Real Estate

BIG U.S. BANKS FACE TOUGHER STANDARDS

The Federal Reserve today outlined a multi-pronged plan to place the nation's largest banks under increasingly stringent capital requirements to guard the financial system from risks posed by "too big to fail" companies, the Wall Street Journal reported today. Fed officials said that they hope to act in the coming months on four separate proposals aimed at the eight largest U.S. firms considered "systemically important" to the global economy, including Goldman Sachs Group Inc., Bank of America Corp. and JPMorgan Chase & Co. Fed Gov. Daniel Tarullo, the agency's point man on regulation, said that regulators could soon propose a higher leverage ratio, which is expected to fall between 5 and 6 percent, for the largest banks. This capital measure gauges equity against total assets and is favored by some regulators as a better measure of a bank's ability to withstand stress. Regulators are also working on a requirement that these banks hold a minimum amount of long-term debt, a separate charge based on a firm's reliance on volatile forms of short-term funding, and a special surcharge agreed upon by international regulators. Read more. (Subscription required.)

COMMENTARY: THE CORKER-WARNER HOUSING REFORM WON'T WORK

The Corker-Warner bill, introduced last week by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.), proposed a new government agency to insure mortgages, but it will only ensure the same loose lending that caused the last financial crisis, according to a commentary in today's Wall Street Journal. The bipartisan bill's intent is to eliminate Fannie Mae and Freddie Mac, the two government-sponsored mortgage giants that cratered in 2008 and were bailed out by taxpayers to the tune of $180 billion. The recent financial crisis was the result of government housing policies. Beginning in 1992, these policies required Fannie and Freddie to lower their underwriting standards so people who otherwise lacked the credit standing or financial resources could purchase homes. Fannie and Freddie could take on the risks of these loans only because of the implicit backing of the federal government. The agency proposed in the Corker-Warner bill will establish a new government agency, the Federal Mortgage Insurance Corp. (FMIC), to insure mortgage-backed securities and wind down Fannie and Freddie. As with Fannie and Freddie, investors in mortgage-backed securities will not have to worry about the quality of the underlying mortgages. A major feature of Corker-Warner is the requirement that the private sector share the insurance risk with the new FMIC. The bill specifies that a private risk-sharer like a bond insurer must take the first losses, no less than 10 percent on any securitized pool of mortgages. This is intended to protect the FMIC against losses, though it works only if the quality of the mortgages remains high. Read the full commentary. (Subscription required.)

NORTH LAS VEGAS EMINENT DOMAIN PROPOSAL FACES PUSHBACK FROM HOMEOWNER

A controversial eminent domain proposal rolled out in North Las Vegas, Nev., to help underwater homeowners with their mortgages is facing pushback from an unlikely party—a homeowner living in the city, Housingwire.com reported yesterday. Gregory Smith sued North Las Vegas, claiming that an eminent domain strategy, proposed locally with the help of consultancy firm Mortgage Resolution Partners (MRP), violates several portions of the U.S. and Nevada State Constitutions. The plan follows a similar pattern that MRP has proposed in other jurisdictions — namely that homeowners who are underwater in the city can be helped by giving local governments the power of eminent domain to seize property rights, thereby allowing officials to grant upside-down borrowers a principal reduction after taking over their loans. In his lawsuit, Smith suggests that this type of intervention into investor property rights violates the Fifth and Fourteenth Amendments of the Constitution, along with various sections of the Nevada Constitution. Furthermore, Smith claims that the proposal disrupts contractual rights granted to all U.S. citizens through the Constitution, as well as the Commerce Clause, which governs interstate commerce. If such a plan were to stick and make it into law, Smith says roughly 5,000 local mortgages would qualify, with MRP targeting loans that are current, underwater and owned by private securitization trusts. This is not the first time MRP has managed to stir up debate in local municipalities: San Bernardino County, Calif., previously debated the strategy before killing off the idea. Read more.

