%1

CONSUMERS PAYING DOWN DEBT HELPS BOOST U.S. EXPANSION



Federal Reserve figures show that household debt as a share of disposable income sank to 113 percent in the second quarter from a record high of 134 percent in 2007 before the recession hit, Bloomberg News reported yesterday. Debt payments on that basis are the smallest in almost 18 years, while the delinquency rate for credit cards is the lowest since the end of 2008. The progress that consumers have been making will allow gross domestic product to absorb stepped-up deficit reduction by the federal government next year and keep on expanding, according to Mark Zandi, chief economist at Moody’s Analytics Inc. He sees GDP growing 2.1 percent in 2013, a bit slower than this year’s projected 2.2 percent, as Congress allows some, but not all, of the scheduled year-end tax increases and spending cuts to go ahead. The GDP number will mask stronger growth for the private side of the economy, which Zandi expects to increase to 3.6 percent from 3.1 percent. Read more.

FED GOVERNOR'S PLAN TO LIMIT BANK SIZE FUELS DEBATE



While academics, politicians and even former bank chiefs have called for the nation's banking behemoths to be broken up or shrunk, Daniel K. Tarullo, a Federal Reserve governor who oversees bank regulation, said in a speech last week that an important part of a bank's balance sheet could be capped at a set percentage of the nation's gross domestic product, the New York Times DealBook blog reported yesterday. That a regulator at the Fed – the most powerful of the banking industry's overseers – would say that such a structural overhaul of the financial system might be considered was a sign that the policy debate over what to do about "too big to fail" might be shifting. Some Republicans looking to repeal the Dodd-Frank Act say that they still want to constrain large banks. Their concern is that the law may lead the market to believe that the government protects large banks. In turn, investors might then provide cheap loans to the biggest banks, fueling even more growth in the banks' balance sheets. "I am completely open to the proposal because of my similar concern about the growing size of institutions that are too big to fail," said Sen. David Vitter (R-La.). "Beyond this specific proposal, there is a growing nonpartisan consensus to do a lot more to limit the size of the megabanks." Read more.

BANKS SEE HOME LOANS AS GATEWAY TO BIG GAINS



Federal stimulus has ignited a boom in mortgage refinancing, and the trend could continue as the government steps up its support of the broad housing market, according to a report in the New York Times DealBook blog on Friday. In the third quarter, banks may have likely originated as much as $450 billion of home loans, according to estimates by Inside Mortgage Finance, a publication that tracks the industry. That figure, which includes both refinances of existing mortgages and new loans to buy a house, would be a considerable jump from the previous period. In the second quarter, banks originated $405 billion, with 68 percent in refinancings. In September, the Fed announced plans to buy large amounts of mortgage-backed bonds. The proposal has driven the price of such securities higher, letting banks earn an even bigger financial gain when they sell mortgages into the market. Read more.

ANALYSIS: FLIPPING HOUSES IS ONCE AGAIN A BOOMING BUSINESS



Flipping houses earned a bad reputation during the housing boom thanks to speculators who bought and sold millions of homes in search of easy profits, but the practice is gaining popularity again as the nation’s real estate market shows signs of life, the Washington Post reported yesterday. The number of flips rose 25 percent during the first half of 2012 from the same period a year earlier, according to research firm RealtyTrac, and the gross profit on each property averaged $29,342. Areas of the country that were hit particularly hard by the housing crash have seen the most pronounced boom in flipping, as investors gobble up foreclosures and short sales — properties sold for less than the owners owe on the mortgage — and resell them to buyers eager to take advantage of record-low interest rates. The Phoenix area leads the country with nearly 10,000 flipped properties during the first half of this year. Las Vegas, Los Angeles, Miami and Atlanta also are high on the list. Read more.

NEW JERSEY CASE MAY UPEND HOME LOAN DISCRIMINATION RULES



A fight between the government and residents of what remains of Mount Holly Gardens in New Jersey has now reached the U.S. Supreme Court, which may decide in the next several weeks whether to take up a case with nationwide implications for the housing industry, Bloomberg News reported yesterday. Civil rights advocates are battling the industry over whether the 1968 Fair Housing Act authorizes discrimination suits even without allegations of intentional bias. Lower courts have said that suits can claim that a government policy or company lending practice has a discriminatory effect, known as "disparate impact," even if that was not the intent. Mount Holly has been buying up what it says had become a blighted, high-crime neighborhood, with an eye toward redevelopment. The opponents say that the effort has hurt black and Hispanic residents, devastating the township's only predominantly minority neighborhood. Although the Mount Holly case involves municipal action, the U.S. Justice Department also enforces the disparate impact doctrine against financial institutions. The statute lacks the language supporting this doctrine, which Congress affirmatively included in other laws, so it should not apply, said Jeffrey Naimon, a banking attorney with BuckleySandler LLP. The courts have disagreed. "Allowing disparate impact claims under the FHA would render illegal many legitimate governmental and private activities designed to promote the general welfare of the community," Mount Holly argued in its appeal to the Supreme Court. Read more.

CFPB REPORT FINDS PRIVATE STUDENT LOAN BORROWERS FACE ROADBLOCKS TO REPAYMENT



The Consumer Financial Protection Bureau (CFPB) Student Loan Ombudsman released a report today saying that private student loan borrowers are sometimes surprised by the terms and conditions of their loans, are given the runaround by their loan servicer and have few options to refinance or modify repayment for a better deal, insideARM.com reported. "Graduates don't have a fair chance to pay back their debts if they are faced with surprises, runarounds, and dead-ends by student loan servicers," said CFPB Director Richard Cordray. "Student loan borrower stories of detours and dead-ends with their servicers bear an uncanny resemblance to problematic practices uncovered in the mortgage servicing business," said CFPB Student Loan Ombudsman Rohit Chopra, who authored the report. Earlier this year, the CFPB announced that outstanding student loan debt crossed the $1 trillion mark. The Dodd-Frank Act established an ombudsman for student loans within the CFPB to assist borrowers with private student loan complaints. Today’s report, which was mandated by Congress, analyzed approximately 2,900 private student loan complaints, comments, and other submissions and input from borrowers. The report found that roughly 95 percent of the complaints are about loan servicing – when borrowers try to pay back their debt or are unable to pay. Read more.

Click here to read the CFPB report.

STUDY: WELL-OFF WILL BENEFIT MOST FROM CHANGE TO STUDENT DEBT RELIEF PLAN



While the federal government is making changes to its income-based student loan repayment plan to help borrowers with relatively high debt, a report released today by the New America Foundation, a nonprofit and nonpartisan policy institute, says that the changes ultimately will provide only marginal help for borrowers who are at the greatest risk of default, the New York Times reported. Rather, the changes would provide big benefits to middle- and high-income borrowers, particularly for those seeking a graduate degree, the authors found. The report says that at least one financial planning company is telling law school students that the changes could allow them to write off $100,000 in student debt. Under current rules, borrowers pay 15 percent of their discretionary income, based on a formula that is meant to exclude money spent on basic life necessities. The remaining balance and accrued interest is forgiven after 25 years of payments. The Obama administration is tweaking the program to lessen the burden for some borrowers by expediting changes that will reduce monthly payments from 15 percent of discretionary income to 10 percent and forgive outstanding balances after 20 years of payments, instead of 25 years. The New America Foundation report says the changes to income-based repayment could provide some benefits to all participants. But the primary beneficiaries would be high-income, high-debt participants who could make relatively small payments for 20 years and then have a large part of their debt forgiven, the authors said. Read more.

