Credit Card Debt Is at Record High as Fed Raises Rates Again​​​

The Fed’s interest rate increases are meant to fight inflation, but they’ve also led to higher annual percentage rates (APRs) for people with credit card debt, the Associated Press reported. The Fed announced yesterday that it would increase rates another quarter of a point. ankrate says the average credit card interest rate, or annual percentage rate, has reached 20.4% — the highest since their tracking began in the mid-1980s. A new poll by The Associated Press-NORC Center for Public Affairs Research finds that 35% of U.S. adults report that their household debt is higher than it was a year ago. Just 17% say it has decreased. Roughly 4 in 10 adults in households making under $100,000 a year say their debt is up, compared with about a quarter in households making more than that. About half of Black and Hispanic adults say their household debt has increased, compared with about 3 in 10 white adults. During the early pandemic, credit card debt dipped 17%, Bankrate said — thanks in part to stimulus programs, emergency relief and a decrease in consumer spending. But in the last three months of 2022, credit card balances in the U.S. increased $61 billion to $986 billion, surpassing the pre-pandemic high of $927 billion, according to the Federal Reserve Bank of New York. ​​​Read more.

Commercial Property Debt Creates More Bank Worries​​​

A record amount of commercial mortgages expiring in 2023 is set to test the financial health of small and regional banks already under pressure following the recent failures of Silicon Valley Bank and Signature Bank, the Wall Street Journal reported. Smaller banks hold around $2.3 trillion in commercial real estate debt, including rental-apartment mortgages, according to an analysis from data firm Trepp Inc. That is almost 80% of the commercial mortgages held by all banks. With the banking industry in turmoil, regulators and analysts are growing increasingly concerned about commercial real estate debt, particularly loans backed by office buildings, according to industry participants. Many skyscrapers, business parks and other office properties have lost value during the pandemic era as their business tenants have adopted new remote and hybrid workplace strategies. High interest rates also have wreaked havoc with commercial property valuations. Many owners with floating-rate mortgages have to pay much more monthly debt service, cutting into their cash flows. Owners with fixed-rate mortgages will feel the pain of higher rates when they have to refinance. (Subscription required.) ​​​Read more.

Banking Turmoil Tests the American Consumer​​​

American consumers are facing another test, from banking-sector turmoil and tighter financial conditions, as households already grappling with elevated inflation and rising interest rates threaten to trim the spending that has been a hallmark of the resilient U.S. economy, the Wall Street Journal reported. Unrest in the banking sector could make it more difficult for some consumers to obtain loans to buy homes, cars and other big-ticket items. Economists say much of the near-term impact could depend more on Americans’ psychology: whether they have confidence the economy will weather the banking storm that might or might not directly hit their pocketbooks. “Because of uncertainty, a business might not go ahead with hiring or investment, or households may become more frugal — saving rather than spending,” said Carl Tannenbaum, chief economist of Northern Trust. “The accumulation of those reactions can interrupt an economic expansion.” (Subscription required.) ​​​Read more.

U.S. Jobless Claims Inch Down as Labor Market Remains Tight​​​

The labor market continues to defy Federal Reserve attempts to cool hiring, with U.S. applications for unemployment benefits down again last week and remaining at historically low levels, the Associated Press reported. Jobless claims in the U.S. for the week ending March 18 fell by 1,000 to 191,000 from the previous week, the Labor Department said today. The four-week moving average of claims, which flattens out some of the week-to-week volatility, fell by 250 to 196,250, remaining below the 200,000 threshold for the ninth straight week. About 1.69 million people were receiving jobless aid the week that ended March 11, an increase of 14,000 from the week before. That number is close to pre-pandemic levels. ​​​Read more.

Inaugural TechBytes Podcast: The Evolution of Technology and ABI​​​

In this inaugural TechBytes podcast, ABI Emerging Industries and Technology Committee co-chair Matthew T. Faga talks with ABI Chief Operating Officer Karim Guirguis about the evolution of Karim’s career at ABI and the technology that propels the organization forward. Listen to the podcast here.

Three Upcoming abiLIVE Webinars Look at the Implications of SVB's Collapse, Funding Bankruptcy Cases Without Debt and a Look at 1Q Bankruptcy Filings!​​​

To help you prep for conversations at ABI's Annual Spring Meeting April 20-22, be sure to enjoy these three upcoming FREE abiLIVE webinars looking at key bankruptcy topics:

- March 30: "Funding Bankruptcy Cases Without Debt: The Employee Retention Credit," sponsored by Frost Law, will cover the basics of the employee retention credit (ERC), how your clients can qualify for and benefit from the ERC, and some common ERC pitfalls to avoid. Register here.

- March 31: "Implications of SVB's Collapse and the Current Banking Crisis" will feature top experts examining SVB's collapse, the financial fallout from its failure, and the path going forward for creditors. Register here.

- April 11: "Bankruptcy Filing Growth: Will Increases Continue Beyond 1Q 2023?," sponsored by Epiq Bankruptcy, will look at the bankruptcy filing growth seen in the first three months of the year, and what might lie ahead. Register here.

ASM Session Spotlight: Kenneth R. Feinberg Will Join an All-Star Panel for "The Many Roles of a Neutral in Bankruptcy"​​​

Don't miss Kenneth R. Feinberg, formerly Special Master of the U.S. government's September 11th Victim Compensation Fund and the Special Master for TARP Executive Compensation, at the Annual Spring Meeting as he joins a panel that will explore the various roles of neutrals in bankruptcy, including applicable provisions of the Bankruptcy Code and Rules, as well as the limitations on the use of neutrals in bankruptcy. Rates go up April 7! Are you registered?

March 31 Is the Nomination Deadline for the Fifth Annual ABI Asset Sale of the Year Award!​​​

ABI's Asset Sales Committee (ASC) is welcoming nominations for its Fifth Annual Asset Sale of the Year Award! The winning Sale and Team will be recognized in a future ASC newsletter and on the committee’s webpage. Depending on publication dates, the winners may also be recognized in (1) one or more of ABI’s weekly or monthly email publications, and (2) the ABI Journal (in the Inside ABI section). For criteria, eligibility and the nomination form, please click here. All submissions are due by Friday, March 31!

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