COMMENTARY: WIELDING DERIVATIVES AS A TOOL FOR DECEIT

Derivatives are not always “financial weapons of mass destruction,” as Warren Buffett famously called them, but they are often weapons of mass deception, according to an editorial in Friday's New York Times. Sometimes, banks use derivatives they create to help their clients deceive the public, according to the editorial, and at other times they enable the banks to deceive those clients. The latest revelation of deception by derivatives came in Italian government documents leaked this week to two European newspapers, La Repubblica and The Financial Times. The Financial Times reprted that it appeared as though Italy had used derivatives in the 1990s to allow it to make its budget deficit seem smaller, thus enabling it to qualify for admission to the euro zone. The report added that it appeared that those derivatives, now restructured, might be exposing Italy to a loss of 8 billion euros ($10.4 billion). Such deception by derivatives is hardly new, according to the editorial. Enron used derivatives called “prepaid forward” contracts to hide debt in a way that made corporate cash flow appear better, something the company thought was necessary to impress the bond rating agencies. The banks have done an excellent job, according to the editorial, of persuading the Financial Accounting Standards Board, which sets the rules, not to mess with them. Rather than force the banks to put the assets and liabilities on their balance sheets, as is required in most other countries, the board has proposed additional disclosures that might make it easier to discern the reality. Read the full editorial.

NEW ABI LIVE WEBINAR ON JULY 15 TO FOCUS ON THE § 1111(b) ELECTION, PLAN FEASIBILITY AND CRAMDOWN ISSUES

Utilizing a case study, ABI's panel of experts will explore issues surrounding a lender’s decision on whether or not to make an election under § 1111(b), plan feasibility and voting. The abiLIVE panel will also walk attendees through the necessary mathematical analyses used to analyze these issues. The webinar will take place on July 15 from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE NORTHEAST BANKRUPTCY CONFERENCE ON JULY 12

The next stop for the ABI Golf Tour is the famed Newport National course in Newport, R.I., in conjunction with the Northeast Bankruptcy Conference on July 12. 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

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: MARSHALL V. MARSHALL (IN RE MARSHALL; 9TH CIR.)

Summarized by Lovee Sarenas of the U.S. Bankruptcy Court for the Central District of California

The Ninth Circuit upheld the decision of the district court to affirm three decisions of the bankruptcy court involving the chapter 11 bankruptcy estate of Howard Marshall III and his wife, Ilane, that was appealed by Pierce Marshall. First, the Ninth Circuit held that a party has no due process right to a random assignment of a bankruptcy case absent a showing of bias or partiality by the presiding judge. Thus, assigning the debtor's chapter 11 case to Judge Bufford, who was the presiding judge in the related chapter 11 case of Vickie Marshall, was not an error. The appellate court rendered a broad view of "related cases" as defined under the bankruptcy court's local rule 1015-2(a). The circuit court rejected evidence of bias solely from the bankruptcy judge's adverse decisions in the Vickie Marshall bankruptcy case against Pierce for purposes of 28 USC sec. 455. Without more, the Ninth Circuit opined that decisions based on facts shown or events that took place during the court's decision do not demonstrate bias.

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: FURTHER EXAMINATION OF THE CORKER-WARNER BILL

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post takes a closer look at the bill introduced last week by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.). The post finds that the bill's explicit guarantee of backing of risky mortgages is better than the implicit one Fannie and Freddie had, but a more fundamental approach would be to demand that financial actors internalize and capitalize the risks themselves.

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

Law firms should provide support for law student-staffed bankruptcy clinics for consumer debtors.

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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2013

July
- Northeast Bankruptcy Conference and Northeast Consumer Forum
     July 11-14, 2013 | Newport, R.I.
- abiLIVE Webinar
     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.
- 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
- 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.
- Chicago Consumer Bankruptcy Conference
    Oct. 14, 2013 | Chicago, Ill.