Click here to read the New America Foundation report.

WATCH COMMISSION HEARING LIVE TOMORROW!



ABI's Commission to Study the Reform of Chapter 11 will hold a public hearing tomorrow, October 17, at the LSTA Annual Conference in New York. The event will be live webcast beginning at 3:15 p.m. ET at the Commission's website (commission.abi.org).

SHOW YOUR SUPPORT FOR STEVEN GOLICK, A COLLEAGUE AND ABI LEADER



Our friend Steven Golick (Osler Hoskin & Harcourt LLP, Toronto) is facing a medical crisis. He has been diagnosed with a serious brain tumor, requiring complex surgery and treatment. Steven’s spirits are very strong and he and his family remain optimistic, but he can use our support. A prominent international restructuring attorney and an ABI member since 1994, Steven is also a founding member of the ABI house band, the Indubitable Equivalents. Because the band is important to Steven, his fellow band-mates have organized a new Blog site for Steven's friends and colleagues to show their love and support at this critical time. Please click on this link to share your thoughts with many others, and post as often as you'd like.

ABI IN-DEPTH

LATEST ABI PODCAST EXAMINES LITIGATION SURROUNDING THE DISSOLUTION OF A DISTRESSED LAW FIRM



The latest ABI podcast features Executive Director Sam Gerdano talking with Paul Hage of Jaffe, Raitt, Heuer & Weiss, PC (Southfield, Mich.) and Dylan Trache of Wiley Rein LLP (McLean, Va.) about unfinished business litigation and other issues surrounding the dissolution of a financially distressed law firm. Click here to listen.

MEMBERS WILL NOT WANT TO MISS ABI'S PROGRAM AT NCBJ'S ANNUAL MEETING ON OCT. 26



Members planning to attend the 86th Annual NCBJ Annual Conference in San Diego from Oct. 24-27 will not want to miss the exciting line-up scheduled for the ABI program track on Oct. 26. In addition to roundtable discussions on the hottest consumer and business bankruptcy topics, ABI will be hosting a ticketed luncheon that will feature the presentation of the 7th Annual Judge William L. Norton, Jr. Judicial Excellence Award and entertainment by Apollo Robbins, a sleight-of hand artist, security consultant and self-described gentleman thief. Click here to register for the Conference.

To view the list of ABI programs on Oct. 26 and the full NCBJ Annual Conference schedule, please click here.



ABI's Chapter 11 Reform Commission will also be holding a public hearing on Oct. 26 from 2:30-4:30 p.m. PT at the San Diego Marriott. Interested parties have the opportunity to submit testimony at the hearing. For further information, please contact ABI Executive Director Samuel J. Gerdano at sgerdano@abiworld.org.

LATEST CASE SUMMARY ON VOLO: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA V. CITY OF BOSTON (IN RE SW BOSTON HOTEL VENTURE LLC; 1ST CIR.)



Summarized by Neal Paul Donnelly of the U.S. Bankruptcy Court for the District of Delaware

In a dispute between a developer-debtor and its primary secured lender, the BAP affirmed the bankruptcy court's decision to calculate postpetition interest (§506(b)) owing to the lender at the contractual default rate. The BAP also reversed the lower court's ruling as to when the post-petition interest began accruing, finding that the lender had been oversecured since the petition date, so that was when the lender became entitled to interest payments under § 506(b).

There are more than 650 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: SUMMARY OF KEY DIFFERENCES BETWEEN CHAPTER 9 AND CHAPTER 11 BANKRUPTCY



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post summarizes several of the key differences between chapter 9 and chapter 11 bankruptcy.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Bankruptcy courts should adopt formal loss mitigation procedures to facilitate the negotiation of residential mortgage modifications for consumer debtors.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?



Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

October

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

- ABI/St. John's "Bankruptcy and Race: Is There a Relation?" Symposium

     October 19, 2012 | Queens, N.Y.

- ABI Program at NCBJ's Annual Conference

     October 26, 2012 | San Diego, Calif.

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

     November 9, 2012 | New York, N.Y.

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

     November 29 - December 1, 2012 | Tucson, Ariz.

December

- Forty-Hour Bankruptcy Mediation Training

     December 4-8, 2012 | New York, N.Y.

2013

January

- Rocky Mountain Bankruptcy Conference

     January 24-25, 2013 | Denver, Colo.

February

- Caribbean Insolvency Symposium

     February 7-9, 2013 | Miami, Fla.

- Kansas City Advanced Consumer Bankruptcy Practice Institute

     February 17-19, 2013 | Kansas City, Mo.

CREDITOR LAWSUIT COULD UNDO AUTO BAILOUT, FORCE GM INTO BANKRUPTCY



A backroom deal negotiated by General Motors during the auto bailout to fulfill the Obama administration's demand for a quick bankruptcy could be reversed, draining the automaker of nearly all of its cash on hand and leaving it in worse shape than it was when it collapsed in 2009, according to a report in the Washington Free Beacon yesterday. As GM teetered on the edge of bankruptcy in June 2009, it cut a $367 million "lock-up agreement" with several major creditors in order to prevent its Canadian subsidiary from going under. The move spared the subsidiary from fulfilling the $1 billion debt it owed the creditors—major hedge funds—ensuring that GM would not have to face bankruptcy courts in two nations, which could have delayed the company’s recovery. "Many U.S. creditors waived their rights to object because the government wanted to push through the bailout for political reasons," risk analyst Chris Whalen said. "If they had continued through normal channels, they could have easily been in bankruptcy for five years." "When I approved the sale agreement and entered the sale approval order, I mistakenly thought that I was merely saving GM, the supply chain, and about a million jobs,” Bankruptcy Judge Robert Gerber said in July. “It never once occurred to me, and nobody bothered to disclose, that amongst all of the assigned contracts was this lock-up agreement, if indeed it was assigned at all." Industry experts say that GM should be very concerned with the judge’s reaction to the deal. More is at stake than the roughly $1 billion that “old GM’s” spurned creditors are seeking, according to industry observers. Judge Gerber may have to reopen the entire bailout, and that, according to bankruptcy experts, could unravel the entire settlement. Read more.

U.S. CHARGES 530 PEOPLE IN MORTGAGE PROBE WITH $1 BILLION IN LOSSES



Attorney General Eric Holder said today that the U.S. brought charges against 530 people over mortgage schemes that cost homeowners more than $1 billion, Bloomberg News reported. More than 73,000 homeowners were victims of various frauds for which charges were filed during a year-long crackdown, including "foreclosure rescue schemes" that take advantage of those who have fallen behind on payments, the Justice Department said. Typical schemes involved promises to homeowners that foreclosures could be prevented by payment of a fee, according to the statement. As part of the schemes, "investors" purchase the mortgage or the titles of homes are transferred to those taking part in the fraud, resulting in homeowners losing their property, the department said. Read more.

