Amendments to Federal Bankruptcy Rules and Forms Effective Today​​​

The following amended and new Bankruptcy Rules and Forms became effective today:

Bankruptcy Rules 1007, 1020, 2009, 2012, 2015, 3002, 3010, 3011, 3014, 3016, 3017.1, 3018, 3019, 5005, 7004 and 8023; new Rule 3017.2; and Official Forms 101, 309E1 and 309E2.

For more information, please click here.

The Judicial Conference of the United States on Sept. 28, 2021, approved the proposed amendments to the Federal Rules of Bankruptcy Procedure Bankruptcy Rules and official Bankruptcy Forms. The proposed amendments were transmitted to the Supreme Court on October 18, 2021. The Supreme Court adopted these proposed amendments and transmitted them to Congress on April 11, 2022.

FTX Collapse Draws Senate Hearing Scrutiny as Lawmakers Push for Crypto Oversight​​​

Lawmakers should pass legislation that would impose strict rules on cryptocurrency exchanges, including rules to limit or prohibit the conflicts of interest that contributed to FTX’s collapse, Commodity Futures Trading Commission Chairman Rostin Behnam said today, the Wall Street Journal reported. Speaking to members of the Senate Agriculture Committee, Mr. Behnam said he still supported a bill that would give his small agency authority to police trading in bitcoin, ether and other digital assets classified as commodities. FTX and its founder, Sam Bankman-Fried, also lobbied in support of the legislation before the firm’s collapse last month. The immediate future of the legislation is unknown. FTX’s support of the bill raises questions about its influence over it. The company’s goal was to steer oversight of crypto into the hands of what was perceived to be a friendlier regulator than the Securities and Exchange Commission, which has authority to write stricter rules that most crypto companies oppose. Mr. Bankman-Fried’s empire blew up last month amid reports that his exchange, FTX, misused customer funds by sending them to an affiliated trading firm, Alameda Research, that had made risky venture investments. Mr. Bankman-Fried has said in recent interviews that he neglected risk-management at FTX, but denied knowing that customer money was wrongly used. Senate Agriculture Committee Chairwoman Debbie Stabenow (D. Mich.) said her committee’s legislation addresses the risks posed by practices that took down FTX. The bill written by Ms. Stabenow and the committee’s ranking member, Sen. John Boozman (R. Ark.), would regulate trading in bitcoin, ether and some other cryptocurrencies through the commission. Giving the CFTC, a relatively small agency, authority to police trading in the most valuable crypto assets would mark a substantial expansion of its authority. Read more. (Subscription required.)

To watch a replay of today's Senate Agriculture hearing titled, "Why Congress Needs to Act: Lessons Learned from the FTX Collapse," please click here. 

Analysis: How Student Loan Debt, or Not Having It, Shapes Lives​​​

Without student loans, millions of Americans couldn’t afford the degrees that might smooth the road to prosperity. Yet having student loans can also make it tougher to get far along that journey, the Wall Street Journal reported. People who leave school without loans can have an easier time buying a home, saving for retirement or starting a business, compared with those who have student debt. One aim of President Biden’s student-debt relief plan, currently stalled by legal challenges, is to help borrowers shed debt and progress toward those goals, though critics argue that the program is unfair to those who sacrificed to pay for college or paid down their debt. Research from the Federal Reserve found that between 2005 and 2014, there was a link between rising student debt and the reduced share of young adults who own a home. Carrying student debt is also associated with being less likely to start a small business, according to research from the Philadelphia Fed, and with being more likely to delay having children, according to researchers at Ohio State University. Furthermore, college graduates with student debt have built up an average of about $9,000 in retirement assets by age 30 — half as much as those without student debt, according to a 2018 study from the Center for Retirement Research at Boston College. The majority of recent four-year college graduates took on at least some student debt. For the class of 2021, 46% of bachelor’s degree recipients had none, according to the College Board, a nonprofit. Among Americans with a bachelor’s degree, 64% of those who didn’t take on student debt report their financial status as “living comfortably,” while 36% of those who currently hold debt say the same, according to a Fed survey. (Subscription required.) Read more.