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

SEVEN MILLION STUDENTS BRACE FOR SURGE IN LOAN RATES

Interest rates on student loans subsidized by the government will most likely double to 6.8 percent on July 1, CNNMoney.com reported today. Congress and the White House agree that something should be done to prevent that, but they are having a difficult time hammering out an agreement. The Republican-controlled House passed a bill last week that would stop the rates – lowered by Congress six years ago – from doubling now, but through a mechanism that might allow them to rise later. President Obama vowed to veto it, calling it the "wrong approach." Chances are that about 7 million students taking out subsidized loans for the next school year will face bigger balances when they start paying off their loans after graduation. The rate hike will only affect a third of all undergraduate students who have subsidized loans, in which the federal government absorbs some of the interest rate. The president and House Republicans disagree on how to let students "lock in" their rates from year to year. They also disagree on how to spend any extra revenue that they might make through student loans. Senate Democrats have an entirely different approach that would charge students only what it costs the federal government to make the loans. To pay for the program, Democrats say that Congress could get rid of tax breaks for the oil and gas industry. Read more.

REPORT: HOME PRICES POST LARGEST ANNUAL GAIN IN 7 YEARS

Home prices in March rose by 10.9 percent from a year earlier, the largest such gain in seven years, according to an index tracking home prices in 20 U.S. cities, the Wall Street Journal reported today. Standard & Poor's Case-Shiller index, released today, shows that all 20 cities have posted year-over-year growth for a third straight month, the latest sign of how tight inventories and growing housing demand have led to a surge in home prices after several years of declines. Prices increased in March by 1.4 percent from February and by 0.3 percent in February from January, a period in which sales volumes—and, consequently, home-price growth—are typically muted because of winter weather. Home prices during the first quarter of the year have not increased since 2006, and the first quarter gain of 1.8 percent this year has been the largest first quarter jump since 2005. Read more. (Subscription required.)

FANNIE MAE PROFITING AS MARKET MIDDLEMAN ANGERS LENDERS

Fannie Mae is snatching potential profits away from mortgage lenders and posting record earnings that are fueling industry concerns about the government-backed company, Bloomberg News reported yesterday. The company has ramped up its purchases of home loans from lenders for cash, in the process cutting out originators from the more profitable business of creating and selling bonds backed by the debt. About 31 percent of the $305 billion in new Fannie Mae-guaranteed securities in the first four months of this year were tied to so-called cash-window purchases, almost triple the shares from early 2011, according to data compiled by Bloomberg and JPMorgan Chase & Co. analyst estimates. The shift is morphing Fannie Mae into more of a middleman between homeowners and the bond market, a role typically played by originators or the larger banks that buy their loans, such as JPMorgan and Wells Fargo & Co. Read more.

VISA, MASTERCARD SUE INTERCHANGE-FEE SETTLEMENT DROP-OUTS

Visa Inc. and MasterCard Inc. sued trade groups and retailers that rejected a $7.25 billion settlement in a price-fixing suit and asked a court to rule that the card companies’ fee practices were not illegal, Bloomberg News reported on Saturday. The settlement, described by plaintiffs in that case as the largest in an antitrust lawsuit, would end an eight-year legal battle over the swipe, or interchange, fees charged to merchants when customers use credit cards to pay. The plaintiffs accused Visa and MasterCard, the two largest U.S. payment-card firms, of illegally fixing the fees. Visa, MasterCard and several banks said in a complaint filed on Friday in a federal court that their suit is “necessary to prevent the continuation of endless, wasteful litigation.” They seek to bar the trade groups and retailers from seeking antitrust damages for the fee practices. Read more.

