Analysis: Credit Card Debt Is Up — and It’s Taking Longer to Pay Down ​​​

From fuel and groceries to hotels and airline tickets, consumers are putting more purchases on credit cards — and taking longer to pay them off, the Wall Street Journal reported. The four biggest U.S. banks reported higher credit card spending in 2023 compared with the previous year. In fact, since 2020, credit card spending has steadily increased at three of the four. The exception is Citigroup, where credit card spending hit a recent peak in 2021. At JPMorgan Chase, the nation’s largest bank, credit card spending was up 9% in 2023 to $1.2 trillion. At Wells Fargo, spending was up 15%. Customers also aren’t paying off their charges as quickly as they used to. Credit card loans, or unpaid balances on accounts, jumped 14% at JPMorgan compared with a year earlier and 9% at Bank of America. Credit card loans were also up at Citigroup and Wells Fargo. In the aggregate, credit card loans at the four banks grew faster than spending in 2023. The unpaid balances also surpassed 2019 levels for the first time, showing that consumers are putting more purchases on cards and taking longer to pay off their bills than they were before the pandemic. Read more. (Subscription required.) 
 

Applications for Jobless Benefits Increase, but Layoffs Remain at Historically Low Levels​​​

More Americans filed jobless benefits last week, but layoffs remain at historically low levels despite elevated interest rates and a flurry of job cuts in the media and technology sectors, the Associated Press reported. Applications for unemployment benefits rose to 214,000 for the week ending Jan. 20, an increase of 25,000 from the previous week, the Labor Department reported today. The four-week average of claims, a less volatile measure, fell by 1,500 to 202,250. Though layoffs remain at low levels, there has been an uptick in job cuts recently across technology and media. Overall, 1.83 million Americans were collecting jobless benefits during the week that ended Jan. 13, an increase of 27,000 from the previous week. Read more.

SEC Wants Some Banks to Disclose More on Commercial Real Estate Exposure​​​

The Securities and Exchange Commission is questioning some community and regional banks about their exposure to commercial real estate in their loan portfolios, as potential losses on the loans could spur them to further cut lending, the Wall Street Journal reported. The SEC released four letter exchanges in the past week or so in which it questioned smaller financial firms about their CRE exposure in loan portfolios. The SEC last year sent letters to banks to request more clarity in their disclosures around the potential consequences from the failures of First Republic Bank, Silicon Valley Bank and Signature Bank. Banks are falling under the regulator’s spotlight increasingly around the effects of the CRE credit crunch, which threatens to trigger failure for banks highly concentrated in property debt. Rising interest rates and high vacancies have pushed the commercial-property sector into a tailspin, as lending shrinks and borrowers face a record amount of looming maturities and the prospect of defaults. Small and medium-sized banks originated loans on many commercial buildings, meaning they could face losses for years. Many lenders are evaluating any possible impacts to their property-loan portfolios and the loans they make to other real-estate creditors. Financial regulators are watching whether the CRE losses will bleed into the broader financial system, echoing aspects of the 2008-09 financial crisis. (Subscription required.) Read more. 

ABI will be presenting a program that will address CRE exposure: the 2024 Distressed Real Estate Symposium, to be held April 30-May 2 in Ojai, Calif. Information and registration will be posted soon at abi.org/events.
 

FINRA Says 70% of Crypto Communications It Reviewed Violated Rules​​​

A top watchdog overseeing brokerage firms and exchange markets says that 70 percent of communications about crypto may have violated its rules to be fair and balanced with the public, The Block reported. The Financial Industry Regulatory Authority (FINRA) found some common themes in a sweep of its member firms, including false statements that crypto functioned like cash or cash equivalents. It also saw comparisons of crypto to other assets such as stocks and misrepresentations that federal securities laws or FINRA rules applied to crypto, according to a report released on Tuesday. FINRA, which is overseen by the Securities and Exchange Commission, began the sweep in November that was tasked with reviewing member firms' communications with retail customers related to crypto and crypto services. Read more. 
 

Retailers Return to Bringing in Inventory ‘Just in Time’​​​

Retailers are reviving an old playbook to manage their inventory levels after four years of struggling to find the sweet spot of holding enough merchandise but not too much, the Wall Street Journal reported. Merchants have worked through the excess inventory that had piled up on store shelves and in warehouses over the past 18 months, and are now focusing on replenishing items rather than stocking up on goods to have on hand in case of supply-chain disruptions. The shift marks a return to the “just-in-time” inventory management strategy many companies had employed before pandemic-driven product shortages and volatile shifts in consumer demand prompted a switch to a “just-in-case” stockpiling approach. Jamie Bragg, chief supply chain officer at Tailored Brands, said just-in-time inventory management is the goal. The Houston-based parent company of Men’s Wearhouse and Jos. A. Bank worked over the past few years to get better visibility into orders that are still in production overseas, positioning it to adjust orders based on demand, he said. Terry Esper, a logistics professor at Ohio State University, said companies are now better able to predict shopper demand and feel they can hold leaner inventories amid moderating spending growth and fewer supply-chain disruptions. “Retailers have more confidence in the overall supply chain and the logistics network and the environment, and as a result, they’re saying, ‘Hey, I think we’re at a point now where we’re safe to go back to just-in-time,’” Esper said. (Subscription required.) Read more. 
 

Don't Miss the Second Episode of the "Directors' Duties Across Borders in the Insolvency Zone" Webinar Series on Feb. 14

ABI's International Committee will be hosting the second in a series of webinars covering key jurisdictions around the globe, focusing on developments you and your clients need to consider when thinking about bankruptcy-type proceedings in foreign jurisdictions. In this next installment on Feb. 14 at 12:00 noon EST, the panelists will be examining the situation in Brazil, Canada, the Caymans and Mexico. Register here for FREE!

Volunteer Today to Become a Preliminary-Round Judge or Brief Grader for the Duberstein National Bankruptcy Moot Court Competition!

The Duberstein National Bankruptcy Moot Court Competition, now in its 32nd year and widely recognized as one of the nation’s preeminent moot court competitions, will be held in New York on March 2-4, 2024. Fifty-three teams from law schools across the country will compete through written briefing and oral argument. Please find the fact pattern by clicking here. 

Volunteers are needed for brief graders (please sign up by Feb. 9) and judges for the preliminary rounds (please sign up by Feb. 10) of the Competition. Click here for more information and to volunteer!

Asset Sale of the Year Award Application Now Available!

ABI’s Asset Sales Committee is seeking nominations for its Annual ABI Asset Sale of the Year award. Any bankruptcy sale that closed between January 1 and December 31, 2023, and involved at least one professional who is a member of ABI’s Asset Sales Committee is eligible. Nominations are due February 16; please send your nominations to Matt LoCascio and Leyza Blanco. For more information, please click here.

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, who 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, although please note that abstracts to be considered for the upcoming Annual Spring Meeting, being held April 18-20, 2024, at the Marriott Marquis in Washington, D.C., were due on December 31, 2023. 

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