Third Circuit Splits with New York by Allowing Make-Whole Premiums in Chapter 11
Third Circuit says that New York bankruptcy court’s MPM decision was wrong.
Judge Name - Do not use it.
Thomas Ambro
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Belize Is Trying to Restructure $530 Million of Bonds
Belize is in talks to restructure $530 million of bonds, citing serious economic and financial challenges facing the country, the Wall Street Journal reported on Friday. The Central American nation announced plans last Wednesday and urged bondholders to form a committee before the end of November, ahead of a semiannual coupon payment due in February. The Belize announcement follows on the heels of a similar plea by Africa’s Mozambique, where bondholders are resisting the restructuring, which would be their second in a year. This month, London-based brokerage Exotix downgraded Mozambique and Belize to sell, saying that each have upcoming bond payments and that one or both could default. Belize’s GDP growth slowed to 1 percent in 2015 due to falling production from various commodity sectors, including oil, and with a currency pegged to the dollar, the country has struggled to remain competitive against other commodity exporters in emerging markets, the IMF said following a review of the country in September.
CFPB Steps Up Inquiry Into Home Contracts
The Consumer Financial Protection Bureau, the nation’s top consumer watchdog, is stepping up an investigation into seller-financed home sales that target lower-income home buyers unable to get a traditional mortgage, the New York Times reported today. The regulatory agency disclosed yesterday that it recently ordered two major companies that offer high-interest installment contracts, called contracts for deed, to comply with a civil investigative demand for documents. The two firms, which challenged the demand for documents, are Harbour Portfolio Advisors of Dallas and National Asset Advisors of Columbia, S.C. The agency began informally looking at seller-financed homes, and specifically contracts for deed, this year. Enforcement lawyers at the agency have been investigating the prevalence of these types of transactions to determine whether they violate federal truth-in-lending laws. Harbour Portfolio bought more than 6,700 single-family homes after the financial crisis of 2008, most of them from Fannie Mae, a government-controlled mortgage finance firm, through bulk sales. Harbour paid $10,000 or less for most of the homes, which were foreclosed on during the financial crisis, and sells them “as is.” This year, Harbour began to sell off more than 600 homes with existing contracts for deeds in place to other investment firms and individual investors.
Obama Officials Work Against Time to Wrap Banking Rules
U.S. officials are striving to put finishing touches on a slew of banking rules before President Barack Obama leaves office and hands regulatory power to Donald Trump who has vowed to rewrite the existing financial rule book, Reuters reported yesterday. President-elect Trump will take over on Jan. 20 and his fellow Republicans will have control of Congress and government agencies, allowing the new administration to block or roll back many of the last-minute changes. But by completing far-advanced work on some banking standards in the next 10 weeks, Obama officials would raising the chances that some elements of the regulatory framework will survive. Some rules are meant to flesh out the Dodd Frank Act of 2010 designed to prevent the next global financial crisis. Trump campaigned on a pledge to scrap the law but now he says only some provisions must go to lighten the regulatory burden. The Federal Reserve is working on rules to govern matters such as executive pay, market stability and what investments Wall Street may hold. Last month, Securities and Exchange Commission Chair Mary Jo White said her agency would "in the near term" finish a rule on one thorny issue: how mutual funds manage derivatives. The SEC and bank regulators have also for years struggled to finalize a rule that would tie more banker pay to the long-term health of their firms rather than short-term performance of Wall Street firms. With only about 40 working days until the handover, it is not clear which, if any, of those standards will get across the finishing line.
Bank Fees, Payday Loans to Get Less Scrutiny From Trump's Consumer Watchdog
Payday lenders, student loan companies and banks that earn revenue from overdraft fees and similar charges should get a lift from the incoming Trump administration's overhaul of the nation's consumer watchdog agency, The Street reported yesterday. The Consumer Financial Protection Bureau was recently in the spotlight for disclosing that employees at Wells Fargo had opened as many as 2 million unauthorized consumer credit card and savings accounts in an effort to meet aggressive sales quotas. While Trump and his transition team have said that he would seek to abolish the entire Dodd-Frank law, it's unlikely that he could eliminate the CFPB. A major priority instead might be replacing its first director, Richard Cordray, which is easier said than done. A panel of federal appeals court judges ruled last month that the president should have the power to "supervise and direct" as well as fire the agency's director at will, although the bureau said before Trump's victory that it would appeal the decision. Regulatory observers contend that President Trump and the Republican-controlled Congress will simultaneously move ahead with a key goal that was blocked by Democrats: Replacing the role of director with a bipartisan commission made up of five members and subject to the congressional appropriations process.
