federal regulators sued Peregrine Financial Group Inc. and CEO Russell Wasendorf Sr. today, alleging fraud, customer funds violations and making false statements, and the FBI began an investigation of the brokerage, the Wall Street Journal reported today. The complaint from the Commodity Futures Trading Commission comes a day after the National Futures Association, the futures industry's self-regulatory body, said that it had taken an emergency enforcement action against broker PFGBest's parent company, Peregrine Financial Group. Regulators have shut down almost all operations of futures broker PFGBest after the firm froze client accounts yesterday. Read more. (Subscription required.)

LATEST ABI PODCAST FEATURES EXPERT DISCUSSING WHAT TO EXPECT FROM STOCKTON'S CHAPTER 9 FILING

The latest podcast features ABI Executive Director Samuel J. Gerdano speaking with Lynnette R. Warman, a partner at Hunton & Williams LLP (Dallas) and ABI Vice President—Publications, about Stockton, Calif.'s recent chapter 9 filing. Warman has been following Stockton's financial distress and she discusses what can be expected for the city and its creditors in the first year of the chapter 9 filing. Click here to listen.

ABI IN-DEPTH

“SUBJECTING BUSINESS PROJECTIONS TO SCRUTINY IN VALUATION DISPUTES” WEBINAR TO BE HELD ON JULY 30!

Reassembling the speakers from the highest-rated panel at the New York City Bankruptcy Conference this year, ABI will be holding a live webinar on July 30 at 11 a.m. ET titled, "Subjecting Business Projections to Scrutiny in Valuation Disputes." Panelists include:

  • Moderator David Pauker of Goldin Associates, LLC (New York)
  • Martin J. Bienenstock of Proskauer (New York)
  • David M. Hillman of Schulte Roth & Zabel LLP (New York)
  • Bankruptcy Judge Robert E. Gerber (S.D.N.Y.)

The panel will address:

  • How much deference should management projections be accorded?
  • How do you determine whether projections are unrealistically optimistic or pessimistic?
  • What is the relevance of "market consensus?"
  • How do management’s incentives impact projections?

The webinar is available to ABI members for $75 and is approved for 1.0 CLE hours in Calif., Ga., Hawaii, Ill., N.Y. (approved jurisdiction policy) S.C. and Texas. CLE approval is pending in Del., Fla., Pa. and Tenn. To register, please click here.

LATEST CASE SUMMARY ON VOLO: SUNBEAM PRODUCTS, INC. V. CHICAGO AMERICAN MANUFACTURING, LLC (7TH CIR.)

Summarized by Jonathan Brand of Lakelaw

The Seventh Circuit was not persuaded by Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985), holding that when an intellectual-property license is rejected in bankruptcy, the licensee does not lose the ability to use any licensed copyrights, trademarks and patents. The court reasoned that, outside of bankruptcy, a licensor's breach does not terminate a licensee's right to use intellectual property. The same is true under §365(g). When a contract is rejected in the context of a bankruptcy, a breach is established, but the other party's rights remain in place. Therefore, Chicago American Manufacturing had the right to continue to perform under the pre-petition contract for the production of fans with the trademark of Lakewood Engineering & Manufacturing Co.

More than 550 appellate opinions are summarized on Volo typically 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: DREIER BANKRUPTCY DEMONSTRATES THE ENDLESS SCOPE OF CLAWBACK CLAIMS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the Dreier, LLP bankruptcy and the important role that clawback claims are playing in the case.

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
The full-payment rule in section 1325's "hanging paragraph" for new car PMSIs should be repealed to level the playing field between car lenders and other partially and fully unsecured creditors.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

IS YOUR ABI MEMBERSHIP PROFILE CURRENT?

Keeping a current profile will allow you to benefit from one of ABI's most important services - networking. When you update your profile, you are putting your most valuable information in the membership directory. Be sure to include your areas of expertise, firm information, education and join any other committees that are of interest. Click here to update your profile.

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.

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July 12-15, 2012
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July 25-28, 2012
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  CALENDAR OF EVENTS
 

July
- Northeast Bankruptcy Conference and Northeast Consumer Forum
     July 12-15, 2012 | Bretton Woods, N.H.
- Southeast Bankruptcy Workshop
     July 25-28, 2012 | Amelia Island, Fla.
-Valuation Webinar, July 30 at 11 a.m. ET

August
- Mid-Atlantic Bankruptcy Workshop
     August 2-4, 2012 | Cambridge, Md.

September
- Complex Financial Restructuring Program
     September 13-14, 2012 | Las Vegas, Nev.
- Southwest Bankruptcy Conference
     September 13-15, 2012 | Las Vegas, Nev.
- 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
     September 19-20, 2012 | New York, N.Y.


  

October
- Nuts & Bolts for Young and New Practitioners - KC
     October 4, 2012 | Kansas City, Mo.
- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum
     October 5, 2012 | Kansas City, Mo.
- Bankruptcy 2012: Views from the Bench
     October 5, 2012 | Washington, D.C.
- Chicago Consumer Bankruptcy Conference
     October 8, 2012 | Chicago, Ill.
- International Insolvency and Restructuring Symposium
     October 18, 2012 | Rome, Italy

 
 
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U.S. Mortgage Credit Card Delinquency Rates Decline

ABI Bankruptcy Brief | August 14, 2012
 
  

August 14, 2012

 
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  NEWS AND ANALYSIS   

U.S. MORTGAGE, CREDIT CARD DELINQUENCY RATES DECLINE

TransUnion Corp. reported today that the delinquency rates for mortgages and credit cards declined during the second quarter, and the firm predicts mortgage-delinquency rates will maintain their downward trajectory for the remainder of 2012, according to Dow Jones Newswires. The national mortgage delinquency rate--or the rate of borrowers at least 60 days past due--dropped for the second consecutive quarter, to 5.49 percent from the 5.78 percent mortgage delinquency rate in the first quarter. Between the first and second quarters of 2012, all but five states experienced decreases in their mortgage-delinquency rates, and 76 percent of metropolitan areas saw improvement in their mortgage-delinquency rates during the second quarter. Meanwhile, the national credit card delinquency rate--or the ratio of borrowers at least 90 days past due--dropped to 0.63 percent in the second quarter from 0.73 percent in the previous quarter. The credit card delinquency rate is at its lowest level since reaching 0.6 percent a year earlier. Read more.

