Deal-Making Down as Inflation, Rate Hikes Spur Caution​​​

Companies hit the brakes on deal-making during the first half of 2022 as concerns over pervasive inflation, interest rate hikes and the threat of a recession loomed over Wall Street, the Associated Press reported. Overall, companies announced $2.2 trillion worth of buyout deals in the first half of the year, a 21% drop from a year earlier. The number of deals also fell, dropping 17% during that period, according to Refinitiv. It’s the slowest start to the year for deal-making since the pandemic stunned markets in 2020. Some of the biggest deals, such as Microsoft’s $69 billion purchase of game-maker Activision Blizzard, were announced early in the year, before the long list of worries really started weighing on Wall Street. The tally also includes Elon Musk’s $44 billion takeover bid for Twitter, announced in April but now uncertain to go through. Recession concerns have hampered deal-making, but worries about higher interest rates have also played a key role in crimping activity. Higher interest rates make deals, much like overall borrowing, more expensive and tend to make companies more cautious about pursuing big purchases. The Federal Reserve had kept rates at historic lows to goose economic growth during the pandemic. That helped fuel gains for the stock market as well as a surge in M&A activity. Now the Fed is aggressively raising rates to help temper inflation by slowing economic growth. Wall Street is worried that the Fed could hit the brakes too hard on an already slowing economy and send the economy into a recession. Technology sector deals, which are typically among the biggest, totaled $531 billion in the first half of the year, a 19% drop. The sector has been hit particularly hard by concerns about rising interest rates, which make pricey stock valuations less attractive to investors. Read more. 
 

Report: FHFA Saved More than 100,000 Homes from Foreclosure in Q1 2022​​​

Through their prevention efforts, Fannie Mae and Freddie Mac saved thousands of homes from mortgage foreclosure during the first quarter of 2022, according to the Federal Housing Finance Agency’s (FHFA) Foreclosure Prevention and Refinance Report, FoxBusiness.com reported. The report shows that Fannie Mae and Freddie Mac completed 129,779 foreclosure-prevention actions during the first quarter. About 75% of those modifications reduced borrowers’ monthly payments by more than 20%. This came as the number of refinances decreased as mortgage rates rose. The number of refinances fell from more than 1.26 million in the fourth quarter of 2021 to nearly 900,000 in the first quarter, according to the report. The serious delinquency rate decreased by 0.97% in the first quarter, down from 1.19% in the fourth quarter, according to the FHFA report. Homeowners with loans backed by Fannie Mae and Freddie Mac are faring better than homeowners with other loans, such as loans backed by the Federal Housing Administration (FHA), which reported a 5.33% delinquency rate; Veterans Affairs (VA) loans, which reported a 3.15% delinquency rate; and the industry average of a 2.39% delinquency rate for all loans.

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Latest ABI Industry Viewpoints Segment Examines Student Loans and Bankruptcy​​​

The latest segment of ABI's Industry Viewpoints features ABI Editor-at-Large Bill Rochelle talking with Prof. Robert M. Lawless of the University of Illinois College of Law (Champaign, Ill.) about the state of student loans and bankruptcy. Prof. Lawless, who participated on a student loan panel at ABI's 2022 Annual Spring Meeting, discusses the magnitude of student loan debt in the U.S. and some of the recent policy proposals aiming to alleviate the burden on borrowers. Watch now!

Cryptocurrency and Bankruptcy, Senior Living Facility Distress, Third-Party Releases and More to Be Discussed at ABI's 2022 Southeast Bankruptcy Workshop!​​​

Eleven bankruptcy judges and more than 300 attendees will gather to discuss the latest bankruptcy topics pertinent to the Southeast region at ABI’s 2022 Southeast Bankruptcy Workshop, being held July 21-24 at The Ritz-Carlton, Amelia Island, in Amelia Island, Fla. The workshop brings together the region’s top insolvency professionals for four days of intense learning and networking. A faculty of outstanding judges, academics and practitioners will present workshops on the hottest topics of the day, including separate tracks for business-, consumer- and skill-focused sessions. Attendees will also have the opportunity to earn up to 12/14 hours of CLE/CPE credit, including 1.5 hours of ethics. Register today!

U.S. Weekly Jobless Claims at Highest Point in Nearly 8 Months​​​

The number of Americans applying for unemployment benefits last week hit its highest level in nearly 8 months, but the total number of those collecting benefits fell, the Associated Press reported. Applications for jobless aid for the week ending July 9 rose by 9,000 to 244,000, up from the previous week’s 235,000 total, the Labor Department reported Thursday. First-time applications generally reflect layoffs. Analysts had expected the number to remain flat from the previous week. The four-week average for claims, which evens out some of the week-to-week volatility, rose by 3,250 from the previous week, to 235,750. The total number of Americans collecting jobless benefits for the week ending July 2 fell by 41,000 from the previous week, to 1,331,000. That figure has hovered near 50-year lows for months. Last week, the Labor Department reported that employers added 372,000 jobs in June, a surprisingly robust gain and in line with the pace of the previous two months. The unemployment rate remained 3.6% for a fourth straight month, matching a near-50-year low that was reached before the pandemic struck in early 2020.

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Wholesale Inflation in June Surged 11.3% from a Year Ago​​​

Inflation at the wholesale level climbed 11.3% in June compared with a year earlier in the latest painful reminder that inflation is running hot through the American economy, the Associated Press reported. The Labor Department reported Thursday that the U.S. producer price index — which measures inflation before it hits consumers — rose at its fastest pace since hitting a record 11.6% in March. Last month’s jump in wholesale inflation was led by energy prices, which soared 54% from a year earlier. But even excluding food and energy prices, which can swing wildly from month to month, producer prices in June jumped 8.2% from June 2021. On a month-to-month basis, wholesale inflation rose 1.1% from May to June, also the biggest jump since March. Thursday’s report on wholesale prices came a day after the Labor Department reported that surging prices for gas, food and rent catapulted consumer inflation to a new four-decade peak in June, further pressuring households and likely sealing the case for another large interest rate hike by the Federal Reserve. Consumer prices soared 9.1% compared with a year earlier, the biggest yearly increase since 1981.

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Senate Confirms Michael Barr as Top Fed Bank Watchdog​​​

The Senate confirmed President Biden’s pick for a key Federal Reserve position on Wednesday with broad bipartisan support, giving the central bank a full board of seven governors for the first time since 2013, The Hill reported. The Senate approved Michael Barr to be a member of the Fed board and the Fed vice chair of supervision, with more than a dozen Republicans joining Democrats in support of the nomination. Barr was confirmed to finish out the remainder of a term on the Fed board lasting through 2032 and a four-year term as the Fed’s point man on financial regulations in two separate votes Wednesday, each ending 66-28. Barr will join the Fed from the University of Michigan, where he served as a dean of public policy and a law professor. He was also an assistant Treasury secretary during the Obama administration and played a key role in crafting the Dodd-Frank Act, the 2010 financial reform law that created the position of Fed vice chair of supervision.

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