Republicans Are Readying Lawsuits to Block Biden’s Student Debt Plan​​​

Republican state attorneys general and other leading conservatives are exploring a number of potential lawsuits targeting President Biden’s plan to cancel some student debt — challenges that could limit or invalidate the policy before it takes full effect, the Washington Post reported. In recent days, a number of GOP attorneys general from states including Arizona, Missouri and Texas have met privately to discuss a strategy that could see multiple cases filed in different courts around the country. Other influential conservatives — including Sen. Ted Cruz (R-Tex.) and allies of the Heritage Foundation, a conservative think tank — are mulling their own options as they ratchet up criticism of Biden’s debt-relief plan. And a conservative advocacy group founded by a major Trump donor said that it would file a lawsuit against the policy. While no lawsuits have been filed to date, the possible litigation also raises the prospect of a broader, precedent-setting courtroom tussle over the scope of the president’s economic authority. The Biden administration has been adamant that its policy is legal. The Justice Department released a 25-page memo last week justifying debt-cancellation as “appropriate” under a 2003 law giving the executive branch broad authority to overhaul student loan programs. That law was passed in the aftermath of the Sept. 11, 2001, terrorist attacks and gave the president the authority to cancel student debt in connection with national emergencies — which the White House says includes the ongoing pandemic. “The legality is very, very strong.… The language of the Heroes Act states that in a national emergency, the president can take action that includes suspending or canceling debt,” said Laurence Tribe, a Harvard law professor close with the Biden administration.
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Commentary: The Problem with College Is So Much Bigger than Student Debt* ​​​

The White House’s decision to cancel federal student loan debts does many things, primarily providing $10,000 in relief to all individual borrowers making $125,000 or less and as much as $20,000 for students from low-income families. What it won’t do is address the ongoing crisis of college affordability that’s left so many saddled with debts they’ll never be able to repay, according to a Bloomberg Businessweek commentary. It’s worth noting that the massive growth of the U.S.’s federal student loan portfolio is at least partly a success story. In 1980, fewer than half of high school graduates enrolled in college; today, roughly 70% pursue higher education of some kind, the highest level in the world. By every statistical measure, Americans are more educated now than at any other time in the country’s history. The trouble is that they can’t pay for it. Over the past 30 years, the average cost of tuition at public four-year colleges has more than doubled, from $4,160 to $10,740; add room and board, living expenses, books and supplies, and the overall cost of attending tops $25,000. Private schools charge, on average, $38,090 in tuition compared with $19,360 in 1991, and the cost of attendance exceeds $50,000. So even as shell-shocked students, parents and politicians demand that colleges rein in prices, the government’s gusher of student loan money has effectively removed any incentive for them to do so. What’s more, rather than use those resources to invest in tools to measure and improve instruction, many elite schools have poured money into hiring administrators, building amenities and upgrading the student “experience.” A McKinsey & Co. report found that from 2007 to 2018, outlays on student services at four-year institutions grew four times faster than spending on instruction and research. Consider this alternative vision of U.S. higher education: a landscape of faster, cheaper vocational options geared toward preparing students for specific fields; apprenticeships that offer paid experience; prestigious colleges and universities focused on delivering the highest value for the money, rather than the most luxe dormitories; and government aid programs that provide the neediest students with the resources to finish their degrees without taking on unsustainable debt.
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*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.

Nonconsensual Third-Party Releases, Mass Torts, Supply-Chain Problems and COVID-19’s Effects on Business and Real Estate Values and More to Be Discussed Next Week at ABI’s 2022 Southwest Bankruptcy Conference!​​​

Experienced practitioners and regional judges will present information-packed sessions at next week’s 2022 Southwest Bankruptcy Conference on a variety of topics, both business and consumer — ensuring that there is something for everyone. The conference will also feature a Judges’ Roundtable Q&A with bankruptcy judges from the Ninth Circuit and across the country. Find out about the sessions and be sure to register!

