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“Real Housewives of New Jersey" star Teresa Giudice agreed last month to split a potential legal windfall with her creditors, but now the bankruptcy attorney whom she is suing is opposing the proposed settlement, NJ.com reported on Wednesday. Giudice filed suit against her former bankruptcy attorney James Kridel last year for legal malpractice, claiming that the Clifton lawyer's bad advice and mistakes led to her conviction for bankruptcy fraud. Giudice, who lives in Montville Township, N.J., served nearly a year in prison after taking a plea deal for bankruptcy fraud and conspiracy to commit wire and mail fraud, the latter pertaining to a mortgage scheme that predated the bankruptcy. Her husband Joe is currently serving a 41-month sentence. After she filed suit, however, John Sywilok, the trustee who represented her creditors in the bankruptcy case, successfully reopened the bankruptcy, after claiming that any money the couple won in the Kridel case should go to their creditors. After a contentious mediation, Giudice's lawyers Anthony Rainone and Carlos Cuevas eventually settled with the trustee John Sywilok, agreeing that her creditors will get 45 percent of any winnings, and that Sywilock will join Giudice's malpractice case as a plaintiff. On Tuesday, Kridel's lawyer Carl Perri filed a motion in federal bankruptcy court objecting to the settlement on the grounds that Rainone and Cuevas have a conflict of interest with Sywilok and his attorney. Read more. 

What is it like to be at the helm of a celebrity bankruptcy? Practitioners to discuss on panel at ABI’s Winter Leadership Conference. 

The Consumer Financial Protection Bureau on Friday requested that a federal court hear arguments again in a case that called into question whether the independent agency’s governance structure is constitutional, MorningConsult.com reported. The CFPB’s petition seeks the reconsideration of an October ruling from the U.S. Court of Appeals for the District of Columbia Circuit that gave the president the ability to fire the CFPB’s director. The majority opinion in PHH v. CFPB, written by Judge Brett Kavanaugh, said the agency would be better served by a regulatory commission structure, a major victory for conservative critics of the CFPB who say its single-director structure makes it unaccountable and subject to overstepping its authority. That ruling, the CFPB argued in Friday’s petition, would impact the five-year-old agency and could hurt operations at other single-director agencies like the Social Security Administration and Federal Housing Finance Agency.

The U.S. Congress could as soon as January start to dismantle President Barack Obama's transformation of student loan rules by blocking freshly minted regulations designed to help students who say they were defrauded by for-profit colleges, Reuters reported yesterday. The new measures, which lay out loan relief procedures for the students, were issued by the Department of Education just days before the election. That is recent enough to allow the new Republican-led Congress to disapprove them under a 1996 law called the Congressional Review Act. It gives Congress 60 legislative days to reverse regulations with a simple vote. Republicans opposed the rule when it was proposed. Lamar Alexander (R-Tenn.), who chairs the Senate committee on education, is considering introducing a resolution that would overturn the so-called "Borrower Defense" rule, according to a spokeswoman. Even without a legislative reversal, president-elect Donald Trump, who ran on an anti-regulation platform and started his own for-profit school, could instruct agencies to be more restrictive in how they interpret this rule and others aimed at easing student loan burdens. Read more.

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House Financial Services Committee Chairman Jeb Hensarling said he’s willing to tweak his plan to overhaul the Dodd-Frank Act before reintroducing it to Congress early next year, Bloomberg News reported yesterday. The committee is “interested in working on a 2.0 version,” Hensarling said. “Advice and counsel is welcome.” The Texas Republican’s comments come amid speculation that his Choice Act could serve as a blueprint for how Donald Trump overhauls financial reforms enacted after the 2008 economic crisis. During the event, Hensarling said that the committee has been in “fairly constant dialogue” with Trump’s transition team about his legislation, but it hasn’t been explicitly endorsed by the president-elect. Last week Trump’s transition team reiterated the campaign promise to scrap Dodd-Frank. A financial policy team is working on crafting measures that would dismantle the 2010 law and replace it with new policies that encourage economic growth and job creation, according to a statement on the transition team’s website. Read more. 

In related news, key Democrats on the Senate Banking Committee said this week they are willing to work with the incoming Trump administration and the Republican Congress on potential changes to the 2010 Dodd-Frank Act, but only to a small extent, MorningConsult.com reported today. Ohio Sen. Sherrod Brown, the panel’s ranking member, and Sen. Jon Tester of Montana said they would be OK with discussing scaled-back regulations on community banks, for example. “If he’s talking about giving some reg relief to those community banks, I’ll work with him,” Tester said. “If he’s talking about giving reg relief to Wall Street, then we’ve got a problem because, frankly, that’s where the risk of a financial meltdown comes from.” Read more. 

Republican lawmakers and business groups are crafting plans to rein in the federal government’s consumer-finance watchdog in the wake of Donald Trump’s presidential victory, the Wall Street Journal reported today. The trade group for credit unions has demanded that the Consumer Financial Protection Bureau immediately “cease its pending rulemaking” affecting its members, seeking to give the new administration a chance to cast a more skeptical eye on the proposals than the current Democratic White House would provide. The agency has “stifled” the industry’s ability to serve its customers, Jim Nussle, head of the Credit Union National Association, said on Friday. Industry experts say that it could be a year or so until a significant structural change could be made to the CFPB. That is in part due to a pending court case in which a panel of federal judges in October ruled the bureau’s single-director unconstitutional and ordered a new structure giving the president the power to dismiss the director at will. CFPB Director Richard Corday’s term runs until 2018. Under current law, Trump couldn’t force him out without cause.

Professional hockey player Jack Johnson will turn over most of what he earns over the next five years, including much of the remainder of a $30.5 million contract with the Columbus Blue Jackets, as part of a plan that would pay off his creditors and allow the NHL star to emerge from bankruptcy protection, the Wall Street Journal reported today. The chapter 11 plan, approved last week by a bankruptcy judge in Columbus, Ohio, includes settlements with creditors holding the majority of debt, more than $14 million. It comes more than two years after Johnson filed for bankruptcy protection. Johnson, a smooth-skating Michigan-raised defenseman who was the No. 3 pick in the 2005 National Hockey League draft, pinned his money problems on his parents who, until 2014, had control over his financial affairs. His lawyers say in court papers that his parents, Jack Sr. and Tina Johnson, kept him in the dark about a number of high-risk loans they took out in their son’s name. Johnson’s lawyers say his parents have admitted in court filings that they withheld financial information from their son. The Johnsons sought to “monetize” their son’s contract by taking out loans that borrowed against his future earnings in the NHL, according to a description of the plan filed by Johnson’s lawyers with the bankruptcy court. Read more. (Subscription required.) 

What is it like to be at the helm of a celebrity bankruptcy? Practitioners to discuss on panel at ABI’s Winter Leadership Conference. 

A group of online consumer loans that were packaged into bonds is going bad faster than lenders and bond underwriters had expected, the latest sign that some startups that aimed to revolutionize the banking industry underestimated the risk they were taking, Bloomberg News reported yesterday. Delinquencies and defaults are reaching key levels known as “triggers” for at least four different sets of bonds. Breaching those levels will force lenders or underwriters to start paying down the bonds early. Avant Inc. and its underwriters, for example, are going to have to begin to repay three of its asset-backed notes. Two of Avant’s securities breached triggers this month for the first time. Another bond, tied to the subprime lender CircleBack Lending Inc., may also soon breach those levels, according to Morgan Stanley analysts. When the four offerings were originally sold last year, they totaled more than $500 million in size. Around $2.8 billion of bonds backed by online consumer loans were sold in 2015, according to research firm PeerIQ.