COURT SAYS CONGRESS CANNOT BLOCK PAY HIKES FOR JUDGES



The U.S. Court of Appeals for the Federal Circuit in a 10-2 decision on Friday found that Congress cannot revoke cost-of-living adjustments promised to federal judges in the Ethics Reform Act of 1989, reversing the court's holding to the contrary in 2001, the National Law Journal reported yesterday. Six current and retired federal judges sued over Congress' decision to block cost-of-living adjustments in the past and whether legislation passed after the court's 2001 decision overrode provisions of the 1989 law. In the Oct. 5 decision, the court found that Congress had violated the Compensation Clause of the Constitution, which aims to protect judicial independence by limiting the ability of the other branches of government from reducing judges' salaries. If Congress wanted to amend the 1989 law, the judges wrote, it could, but not in a way that affected any sitting judges. Read more.

WALL STREET REGULATOR RAMPS UP ENFORCEMENT



The Commodity Futures Trading Commission (CFTC), once considered a toothless regulator, brought a record number of enforcement cases over the past year as fines soared, the New York Times DealBook blog reported on Friday. The agency said on Friday that it levied $585 million in sanctions during its 2012 fiscal year, which ended Sept. 30, up from $450 million the year before. The surge in fines is largely tied to one case. In June, the British bank Barclays agreed to pay $200 million to the agency for trying to manipulating a crucial interest rate. Read more.

ABI MEMBERS CAN RECEIVE A DISCOUNT ON THEIR PURCHASE OF A DEBTOR WORLD



A Debtor World, published by Oxford University Press, contains a collection of contributions about the societal implications of private debt from top scholars at the 2008 Debt Symposium sponsored by ABI and hosted by the University of Illinois College of Law. The essays comprising this volume are authored by dozens of leading U.S. and international academics who have written about debt or issues related to debt in a wide range of disciplines including law, sociology, psychology, history, economics and more. The collection explores debt as neither a problem nor a solution but as a phenomenon, and promotes the exchange of knowledge to better comprehend why consumers and businesses decide to borrow money. It explores what happens to businesses and consumers under heavy debt loads, and what legal norms and institutions societies need in order to encourage the efficient use of debt while promoting a greater understanding of the global phenomenon of increased indebtedness and societal dependence. To order your copy and receive an ABI member discount, please click here and enter promo code "31256" when making your purchase. The discount expires 12/31.

SHOW YOUR SUPPORT FOR STEVEN GOLICK, A COLLEAGUE AND ABI LEADER



Our friend Steven Golick (Osler Hoskin & Harcourt LLP, Toronto) is facing a medical crisis. He has been diagnosed with a serious brain tumor, requiring complex surgery and treatment. Steven’s spirits are very strong and he and his family remain optimistic, but he can use our support. A prominent international restructuring attorney and an ABI member since 1994, Steven is also a founding member of the ABI house band, the Indubitable Equivalents. Because the band is important to Steven, his fellow band-mates have organized a new Blog site for Steven's friends and colleagues to show their love and support at this critical time. Please click on this link to share your thoughts with many others, and post as often as you'd like.

ABI IN-DEPTH

LAST CHANCE TO GET YOUR TICKET FOR TOMORROW’S PLAYOFF GAME TO SEE THE ST. LOUIS CARDINALS TAKE ON THE WASHINGTON NATIONALS IN D.C.!



Only a few tickets remain to the ABI Endowment's special event at Nationals Park tomorrow at 1 p.m. ET to see the St. Louis Cardinals take on the Washington Nationals in Game 3 of the National League Division Series. For $400, you will receive a game ticket to a luxury suite, food and open bar. Don't miss playoff baseball in Washington, D.C.! Click here to register!

Sponsorships Are also Available!

Stand out from the crowd and sponsor this historic playoff event! Bring a client; tickets included with your sponsorship. All sponsorships are tax deductible. Click here for details.

MEMBERS WILL NOT WANT TO MISS ABI'S PROGRAM AT NCBJ'S ANNUAL MEETING ON OCT. 26



Members planning to attend the 86th Annual NCBJ Annual Conference in San Diego from Oct. 24-27 will not want to miss the exciting line-up scheduled for the ABI program track on Oct. 26. In addition to roundtable discussions on the hottest consumer and business bankruptcy topics, ABI will be hosting a ticketed luncheon that will feature the presentation of the 7th Annual Judge William L. Norton, Jr. Judicial Excellence Award and entertainment by Apollo Robbins, a sleight-of hand artist, security consultant and self-described gentleman thief. Click here to register for the Conference.

To view the list of ABI programs on Oct. 26 and the full NCBJ Annual Conference schedule, please click here.



ABI's Chapter 11 Reform Commission will also be holding a public hearing on Oct. 26 from 2:30-4:30 p.m. PT at the San Diego Marriott. Interested parties have the opportunity to submit testimony at the hearing. For further information, please contact ABI Executive Director Samuel J. Gerdano at sgerdano@abiworld.org.

LATEST CASE SUMMARY ON VOLO: LIQUIDATORS OF LEHMAN BROTHERS AUSTRALIA LTD. V. LEHMAN BROTHERS SPECIAL FINANCING INC. (IN RE LEHMAN BROTHERS HOLDINGS INC.; 2D CIR.)



Summarized by Janice Grubin of Todtman, Nachamie, Spizz & Johns, P.C.

The Second Circuit vacated and remanded the judgment of the district court and reinstated the appeal for consideration of the bankruptcy court order denying intervention on the merits. Given that (1) denials of intervention are generally considered to be final appealable orders in the non-bankruptcy context, (2) the bankruptcy standard for finality is more flexible than other civil litigation and (3) the pragmatic approach is required by the instant circumstances, the Circuit held that the bankruptcy court's denial of the appellants' motions to intervene was a final, appealable order.

There are more than 650 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: PINNACLE UNIONS BALK AT AIRLINE'S ATTEMPTS TO SCRAP CONTRACT



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post reported on how Pinnacle Airlines Corp.'s thousands of pilots and flight attendants are objecting to the airline’s bid to scrap their contracts, a move the regional carrier says is necessary to exit bankruptcy protection.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Bankruptcy courts should adopt formal loss mitigation procedures to facilitate the negotiation of residential mortgage modifications for consumer debtors.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?



Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

October

- ABI Endowment Event: Nationals Playoff Game

     October 10, 2012 | Washington, D.C.

- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar

October 15, 2012

- ABI/Bloomberg Distressed Lending Conference

October 16, 2012 | New York, N.Y..

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

- ABI/St. John's "Bankruptcy and Race: Is There a Relation?" Symposium

     October 19, 2012 | Queens, N.Y.

- ABI Program at NCBJ's Annual Conference

     October 26, 2012 | San Diego, Calif.

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

     November 9, 2012 | New York, N.Y.

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

     November 29 - December 1, 2012 | Tucson, Ariz.

December

- Forty-Hour Bankruptcy Mediation Training

     December 4-8, 2012 | New York, N.Y.

2013

January

- Rocky Mountain Bankruptcy Conference

     January 24-25, 2013 | Denver, Colo.

February

- Kansas City Advanced Consumer Bankruptcy Practice Institute

     February 17-19, 2013 | Kansas City, Mo.