TOMORROW’S ABI LIVE WEBINAR WILL FOCUS ON CLASS ACTIONS IN BOTH BUSINESS AND CONSUMER CASES

Class action lawsuits in both chapter 11 and 13 cases are becoming more prevalent. Are you wondering whether your clients’ WARN Act claims would be better pursued against a debtor company in a class action adversary proceeding or in a class proof of claim, or both? If your client has been sued in a debtor’s consumer class action adversary proceeding, do you know the best defenses against class certification? ABI's panel of experts will highlight the case law and explore the potential benefits and pitfalls of class actions by creditors against debtor companies in chapter 11 cases and by debtors/trustees against creditors in chapter 13 cases on May 29 from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

ASSOCIATES: ABI'S NUTS & BOLTS ONLINE PROGRAMS HELP YOU HONE YOUR SKILLS WHILE SAVING ON CLE!

Associates looking to sharpen their bankruptcy knowledge should take advantage of ABI's special offer of combining general, business or consumer Nuts & Bolts online programs. Each program features an outstanding faculty of judges and practitioners explaining the fundamentals of bankruptcy, offering procedures and strategies tailored for both consumer and business attorneys. Click here to get the CLE you need at a great low price!

ABI GOLF TOUR UNDERWAY; NEXT STOP IS CENTRAL STATES BANKRUPTCY WORKSHOP IN JUNE

Rob Schwartz and Scott Gautier are tied at 34 Stableford Points atop the closely bunched leaderboard after the ABI's Golf Tour's first stop at Lake Presidential Golf Club. Next up for the Tour is the famed Bear course at the Grand Traverse Resort at the Central States Bankruptcy Workshop on June 14. Final scoring to win the Great American Cup—sponsored by Great American Group—is based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! There's no charge to register or participate in the Tour, and women are most welcome.

ABI MEMBERS WELCOME TO ATTEND INSOL'S LATIN AMERICAN REGIONAL SEMINAR ON JUNE 13 IN SAO PAULO

ABI members are encouraged to attend INSOL’s Latin American regional seminar in São Paulo, Brazil, on June 13. The one-day seminar has been organized by INSOL in association with TMA Brasil to cover current cross-border insolvency and restructuring topics. The seminar is designed to be interactive and to allow the attendees to discuss and debate about practical issues with speakers who are leading players in the insolvency and restructuring field and with experience in insolvency proceedings involving different countries. The seminar will benefit from simultaneous translation in English, Portuguese and Spanish. For more information and to register, please click here.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: SMITH V. SA CHALLENGER INC. (IN RE WEST COAST REAL ESTATE & MORTGAGE INC.; 9TH CIR.)

Summarized by Laury Macauley of Lewis and Roca LLP

In an unpublished decision, the Bankruptcy Appellate Panel for the Ninth Circuit vacated and remanded orders of the bankruptcy court granting sanctions against the chapter 11 debtor and certain related individuals for reimbursement of a secured creditor's attorneys' fees, because the court had not indicated on the record how it had determined the sanction amount of $20,000 under the "lodestar approach." The BAP affirmed the bankruptcy court's denial of a request for sanctions to the extent that they were based on "missing rents" that were allegedly never received by the secured creditor after a bad-faith transfer of the subject property by the sanctioned parties. The BAP determined that the bankruptcy court had not abused its discretion and could have reasonably concluded that the secured creditor had not made a strong enough showing to justify the larger sanction award based on the "missing rents."

There are nearly 900 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: MANDATING CEO-CHAIRMAN DIVISION AT TOO-BIG-TO FAIL BANKS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post suggests that regulatory proposals to ensure good governance at too-big-to-fail banks include the division of the CEO and chairman positions.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Bankruptcy courts should implement constructive trusts in any case where applicable state law would recognize them.

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

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

2013

May
- 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
- Charity Golf Tournament
     June 14, 2013 | City of Industry, Calif.

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.
- 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.
- Bankruptcy 2013: Views from the Bench
    Sept. 27, 2013 | Washington, D.C.

October
- ABI Endowment Football Game
    Oct. 6, 2013 | Miami, Fla.

