U.S. Economy Grows at 3.1% Pace in Third Quarter, an Upgrade from Previous Estimate​​​

The American economy grew at a healthy 3.1% annual clip from July through September, propelled by vigorous consumer spending and an uptick in exports, the government said in an upgrade to its previous estimate, the Associated Press reported. Third-quarter growth in U.S. gross domestic product — the economy's output of goods and services — accelerated from the April-July rate of 3% and continued to look sturdy despite high interest rates, the Commerce Department said Thursday. GDP growth has now topped 2% in eight of the last nine quarters. Consumer spending, which accounts for about two-thirds of U.S. economic activity, expanded at a 3.7% pace, fastest since the first quarter of 2023 and an uptick from Commerce’s previous third-quarter estimate of 3.5%. Exports climbed 9.6%. Business investment grew a lackluster 0.8%, but investment in equipment expanded 10.8%. Spending and investment by the federal government jumped 8.9%, including a 13.9% surge in defense spending. Read more.

Fed Signals Plan to Slow Interest Rate Cuts​​​

The Federal Reserve signaled greater doubt over how much it would continue to cut interest rates after agreeing to a reduction on Wednesday that Chair Jerome Powell conceded had been a close call, the Wall Street Journal reported. “Today was a closer call, but we decided it was the right call,” Powell said at a news conference after the meeting. He later added, “From here, it’s a new phase, and we’re going to be cautious about further cuts.” New projections released Wednesday show Fed officials expect inflation to be stickier next year than previously anticipated, possibly because of policy changes by President-elect Donald Trump. The projections show officials expect to make fewer rate reductions, with most penciling in two cuts for 2025, down from four at their meeting in September. Inflation has declined notably since the middle of 2023, but the slowdown in price growth has been uneven at times, including in the past two months. Based on the Fed’s preferred inflation gauge, so-called core prices that exclude volatile food and energy items rose 2.8% for the year ended in October. Officials expect those prices to rise by 2.5% next year, up from their expectations just a few months ago for 2.2%. Powell said recent data, and not just potential policy shifts, warranted a change in the inflation forecast. The labor market has also been a little sturdier than officials thought it would be when they started cutting in September. The latest cut, approved by 11 of 12 Fed voters, will lower the central bank’s benchmark federal-funds rate to a range between 4.25% and 4.5%, a two-year low. It marks the third reduction in a row and leaves the rate a full percentage point below where it stood before September. (Subscription required.). Read more.

Subchapter V Experiences to Share? ABI Wants to Hear from You!

ABI is continuing its study of Subchapter V, and it needs your help! We are particularly interested in learning more about the real-world impact of Subchapter V. So our question is, do you have a story about a distressed business or creditor who has used or benefited from the subchapter? If so, could that case still happen under the lower debt cap for Subchapter V debtors? Any and all responses are welcome. Submit your story at https://abi.org/subvstories.
 

Weekly Unemployment Claims Decreased in Latest Report​​​

The number of Americans filing new applications for jobless benefits fell more than expected last week, reversing the prior week's jump and suggesting that a gradual labor market slowdown remained in place, Reuters reported. Initial claims for state unemployment benefits dropped 22,000 to a seasonally adjusted 220,000 for the week ended Dec. 14, the Labor Department said. They had jumped 17,000 in the prior week. Claims have entered a period of volatility, which could see large swings in the data. Unadjusted claims plunged 57,932 to 251,527 last week, pulled down by large decreases in New York, California, Georgia, Illinois, Michigan, Minnesota, Texas, Washington state, Wisconsin, New Jersey and Ohio. A range of indicators, including job openings, suggests that conditions are much looser than they were before the COVID-19 pandemic, but the labor market is slowing in an orderly fashion. Read more.

Short-Term Loans Get Just What They Need: A Long-Term Commitment​​​

It may be no surprise that people are eager to put off paying in full for their holiday shopping. But who would want to fund that? Increasingly, there is an answer: private credit, the Wall Street Journal reported. Buy now, pay later provider Affirm last week announced a $4 billion commitment for lending from investment firm Sixth Street. Because loans used to pay for individual purchases are relatively short term, and thus turn over quickly, that sum can fund more than $20 billion worth of Affirm volume over the next three years. So while the structure of the deal might be complex, it is a straightforward illustration of how both of these businesses are evolving, and are likely to continue to move ahead in 2025. For private credit, what might look like a market niche will continue to bleed into the wider world of banking. Via what is termed asset-based finance, private-credit managers are increasingly in the mainstream of the kinds of lending that banks or the securitization markets have long dominated. Those managers can be backed by the money of big institutions such as sovereign-wealth funds or pension funds, pools of insurance money or even the retirements of individuals. Sixth Street itself earlier this year led a consortium to acquire GreenSky, another consumer lending business, from Goldman Sachs. (Subscription required.) Read more.