COMMENTARY: THE INTANGIBLE COSTS OF BANKRUPTCIES



While most experts examine direct costs, such as filing fees, professionals fees and court fees, there are indirect costs of a company’s financial distress, which are more abstract, like lost revenue, lost opportunities and lost good will, according to a commentary by Prof. Stephen Lubben in the New York Times DealBook blog on Monday. Some of these costs may be of concern to the company’s stakeholders, but not to policy makers if, for example, financial distress simply results in the shifting of sales from the distressed firm to a competitor firm – unless the competitor is abroad, according to Lubben. If most of the cost is incurred long before bankruptcy, according to Lubben, then we may need to reform the chapter 11 portion of the bankruptcy code in a way that will allow those costs to be cut sooner. Read the full commentary.

ANALYSIS: BURDENED BY OLD MORTGAGES, BANKS ARE SLOW TO LEND NOW



While the average rate on a 30-year fixed-rate mortgage hit 3.53 percent last week, thousands of would-be homeowners are being locked out of the market because lenders, facing a hard-line stance from Fannie Mae and Freddie Mac, have grown wary of making new loans, the Wall Street Journal reported yesterday. The two mortgage giants have been forcing banks to take back an increasing number of loans that the banks made during the boom years and sold to Fannie and Freddie. To protect themselves from such demands in the future, banks are ratcheting up credit and documentation standards for new mortgages. This play-it-safe stance by banks threatens to undercut the Federal Reserve's latest effort to push down mortgage rates by buying up mortgage-backed securities. Even if rates keep falling, many people will find it much harder to take advantage. Read more. (Subscription required.)

REPORT: CONSUMER CREDIT DELINQUENCIES NEAR 6-YEAR LOW



The American Bankers Association (ABA) said that U.S. consumer-loan delinquencies dropped to their lowest level in nearly six years during the second quarter of 2012, Bloomberg News reported today. Delinquencies across eight loan categories fell a total of 11 basis points to 2.24 percent of all accounts in the second quarter, the best showing since the fourth quarter of 2006, when the rate was 2.23 percent. The rate has now been below the 15-year average of 2.40 percent for two consecutive quarters, the ABA said in its Consumer Credit Delinquency Bulletin. Delinquencies on bank card debt fell from 3.08 percent of all accounts in the first quarter to an 11-year low of 2.93 percent, well below the 15-year average of 3.91 percent. Read more.

SUBPRIME SECURITIES GAIN 30 PERCENT AS GOLDMAN, CERBERUS TARGET MARKET



U.S. home-loan securities without government backing, the kind of debt that sparked the worst financial crisis since the Great Depression, shrank last quarter to less than $1 trillion for the first time in eight years, leaving fewer bonds to meet soaring demand as housing recovers, Bloomberg News reported today. The non-agency mortgage bond market has contracted from $2.3 trillion in mid-2007, when a property bubble fueled by shoddy loans burst, according to Federal Reserve data. It’s fallen to about $970 billion after record homeowner defaults, borrower refinancing and limited sales of new debt. Growing interest in a diminishing asset has bolstered a rally that has pushed returns on subprime-backed securities to almost 30 percent this year. Cerberus Capital Management LP and Goldman Sachs Group Inc. are among firms that have raised money for new funds targeting the bonds, as investors speculate on the real estate recovery or seek to earn higher returns as the Fed pushes yields on safer debt to record lows. Read more.

COMMENTARY: WHY DODD-FRANK RULES KEEP LOSING IN COURT



Since the mid-2000s, regulations of the Securities and Exchange Commission have been challenged six times in the federal court of appeals in Washington, D.C., and the SEC lost every time, according to a commentary in the Wall Street Journal today. Some former SEC staffers and investor advocates try to blame the judges of the U.S. Court of Appeals for the D.C. Circuit, saying that they favor Wall Street. The "blame-the-appellate-judges" theory suffered its latest setback last Friday, when a judge appointed by President Obama, in the district court in Washington, D.C., struck down the controversial rule of the Commodity Futures Trading Commission (CFTC) that placed new "position limits" on the amounts of commodities investors can hold. Financial regulators should be particularly attentive to the financial consequences of their actions when adopting regulations, the commentary said. Other agencies have conducted sophisticated cost-benefit analyses for decades, and these are reviewed (and sometimes rejected) by a special White House office of regulation. As an independent agency, the SEC is exempt from that external expert review. Its rules have suffered as a result, according to the commentary. Read the full commentary.

SHOW YOUR SUPPORT FOR STEVEN GOLICK, A COLLEAGUE AND ABI LEADER



Our friend Steven Golick (Osler Hoskin & Harcourt LLP, Toronto) is facing a medical crisis. He has been diagnosed with a serious brain tumor, requiring complex surgery and treatment. Steven’s spirits are very strong and he and his family remain optimistic, but he can use our support. A prominent international restructuring attorney and an ABI member since 1994, Steven is also a founding member of the ABI house band, the Indubitable Equivalents. Because the band is important to Steven, his fellow band-mates have organized a new Blog site for Steven's friends and colleagues to show their love and support at this critical time. Please click on this link to share your thoughts with many others, and post as often as you'd like.

ABI IN-DEPTH

SEE THE N.L. EAST DIVISION CHAMPION WASHINGTON NATIONALS IN THE PLAYOFFS: ABI HAS YOUR TICKET FOR OCTOBER 10!



Don't miss playoff baseball in Washington, D.C.! Only 20 tickets are available to the ABI Endowment's special event at the Nationals first home playoff game to be played on Oct. 10. For $400, you will receive a game ticket to a luxury suite, food and open bar.Click here to register!

Sponsorships Are also Available!

Stand out from the crowd and sponsor this historic playoff event! Bring a client; tickets included with your sponsorship. All sponsorships are tax deductible. Click here for details.

MEMBERS WILL NOT WANT TO MISS ABI'S PROGRAM AT NCBJ'S ANNUAL MEETING ON OCT. 26



Members planning to attend the 86th Annual NCBJ Annual Conference in San Diego from Oct. 24-27 will not want to miss the exciting line-up scheduled for the ABI program track on Oct. 26. In addition to roundtable discussions on the hottest consumer and business bankruptcy topics, ABI will be hosting a ticketed luncheon that will feature the presentation of the 7th Annual Judge William L. Norton, Jr. Judicial Excellence Award and entertainment by Apollo Robbins, a sleight-of hand artist, security consultant and self-described gentleman thief. Click here to register for the Conference.

To view the list of ABI programs on Oct. 26 and the full NCBJ Annual Conference schedule, please click here.



ABI's Chapter 11 Reform Commission will also be holding a public hearing on Oct. 26 from 2:30-4:30 p.m. PT at the San Diego Marriott. Interested parties have the opportunity to submit testimony at the hearing. For further information, please contact ABI Executive Director Samuel J. Gerdano at sgerdano@abiworld.org.

LATEST CASE SUMMARY ON VOLO: SUHAR V. BRUNO (IN RE NEAL; 6TH CIR.)