COMMENTARY: THE GOVERNMENT SHOULD LOOK TO MASS MORTGAGE REFINANCING

With principal writedown no longer an option, the government needs to find a new way to facilitate mass mortgage refinancings, according to a commentary in today's New York Times by Prof. Joseph E. Stiglitz of Columbia University and Mark Zandi of Moody's Analytics. Refinancing at the current low rates would allow homeowners to significantly reduce their monthly payments, and a mass refinancing program would work like a potent tax cut. Refinancing would also significantly reduce the chance of default for underwater homeowners, according to the commentary. With fewer losses from past loans burdening their balance sheets, lenders could make more new loans, and communities plagued by mass foreclosures might see relief from blight. Read the full commentary.

DURBIN SEES VISA ACCORD THWARTING PUSH TO CAP CREDIT CARD FEES

Senator Richard Durbin (D-Ill.)'s office told retailers that their efforts to have Congress rein in credit card swipe fees would be imperiled if they support a $6.6 billion antitrust settlement with Visa Inc. and MasterCard Inc., Bloomberg News reported yesterday. "This is going to foreclose the prospect of good legislation for the foreseeable future," Dan Swanson, senior judiciary counsel for Durbin, said in a conference call with the Food Marketing Institute. Durbin, the Senate Majority Whip, won the inclusion of limits on debit-card swipe fees, or interchange, in the 2010 Dodd-Frank Act. That trimmed annual revenue for the biggest U.S. banks by about $8 billion and benefited retailers including Wal-Mart Stores Inc. and Target Corp. Credit-card swipe fees are higher and generate about $40 billion a year for lenders such as JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. The Food Marketing Institute, a trade group whose members include Target, Sears Holdings Corp. and Wal-Mart, does not have a position on the settlement. Visa, MasterCard and banks agreed last month to resolve the seven-year-old case, one of the largest class actions in history. The deal, which requires the approval of U.S. District Judge John Gleeson in Brooklyn, N.Y., may be nullified if enough merchants refuse to join the proposed class action. Read more.

MUNICIPAL BOND RULE MIRED IN LEGISLATIVE LIMBO

A provision of the Dodd-Frank Act that would require municipal bond advisers to put the interests of taxpayers first has been bogged down in a rule-making quagmire in Washington, D.C., the New York Times reported today. As part of the wide-ranging regulatory changes that followed the financial crisis of 2008, the Dodd-Frank Act included a provision that would make municipal advisers "fiduciaries," meaning they must put local residents’ interests ahead of their own. Making advisers fiduciaries would be “the first time in the history of the securities laws that issuers of the securities have been protected,” said Robert W. Doty, president of AGFS, a consulting firm in Sacramento. He is a registered municipal adviser and favors the fiduciary mandate. But before that provision can take effect, the law calls for the Securities and Exchange Commission to define "municipal adviser." The SEC proposed a definition 20 months ago, but it was swiftly beaten back by the banking, brokerage and engineering industries, among others. Opponents argued that the SEC was overreaching and that they were already regulated and should not be given a new mandate. Additionally, Rep. Robert J. Dold (R-Ill.) introduced a bill last year that would eliminate the measure. Read more.

ANALYSIS: HARD TIMES SPREAD FOR CITIES

Fiscal woes that have caused high-profile bankruptcies in California are surfacing across the country as municipalities struggle with uneven growth and escalating health and pension costs following the worst recession since the 1930s, the Wall Street Journal reported today. Budget crunches already have prompted Michigan lawmakers to authorize emergency fiscal managers, and led the mayor of Scranton, Pa., to temporarily cut the pay of all city workers to the minimum wage. In a majority of the nation's 19,000 municipalities—urban and rural, big and small—stagnant property tax revenues, diminish aid from states and rising costs are forcing less dramatic but still difficult steps. Moody's Investors Service recently said that while municipal bankruptcies are likely to remain rare, it warned of a "a small but growing trend in fiscally troubled cities unwilling to pay their debt obligations." Read more. (Subscription required.)

ABI MEMBERS WELCOME TO ATTEND ACB'S FREE HALF-DAY "BANKRUPTCY: BACK TO THE FUTURE" PROGRAM IN SEPTEMBER

The American College of Bankruptcy invites you to attend a free half-day program on Sept. 28 in Chicago for a discussion of many of the challenging topics facing current bankruptcy and reorganization professionals. Topics to be addressed include recent decisions of the U.S. Supreme Court and Court of Appeals, important work of the Advisory Committee on Bankruptcy Rules, and developments in the field of bankruptcy ethics. The nation’s leading judges, academics and bankruptcy professionals are among the speakers for the program. While there is no cost to attend, seating is limited, so early reservation is suggested. For more information and to register, please click here.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: FIRST PREMIER CAPITAL LLC V. REPUBLIC BANK OF CHICAGO (IN RE EQUIPMENT ACQUISITION RESOURCES; 7TH CIR.)

Summarized by Allen Guon of Shaw Gussis Fishman Glantz Wolfson & Towbin LLC

Seventh Circuit Court of Appeals affirmed the district court's ruling, which affirmed the bankruptcy court's ruling, that the granting of the settlement motion was not an abuse of discretion.

There are 600 appellate opinions summarized on Volo typically 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: FIFTH CIRCUIT HOLDS STATE AGENCY PROCEEDINGS EXEMPT FROM AUTOMATIC STAY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the Fifth Circuit’s ruling on June 18 in Halo Wireless, Inc. v. Alenco Communications, Inc., et al., affirming a bankruptcy court order that various state public utility commission proceedings initiated against Halo could proceed despite Halo’s subsequent chapter 11 bankruptcy.

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
The Twombly/Iqbal rule for pleading ‘plausible’ claims has been applied too stringently in dismissing avoidance actions for failure to state a claim.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?

Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

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.

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Sept. 11, 2012
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ABI YOUNG AND NEW MEMBERS COMMITTEE “TRENDING ISSUES: EXAMINERS AND SELECT PLAN CONFIRMATION ISSUES” WEBINAR
Oct. 15, 2012
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Oct. 18, 2012
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Nov. 7, 2012
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4TH ANNUAL PROFESSIONAL DEVELOPMENT PROGRAM
Nov. 9, 2012
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SE 2012
Nov. 12, 2012
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  CALENDAR OF EVENTS
 

September
- 7th Annual Golf and Tennis Outing
     September 11, 2012 | Maplewood, N.J.
- Complex Financial Restructuring Program
     September 13-14, 2012 | Las Vegas, Nev.
- Southwest Bankruptcy Conference
     September 13-15, 2012 | Las Vegas, Nev.
- 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
     September 19-20, 2012 | New York, N.Y.
- American College of Bankruptcy's "Bankruptcy: Back to the Future" Program
     September 28, 2012 | Chicago, Ill.

October
- Nuts & Bolts for Young and New Practitioners - KC
     October 4, 2012 | Kansas City, Mo.
- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum
     October 5, 2012 | Kansas City, Mo.

  


- Bankruptcy 2012: Views from the Bench
     October 5, 2012 | Washington, D.C.
- Chicago Consumer Bankruptcy Conference
     October 8, 2012 | Chicago, Ill.
- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar
     October 15, 2012
- International Insolvency and Restructuring Symposium
     October 18, 2012 | Rome, Italy

November
- U.S./Mexico Restructuring Symposium
     November 7, 2012 | Mexico City, Mexico
- Professional Development Program
     November 9, 2012 | New York, N.Y.
- Detroit Consumer Bankruptcy Conference
     November 12, 2012 | Detroit, Mich.


 
 
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Report HAMP Increased Mortgage Renegotiations but Only Reached One-Third of Targeted Households

ABI Bankruptcy Brief | September 6, 2012
 
  

September 11, 2012

 
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  NEWS AND ANALYSIS   

REPORT: HAMP INCREASED MORTGAGE RENEGOTIATIONS, BUT ONLY REACHED ONE-THIRD OF TARGETED HOUSEHOLDS

A recent report by academics and Federal Reserve researchers revealed that the 2009 Home Affordable Modification Program generated an increase in the intensity of renegotiations while adversely affecting the effectiveness of renegotiations performed outside the program. Renegotiations induced by the program resulted in a modest reduction in the rate of foreclosures, but did not alter the rate of house price decline, durable consumption or employment in regions with higher exposure to the program. The overall impact of HAMP, according to the report, will be substantially limited since the renegotiations it induces will reach just one-third of its targeted 3 to 4 million indebted households. To read the full report, please click here.

COMMENTARY: TOO MUCH PROTECTION FOR DERIVATIVES IN BANKRUPTCY

Current "safe harbors" in the Bankruptcy Code are too broad and amount to little more than a subsidy to the derivatives industry, according to a commentary by Prof. Stephen Lubben in the New York Times DealBook blog today. The safe-harbor provisions Prof. Lubben addresses are derivatives and repo contracts that are exempt from the automatic stay, the prohibition on termination of contracts with the debtor, the prohibition on constructively fraudulent transfers and the prohibition on obtaining preferential treatment on the eve of bankruptcy. Similar provisions protect "securities contracts," and open up the argument that any transaction that occurs in the general vicinity of a broker-dealer is immune from the normal rules of bankruptcy. Prof. Lubben's concern with the safe harbors is not so much the statutory provisions but the role that courts have come to play in expanding the provisions beyond their already-broad statutory language. Read more.

DEBT COLLECTORS CASHING IN ON STUDENT LOANS

As the number of people taking out government-backed student loans has exploded, so has the number who have fallen at least 12 months behind in making payments — about 5.9 million people nationwide, up about a third in the last five years, the New York Times reported on Sunday. Nearly one in every six borrowers with a loan balance is in default. The amount of defaulted loans — $76 billion — is greater than the yearly tuition bill for all students at public two- and four-year colleges and universities, according to a survey of state education officials. In an attempt to recover money on the defaulted loans, the Education Department paid more than $1.4 billion last fiscal year to collection agencies and other groups to hunt down defaulters. Unlike private lenders, the federal government has extraordinary tools for collection that it has extended to the collection firms. Overall, the government recoups about 80 cents for every dollar that goes into default — an astoundingly high rate, considering that most lenders are lucky to recover 20 cents on the dollar on defaulted credit cards. Read more.

TOUGHER DODD-FRANK FIDUCIARY STANDARD FOR BROKERS STALLED

Despite support from both Wall Street and consumer advocates, a U.S. Securities and Exchange Commission proposal to raise standards for brokers advising retail investors has run aground, Bloomberg News reported yesterday. The SEC, which has been drafting a rule for almost two years, has scheduled no action on the measure as 2012 wanes and a presidential election approaches. SEC Chairman Mary Schapiro, who pushed to include the measure in the Dodd-Frank Act to ensure that clients receive equal treatment from brokers and investment advisers, said that other rules will probably take precedence in coming months. Dodd-Frank instructed the SEC to consider mandating that brokers operate under a fiduciary standard as rigorous as that for investment advisers. Lawmakers sought the uniform standard to eliminate investor confusion over the roles of brokers and advisers, and to protect customers from being overcharged or sold inappropriate products. Schapiro declined to predict when the SEC will act on the rule, which is considered optional under Dodd-Frank. The agency is "steadily working through all the mandated rulemakings," she said. Read more.

