Auto Loans Pass Student Loans in Consumer Debt Load, Fed Data Shows​​​

Auto loans have moved past student loans this year as the second-largest debt burden for consumers, at $1.582 trillion compared with $1.569 trillion for student loans, according to Federal Reserve Bank of New York data, WSJ Pro Bankruptcy reported. At $12 trillion, mortgages are the largest debt for consumers. Consumers had owed more in student loans than auto loans since early 2010, when a surge of college students, some of whom lost jobs in the financial crisis and sought education and new training, led to big student loan borrowing. But the U.S. government froze payments and interest on federal student loans for the pandemic, an emergency measure that is now ending. Meanwhile, consumers bought vehicles at inflation-juiced prices. In June 2021, new- and used-vehicle inflation hit 20.4% and stayed elevated until late 2022. Some cracks are now appearing in the auto loan market. Auto loan delinquencies climbed to 3.59% in August on a seasonally adjusted basis, their highest level since April 2010, shortly after the financial crisis, according to Moody’s Analytics. Read more.

Commentary: Are Third-Party Releases Proper?*​​​

Following on the Havard Law Schools Bankruptcy Roundtable’s previous coverage of recent developments in mass tort bankruptcies, this week’s commentaries featured two articles, each with different views on the propriety of third-party releases and the breadth of the power of bankruptcy courts more generally. The first post, "Coerced Releases: Are Non-Consensual Third Party Releases in Bankruptcy Code Chapter 11 Cases Allowed by the Constitution and the Bankruptcy Code?," is authored by Martin J. Bienenstock and Daniel S. Desatnik of Proskauer Rose LLP. Their position is that the Bankruptcy Code, by limiting chapter 11 plans to provisions consistent with title 11, does not authorize coerced releases, except in asbestos cases. The second post in the Roundtable series is titled "For Bankruptcy Exceptionalism," by Prof. Jared Mayer of the University of Chicago Law School. Prof. Mayer argues that bankruptcy law is exceptional, and bankruptcy exceptionalism begins with the Code. "Even within its own confines," Prof. Mayer writes, "the Bankruptcy Code cloaks bankruptcy courts with unparalleled powers." Click here to read both posts and others in a series that the Havard Law School Bankruptcy Roundtable has published on the Purdue Pharma case and mass tort bankruptcies.

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

Get expert perspectives on the Purdue Pharma case and third-party releases on an Oct. 4 abiLIVE webinar that features experts discussing key issues surrounding the case before the Supreme Court. Click here to register for FREE.

Tomorrow: ABI’s Subchapter V Task Force Virtual Public Hearing to Examine Post-Confirmation Issues​​​

The sixth virtual public hearing of ABI's Subchapter V Task Force will take place tomorrow at 3 p.m. EDT, during which bankruptcy judges and practitioners will provide testimony on post-confirmation issues. Click here to register.

Looking to catch up on previous hearings? Access them here!
 

U.S Weekly Jobless Claims, Continuing Unemployment Claims at 8-Month Low​​​

The number of Americans filing new claims for unemployment benefits dropped to an eight-month low last week, but a rebound is likely as a partial strike by the United Auto Workers (UAW) union forces automobile manufacturers to temporarily lay off workers because of shortages of some materials, Reuters reported. The report from the Labor Department on Thursday offered an upbeat assessment of the jobs market, with the number of people on unemployment rolls also falling during the first week of September to the lowest level since January. Though demand for labor is slowing, overall labor market conditions have remained tight despite higher interest rates. Initial claims for state unemployment benefits dropped 20,000 to a seasonally adjusted 201,000 for the week ended Sept. 16, the lowest level since January, the Labor Department said on Thursday. Claims are in the lower end of their 194,000-265,000 range for this year. Unadjusted claims rose only 67 to 175,661 last week. There were notable declines in claims in Indiana and California, which mostly offset sizable increases in South Carolina, New York and Georgia. Read more.

August Home Sales Declined to Slowest Pace Since January​​​

Sales of previously owned homes fell in August to the slowest pace since January as high mortgage rates stifled demand, the Wall Street Journal reported. Home sales have slumped this year, but home prices have started rising again, because the inventory of homes for sale has remained persistently low, frustrating the buyers who are still in the market and forcing many to compete in bidding wars. Existing-home sales, which make up most of the housing market, decreased 0.7% in August from the prior month to a seasonally adjusted annual rate of 4.04 million, the National Association of Realtors said Thursday. August sales fell 15.3% from a year earlier. The national median existing-home price rose 3.9% in August from a year earlier to $407,100, the fourth-highest level on record in data going back to 1999, NAR said. Prices aren’t adjusted for inflation. (Subscription required.) Read more.
 

Supreme Court Developments, § 363 Sales, Case Confirmation and More to Be Discussed at ABI's Views from the Bench Program Next Friday​​​

Practitioners will not want to miss ABI’s Bankruptcy 2023: Views from the Bench program taking place next Friday, Sept. 29, in the Washington, D.C., offices of Jones Day. The program, featuring both in-person and virtual attendance options, features the views of 20 sitting and retired bankruptcy judges. This year’s program will examine key issues surrounding bankruptcy confirmation, § 363 sales, Supreme Court cases, ethics and much more. The keynote luncheon speaker for the program is Kevyn D. Orr, the partner-in-charge of Jones Day’s U.S. offices. Orr served as Emergency Manager of the City of Detroit during the city's chapter 9 case, the largest municipal bankruptcy case in U.S. history, and was charged with restructuring the city's finances and operations. Views from the Bench will also feature ABI’s popular “Great Debates” session, during which judges and experts will square off on issues related to bankruptcy examiners. Attendees have the chance to earn up to 6/7.2 hours of CLE/CPE credit and 1 hour of ethics. Register today to attend in person or via the virtual option!
 

America’s Biggest Landlords Can’t Find Houses to Buy, Either​​​

It isn’t just regular Americans who are having trouble buying houses these days. High borrowing costs and the shortage of properties for sale have slowed home buying by Wall Street’s rental giants as well, limiting their ability to grow at the same time suburban rents are climbing, the Wall Street Journal reported. The big landlords’ computers are still poring over listings, scanning for houses they can buy and turn into rentals. But financing has become expensive even for them, and competition is fierce from people willing to pay up for the few homes hitting the market. Prices have pushed past what big landlords, including AMH and Invitation Homes, can pay and still meet profit targets. There has rarely been a better time to own tens of thousands of single-family rentals. Record home prices, the highest mortgage rates in a generation and limited properties for sale are pushing homeownership beyond the reach of many Americans and leaving plenty of room for rents to rise and still be cheaper than owning, analysts say. Landlords with 1,000 properties or more accounted for 0.4% of U.S. home purchases during the second quarter, down from a peak of 2.4% in late 2021, according to John Burns Research & Consulting. Suburban America’s mega-landlords have seldom accounted for such a small share of the market since they emerged after the 2008 housing crash. Property moguls, private-equity firms and other big investors started out by scooping up foreclosed homes on the courthouse steps, and when those ran out they took to the open market to buy more. They ramped up purchasing after the COVID lockdowns — as did smaller investors — until roughly one in four homes sold in boomtowns such as Miami, Houston and Phoenix were being bought by someone who would never move in. (Subscription required.) Read more.

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