Summarized by Robert Miller of the U.S. Bankruptcy Court for the Middle District of North Carolina

The Sixth Circuit found that the debtor's assumption of the marital credit card debt of the debtor and the defendant, as part of a separation agreement, should not impact whether the debtor received reasonably equivalent value for transfers to the defendant in the separation agreement. The Sixth Circuit also followed recent precedent holding that a separation decree under Ohio law neither adjudicates reasonably equivalent value nor has a preclusive effect in a subsequent bankruptcy proceeding to determine whether reasonably equivalent value was transferred as part of the separation agreement.

There are more than 650 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: STOCKTON'S CREDITORS CHALLENGE CITY'S ELIGIBILITY TO FILE FOR CHAPTER 9



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the court challenge from Stockton, Calif.'s creditors about the city's eligibility to file for chapter 9 protection.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Bankruptcy courts should adopt formal loss mitigation procedures to facilitate the negotiation of residential mortgage modifications for consumer debtors.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?



Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

October

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

- ABI Endowment Event: Nationals Playoff Game

     October 10, 2012 | Washington, D.C.

- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar

October 15, 2012

- ABI/Bloomberg Distressed Lending Conference

October 16, 2012 | New York, N.Y..

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

- ABI/St. John's "Bankruptcy and Race: Is There a Relation?" Symposium

     October 19, 2012 | Queens, N.Y.

- ABI Program at NCBJ's Annual Conference

     October 26, 2012 | San Diego, Calif.

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

     November 9, 2012 | New York, N.Y.

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

     November 29 - December 1, 2012 | Tucson, Ariz.

December

- Forty-Hour Bankruptcy Mediation Training

     December 4-8, 2012 | New York, N.Y.

2013

February

- Kansas City Advanced Consumer Bankruptcy Practice Institute

     February 17-19, 2013 | Kansas City, Mo.

REPORT: FEWER MORTGAGE LOANS PAST DUE, IN FORECLOSURE



Lender Processing Services (LPS), which provides mortgage and consumer loan processing services and default solutions, said that mortgage delinquencies are down by more than 10 percent over the past year, although more than one homeowner in 10 remains at risk of losing their home, MortgageLoan.com reported yesterday. The nation’s mortgage delinquency rate fell to 6.87 percent in August to 3.43 million, according to new figures from LPS. That represents a 10.6 percent decline over the past year and a 2.3 percent drop from the July figure. Delinquent mortgages in the LPS survey include loans that are at least 30 days past due but not in foreclosure. Meanwhile, the national foreclosure rate fell to 4.04 percent, representing 2.02 million homes in foreclosure but not yet repossessed. That number is down 2.0 percent from the August 2011 level and 1.0 percent from July’s figures. Click here.

CONSUMERS GIVEN DIFFERENT CREDIT SCORES THAN WHAT IS PROVIDED TO LENDERS, CFPB SAYS



The Consumer Financial Protection Bureau (CFPB) released a study today that found that one in five U.S. consumers is likely to receive a credit score that is different than the one provided to lenders, potentially closing off access to credit for millions of Americans who believe that they are eligible for it, Bloomberg News reported today. The study comes five days before the consumer agency, created by the Dodd-Frank law of 2010, begins supervising credit-reporting companies' records and practices. The work involves direct examination of about 30 businesses, including the three biggest, Equifax Inc., Experian Plc and TransUnion Corp. Under the Fair Credit Reporting Act, consumers are entitled to a free copy of their credit report each year. Consumer advocates have long charged that credit-reporting companies provide varying scores to lenders, potentially driving the cost of credit higher or depriving consumers of it entirely. Specifically, the bureau found that one in five consumers likely receive a "meaningfully different" score than the one their lender receives from credit bureaus, and consumers are unlikely to know about the discrepancy. Read more.

MOODY'S: CARD CHARGE-OFFS, LATE PAYMENT RATE FELL IN AUGUST



Moody's Investors Service said yesterday that the rate of U.S. credit card charge-offs fell to 4.19 percent in August from 4.56 percent in July, the Associated Press reported. Moody's index of credit card delinquencies, or those balances with a monthly payment more than 30 days past due, also improved. The rate declined to 2.32 percent in August from 2.36 percent the previous month. August's card delinquency rate is at a record low, which points to lower charge-offs in coming months, Moody's said. As delinquencies drop, Moody's data shows that card users are increasing the size of their payments. The average amount of principal that cardholders paid as a percentage of their balance hit a new high in August, rising to a rate of 22.71 percent from 22.47 percent a month earlier, the firm said. Read more.

ANALYSIS: PENSION CRISIS LOOMS DESPITE CUTS



Almost every state in the U.S. has made cuts to its public-employee pensions, seeking to dig their way out from the economic downturn, but so far the measures have fallen well short of bridging a nearly $1 trillion funding gap, the Wall Street Journal reported on Saturday. Since 2009, 45 states have rolled back pension benefits for teachers, police, firefighters and other public workers, including cuts by Michigan and California this month. Next week, Ohio Gov. John Kasich (R) is expected to sign legislation requiring, for example, that certain teachers work longer and pay more toward their pensions. The state measures show how economic forces are reshaping traditional rivalries, convincing lawmakers and labor leaders that past public pension plans are unsustainable. Read more. (Subscription required.)

SYMPOSIUM ON OCT. 19 TO EXAMINE RELATIONSHIP BETWEEN BANKRUPTCY AND RACE



ABI, St. John's Center for Bankruptcy Studies and The Ronald H. Brown Center for Civil Rights and Economic Development are going to hold a symposium titled "Bankruptcy and Race: Is There a Relation?" on Oct. 19 from 8:30 a.m.-2:30 p.m. ET at the St. John's School of Law. In a recent study of personal bankruptcy cases and practitioners, Profs. Jean Braucher, Dov Cohen and Robert Lawless made a troubling finding: the debtor's race appears to affect the advice that lawyers give about whether to file for bankruptcy under chapter 7 or chapter 13 of the Bankruptcy Code. Is this finding correct? And if so, what are its implications for bankruptcy law and policy? This symposium will bring together leading bankruptcy, empirical, and race scholars to address these questions through commentary on the Braucher study and a reply from the primary study authors. The papers will be published in the winter issue of the ABI Law Review. There is no fee to attend the symposium, but advance registration is required. To register, please complete and submit the online registration form by Oct. 15.

SHOW YOUR SUPPORT FOR STEVEN GOLICK, A COLLEAGUE AND ABI LEADER



Our friend Steven Golick (Osler Hoskin & Harcourt LLP, Toronto) is facing a medical crisis. He has been diagnosed with a serious brain tumor, requiring complex surgery and treatment. Steven’s spirits are very strong and he and his family remain optimistic, but he can use our support. A prominent international restructuring attorney and an ABI member since 1994, Steven is also a founding member of the ABI house band, the Indubitable Equivalents. Because the band is important to Steven, his fellow band-mates have organized a new Blog site for Steven's friends and colleagues to show their love and support at this critical time. Please click on this link to share your thoughts with many others, and post as often as you'd like.