SOME EXPERTS SEE AIG BAILOUT SUCCESS AS A DOUBLE-EDGED SWORD

The Treasury Department estimated yesterday that its pending sale of shares in global insurance giant American International Group would put taxpayers in the black, four years after the government rescued the company in one of the largest bailouts of the financial crisis, according to a Washington Post report today. Officials estimated that after the sale, the Treasury and the Federal Reserve will have netted $194.7 billion from its AIG investment, about $12 billion more than the government committed in aid. The stock sale would leave Treasury with approximately 317 million shares in AIG — a 21.5 percent stake in the company, down from a high of 92 percent — and leave open the possibility for future additional profit as the government exits the company. However, some experts insist that even a largely successful bailout comes with its own set of circumstances. "It creates perverse incentives,” said Prof. William Black of the University of Missouri-Kansas City Law School. "There's an enormous danger to providing bailouts to systemically dangerous institutions and, in particular, bailing out their creditors 100 cents on the dollar." Christy Romero, the special inspector general for the government’s bailout fund, the Troubled Assets Relief Program, shares concerns that the success of the AIG bailout could lead investors to expect the government to rescue other firms whose failure could threaten the economy and thereby does not adequately discourage excessively risky practices. Read more.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: IN RE KNIGHT-CELOTEX LLC (7TH CIR.)

Summarized by Attorney Karl Johnson

Affirming the district court, the Seventh Circuit held that the bankruptcy court did not abuse its discretion by finding that a trustee was not judicially estopped from assigning claims against the principal of corporate debtors due to the trustee's failure to state an intent to pursue or abandon those claims in an application to employ counsel; instead, the omission was found to be a harmless violation of the disclosure requirements of Section 327(a) and Rule 2014(a) because the claims had been prominent in prior court records and because it "defie[d] belief to think that the trustee would abandon a possible multimillion dollar recovery on behalf of the companies’ creditors without a word."

There are more than 600 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: SECOND CIRCUIT TO WEIGH IN ON TRADING OF BANKRUPTCY CLAIMS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines how the Second Circuit Court of Appeals recently heard arguments in a case that could have substantial implications on the trading of bankruptcy claims. While the court could choose to resolve the case, Longacre Master Fund, Ltd. v. ATS Automation Tooling Systems Inc., based on a straightforward analysis of New York contract law, it may also take the opportunity to consider the controversial claims trading case of Enron v. Springfield Associates decided several years ago by the district court for the Southern District of New York.

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 have unfettered discretion in adjusting fee applications, even when no party-in-interest has raised objections.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?

Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

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.

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Sept. 13-14, 2012
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Sept. 19-20, 2012
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"WHEN IS AN INDIVIDUAL CHAPTER 11 THE BEST FIT?" LIVE WEBINAR
Sept. 27, 2012
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Oct. 4, 2012
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Oct. 5, 2012
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Oct. 8, 2012
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ABI YOUNG AND NEW MEMBERS COMMITTEE “TRENDING ISSUES: EXAMINERS AND SELECT PLAN CONFIRMATION ISSUES” WEBINAR
Oct. 15, 2012
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SE 2012
Oct. 18, 2012
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Nov. 7, 2012
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Nov. 9, 2012
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Nov. 12, 2012
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Nov. 29 - Dec. 1, 2012
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Dec. 4-8, 2012
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ACBPIKC 2013
Feb. 17-19, 2013
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  CALENDAR OF EVENTS
 

September
- Complex Financial Restructuring Program
     September 13-14, 2012 | Las Vegas, Nev.
- Southwest Bankruptcy Conference
     September 13-15, 2012 | Las Vegas, Nev.
- 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
     September 19-20, 2012 | New York, N.Y.
- "When Is an Individual Chapter 11 the Best Fit?" Live Webinar
     September 27, 2012
- American College of Bankruptcy's "Bankruptcy: Back to the Future" Program
     September 28, 2012 | Chicago, Ill.

October
- Nuts & Bolts for Young and New Practitioners - KC
     October 4, 2012 | Kansas City, Mo.
- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum
     October 5, 2012 | Kansas City, Mo.
- Bankruptcy 2012: Views from the Bench
     October 5, 2012 | Washington, D.C.
- Chicago Consumer Bankruptcy Conference
     October 8, 2012 | Chicago, Ill.
- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar
October 15, 2012

  

 

- International Insolvency and Restructuring Symposium
     October 18, 2012 | Rome, Italy

November
- U.S./Mexico Restructuring Symposium
     November 7, 2012 | Mexico City, Mexico
- Professional Development Program
     November 9, 2012 | New York, N.Y.
- Detroit Consumer Bankruptcy Conference
     November 12, 2012 | Detroit, Mich.
- Winter Leadership Conference
     November 29 - December 1, 2012 | Tucson, Ariz.

December
- Forty-Hour Bankruptcy Mediation Training
     December 4-8, 2012 | New York, N.Y.

2013

February
- Kansas City Advanced Consumer Bankruptcy Practice Institute
     February 17-19, 2013 | Kansas City, Mo.


 
 
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Report Big Banks Engaging in Payday Lending

ABI Bankruptcy Brief | March 21 2013
 
  

March 21, 2013

 
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  NEWS AND ANALYSIS   

REPORT: BIG BANKS ENGAGING IN PAYDAY LENDING

A new report from the Center for Responsible Lending found that some of the nation's largest banks are providing short-term loans with interest rates of up to 300 percent, driving borrowers into a cycle of debt, the Washington Post reported today. The study that was released today gives an updated look at the perils of advance-deposit loans offered by Wells Fargo, U.S. Bancorp, Regions Bank, Fifth Third Bank, Guaranty Bank and Bank of Oklahoma. Researchers looked at a sample of 66 direct-deposit advances over a 12-month period. Critics say that the structure of advance-deposit loans promotes a cycle of debt. Account holders typically pay up to $10 for every $100 borrowed, with the understanding that the loan will be repaid with their next direct deposit. If the deposited funds are not enough to cover the loan, the bank takes whatever money comes in, triggering overdraft fees and additional interest. Banks contend that they are offering a vital service to customers at more reasonable price points than storefront lenders, who often charge twice as much as banks. The Consumer Financial Protection Bureau has supervisory and enforcement authority for storefront and bank payday lenders with more than $10 billion in assets. The bureau issued a request for comment last year to gauge consumer and industry concerns. Read more.

