ABI President Ted Gavin Discusses Formation of ABI Task Force on Veterans Affairs



At ABI's Annual Spring Meeting last month in Washington, D.C., ABI President Ted Gavin of Gavin/Solmonese LLC (Wilmington, Del.) announced the formation of the ABI Task Force on Veterans Affairs. Gavin provided more information on the Task Force in the May edition of the ABI Journal and in a recent op/ed in the Petition blog. “Led by Past ABI Presidents John W. Ames of Bingham Greenebaum Doll LLP and John D. Penn of Perkins Coie LLP with former two-time ABI Resident Scholar Jack F. Williams of Baker Tilly/Georgia State University, this group will examine areas in which the bankruptcy system treats veterans and service members differently from civilians and will make recommendations as to how the Bankruptcy Code, Bankruptcy Rules or systemic practice can be changed to ensure that veterans and service members are not subject to worse outcomes than those who did not serve,” Gavin wrote in the "President's Column" in the May ABI Journal.



 

GAO Highlights Puerto Rico Debt Crisis Causes, Possible Steps



The Government Accountability Office released a report yesterday that said that Puerto Rico's debt crisis was caused by inadequate financial management and oversight, poor policy decisions including pension underfunding and high levels of debt issuance, and prolonged economic contraction, Pensions & Investments reported. While the report did not make specific recommendations, it identified three potential federal actions to help address the factors covered in the report. Puerto Rico has been using debt to finance its deficits partly because of high demand for its bonds, which have more favorable tax treatment than other states. To that end, GAO experts suggested modifying their tax-exempt status by making interest income subject to state and local taxes. A second suggestion is to apply federal investor protections laws so that there is greater disclosure of the risks with those bonds. A third suggestion is to modify the Securities and Exchange Commission's authority over municipal bond disclosure requirements to allow for timely disclosure of audited financial statements and other materials to help investors "make informed decisions," the report said.

House Passes Bill Aimed at Helping Employees Buy Out Their Employers



H.R. 5236, the "Main Street Employee Ownership Act of 2018," which is aimed at providing financing for employees to purchase ownership in their companies, passed the House on Monday, the Washington Post reported. The bill, which has a Senate companion, would provide $500 million in support for employee stock ownership plans as well as for updating the Small Business Administration’s lending practices so that the SBA can better help employee groups get the assistance and financing they need to purchase ownership in their companies. “Supporting employee-owned businesses constitutes a great jobs policy,” said J. Michael Keeling, president of the ESOP Association, an advocacy group for employee stock ownership plans. “These companies are 7.3 times more likely to retain workers than conventionally owned firms.”



 

Analysis: Pension Funds Still Making Promises They Probably Can’t Keep



The value of investments by public pension funds declined last quarter, widening the gap between what these funds say they will earn and what they actually make, the Wall Street Journal reported. Pension funds across the U.S. must each year estimate how much they expect to earn on investments, a projection that determines the amount the government that is affiliated with the pension fund must pay into it. Robust returns reduce the need for government support. But forecasts don’t always square with funds’ actual experience. Retirement plans across the country still project that their investments will increase at a median annual rate of 7.25 percent, according to Wilshire Consulting, an adviser to pension funds. Yearly returns on public pension plans have returned a median 6.79 percent over the past decade and 6.49 percent over the past 20 years, according to Wilshire Trust Universe Comparison Service, a database. Unlike corporations, public pensions have wide latitude in projecting investment returns.

Should the Fed Create ‘FedCoin’ to Rival Bitcoin? A Former Top Official Says ‘Maybe’



If cryptocurrency and blockchain technology really are the future of money, the world’s central banks need to get involved, a former Fed governor argues, the New York Times reported. “Most central banks have a view that these crypto-assets are clever, like guys in the garage did it and it’s kind of cool, or risky,” given the potential investor losses and widespread fraud, said Kevin Warsh, who was a governor at the Fed from 2006-11 and was a top contender to become its chairman late last year when President Trump instead appointed Jerome Powell. He added that blockchain technology, which allows reliable, decentralized record-keeping of transactions, could be useful in the payment systems operated by the Fed, which enable the transfer of trillions of dollars between banks. “It strikes me that a central bank digital currency might have a role to play there,” said Warsh. Some central banks are already doing work in this vein, including the Monetary Authority of Singapore and the Bank of England. And Powell acknowledged the potential applications in his confirmation hearing for the Fed chairmanship in November, saying, “We actually look at blockchain as something that may have significant applications in the wholesale payments part of the economy.”

Nominations Now Being Accepted for the 2018 Class of ABI's “40 Under 40” Program!



Nominations are now open for ABI's “40 Under 40” program. This program recognizes outstanding young insolvency professionals who are driven by success, motivated by challenges and are role models for their peers. If you are, or know of, a dynamic insolvency professional who is committed to growth and excellence both professionally and in your community, this is one opportunity not to be missed! Visit the website for additional details on nominations and applications.

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