Continuing U.S. Jobless Claims Rise to Highest Level Since February​​​

Recurring applications for U.S. unemployment benefits rose to the highest level since February, Bloomberg News reported. Continuing claims, which include people who have already received unemployment benefits for a week or more, rose by 57,000 to 1.6 million in the week ended Nov. 19, the biggest jump in a year. Initial unemployment claims meanwhile decreased by 16,000 to 225,000 in the week ended Nov. 26, Labor Department data showed Thursday. The median estimate in a Bloomberg survey of economists called for 235,000 applications. While there’s been a wave of layoffs at high-profile technology and banking companies, it’s still largely contained to a few industries. Meanwhile, data out Wednesday showed that job openings declined and wage gains moderated in October, suggesting that demand for workers might be starting to abate. On an unadjusted basis, initial claims fell by about 50,000 to 198,557 last week. California, Texas, Illinois and Georgia led the drop. The jobless claims data tend to be more volatile around holidays, and last week included Thanksgiving. The four-week moving average, which smooths out such volatility, edged up to 228,750. Read more.

U.S. Consumer Spending Powers Ahead in October; Inflation Cooling​​​

U.S. consumer spending increased solidly in October, while inflation moderated, giving the economy a powerful boost at the start of the fourth quarter as it faces rising headwinds from the Federal Reserve's aggressive monetary policy-tightening, Reuters reported. The labor market, the economy's other pillar of support, continues to show resilience. The number of Americans filing new claims for unemployment benefits declined last week, almost unwinding the prior week's jump, which had lifted claims to a three-month high, other data showed on Thursday. The outlook was, however, darkened by news that manufacturing activity contracted in November for the first time in 2-1/2 years, with factories reporting weakening demand. Still, economists remain cautiously optimistic that an anticipated recession next year would be short and mild. Inflation-adjusted consumer spending rose 0.5%, the most since January. Economic growth estimates for the fourth quarter are as high as a 2.8% annualized rate. The economy grew at a 2.9% pace in the third quarter. Spending on goods increased 1.4%, driven by purchases of motor vehicles, furniture and recreational goods. Outlays on services gained 0.5%, lifted by spending at restaurants and bars as well as on housing and utilities. Read more.

As Mortgage Rates Rise, More People Choosing to Rent Single-Family Homes​​​

U.S. consumers faced with inflation and the high price of homes are increasingly pressing the pause button on home buying, the Wall Street Journal reported. The rate on an average 30-year fixed mortgage is now 6.61%, more than double what it was in October 2021, according to housing-finance agency Freddie Mac. As a result, single-family home rentals, or SFRs, are now a hot area in the real estate market. “We are in the midst of a housing-affordability crisis, and people are suffering from sticker shock,” says Gary Berman, CEO of Tricon Residential, a major developer, builder and operator of single-family homes for rent across the U.S. and Canada. The trend has made consumers closely examine whether renting a single-family home currently is more economical than owning one. Nationally, it cost $888 a month more to buy an entry-level single-family home than to rent it, according to September data from John Burns Real Estate Consulting. A 30-year-fixed mortgage with 5% down (including principal, interest, taxes, insurance and maintenance) on such a home cost $3,058 a month, while the median monthly rent on such a single-family house was $2,170, based on John Burns research. The firm weighted 99 housing markets in the U.S. to determine the median mortgage payment versus the median rent payment. According to the National Association of Home Builders, the $4.4 trillion SFR market is one of the fastest-growing sectors in real estate. “Today, single-family, built-for-rent homes account for 11% of all single-family home construction in the housing market, versus a 3% market share that was typical over the last several decades,” says Robert Dietz, senior vice president and chief economist for the National Association of Home Builders. “The sector’s market share is on an upswing and should rise to 15% in the coming quarters.” (Subscription required.) Read more.

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