In related news, a New York Times editorial today found that even though JPMorgan Chase has instituted new policies intended to shield customers from predatory lenders, which can charge up to 500 percent in interest, banks should be doing more to protect their customers. State and federal banking officials also need to expedite their investigations into the relationship between banks and predatory lenders, according to the editorial, with the aim of developing industrywide regulations that protect the public. New rules that go into effect at JPMorgan in May will limit the overdraft fees charged to customers in situations where the lender tries to collect a payment multiple times. Banks could adopt common practices that would allow customers to close their accounts at any time and deny lenders access to automatic payments in states where predatory loans are illegal. Read more.

JUSTICE DEPARTMENT PROBING BANKS' ROLE IN FRAUD BY CUSTOMERS

The U.S. Justice Department is examining the role financial institutions play in fraud schemes perpetrated by bank customers offering deceptive products, Reuters reported yesterday. Attorneys and investigators in the DOJ's Civil Division are examining banks' possible role in assisting scammers who offer questionable payday loans, false offers of debt relief, fraudulent health care discount cards and phony government grants, according to Michael Bresnick, who heads the department's Financial Fraud Enforcement Task Force. That task force has been focused on pursuing the type of misconduct that fueled the financial crisis, but the new priorities suggest that investigators are looking beyond those cases into other types of financial misconduct that extends to different industries, from payday lending to auto loans. Read more.

WITH FREDDIE MAC SUIT, BANKS FACE BILLIONS MORE IN LIBOR CLAIMS

The fallout from the manipulation of the London interbank offered rate (Libor) has already cost banks $2.5 billion in penalties, but that sum pales in comparison to payouts that will come from private lawsuits, the New York Times DealBook blog reported yesterday. Any finding of liability could be compounded because of the potential for any award to be tripled under the antitrust laws. The latest salvo comes from mortgage finance company Freddie Mac, which has filed a lawsuit in the Federal District Court in Alexandria, Va. It asserts that the company was harmed by collusive activity among the banks that lowered the benchmark interest rate. And where Freddie Mac goes, Fannie Mae, its larger sibling, usually follows, so we can expect it to file a suit seeking damages from Libor manipulation. The three regulatory settlements to date – with Barclays, UBS and the Royal Bank of Scotland — provide much of the evidence Freddie Mac relies on in its complaint. Among the documents now public is a litany of e-mails demonstrating just how the banks worked to lower their Libor submissions to benefit their trading positions and make themselves appear stronger during the height of the financial crisis. Read more.

COMMENTARY: THE PROBLEM WITH "TOO BIG TO FAIL" BANKS

The real issue with "too big to fail" financial institutions resides in the government-provided incentives for banks to get inefficiently big in the first place, according to a commentary in yesterday's Wall Street Journal. In the absence of such incentives, according to the commentary, the risk-averse funding on which banks thrive would not be available to allow banks to create sprawling credit portfolios impossible for regulators or investors in the marketplace to assess. Modern governments, as long as they are assuming the risks of the financial system, find it convenient to have those risks concentrated in a few very large, very handy institutions. A lean solution would be to require banks to hold Treasury paper against their insured deposits, according to the commentary. Those experts who prefer solutions like higher capital requirements maintain that the business of banks would survive, forcing banks to rely more on equity than debt to finance their activities. If so, then experts should also consider that equity markets might erect new business models to finance small businesses and credit-worthy consumers if government-insured deposits were no longer available at all to underwrite such risks. Read the full commentary. (Subscription required.)

ANALYSIS: SYNTHETIC CDOs MAKING COMEBACK

Derivatives that pool credit-default swaps to make magnified bets on corporate debt, popularized in the last credit bubble, are making a comeback as investors search farther afield for alternatives to bonds at record-low yields, Bloomberg News reported yesterday. Citigroup Inc. is among several banks that have sold as much as $1 billion of synthetic collateralized debt obligations (CDOs) this year, following $2 billion in all of 2012, according to estimates from the New York-based lender. Trading in tranches of indexes that use a similar strategy to juice yields rose 61 percent in the past month. Synthetic credit, which amplified the financial crisis five years ago, is enticing investors after corporate-bond yields dropped to less than half the 20-year average. Read more.

LATEST ABI PODCAST EXAMINES EFFECTIVENESS OF CURRENT FINANCIAL EDUCATION PROGRAMS

The latest ABI podcast features ABI Resident Scholar Prof. Scott Pryor speaking with Prof. Lauren Willis of Loyola Law School talking about the effectiveness of current financial education programs. Willis discusses the strengths and weaknesses of current financial education programs and what improvements can be made going forward. Click here to listen to the podcast.

BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: WHY IS KODAK'S STOCK SOARING?

Despite Eastman Kodak Co. stock shooting up dramatically in a week's time, investors might not have the same long-term profitable outcome that owners of American Airlines shares enjoyed, as Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle discuss on their new video. Click here to watch the video.

DON'T MISS ACB'S FREE EVENT TOMORROW, "THE AUTO BANKRUPTCIES: CHECKING THE REARVIEW MIRROR," ON MARCH 22!

ABI members are encouraged to register for the American College of Bankruptcy's "The Auto Bankruptcies: Checking the Rearview Mirror" on March 22 at Boston College Law School in Newton, Mass. The afternoon event will feature key players looking back at the events that led to GM and Chrysler being placed into bankruptcy and the lessons that have been learned from the cases. Panelists include:

Corinne Ball of Jones Day (New York), who served as lead bankruptcy counsel to Chrysler.

Matthew A. Feldman of Willkie Farr and Gallagher LLP (New York), who served as chief legal advisor to the Obama administration's Task Force on the Auto Industry.

• Hon. Arthur J. Gonzalez, a Senior Fellow at New York University School of Law and formerly the Chief Bankruptcy Judge for the U.S. Bankruptcy Court for the Southern District of New York, who presided over the Chrysler chapter 11 proceedings.

Harvey R. Miller of Weil, Gotshal & Manges LLP (New York), who served as lead bankruptcy counsel to GM.

The moderator will be Mark N. Berman of Nixon Peabody LLP (New York).

