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Federal Reserve Chair Janet Yellen on Wednesday defended the central bank’s tighter oversight of the financial system as essential for a stronger banking system during a contentious hearing on Capitol Hill, the Washington Post reported today. The sweeping reform of the financial system passed in 2010, known as the Dodd-Frank Act, mandated that the White House appoint a vice chairman of supervision at the Fed to oversee its expanded regulatory responsibilities. However, the Obama administration has yet to name someone for the job, so Yellen was filling in to testify before the House Financial Services committee. Rep. Jeb Hensarling (R-Tex.), who heads the committee, struck a combative tone from the start of the hearing, criticizing Yellen for the lack of transparency in developing the new regulations, many of which were required under Dodd-Frank. Yellen said that many of the largest institutions are healthier and have more stable funding sources than they did before the 2008 financial crisis. However, she said many still have “substantial compliance and risk-management issues.”

Debt service will consume less than 17 percent of Puerto Rico’s consolidated budget this fiscal year, according to an op-ed in today’s Wall Street Journal. In the general-fund budget, which does not include government-owned corporations and agencies, debt service is below 16 percent. Neither number sounds like grounds for declaring bankruptcy. Factor in all the fat in government spending that could be cut, and the case for walking away from obligations to creditors is even weaker, according to the commentary. Read more. (Subscription required.) 

In related news, an index of Puerto Rico bond yields reached a record high this week as investors remain unsure whether they’ll be paid on Dec. 1 and lawmakers in Washington, D.C., ponder extending a bankruptcy option to the cash-strapped commonwealth, Bloomberg News reported on Friday. Ten-year Puerto Rico general obligations yield 12.3 percent, the highest since at least January 2013 and up from 10.1 percent on Oct. 20, according to data compiled by Bloomberg. That’s 10.3 percentage points more than benchmark municipal bonds with the same maturity and equivalent to a 21.8 percent taxable interest rate for the highest earners. A spokesman for Governor Alejandro Garcia Padilla said on Thursday that while the commonwealth intends to meet its obligations, the government could run out of cash and will pay for essential services over creditors. That announcement came a week after the Obama administration proposed giving the commonwealth unprecedented authority to restructure its entire debt burden through bankruptcy protection, a proposal the governor endorses. Read more. 

For continuing news, analysis and information on Puerto Rico’s debt crisis, be sure to visit ABI’s “Puerto Rico” in distress webpage. 

The House acted with rare bipartisanship yesterday to approve legislation that would reopen the federal Export-Import Bank, the New York Times reported today. The result, a victory for an alliance of business and organized labor, was a big step toward reversing a triumph for hard-line conservatives when they blocked the reauthorization of the small agency four months ago. Since then, the bank has been unable to offer new assistance to foreign buyers of American goods, managing only existing claims. But the bank’s future may not be resolved until December. The House bill now goes to the Senate, which approved a similar bank reauthorization measure as part of an unrelated transportation bill. While the Senate majority leader, Mitch McConnell, Republican of Kentucky, opposes the bank bill, the bipartisan House vote is expected to strengthen the hand of the bank’s proponents in negotiations over the transportation bill’s provisions. Big and small businesses alike have increasingly complained of lost sales opportunities, and General Electric announced that it would move some operations out of the United States to take advantage of foreign countries’ export financing.

John Chiang, the treasurer of California, recently called for legislation requiring full transparency in the reporting of fees charged by private-equity firms, the New York Times DealBook reported on Saturday. In an Oct. 12 letter to the California Public Employees’ Retirement System and California State Teachers’ Retirement System, Chiang urged both organizations to help him devise legislation to solve the problem of investors who “pay excessive fees to private-equity firms and do not have sufficient visibility into the nature and amount of those fees.” Giants like Blackstone, TPG and the Carlyle Group have said that disclosing their agreements with investors would reveal trade secrets. Pension funds investing in these deals also refuse to disclose relevant documents, saying that private-equity firms would bar them from future deals if they did so.

The Senate Energy and Natural Resources Committee will hold a hearing on Thursday at 10 a.m. ET to receive testimony on Puerto Rico's economy, debt, and options for Congress moving forward. More information on witnesses and prepared testimony forthcoming.

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" page.

It is reasonable to ask, 10 years since the implementation of the Bankruptcy Abuse Reform and Consumer Protection Act, whether the reform law achieved its goals, according to an American Banker commentary today by John McMickle, a former counsel to the Senate Judiciary Committee who helped to draft the legislation. McMickle believes that the law has worked well, though not perfectly. As intended, the number of bankruptcy filings has declined dramatically since 2005, from almost 1.7 million to 920,000 in 2104, according to McMickle. He thinks that the "means test" — which measures a prospective bankruptcy filer's ability to pay and channels those with higher incomes into repayment plans — has worked well. “Despite criticism, the ‘means test’ assures repayment but permits the truly distressed to avoid hardship,” McMickle writes. Read the commentary.

For additional expert perspectives of business and consumer bankruptcy trends on the 10th anniversary of BAPCPA, be sure to watch ABI’s media webinars, “BAPCPA at 10.”

Recent retail bankruptcy cases speak to the debate underway about proposed changes to bankruptcy laws that would make the process cheaper for and potentially more favorable to businesses trying to reorganize, according to a commentary yesterday by Prof. Stephen J. Lubben in the New York Times DealBook blog. In response to the recommendations of ABI's Chapter 11 Reform Commission, the Loan Syndications and Trading Association recently released a report in response focused on the importance of preserving chapter 11 in its current form. ABI's Chapter 11 Reform Commission instead portrays its proposed changes as restoring the balance of power in chapter 11. Read more. 

To read more or to watch presentations on the Commission's the recommendations to modernize chapter 11, be sure to visit http://commission.abi.org/.