Trump’s Transition Team Pledges to Dismantle Dodd-Frank Act
President-elect Donald Trump is translating some of his campaign rhetoric into policy statements, including the contention that the Dodd-Frank Act should be scrapped, Bloomberg reported yesterday. The “big banks got bigger while community financial institutions have disappeared at a rate of one per day, and taxpayers remain on the hook for bailing out financial firms deemed ‘too big to fail,’” says a statement posted on Trump’s official transition website. “The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.” U.S. bank stocks climbed for a second straight day on Thursday as investors bet that a Trump presidency will lead to less regulation and sideline industry critics in Congress. The call to scrap Dodd-Frank isn’t likely to go over well with Sen. Elizabeth Warren, who said that she’d be willing to work with the incoming administration. Warren cited issues they agree on, including the need to curtail Wall Street influence in politics, reinstate Glass-Steagall Act limits on banking activities and reform trade deals. Trump’s website also outlines several policies that will be familiar to those who followed his campaign, including calls for a moratorium on new rules so existing measures can be reviewed.
Wall Street Rallies with Optimism in Trump’s Business-Friendly Plans
Wall Street roared to life Wednesday after a tumultuous day of trading in global financial markets amid hopes that Donald Trump would reinvigorate the American economy by combining big tax cuts with new government investments, The Washington Post reported yesterday. What initially was a panicked global sell-off Tuesday night transformed into a near-record high for Wall Street by Wednesday. The turnaround began as Trump struck a conciliatory tone, calling on voters to “bind the wounds of division.” The blue-chip Dow Jones industrial average surged ahead about 250 points close to an all-time high — despite futures markets overnight signaling a decline of as much as 800 points. The Standard & Poor’s 500-stock index and Nasdaq each gained about 1 percent. On the campaign trail, Trump delivered a potent blend of economic populism and business-friendly rhetoric that ultimately propelled him to victory. He has pledged to slash corporate taxes from 35 to 15 percent and streamline and lower individual tax rates. In addition, Trump called for $1 trillion in spending on infrastructure, drawn from both the federal government and the private sector. Such moves, he said, would jump-start economic growth in a recovery that has repeatedly proved disappointing.
Stock Futures Pare Losses as Trump Wins White House
U.S. equity futures plunged on election night, but pared losses in the wee hours of Wednesday morning, Fox Business reported yesterday. With Donald Trump looking to emerge victorious throughout the night, traders rushed to reassess the outcome of the vote, and its impact on financial markets. They piled into safe havens like gold and government debt. The precious metal rallied as much as 4.68 percent, while the yield on the benchmark 10-year U.S. Treasury bond, which moves inversely to its price, declined 0.137 percentage points to 1.73 percent. Meanwhile, the Mexican peso plunged 11.54 percent, its lowest-ever level against the U.S. dollar. The currency has been seen as Wall Street’s favorite proxy for betting on the presidential race during the 2016 election cycle. As Trump’s prospects of winning looked better, especially with the tight race in Florida, the peso dropped. Dow futures plunged nearly 800 points during the night’s volatile trade, while S&P 500 and Nasdaq 100 futures fell sharply in sympathy. Futures pointed to a 2.2 percent opening loss for the S&P 500. The night’s action threatened to wipe out 2016 gains on both the S&P and Nasdaq at the opening bell on Wednesday.
Federal Court Rejects NAFA Attempt to Kill DOL Fiduciary Rule
In a victory for the Department of Labor, a federal judge has rejected an attempt by an insurance trade group to strike down its new fiduciary rule for retirement advice, Investment News reported on Friday. In the first court decision involving a legal challenge to the DOL rule, District Judge Randolph Moss turned back the challenge brought by the National Association for Fixed Annuities. In addition to seeking a preliminary injunction to delay the implementation date, NAFA also was asking the court to vacate and set aside the fiduciary rule and its associated exemptions. NAFA had challenged the new rules “on numerous grounds,” including the new definition of “fiduciary” and a claim that the DOL had acted beyond its authority. NAFA further contended that “the new rules will have catastrophic consequences for the fixed indexed annuities industry.”
California Gets $15 Million in Bernard Madoff Fraud Recovery Effort
California will recover $15 million related to the massive Ponzi scheme engineered by Bernard Madoff as part of a larger agreement liquefying the $277 million estate of a Beverly Hills investment adviser, The Associated Press reported. The settlement ends a 7-year-old lawsuit filed by the state attorney general against Stanley Chais, who charged what officials called astronomical fees to invest hundreds of millions of dollars from more than 460 often-elderly victims. Chais, who died in 2010, collected nearly $270 million in fees between 1995 and 2008 while presenting himself as an "investment wizard.“ In fact, he simply funneled investors' life savings to Madoff. The agreement settles separate lawsuits against Chais that trustees said will essentially turn over his estate to his victims.