Registration for the afternoon event is free, so be sure to sign up today before it reaches capacity!

HOTEL BLOCK FOR ABI'S ANNUAL SPRING MEETING ALMOST SOLD OUT! REGISTER TODAY!

The hotel block at the Gaylord National Resort and Convention Center in National Harbor, Md., is almost sold out for ABI’s 2013 Annual Spring Meeting! Held April 18-21, 2013, ASM features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various “tracks,” including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. More than 16 hours of CLE/CPE is offered in some states, along with ethics credit totaling 3 hours, making the cost only about $50 per credit. In addition, committee sessions will drill down on other topics to provide you with the most practical and varied CLE/CPE experience ever. Sessions include:

• 17th Annual Great Debates
• Mediation: An Irrational Approach to a Rational Result
• Creditors’ Committees and the Role of Indenture Trustees and Related Issues
• Current Issues for Financial Advisors in Bankruptcy Cases
• The Individual Conundrum: Chapter 7, 11 or 13?
• The Power to Veto Bankruptcy Sales
• Real Estate Issues in Health Care Restructurings
• How to Be a Successful Expert
• The Ethical Compass: Multiple Ethical Schemes Applicable to Financial Advisors
• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes
• And much more!

The Spring Meeting will also feature a field hearing of the ABI Commission to Study the Reform of Chapter 11, a report from the ABI Ethics Task Force, a luncheon panel discussion moderated by Bill Rochelle of Bloomberg News, and a Final Night Gala Dinner featuring a concert by Joan Jett and the Blackhearts!

Make sure to register today!

ABI IN-DEPTH

TEE OFF ON THE NEW ABI GOLF TOUR!

Starting with the Annual Spring Meeting, ABI will offer conference registrants the option to participate in the ABI Golf Tour. The Tour will take place concurrently with all conference golf tournaments. The Tour is designed to enhance the golfing experience for serious golfers, while still offering a fun networking opportunity for players of any ability. As opposed to the format used in the regular ABI conference events, Tour participants will "play their own ball." They will be grouped on the golf course separately from other conference golf participants and will typically play ahead of the other participants, expediting Tour play. Tour participants will randomly be grouped in foursomes, unless otherwise requested of the Commissioner in advance of each tournament. Prizes will be awarded for each individual Tour event, which are sponsored by Great American Group. The grand prize is the "Great American Cup," also sponsored by Great American Group, and will be awarded to the top player at the end of the Tour season. Registration is free. Click here for more information and a list of 2013 ABI Golf Tour event venues.

NEW BANKRUPTCY PROFESSIONALS: DON'T MISS THE NUTS AND BOLTS PROGRAM AT ABI'S ANNUAL SPRING MEETING! SPECIAL PRICING IF YOU ARE AN ASM REGISTRANT!

An outstanding faculty of judges and practitioners explains the fundamentals of bankruptcy in a one-day Nuts and Bolts program on April 18 being held in conjunction with ABI's Annual Spring Meeting. Ideal training for junior professionals or those new to this practice area!

The morning session covers concepts all bankruptcy practitioners need to know, and the afternoon session splits into concurrent tracks, focusing on consumer and business issues. The session will include written materials, practice tip sessions with bankruptcy judges, continental breakfast and a reception after the program. Click here to register!

LATEST CASE SUMMARY ON VOLO: STAKER V. JUBBER (IN RE STAKER; 10TH CIR.)

Summarized by Geoffrey Miller from the U.S. Bankruptcy Court for the District of Arizona

Dismissing the appeals of the bankruptcy court's orders remanding two quiet title actions to state court, the Tenth Circuit BAP held that the appeals were moot and that the debtors lacked the requisite standing to appeal the bankruptcy court's orders.

There are more than 800 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: EXAMINATION OF PENSION AND OPEB LIABILITIES FACING MUNICIPALITIES

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines two of the largest issues facing municipalities today: underfunded pensions and unfunded "other" post-employment obligations (OPEB).

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

Who will win the NCAA basketball tournament?

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.

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TOMORROW:

 

 

BBW 2013
March 22, 2013
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COMING UP

 

 

 

BBW 2013
April 5, 2013
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BBW 2013
April 10, 2013
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ASM NAB 2013
April 18, 2013
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ASM 2013
April 18-21, 2013
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NYCBC 2013
May 15, 2013
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ASM 2013
May 16, 2013
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ASM 2013
May 21-24, 2013
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ASM 2013
June 7, 2013
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ASM 2013
June 13-16, 2013
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NE 2013
July 11-14, 2013
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ASM 2013
July 18-21, 2013
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  CALENDAR OF EVENTS
 

2013

March
- Bankruptcy Battleground West
     March 22, 2013 | Los Angeles, Calif.
- ACB's Free Event, "The Auto Bankruptcies: Checking the Rearview Mirror" Program
     March 22, 2013 | Newton, Mass.

April
- ABI Live Webinar: "Legacy Liabilities : Dealing with Environmental, Pension, Union and Similar Types of Claims"
     April 5, 2013
- ABI Live Webinar: "Student Loans: Bankruptcy May Not Have the Answers - But Does Congress?"
     April 10, 2013
- "Nuts and Bolts" Program at ASM
     April 18, 2013 | National Harbor, Md.
- Annual Spring Meeting
     April 18-21, 2013 | National Harbor, Md.


  

 

May
- "Nuts and Bolts" Program at NYCBC
     May 15, 2013 | New York, N.Y.
- ABI Endowment Cocktail Reception
     May 15, 2013 | New York, N.Y.
- New York City Bankruptcy Conference
     May 16, 2013 | New York, N.Y.
- Litigation Skills Symposium
     May 21-24, 2013 | Dallas, Texas

June
- Memphis Consumer Bankruptcy Conference
     June 7, 2013 | Memphis, Tenn.
- Central States Bankruptcy Workshop
     June 13-16, 2013 | Grand Traverse, Mich.

July
- Northeast Bankruptcy Conference and Northeast Consumer Forum
     July 11-14, 2013 | Newport, R.I.
- Southeast Bankruptcy Workshop
     July 18-21, 2013 | Amelia Island, Fla.