Fewer Americans Filed for Jobless Benefits Last Week​​​

Fewer Americans filed for unemployment benefits last week as the labor market continues to shine despite weakening elements of the U.S. economy, the Associated Press reported. Applications for jobless aid for the week ending Aug. 27 fell by 5,000 to 232,000, the Labor Department reported yesterday. The four-week average for claims, which evens out some of the week-to-week volatility, decreased by 4,000 to 241,500. The number of Americans collecting traditional unemployment benefits rose by 26,000 the week that ended Aug. 20, to 1.44 million. First-time applications generally reflect layoffs and are often seen as an early indicator of where the job market is headed. Hiring in the U.S. in 2022 has been remarkably strong even as the country faces rising interest rates and weak economic growth. On Tuesday, the government reported that the number of open jobs in the United States rose in July after three months of declines. There were 11.2 million open jobs available on the last day of July — nearly two jobs, on average, for every unemployed person — a sign that employers are still urgently seeking workers despite a weakening economy and high inflation.
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U.S. Manufacturing Growth Holds Steady, Inflation Pressures Ease​​​

U.S. manufacturing growth steadied in August at the slowest pace in over two years, while a measure of materials costs declined for a fifth straight month in a welcome sign that inflationary pressures are abating, Bloomberg News reported. The Institute for Supply Management’s gauge of factory activity held at 52.8, matching the lowest level since June 2020, according to data released Thursday. Readings above 50 indicate expansion, and the latest figure compared with a median projection of 51.9 in a Bloomberg survey of economists. “Sentiment remained optimistic regarding demand, with five positive growth comments for every cautious comment,” said Timothy Fiore, chair of ISM’s Manufacturing Business Survey Committee. Still, “Panelists continue to express unease about a softening economy.” Ten manufacturing industries reported growth for the month, led by mineral products, petroleum and transportation equipment. The figures suggest sustained-yet-moderate growth in manufacturing and some additional easing in supply constraints. The industry is so far faring better than its counterparts in Europe and Asia, where the war in Ukraine and economic slowdown in China are leading to shrinking factory activity.
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Review of Federal Home-Loan Banks Is Planned​​​

The U.S. government is eyeing a potential revamp for the Federal Home Loan Banks, a nearly $1 trillion network of government-chartered cooperatives that provide cheap funding to thousands of banks, the Wall Street Journal reported. The Federal Housing Finance Agency said yesterday that it would launch this fall a review of the structure and role of the home-loan banks, a 90-year-old system that has drawn scrutiny from current and former policymakers over whether its modern-day activities fully match its original mission of supporting mortgage lending. The FHFA has yet to outline an overriding goal for its review, but it could lead to a push to expand the membership of the system to nonbank mortgage companies and real estate investment trusts, potentially making the system more housing-focused after decades of what critics characterize as drift. It also opens up the possibility of the system serving purposes in addition to housing. Founded during the Great Depression, the home-loan banks’ role has evolved. They were an important source of liquidity to commercial banks during the financial crisis of 2008. Since then, they have also become a supplier of cheap funding to some of the largest U.S. banks, in recent years including Wells Fargo & Co. and JPMorgan Chase & Co. Nonbank mortgage companies and real estate investment trusts have come to play big roles in housing finance but generally aren’t among the 6,500 members of the home-loan bank system. Including them could help those firms fill the void left by big commercial banks, which have cut back on mortgage lending to all but the most creditworthy customers. (Subscription required.)
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International Committee Seeking Nominations for Its First Annual "Matter of the Year" by Sept. 15​​​

ABI's International Committee is proud to announce its First Annual International Committee Matter of the Year Award! The nominated matter needs to involve the U.S. and other jurisdictions and be of some international legal significance and/or impact to international insolvency, as well as international cooperation. Nominations are due September 15, 2022, by 5:00 PM EDT. For more information, visit the International Committee page.

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