ABI IN-DEPTH

MEMBERS WILL NOT WANT TO MISS ABI'S PROGRAM AT NCBJ'S ANNUAL MEETING ON OCT. 26



Members planning to attend the 86th Annual NCBJ Annual Conference in San Diego from Oct. 24-27 will not want to miss the exciting line-up scheduled for the ABI program track on Oct. 26. In addition to roundtable discussions on the hottest consumer and business bankruptcy topics, ABI will be hosting a ticketed luncheon that will feature the presentation of the 7th Annual Judge William L. Norton, Jr. Judicial Excellence Award and entertainment by Apollo Robbins, a sleight-of hand artist, security consultant and self-described gentleman thief. Robbins gained notoriety after pick-pocketing Secret Service agents accompanying former president Jimmy Carter. Click here to register for the Conference.



ABI's Chapter 11 Reform Commission will also be holding a public hearing on Oct. 26 from 2:30-4:30 p.m. PT at the San Diego Marriott. Interested parties have the opportunity to submit testimony at the hearing. For further information, please contact ABI Executive Director Samuel J. Gerdano at sgerdano@abiworld.org.

LATEST CASE SUMMARY ON VOLO: OLICK V. KEARNEY (IN RE OLICK; 3D CIR.)



Summarized by George Utlik of Arent Fox LLP

Affirming three decisions from the United States Bankruptcy Court for the Eastern District of Pennsylvania, the U.S. Court of Appeals for the Third Circuit held that: (1) plaintiff-appellant waived his objections to the summary judgment order and oral opinion rendered from the bench in March 2008 because he had failed to secure a transcript of proceedings in the bankruptcy court, despite having ample time to do so and despite having the option of moving for transcripts to be provided at the government's expense under 28 U.S.C. § 753(f)); (2) plaintiff-appellant failed to meet his burden of showing that defendants’ proffered reason for an adverse employment action (poor employment performance) was pretext because no reasonable jury would find that defendants-appellees acted with discriminatory intent when they terminated him; (3) with respect to plaintiff-appellant’s claim under Age Discrimination in Employment Act (“ADEA”), no causal connection existed between plaintiff-appellant’s protected activity and the termination of his field-agent contract.

There are more than 600 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: LEHMAN TO PAY LEGAL FEES OF PAULSON GROUP, GOLDMAN



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines how a number of Wall Street banks and hedge funds—including Goldman Sachs Group Inc., Paulson & Co. and Mark Brodsky’s Aurelius Capital—received bankruptcy court approval to have Lehman’s estate cover their legal fees.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Bankruptcy courts should have unfettered discretion in adjusting fee applications, even when no party-in-interest has raised objections.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?



Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

September

- "When Is an Individual Chapter 11 the Best Fit?" Live Webinar

     September 27, 2012

- American College of Bankruptcy's "Bankruptcy: Back to the Future" Program

     September 28, 2012 | Chicago, Ill.

October

- Nuts & Bolts for Young and New Practitioners - KC

     October 4, 2012 | Kansas City, Mo.

- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum

     October 5, 2012 | Kansas City, Mo.

- Bankruptcy 2012: Views from the Bench

     October 5, 2012 | Washington, D.C.

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar

October 15, 2012

- ABI/Bloomberg Distressed Lending Conference

October 16, 2012 | New York, N.Y..

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

- ABI/St. John's "Bankruptcy and Race: Is There a Relation?" Symposium

     October 19, 2012 | Queens, N.Y.

- ABI Program at NCBJ's Annual Conference

     October 26, 2012 | San Diego, Calif.

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

     November 9, 2012 | New York, N.Y.

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

     November 29 - December 1, 2012 | Tucson, Ariz.

December

- Forty-Hour Bankruptcy Mediation Training

     December 4-8, 2012 | New York, N.Y.

2013

February

- Kansas City Advanced Consumer Bankruptcy Practice Institute

     February 17-19, 2013 | Kansas City, Mo.

ACADEMICS WANT CONGRESS TO GIVE CHAPTER 14 A CHANCE



Members of Stanford University's Hoover Institution's "resolution project" say that the environment is right to revisit their proposed modification of the Bankruptcy Code that adds a section, dubbed "Chapter 14," to address large financial institutions, Dow Jones Newswires reported yesterday. When the official debate on Capitol Hill ended in July 2010 with the passage of the Dodd-Frank financial reform, it looked as though the Hoover Institution had lost its battle to keep the job of unwinding a failing financial institution out of the hands of government. Their proposal, presented at a Senate Banking Committee hearing, never gained traction, and Dodd-Frank's Title II tasks the Federal Deposit Insurance Corp. with intervening should the collapse of a financial institution threaten the economy. However, the academics now argue in a new book, Bankruptcy Not Bailout: A Special Chapter 14, that their proposal still has a chance at becoming law. The book's authors also have an unlikely supporter: the FDIC. "The FDIC would support improvements to the Bankruptcy Code that would better allow for the failure of a large complex financial institution without broad systemic disruption," said Andrew Gray, a spokesman for the FDIC, characterizing Title II as a last resort. "Constructive efforts to improve the bankruptcy law and reduce the likelihood that Title II would be necessary are positive." Acknowledging that the repeal of all or part of Dodd-Frank is unlikely, the authors argue that Dodd-Frank and chapter 14 could coexist, providing the government and companies with another option. Read more.

REGULATORS TRY TO BEAT THE CLOCK IN RATE PROBE



U.S. prosecutors are seeking more time to complete their investigation of alleged interest-rate fixing, while banks ensnared in the probe are trying to turn the clock to their advantage as they battle lawsuits claiming damages from rate-rigging, the Wall Street Journal reported today. The Justice Department recently asked several banks to sign "tolling" agreements, in which the companies promise they will not challenge any enforcement action on the grounds that the alleged wrongdoing occurred beyond the statute of limitations. The requests were sent to all the major banks under investigation including Citigroup Inc., Deutsche Bank AG, JPMorgan Chase & Co., Royal Bank of Scotland Group PLC and UBS AG. Read more. (Subscription required.)

ANALYSIS: CRIMINAL AND CIVIL MORTGAGE-FRAUD CASES HAVE EXPLODED SINCE HOUSING CRISIS



The problem of mortgage scams involving attorneys is growing, according to experts, the Wall Street Journal reported today. Joseph Dunn, executive director of the State Bar of California, said that more than 100 lawyers in California have been disbarred or otherwise disciplined, while about 200 others are facing charges or are under investigation. The California Bar has received more than 11,000 mortgage-related complaints about lawyers since early 2009. John Berry, director of the legal division of the Florida Bar, calls the involvement of attorneys in alleged mortgage scams "one of the most difficult issues we have had to deal with." In a national database of 25,000 homeowner complaints regarding suspected mortgage-related frauds, more than a quarter relate to activities by lawyers or law firms, said Yolanda McGill, a senior counsel at the nonprofit Washington-based Lawyers' Committee for Civil Rights under Law, which began collecting the complaints in 2010. The committee has filed eight lawsuits against parties for allegedly cheating homeowners with false promises of help with their mortgages. Read more. (Subscription required.)