With Sports Gambling Surging, Federal Regulation Is Discussed​​​

A Senate committee discussed the potential for federal regulation of sports gambling during a nearly two-hour hearing on Tuesday that focused on how the industry’s widespread legalization across the U.S. was affecting athletes, the general public and the integrity of amateur and professional sports. Senate Judiciary Committee chair Richard J. Durbin (D-Ill.) said that sports betting had become a public health issue since a Supreme Court decision in 2018 overturned a federal law that had effectively banned the practice outside Nevada. Sports betting is now legal in 38 states and the District of Columbia, with Missouri set to become the 39th state in 2025. This was the first Senate hearing focused on the possibility of national regulations for the $10 billion sports betting industry. “I think there is a feeling on both sides of the table that we need to address this,” Mr. Durbin said. That these issues were being debated by one of the most powerful Senate committees, albeit during a lame-duck session, speaks to the rapid rise of the sports betting industry in the United States. Its exponential growth over the last six years has surprised even people in the gambling industry, and public officials are grappling with how to catch up. Americans legally wagered more than $30 billion on sports in the last quarter, according to the American Gaming Association, the industry’s trade organization. The National Council on Problem Gambling also estimates that 2.5 million adults each year may have a severe gambling problem, and that five million to eight million additional people have mild or moderate gambling problems. Read more.

CFPB Report Finds Mortgage Companies Create Obstacles for Homeowners After Death or Divorce​​​

The Consumer Financial Protection Bureau (CFPB) issued a report on Tuesday on the experiences of homeowners dealing with their mortgage company after divorce or the death of an original borrower, according to a CFPB press release. Many homeowners report that their servicers push them to take on new, higher-interest loans instead of keeping their existing mortgage. Homeowners also report recurring requests from servicers for the same or updated documents extending over months and sometimes years, at the same time they are dealing with the death of a loved one or a divorce. Domestic violence survivors face additional challenges, including mortgage companies continuing to send critical mortgage information to the abuser and thus putting the survivor’s safety at risk. Servicers generally blame investor requirements, processing volumes, or “systems issues,” rather than taking responsibility for their shoddy customer service. Based on its review of consumer complaints, the CFPB has identified multiple areas of concern, including:

- Pressure to take out higher-interest loans: Homeowners report servicers telling them they must refinance their mortgages at today's higher interest rates even though federal mortgage guidelines allow them to maintain the existing loan terms.
- Repeated delays and paperwork requests: Many homeowners report waiting months or even years for servicers to process their paperwork, with some reporting that servicers repeatedly request the same documentation or fail to respond to inquiries.
- Refusals to release the original borrower from liability: Some homeowners report that servicers are denying their requests to remove the original borrower from the mortgage, even when the successor homeowner has been making all payments on the mortgage for years.
- Risks to domestic violence survivors: Survivors of domestic violence have reported that servicers continue sending account information to their abusers and require their abusers' consent for account changes, potentially creating safety threats.

Click here to read the full report.

Report: Losses from Crypto Hacks Jump to $2.2 Billion in 2024​​​

Funds stolen by hacking cryptocurrency platforms surged 21% from a year ago to $2.2 billion in 2024, a report from blockchain analysis firm Chainalysis showed on Thursday, Reuters reported. The hacking amount exceeded $1 billion for the fourth straight year and the number of incidents rose to 303 from 282 in 2023, it said. Hackers had stolen $1.8 billion in 2023. The rise in crypto heists comes as bitcoin (BTC-USD) jumped 140% this year to surpass the $100,000 mark, drawing institutional participation and backing from U.S. President-elect Donald Trump. "As the digital asset market booms, it is typical to see the illicit use of crypto grow in tandem," Chainalysis' cybercrimes research lead Eric Jardine said. Compromises to private keys that control access to users' assets accounted for the majority of stolen crypto this year with most of the attacks targeting centralized platforms, the report said. Read more.

Tenth Circuit Accepting Applications for Bankruptcy Judge Vacancy in Utah​​​

The U.S. Court of Appeals for the Tenth Circuit is seeking applications for a bankruptcy judgeship in the District of Utah. Bankruptcy judges are appointed to 14-year terms pursuant to 28 U.S.C. § 152. The position is located in Salt Lake City and will be available July 1, 2025, pending successful completion of a background investigation. The current annual salary is $223,836. Go to https://ca10.uscourts.gov/hr/jobs to view the position requirements and download the application. The deadline for applications is Wednesday, January 22, 2025.

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Have an Idea for a Topic for an ABI Conference Session? Submit Your Proposal via ABI’s “Call for Abstracts” Page!​​​

ABI has launched an online portal for professionals to submit proposals for educational sessions at future ABI conferences. Submitters can describe their proposed topic, outline the session’s focus and learning goals, suggest speakers, and provide contact information via the portal’s detailed form. The portal can be accessed here.

All submissions will be reviewed by an internal Education Committee, which will contact the submitter to ask questions as needed and to discuss the status of the proposal. Submissions will be reviewed on a rolling basis.

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