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

REPORT: SHARP DROP IN U.S. HOMES LOST TO FORECLOSURE IN FEBRUARY

Though the nation's foreclosure woes persist, new data from RealtyTrac Inc. show they are easing amid a resurgent housing market, rising home prices and efforts by some states to buy homeowners more time to avoid losing their homes, the Associated Press reported today. The number of U.S. homes repossessed by lenders last month fell 11 percent from January and declined 29 percent from February last year, tumbling to the lowest level since September 2007, RealtyTrac said today. Some states continued to see sharp increases in homes lost to foreclosure last month, including Washington, Wisconsin and Iowa. But home repossessions declined both on an annual and monthly basis in a majority of states, including past foreclosure hotbeds such as California, Georgia and Arizona. All told, 45,038 U.S. homes completed the foreclosure process in February, less than half of the 102,000 homes lost to foreclosure in March 2010, when home repossessions peaked, according to the firm's records, which go back to January 2005. Read more.

COMMENTARY: FANNIE, FREDDIE AND THE GOVERNMENT'S HOUSE OF CARDS

The nascent housing price recovery is restoring health to Fannie Mae and Freddie Mac, the two government-sponsored enterprises that contributed so much to the crash of 2008, according to a commentary in today's Wall Street Journal. Both had earnings in 2012 and thus will not need money from the U.S. Treasury to cover operating losses, which is in contrast to the preceding three years when they cost the taxpayers over $180 billion. When Fannie and Freddie were losing money, Congress had a strong incentive to privatize or liquidate them, according to the commentary. The Obama administration proposed three options, the third of which was to restore them to the public-private status that fueled their rapid expansion in the late 1990s and early 2000s—and contributed to their downfall. Now that these GSEs promise to become cash cows able to palliate the government's budgetary distress, the government's talk about "resolving" them is more subdued, according to the commentary. The latest monthly Federal Reserve survey reported that "home prices rose amid falling inventories across much of the country." The GSEs' business in mortgage-backed securities is thriving, with Fannie having issued $865.5 billion of these instruments in 2012. The disturbing thing about this rosy scenario is that the entire home mortgage industry—not only Fannie and Freddie—has been effectively nationalized, according to the commentary. Read more. (Subscription required.)

ANALYSIS: AFTER FINANCIAL CRISIS, PROSECUTORS NAVIGATE TRICKY WATERS

Despite the recent political finger-pointing, the fact remains that few executives have been held responsible for when their companies engaged in misconduct, the New York Times DealBook blog reported yesterday. Despite the fear of charging a large bank with a crime, the Justice Department has tried to show its mettle recently in cases involving the manipulation of the London interbank offered rate (Libor). Its solution to the problem has involved having foreign subsidiaries of global banks plead guilty to a charge, rather than the whole entity. At a Senate Banking Committee hearing, Treasury Undersecretary David S. Cohen acknowledged that regulators had not aggressively pursued the individuals "who are responsible for the conduct that has resulted in fines and penalties against the institution itself." Although a few lower-level traders have been charged, the settlements involving large banks over Libor manipulation have not involved any real costs to senior executives, and HSBC’s money-laundering case involved neither a corporate guilty plea nor any direct action against the individuals responsible for long-running practices. Read more.

JOBLESS CLAIMS AT FIVE-YEAR LOW

A measure of jobless claims widely followed by economists fell to a five-year low, the latest sign that the labor market is slowly improving, the Wall Street Journal reported today. The four-week moving average of jobless claims, which smooths out weekly volatility in new unemployment claims, sank to 346,750, the lowest level since March 2008, the Labor Department said today. Meanwhile, the weekly number of U.S. workers filing new applications for benefits fell more than economists forecast, declining by 10,000 to a seasonally adjusted 332,000 for the week ended March 9. The Labor Department reported last week that employers added 236,000 jobs in February while the unemployment rate moved down to a four-year low of 7.7 percent. Read more. (Subscription required.)