REPORT: PAY GAPS WIDENING AMONG PARTNERS



According to a new survey conducted by legal search consultant Major, Lindsey & Africa and Am Law Daily affiliate ALM Legal Intelligence, partners at Am Law 200, NLJ 350, and American Lawyer Global 100 firms saw their annual compensation rise, on average, 6.4 percent to $681,000 over the past two years. The jump was apparently driven, at least in part, by an uptick in the average rate those partners are billing, from $555 per hour in 2010 to $585 today. The survey, which drew 2,228 responses from attorneys at the firms in question, shows that not all partners have benefited equally from the increase. On average, equity partners are better compensated than their non-equity counterparts, male partners make more than their female colleagues, corporate partners earn more than litigators, and partners in open compensation systems are paid better than those in closed compensation systems. Read more.

FORMER GM CEO: TIME FOR "GOVERNMENT MOTORS" TO HIT THE ROAD



Until the government sells its shares of GM, the company won't be master of its own destiny and will remain wrongly tagged a failure, according to a commentary in today's Wall Street Journal by former GM CEO Ed Whitacre. The government has been an active participant in GM's management for more than three years, according to Whitacre, and it is time for Treasury to step out of the way so that GM can fully focus on what it does best: designing, building and selling the world's best vehicles. The government's authority over GM today is not concentrated in the 500 million shares it still owns, which amount to a hefty but not controlling 26.5 percent ownership stake, according to Whitacre. Rather, the government's power comes from the management apparatus of TARP, the Troubled Asset Relief Program, from which the $50 billion bailout originally came. The result: GM spends an awful lot of time checking in with the people who administer TARP over everything from hiring to executive compensation and management. Read more. (Subscription required.)

HIGH-SPEED TRADING IN THE CONGRESSIONAL SPOTLIGHT



An insider of the secretive world of high-frequency trading is set to attack that industry today on Capitol Hill, giving lawmakers a potential road map to address practices that critics say can put ordinary investors at a disadvantage and the financial system at risk, the Wall Street Journal reported today. Since rapid-fire trading firms now provide many of the buy-and-sell orders that support the market, investors are at the mercy of automated systems that can run amok during volatile times, according to Dave Lauer, who last year quit his job as a trader for an elite Chicago high-frequency trading outfit. Lauer is part of a growing chorus of industry insiders blowing the whistle on approved trading techniques that they say are designed by the traders who derive the most benefit. Lauer is now a consultant on market-structure issues for Better Markets, a Washington, D.C., advocacy group funded by a hedge fund. He testified today before the Senate Banking committee about how he came to believe that high-speed trading has made the market less fair for many investors. One way sophisticated firms get an edge over other investors is the use of complex order types, which are commands that traders use to tell exchanges how to handle their buy-and-sell orders, according to Lauer's testimony. Regulators are looking into whether exchanges, in a rush to gain the business of high-frequency firms, have provided advantages to some sophisticated trading firms that allow them to trade profitably at the expense of other investors. High-frequency trading accounts for some two-thirds of all trading volume, experts say. Read more. (Subscription required.)

Click here for prepared testimony from today's Senate Banking Committee hearing.

SHOW YOUR SUPPORT FOR STEVEN GOLICK, A FELLOW COLLEAGUE AND ABI MEMBER



Our friend Steven Golick (Osler Hoskin & Harcourt LLP, Toronto) is facing a medical crisis. He has been diagnosed with a serious brain tumor, requiring complex surgery and treatment. Steven’s spirits are very strong and he and his family remain optimistic, but he can use our support. A prominent international restructuring attorney and an ABI member since 1994, Steven is also a founding member of the ABI house band, the Indubitable Equivalents. Because the band is important to Steven, his fellow band-mates have organized a new Blog site for Steven's friends and colleagues to show their love and support at this critical time. Please click on this link to enter and share your thoughts, and post as often as you'd like.

ABI IN-DEPTH

ABI LAUNCHES FIFTH ANNUAL WRITING COMPETITION FOR LAW STUDENTS; PARTICIPANTS RECEIVE ONE-YEAR ABI MEMBERSHIP



Law school students are encouraged to submit a paper now through March 1, 2013, for ABI’s Fifth Annual Bankruptcy Law Student Writing Competition. ABI will extend a complimentary one-year membership to all students who participate in this year's competition. Eligible submissions should focus on current issues regarding bankruptcy jurisdiction, bankruptcy litigation, or evidence issues in bankruptcy cases or proceedings.



The first-place winner, sponsored by Invotex Group, Inc., will receive a cash prize of $2,000 and publication of his or her paper in the prestigious ABI Journal. The second-place winner, sponsored by Jenner & Block LLP, will receive a cash prize of $1,250 and publication of his or her paper in an ABI committee newsletter. The third-place winner, sponsored by Thompson & Knight LLP, will receive a cash prize of $750 plus publication of his or her paper in an ABI committee newsletter. For competition participation and submission guidelines, please visit http://papers.abi.org.

LATEST CASE SUMMARY ON VOLO: STATE OF NEVADA V. MORTGAGE ELECTRONIC REGISTRATION SYSTEM INC. (9TH CIR.)



Summarized by Richard Corbi of Lowenstein Sandler PC

Because the defendants had no "obligation" to record assignments or other documents relating to securing property, the prosecution failed to state a claim of liability under Nevada False Claims Act section 357.040(1)(g).

There are more than 600 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: SECOND CIRCUIT SUMMARILY REVERSES CLAIMS-TRADING DECISION



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines a ruling by the U.S. Court of Appeals for the Second Circuit in Longacre Master Fund v. ATS Automation Tooling Systems. The Second Circuit summarily reversed a district court decision that will likely strengthen the hand of specialized firms that look to buy claims in large chapter 11 cases, according to the post.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Bankruptcy courts should have unfettered discretion in adjusting fee applications, even when no party-in-interest has raised objections.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?



Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

September

- "When Is an Individual Chapter 11 the Best Fit?" Live Webinar

     September 27, 2012

- American College of Bankruptcy's "Bankruptcy: Back to the Future" Program

     September 28, 2012 | Chicago, Ill.

October

- Nuts & Bolts for Young and New Practitioners - KC

     October 4, 2012 | Kansas City, Mo.

- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum

     October 5, 2012 | Kansas City, Mo.

- Bankruptcy 2012: Views from the Bench

     October 5, 2012 | Washington, D.C.

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar

October 15, 2012

- ABI/Bloomberg Distressed Lending Conference

October 16, 2012 | New York, N.Y..

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

     November 9, 2012 | New York, N.Y.

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

     November 29 - December 1, 2012 | Tucson, Ariz.

December

- Forty-Hour Bankruptcy Mediation Training

     December 4-8, 2012 | New York, N.Y.

2013

February

- Kansas City Advanced Consumer Bankruptcy Practice Institute

     February 17-19, 2013 | Kansas City, Mo.

FEDERAL RESERVE PLANS TO BUY $40 BILLION IN MORTGAGE SECURITIES A MONTH



The Federal Reserve said today that it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a bid to boost growth and reduce unemployment, Bloomberg News reported today. "If the outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate," the Federal Open Market Committee said today. The FOMC said it would likely hold the federal funds rate near zero "at least through mid-2015." Since January, the Fed had said that the rate was likely to stay low at least through late 2014. The Fed also said it will continue its program to swap $667 billion of short-term debt with longer-term securities to lengthen the average maturity of its holdings, an action dubbed “Operation Twist.” The central bank will also continue reinvesting its portfolio of maturing housing debt into agency mortgage-backed securities. Read more.