 
 
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Cordray Confirmed by Senate to Lead CFPB

ABI Bankruptcy Brief | July 16, 2013
 
  

July 16, 2013

 
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  NEWS AND ANALYSIS   

CORDRAY CONFIRMED BY SENATE TO LEAD THE CFPB

The Senate today confirmed (66-34) Richard Cordray's nomination to become the director of the Consumer Financial Protection Bureau, the Washington Post reported. The vote effectively ends a two-year long process during which Republicans blocked Cordray's nomination over disagreements about the bureau's setup. Cordray was appointed to the Consumer Financial Protection Bureau position during a congressional recess in January 2012 and had been awaiting confirmation. Cordray's recess appointment would expire in January 2014. The vote came as Senate leaders struck a deal to avert Democrats' move to change Senate rules on filibusters of certain nominees. Read more.

COMMENTARY: THE FINANCIAL INSTABILITY COUNCIL

There's finally a healthy discussion in Washington, D.C., about how to end too-big-to-fail banks, but before the government can start getting rid of taxpayer-backed behemoths, it first has to stop creating them, according to an editorial in today's Wall Street Journal. The Dodd-Frank Act classified all banks with more than $50 billion in assets as systemically important, and the federal Financial Stability Oversight Council (FSOC) is considering which non-banks should also be deemed too big to fail. Last year the board of regulators slapped the systemic tag on eight "financial market utilities," including clearinghouses, which means taxpayers now stand behind derivatives trading. Last week the council, chaired by Treasury Secretary Jack Lew, declared that GE Capital, the finance arm of General Electric, and AIG are also officially important. Now the council is trying to designate insurer Prudential as systemic, and perhaps MetLife too. GE Capital was rescued in the 2008 panic and thus deserves the systemic label, according to the editorial. AIG seems to welcome the designation, according to the editorial, perhaps because its current mix of businesses means that it will face a lighter regulatory burden than some competitors. However, Prudential and MetLife are resisting membership in the too-big-to-fail club, according to the editorial, as it would be a giant and counterproductive leap to conclude that the insurance business presents a systemic risk to the financial system. Read more. (Subscription required.)

SUBPRIME BORROWERS WITH BEST CREDIT SCORE STILL DENIED HELP

President Obama to date has failed to win Congressional backing for his proposal to expand eligibility for government-backed refinancing nationally to include subprime mortgages, Bloomberg News reported today. Expanding eligibility for the government's Home Affordable Refinance Program (HARP) is still at the top of the White House's agenda for housing. The effort is dubbed "Where's my refi?" The Treasury Department, which funds the nation's anti-foreclosure efforts, supports the program. Four years after the peak of the foreclosure crisis, Treasury has spent only a fifth of the $38.5 billion of funds from the Troubled Asset Relief Program (TARP) set aside for housing. "This is where you get to the heart of the subprime lending problem -- these expensive private loans where people kept paying," said Diane Swonk, chief economist at Chicago-based Mesirow Financial Inc. "It's easy to forget they are still out there." Borrowers who refinanced through HARP in the first quarter had an average interest-rate reduction of 2.1 percentage points and will save about $4,300 in the first 12 months of the new loan, according to mortgage financier Freddie Mac. But while expanding HARP would benefit homeowners, it wouldn't benefit investors, said Walt Schmidt, a mortgage strategist at FTN Financial. Bondholders in private-label securities would lose a paying loan, and potential buyers of government-backed securities would fear another mid-stream change in eligibility standards, he said. Read more.

COMMENTARY: BANKS DODGE A BULLET WITH DEAL ON SWAPS

A deal between American and European regulators on derivatives has helped banks dodge a bullet, according to a commentary yesterday on the New York Times DealBook blog. Before reaching a compromise on July 11, the Commodity Futures Trading Commission intended to force swaps involving U.S.' counterparties to be cleared in this country. That would have frozen cross-border flows and hammered volumes by creating separate regulatory jurisdictions. For global banks, that situation has been averted as banks will now have the choice of trading and clearing trans-Atlantic swaps in either Europe or the United States. To satisfy the Dodd-Frank Act reforms, the regulatory framework on swaps will be judged as "essentially identical" in each jurisdiction -- although in reality they are nothing of the sort. The two regimes differ in that Europe's swaps reforms are taking longer to implement than America's, but are more stringent on most of the main issues. The European Securities and Markets Authority reckons it will take at least a year, possibly two, before they are in place. The U.S., meanwhile, is ready to implement its rules. Europeans are tougher on data transparency, margin posting and trade reporting, and they also cover foreign-exchange swaps. Read more.

DID YOU MISS MONDAY'S abiLIVE WEBINAR DISCUSSING § 1111(b) ELECTION, PLAN FEASIBILITY AND CRAMDOWN ISSUES? RECORDING IS NOW AVAILABLE!

If you were not able to join Monday's well-attended abiLIVE webinar examining § 1111(b) elections, plan feasibility and voting, a recording of the program is now available for downloading! Utilizing a case study, ABI's panel of experts explored the issues surrounding a lender's decision on whether or not to make an election under § 1111(b), plan feasibility and voting. The abiLIVE panel also walked attendees through the necessary mathematical analyses used to examine these issues. The 90-minute recording is available for the special price of $75 and can be purchased here.

NEW abiLIVE WEBINAR ON AUGUST 20: HOW WILL THE NEW U.S. TRUSTEE FEE GUIDELINES IMPACT YOU?

The new U.S. Trustee Fee Guidelines will affect all attorneys and firms who work on larger chapter 11 cases filed on or after November 1st. ABI's Ethics & Professional Compensation Committee will present a panel of experts, including Cliff White, the Director of the U.S. Trustee Program, to discuss some of the ways the new guidelines may change day-to-day operations in firms, issues relating to the new market rate benchmarks, and how these changes might alter insolvency practice. Register today to hear government, attorney and academic perspectives on this important and timely topic.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE SOUTHEAST BANKRUPTCY CONFERENCE THIS WEEK

The next stop for the ABI Golf Tour is the famed Golf Club of Amelia Island course on Amelia Island, Fla., in conjunction with the Southeast Bankruptcy Conference this week. 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.