CONSUMER SPENDING INCREASED IN FEBRUARY

The Commerce Department reported yesterday that retail sales rose 1.1 percent in February from the prior month, seasonally adjusted, thanks in large part to robust gains for cars and building materials and at Internet stores, the Los Angeles Times reported today. Consumers did feel the pinch from higher fuel prices; sales at gasoline stations jumped 5 percent last month from January. After excluding consumer spending for gas and cars, so-called core retail sales increased 0.4 percent in February, and this measure was revised up to 0.3 percent for January from the previously estimated 0.1 percent. Car and home sales are benefiting from pent-up demand as well as low interest rates, and that is supporting business at other retailers. Sales at building material and garden supply stores rose 1.1 percent in February from the prior month. Read more.

For more on consumer spending, be sure to visit yesterday’s post on ABI’s Chart of the Day.

IPHONE AND IPAD USERS: THE ABI JOURNAL APP IS AVAILABLE NOW!

The wait is over! With the new ABI Journal iPad app, sponsored by KCC, each new issue will be sent automatically to your device, ready to read at your convenience. Download the app for free from the Apple iTunes store (link below) to your iPad and/or iPhone. Once it's installed, open the app and you will be prompted to log in (see below). (You only have to provide this information once, then the app will recognize you each time you open it.)

Each available issue will show up automatically in the onscreen library. Simply download the issue you wish to read and access it anytime, even when you're not connected to the Internet. With the app, you can:

• take notes or leave comments
• share individual pages to social media
• bookmark favorite pages
• search for key phrases in all online issues

Unlock the power of this terrific new app* today. Download the app here.

USERNAME: Your email address (it must be the one that ABI has on file for you)
PASSWORD: abijournal

*The app is not available for Android devices at this time.
Go to journal.abi.org to access ABI Journal archives, submission guidelines and more!

LATEST BLOOMBERG "BILL ON BANKRUPTCY" VIDEO: HOW PURCHASERS OF AMR STOCK MADE A KILLING

Someone who bought stock in American Airlines last year already made a killing. Stock that could have been bought in November for less than 40 cents a share is now trading above $4, for reasons explained on the video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. Click here to watch.

DON'T MISS ABC'S FREE EVENT, "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

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: VASSALLE V. MIDLAND FUNDING LLC (6TH CIR.)

Summarized by Jim Morgan of the Enterprise Law Group

The Sixth Circuit Court of Appeals reversed the decision of the U.S. District Court for the Northern District of Ohio approving a class action settlement and certifying a nationwide class. The Sixth Circuit found that the settlement was not fair or reasonable because it provided preferential treatment to the class representatives and only perfunctory relief to the unnamed class members. The Sixth Circuit further held that class certification was inappropriate because the class representatives were inadequate and that a class action was not a superior method of resolving the controversy.

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: BIG BANKS SHOULD BREAK UP VOLUNTARILY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post said that megabanks may be able to fight off regulatory forces demanding their corporate downsizing, but a voluntary break up may be the only way to sway public opinion their way.

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

As a result of the RadLAX decision, the right to credit-bid will likely chill bidding at auctions, as potential purchasers may be dissuaded from participating in the bidding process.

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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2013

March
- Bankruptcy Battleground West
     March 22, 2013 | Los Angeles, Calif.

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.

VALIDITY OF CFPB AT STAKE IN LEGAL CHALLENGE

A law firm sued by the Consumer Financial Protection Bureau (CFPB) over its treatment of struggling homeowners may be the first to contest the validity of Richard Cordray's status as the agency's director after a D.C. Circuit ruling invalidating three presidential appointees installed as recess appointments, Bloomberg News reported today. Gary Kurtz, a lawyer representing the Gordon Law Firm of Los Angeles, said that he sent a letter on Jan. 29 to the Bureau asking for a negotiated settlement of the six-month-old case in light of a federal court ruling that declared unconstitutional so-called recess appointments similar to Cordray's. Absent a settlement with Gordon, the Bureau risks a court challenge that could become a test case for its authority in the wake of its recess-appointment ruling. In its July 17 complaint against the firm, the CFPB said that Gordon took up-front fees to help homeowners facing foreclosure, then did "little or nothing" for them. White House Press Secretary Jay Carney said last week that the court ruling has no bearing on the CFPB. Read more.