FORECLOSURE STARTS FELL ON ANNUAL BASIS IN AUGUST



Foreclosure listing firm RealtyTrac Inc. said that fewer homes were placed on the foreclosure track last month than in August last year, when they hit a 17-year high, the Associated Press reported yesterday. More than 99,400 homes entered the foreclosure process in August 2012, up 1 percent from July but down 13 percent from August last year, RealtyTrac said. At the same time, foreclosure starts increased almost exclusively in judicial states like Florida and New York, where the courts must sign off on foreclosures, the firm said. Conversely, in many non-judicial states like California and Arizona, the number of foreclosure starts declined versus August last year. Read more.

ANALYSIS: INVESTMENT FIRMS FLOCK TO FORECLOSURE AUCTIONS



The business of buying foreclosed homes, renovating and renting them out is morphing from a largely mom-and-pop business into the next big thing on Wall Street, according to a report in yesterday's Wall Street Journal. Investors who once chased only big-ticket deals now are buying houses one at a time. According to investment bank Jefferies & Co., major financial firms led by Colony Capital LLC, Blackstone Group LP, Och-Ziff Capital Management and Oaktree Capital Group LLC have raised more than $8 billion to buy houses, largely in markets pummeled by the housing crisis. At first, many investors hoped lenders would sell foreclosed houses in bulk. But most banks prefer to sell one house at a time, figuring that approach will fetch higher prices. As a result, the foreclosure circuit has not yet produced a giant windfall for buyers like Colony, though executives say early returns are promising. Yields on rents from houses owned by the firm are 7 to 8 percent, higher than many other types of real estate. Purchase prices have averaged 12 percent less than Colony expected, which should make it easier to sell the homes or borrow against them and exit with double-digit percentage gains. Read more. (Subscription required.)

REPORT: FINANCIAL CRISIS, RECESSION COST U.S. $12.8 TRILLION



The financial crisis and the Great Recession have taken a heavy toll on the U.S., and now public interest group Better Markets, which supports tougher financial regulations, said that it has calculated that cost to be at least $12.8 trillion, the Los Angeles Times reported today. The report tries to calculate the effect of the crisis and the recession in terms of reduced economic output and the costs of stabilizing the markets and bailing out banks and large financial firms. The estimate builds off previous calculations, including one by economists Alan S. Blinder and Mark Zandi. Blinder and Zandi released a report in 2010 estimating the total budgetary cost of the financial crisis to be $2.35 trillion. Better Markets used that amount as a jumping-off point for what it said was a conservative estimate of the true costs of the crisis. The group estimated that the loss in gross domestic product from 2008 to 2018 will be $7.6 trillion. Then they used the estimates of Blinder and Zandi to add an additional figure: an estimate of how much GDP loss was avoided by government bailouts and other interventions. That figure was $5.2 trillion from 2008 to 2012. Read more.

COMMENTARY: WHY MARKETS NEED "NAKED" CREDIT DEFAULT SWAPS



Many regulators, politicians and academics are recommending a ban on "naked" credit default swap (CDS) purchases, but the premise that only sovereign-debt holders suffer when a country defaults is false, according to a commentary in the Wall Street Journal yesterday. Many other agents are adversely affected by a default, and they should be allowed to purchase sovereign CDS, according to the commentary. A 2006 Bank of England study found that the output losses for 45 sovereign debt defaults between 1970 and 2000 "appear to be very large—around 7 percent a year on the median measure—as well as long lasting." The haircut taken by investors after sovereign defaults ranges from 20-70 percent. But many bystanders in the sovereign-default drama also suffer significant losses of wealth and livelihood. Domestic importers and foreign exporters suffer when the default is accompanied by a devaluation. Financial institutions and holders of domestic corporate debt suffer as their asset values fall. Domestic companies suffer as their credit risk increases, with smaller businesses being especially harmed as banks reduce loan availability. Read the full commentary. (Subscription required.)

REPORT: HOUSEHOLD INCOME SINKS TO 1995 LEVEL



A report from the Census Bureau yesterday said that annual household income fell in 2011 for the fourth straight year to an inflation-adjusted $50,054, an amount last approached in 1995, the Wall Street Journal reported today. Median annual household income—the figure at which half are above and half below—now stands 8.9 percent below its all-time peak of $54,932 in 1999, at the end of the 1990s economic expansion. Other measures of well-being in the report were more positive. The poverty rate, which had risen in the past four years, held steady in 2011, and the number and share of people without health insurance fell. The shift in health coverage is in large part due to more Americans getting covered by government programs, such as Medicare. Read more. (Subscription required.)

ABI IN-DEPTH

ABI MEMBERS WELCOME TO ATTEND ACB'S FREE HALF-DAY "BANKRUPTCY: BACK TO THE FUTURE" PROGRAM IN SEPTEMBER



The American College of Bankruptcy invites you to attend a free half-day program on Sept. 28 in Chicago for a discussion of many of the challenging topics facing current bankruptcy and reorganization professionals. Topics to be addressed include recent decisions of the U.S. Supreme Court and Court of Appeals, important work of the Advisory Committee on Bankruptcy Rules, and developments in the field of bankruptcy ethics. The nation’s leading judges, academics and bankruptcy professionals are among the speakers for the program. While there is no cost to attend, seating is limited, so early reservation is suggested. For more information and to register, please click here.

LATEST CASE SUMMARY ON VOLO: LEFKOWITZ V. MICHIGAN TRUCKING LLC (IN RE GAINEY CORP.; 6TH CIR.)



Summarized by Omid Moezzi from the Office of Nancy Curry, Chapter 13 Trustee

The Sixth Circuit affirmed the bankruptcy court's ruling for an order dismissing the appellant's (the liquidation trustee) adversary complaint for failure to state a claim for relief pursuant to Federal Rule of Civil Procedure 12(b)(6).

There are more than 600 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: WHOSE FAULT IS IT THAT PONZI SCHEMES THRIVE?



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines how defrauded investors are increasingly directing their blame at the SEC for failing to detect ponzi schemes.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Bankruptcy courts should have unfettered discretion in adjusting fee applications, even when no party-in-interest has raised objections.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?



Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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September

- 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization

     September 19-20, 2012 | New York, N.Y.

- "When Is an Individual Chapter 11 the Best Fit?" Live Webinar

     September 27, 2012

- American College of Bankruptcy's "Bankruptcy: Back to the Future" Program

     September 28, 2012 | Chicago, Ill.

October

- Nuts & Bolts for Young and New Practitioners - KC

     October 4, 2012 | Kansas City, Mo.

- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum

     October 5, 2012 | Kansas City, Mo.

- Bankruptcy 2012: Views from the Bench

     October 5, 2012 | Washington, D.C.

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar

October 15, 2012

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

     November 9, 2012 | New York, N.Y.

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

     November 29 - December 1, 2012 | Tucson, Ariz.

December

- Forty-Hour Bankruptcy Mediation Training

     December 4-8, 2012 | New York, N.Y.

2013

February

- Kansas City Advanced Consumer Bankruptcy Practice Institute

     February 17-19, 2013 | Kansas City, Mo.