ABI IN-DEPTH

NORTON JUDICIAL EXCELLENCE AWARD NOMINATIONS OPEN

Nominations are now open for the 8th Annual Judge William L. Norton Judicial Excellence Award, to be presented during the ABI luncheon at the annual meeting of the National Conference of Bankruptcy Judges on Nov. 1, 2013. The award is presented by ABI and Thomson Reuters each year to the current or retired bankruptcy judge whose career embodies the same continued dedication and outstanding contributions to the insolvency community as the award’s namesake, Judge Norton. Nominations are considered by a committee made up of representatives from the Norton treatise and past ABI presidents. Nomination forms are available from Clay Mattson at Thomson Reuters ([email protected]) and should be submitted by July 29.

NEW ABI "BANKRUPTCY IN DEPTH" ON-DEMAND CLE PROGRAM LOOKS AT PRINCIPLES OF PROPERTY OF THE ESTATE: DEMYSTIFYING EQUITABLE INTERESTS

In this 90-minute seminar, Profs. Andrew Kull of Boston University School of Law and Scott Pryor of Regent University School of Law provide an in-depth analysis of a legal principle that has become, in their words, "a long-lost area of the law": § 541 of the Bankruptcy Code. Seeking to demystify what is meant by "property of the estate" and, in particular, the distinction between legal or equitable interests of the debtor in property, Kull and Pryor describe the legal entanglements that ensue when legal title belongs to one person but the equitable title belongs to someone else. The cost of the seminar, which includes written materials and qualifies for 1.5 hours of CLE, is $95. To order or to learn more, click here.

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!

NEW CASE SUMMARY ON VOLO: PALOMAR V. FIRST AMERICAN BANK (7TH CIR.)

Summarized by John Eggum of Foran Glennon Palandech Ponzi & Rudloff

The Seventh Circuit ruled that a chapter 7 debtor cannot strip off a wholly unsecured mortgage. The Seventh Circuit also distinguished the ability to strip off wholly unsecured mortgages in chapter 13 because "[t]he strip-off right in Chapter 13 is a partial offset to the advantages that chapter 13, relative to chapter 7, grants creditors, such as access to a larger pool of assets [created by the commitment of the debtor's disposable income]." Additionally, the strip-off right in chapter 13 is an aspect of a chapter 13 plan, as indicated by § 1322. Nothing in § 506 compelled a different result; chapter 7 debtors cannot rely on § 506 to import a strip-off power into chapter 7.

There are more than 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: DELAWARE BANKRUPTCY COURT FINDS NO VALUE IN LITIGATION TRUSTEE'S METHOD OF VALUING GOING CONCERN OF DEBTOR

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. In a post examining Whyte v. C/R Energy Coinvestment II, L.P. (In re SemCrude, L.P.), the U.S. Bankruptcy Court for the District of Delaware dealt with the familiar scenario of a litigation trustee aggressively pursuing fraudulent-transfer claims. Faced with a fight over valuation theories, the court held that using a balance sheet-based test was inappropriate for valuing a debtor as a going concern, where a third-party had prepared a then-current valuation utilizing the discounted cash flow method, notwithstanding the fact that such valuation failed to take into account certain facts that adversely affected the value of the debtors.

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

When will the dowward trend of consumer bankruptcy filings turn around?

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.

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THIS WEEK:

 

 

SEBW 2013
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COMING UP

 

 

MA 2013
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abiLIVE WEBINAR:

abiLIVEAugust
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SW 2013
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NYIC Golf Tournament 2013
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Endowment Baseball 2013
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NYU 2013
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abiLIVE WEBINAR:

abiLIVESeptember
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VFB2013
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MW2013
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Endowment Football 2013
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Mid-Level PDP 2013
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Detroit
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Detroit
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ACBPIA13
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Detroit
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40-Hour Mediation Program
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  CALENDAR OF EVENTS
 

2013

July
- Northeast Bankruptcy Conference and Northeast Consumer Forum
     July 11-14, 2013 | Newport, R.I.
- abiLIVE Webinar: § 1111(b) Election, Plan Feasibility and Cramdown Issues
     July 15, 2013
- Southeast Bankruptcy Workshop
     July 18-21, 2013 | Amelia Island, Fla.

August
- Mid-Atlantic Bankruptcy Workshop
    August 8-10, 2013 | Hershey, Pa.
- abiLIVE Webinar: How Will the New U.S. Trustee Fee Guidelines Impact You?
     August 20, 2013
- Southwest Bankruptcy Conference
    August 22-24, 2013 | Incline Village, Nev.

September
- ABI Endowment Golf & Tennis Outing
    Sept. 10, 2013 | Maplewood, N.J.
- ABI Endowment Baseball Game
    Sept. 12, 2013 | Baltimore, Md.
- Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
    Sept. 18-19, 2013 | New York
- abiLIVE Webinar: Complex Requirements and Ethical Duties of Representing Consumer Debtors
     Sept. 24, 2013
- Bankruptcy 2013: Views from the Bench
    Sept. 27, 2013 | Washington, D.C.


  


October
- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum
    Oct. 4, 2013 | Kansas City, Mo.
- ABI Endowment Football Game
    Oct. 6, 2013 | Miami, Fla.
- Professional Development Program
    Oct. 11, 2013 | New York, N.Y.
- Chicago Consumer Bankruptcy Conference
    Oct. 14, 2013 | Chicago, Ill.
- International Insolvency Symposium
    Oct. 25, 2013 | Berlin, Germany

November
- Austin Advanced Consumer Bankruptcy Practice Institute
   Nov. 10-12, 2013 | Austin, Texas
- Detroit Consumer Bankruptcy Conference
   Nov. 11, 2013 | Detroit, Mich.

December
- ABI/St. John’s Bankruptcy Mediation Training
    Dec. 8-12, 2013 | New York


 
 
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