REPORT: 2012 FORECLOSURES UP IN 57 PERCENT OF U.S. METRO AREAS

RealtyTrac reported today that U.S. foreclosure activity last year increased on an annual basis in 57 percent of the nation's metropolitan areas with a population of 200,000 or more, MarketWatch.com reported today. However, foreclosure activity during 2012 decreased from 2010, when foreclosures peaked in most markets, in 85 percent of the 212 markets tracked in the report. The report found that foreclosure activity last year fell in 12 of the U.S.'s 20 largest metropolitan areas, with the biggest declines in Phoenix, San Francisco and Detroit. Despite double-digit percentage decreases in foreclosure activity in 2012 from the prior year, California cities accounted for the four highest metro foreclosure rates, according to the report. Florida cities made up eight of the 20 highest metro foreclosure rates. Read more.

ANALYSIS: POST-LEHMAN, THE PUSH FOR GLOBAL FINANCIAL PROTECTION STALLS

Five years after the collapse of Lehman Brothers, a global push to tighten financial regulation around the world has slowed in the face of a tepid recovery and a tough industry lobbying effort, the Washington Post reported yesterday. Important progress has been made as banks in the United States and Europe have socked away capital to guard against a fresh economic downturn, and evolving rules may force them to split off some of their riskier operations. But the post-Lehman goal -- of a global scheme that would immunize the financial system from another large-scale shock -- remains incomplete. Big banks, insurers and other financial giants remain intact and "too big too fail" by some experts' arguments. Tools to guard against dangerous bubbles in the value of property or other assets are not yet in place, and there is no agreement on how countries should coordinate the failure of a globally important financial company. Implementation of basic banking rules in major nations has fallen behind schedule. Finishing the job "is going to take many years," International Monetary Fund chief economist Olivier Blanchard said last week. "It is conceptually very difficult, politically very difficult." Read more.

SENATORS QUESTION U.S. PENALTIES AGAINST WALL STREET BANKS AS TOO SOFT

A bipartisan pair of lawmakers on Tuesday questioned the Justice Department's prosecution of large financial institutions, raising concerns that recent settlements have fallen short of holding Wall Street accountable for wrongdoing, the Washington Post reported yesterday. Sens. Sherrod Brown (D-Ohio) and Charles E. Grassley (R-Iowa) sent a letter to Attorney General Eric H. Holder Jr. asking for a detailed explanation of the department's procedures for going after financial crime. Penalties in settlements have been disproportionately low relative to company profits and the costs imposed on consumers, investors and the market, they said. "The nature of these settlements has fostered concerns that 'too big to fail' Wall Street banks enjoy a favored status, in statute and in enforcement policy," the senators wrote in the letter. Critics say multimillion-dollar fines imposed on mega­banks are tantamount to a slap on the wrist as long as no senior executives are behind bars. Prosecutors, however, contend that they must be prudent in doling out justice so as not to cripple institutions whose failure could jeopardize the stability of the financial markets. Read more.

BLOOMBERG'S LATEST "BILL ON BANKRUPTCY” VIDEO: JUNK DEBT INTEREST RATES AT 30-YEAR LOW

Interest rates for junk debt reached a 30-year low in the last week, as Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle discuss on their new video. Click here to watch.

NOW AVAILABLE FOR PRE-ORDER FROM ABI'S BOOKSTORE: A PRACTICAL GUIDE TO BANKRUPTCY VALUATION

ABI's latest title, A Practical Guide to Bankruptcy Valuation, helps both practitioners and students navigate the complex task of valuing a bankrupt or other financially distressed business, and provides practical guidance on the selection and application of valuation approaches, methods and procedures. Interspersed with helpful charts and hypothetical examples (some based on real cases), the book describes the generally accepted approaches for valuing the assets and securities of a financially troubled business. Written by Robert F. Reilly of Willamette Management Associates, Inc. (Chicago) and Dr. Israel Shaked of The Michel-Shaked Group (Boston), who have a combined 75 years of experience in the valuation field, A Practical Guide to Bankruptcy Valuation lays a solid foundation for those seeking a better understanding of valuation within the bankruptcy context. Click here to pre-order your copy today!

LAW FIRM BANKRUPTCIES AMONG TOPICS TO BE EXAMINED AT ABI'S 31ST ANNUAL SPRING MEETING

The 2013 Annual Spring Meeting, to be held April 18-21, 2013, at the Gaylord National Resort and Convention Center in National Harbor, Md., 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!

Register today!

ABI IN-DEPTH

ABI LIVE WEBINAR: REVISITING RADLAX AND HALL – NEW LEGAL AND PRACTICAL IMPACT OF THE DECISIONS

See why this was the top-rated panel at the ABI Winter Leadership Conference last month! Join the expert panel on Feb. 19 from 12:00-1:15pm EST as the summarize and discuss the legal impact and practical implications of the Supreme Court’s 2012 decisions in Radlax and Hall. Participants include:

• Susan M. Freeman of Lewis and Roca LLP (Phoenix)

• Adam A. Lewis of Morrison & Foerster LLP (San Francisco)

• Prof. Charles J. Tabb of the University of Illinois College of Law (Champaign, Ill.)

• Eric E. Walker of Perkins Coie LLP (Chicago)

Click here to register!

DON'T MISS THE 9TH ANNUAL WHARTON RESTRUCTURING AND DISTRESSED INVESTING CONFERENCE ON FEB. 22!

The University of Pennsylvania's Wharton School of Business will be holding the 9th Annual Wharton Restructuring and Distressed Investing Conference on Feb. 22 at the Hyatt at The Bellevue in Philadelphia. The theme of this year's conference is “Health of Nations: Distress, Recovery or Revival?” It will offer a unique opportunity to hear from a distinguished gathering of keynote speakers and panelists in their discussion of the current economic climate and issues of debt, investing, and restructuring across the globe. To register, please click here.

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: IN RE PORAYKO (7TH CIR.)

Summarized by George Spathis of Horwood Marcus & Berk

A recent ruling by the Seventh Circuit found that a checking account constitutes "personal property" that remains within the "control" of the account's holder, and therefore is subject to a citation lien under Illinois law.

There are more than 750 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: WILL THE PAYDAY LOAN BE REINVENTED?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. While several tech startups have made short-term credit the focus of their business models, a recent post asks whether such a previously frowned-upon product could ever achieve mainstream acceptance.

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

After Stern, bankruptcy courts do not have the constitutional authority to enter final judgments on fraudulent conveyance claims.

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.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

2013

February
- Caribbean Insolvency Symposium
     February 7-9, 2013 | Miami, Fla.
- ABI Live Webinar: Revisiting RadLAX and Hall- New Legal and Practical Impact of the Decisions
     February 19, 2013
- VALCON 2013
     February 20-22, 2013 | Las Vegas, Nev.
- 9th Annual Wharton
Restructuring and Distressed Investing Conference
     February 22, 2013 | Philadelphia, Pa.

March
- 37th Annual Alexander L. Paskay Seminar on Bankruptcy Law and Practice
     March 7-9, 2013 | St. Petersburg, Fla.
- Bankruptcy Battleground West
     March 22, 2013 | Los Angeles, Calif.

April
- "Nuts and Bolts" Program at ASM
     April 18, 2013 | National Harbor, Md.
- Annual Spring Meeting
     April 18-21, 2013 | National Harbor, Md.

May
- New York City Bankruptcy Conference
     May 16, 2013 | New York, N.Y.