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Lenders are courting risky credit card borrowers more aggressively than they have since the financial crisis in a bid to jolt revenue in a period of sluggish growth and tight regulation, the Wall Street Journal reported today. Banks and other lenders issued 3.7 million credit cards to so-called subprime borrowers during the first quarter, a 39 percent jump from a year earlier and the most since 2008, according to data provided exclusively to the Wall Street Journal by credit bureau Equifax Inc. About one-third of all credit cards issued in that period were to subprime customers, the biggest share in six years, according to Equifax. The average interest rate for subprime customers was 21.1 percent in the first quarter, up from 20.2 percent a year earlier, according to research firm CardHub.com. In contrast, the highest-quality borrowers paid 12.9 percent on average in the first quarter, virtually unchanged from a year earlier.

Senate Education Committee Chair Tom Harkin (D- Iowa) unveiled legislation yesterday that would allow a small portion of Americans’ student debt to be discharged through bankruptcy proceedings, the Wall Street Journal reported yesterday. Federal law currently prohibits, except in rare cases, private or federal student loans from being discharged in bankruptcy. Backers of the current law, including the banking industry, have argued that it helps keep a lid on interest rates by reducing the risk that borrowers will walk away from their debts in court. Consumer advocates say that the prohibition is keeping some borrowers trapped under high debt burdens that they’ll likely never be able to repay. Harkin’s measure would allow only student loans issued by private lenders — rather than the federal government — to be discharged in bankruptcy court. Private lenders hold only about 10-15 percent of the nation’s $1.1 trillion in outstanding student debt, with the U.S. Education Department holding the rest. The bill’s prospects for passage this year are not favorable given the midterm elections and broad partisan disputes over higher-education policy. (Subscription required.)
http://blogs.wsj.com/economics/2014/06/25/harkin-opens-door-to-bankrupt…

For additional perspective on student loan debt, be sure to utilize the following infographic from the Credit Abuse Resistance Education (CARE).
http://care4yourfuture.org/student-debt

Miss ABI's Student Debt Symposium on May 30? You can purchase all sessions from the program on ABI's eLearning site! Click here to browse and purchase the sessions.
http://cle.abi.org/taxonomy/term/2045,1496

The Department of Justice said that GE Capital Retail Bank, a division of General Electric, excluded tens of thousands of Spanish-speaking credit card customers from a debt-reduction program it ran for two years, a pattern of discrimination that will cost the bank $169 million in fines, the Washington Post reported today. The bank ran two programs from 2009 to 2012 that helped cardholders with low credit scores and high balances catch up on their payments. During that time, prosecutors say, the bank sent out offers to 400,000 people but did not inform 108,000 cardholders with mailing addresses in Puerto Rico or whose accounts indicated a preference for communications in Spanish.

Bank of America Corp. failed to win dismissal of a U.S. Justice Department lawsuit in which it’s accused of misleading investors about the quality of loans tied to $850 million in residential mortgage-backed securities, Bloomberg News reported yesterday. U.S. District Judge Max O. Cogburn Jr. in Charlotte, N.C., gave the Justice Department 30 days to revise the suit after a magistrate judge earlier found the government’s complaint was deficient and recommended it be dismissed. The case is part of a U.S. bid to punish companies for actions it says helped trigger the financial crisis. The Bank of America case and others like it rely on a law dating to the savings-and-loan crisis of the 1980s that allows the government to punish actions taken too long ago to be covered by other laws. It also lets the U.S. seek larger damages awards. Bank of America will still have a chance to challenge the amended complaint and could appeal any ruling against it.

More than a million Americans have been effectively blacklisted from the mainstream financial system because they overdrew their accounts or bounced a check — mistakes that routinely bedevil young and low-income consumers, financial counselors say, the New York Times DealBook blog reported today. Databases, used by Bank of America, JPMorgan Chase and other big banks, were intended to weed out serial fraudsters. Now, regulators say, banks are screening out potential customers and swelling the ranks of the so-called unbanked — the roughly 10 million households in the United States that lack even a basic bank account. New York’s attorney general today will become the first government authority to take aim at how banks use the databases. The attorney general’s office is expected to announce that Capital One has agreed to fundamentally change the way it uses the largest database, ChexSystems, barring only customers who land in the database for fraud.

President Obama took an important step this week when he signed an executive order providing relief to millions of struggling student loan borrowers and urged Congress to pass a student loan refinancing bill that is scheduled for a vote in the Senate today, according to an editorial today in the New York Times. Both the executive order and the refinancing bill speak to a grave problem that has trapped recent college graduates and threatens the long-term health of the economy. This problem has its roots in the financial crisis, which the editorial claimed to have destroyed trillions of dollars in household savings and home equity that families might otherwise have used to pay for college. (Even before the recession, the state colleges, which educate about 70 percent of the nation’s students, reacted to state budget cuts by raising tuition.) With no other choice, students and their families financed college by relying more heavily on student loans. According to the federal Consumer Financial Protection Bureau, student debt has doubled since 2007 and now stands at about $1.2 trillion.
http://www.nytimes.com/2014/06/11/opinion/student-borrowers-and-the-eco…

The student loan debt crisis was the subject of ABI's Student Debt Symposium, held on May 30 at Georgetown University Law Center. If you were unable to attend, you can purchase all sessions from the program on ABI's eLearning site! This unique day-long symposium, funded in part by a grant from the National Conference of Bankruptcy Judges Endowment for Education, featured academics, consumer bankruptcy practitioners, bankruptcy judges, consumers and policy-makers addressing the causes, consequences and possible reform of the student debt problem. Click here to purchase: http://cle.abi.org/taxonomy/term/2045,1496

President Obama signed an executive order yesterday intended to lessen the college loan burden on nearly five million younger Americans by capping repayments at 10 percent of the borrowers’ monthly income, the New York Times reported today. Joined by indebted graduates in the East Room of the White House, Obama said the spiraling cost of higher education had put “too big a debt load on too many people.” Obama’s executive actions coincided with the introduction of a bill by Senate Democrats that would allow 25 million borrowers to refinance student loans at lower interest rates. The government would finance the measure by imposing a new tax on wealthy people.
http://www.nytimes.com/2014/06/10/us/politics/obama-noting-own-student-…

The student loan debt crisis was the subject of ABI's Student Debt Symposium, held on May 30 at Georgetown University Law Center. If you were unable to attend, you can purchase all sessions from the program on ABI's eLearning site! This unique day-long symposium, funded in part by a grant from the National Conference of Bankruptcy Judges Endowment for Education, featured academics, consumer bankruptcy practitioners, bankruptcy judges, consumers and policy-makers addressing the causes, consequences and possible reform of the student debt problem. Click here to purchase: http://cle.abi.org/taxonomy/term/2045,1496

While the unemployment rate for college graduates ages 22 to 27 fell to 5.6 percent in 2013 from 6.4 percent at the recession’s peak in 2009, many are taking jobs not requiring a college degree, according to a Bloomberg News analysis yesterday. Among 22-year-old degree holders who found jobs in the past three years, more than half were in roles not requiring a college diploma, said John Schmitt, a labor economist for the Center for Economic and Policy Research in Washington, D.C. “While graduates today are more likely to get jobs, they’re unlikely to get a job that they are qualified for or in their area of expertise,” said Kevin Scott, an Atlanta-based consultant who works at the Addo Institute. “Because it’s such a buyer’s market for employers, they get graduates who will work for less money and for more hours.” Young people are also getting off to a slower start as they are delaying homeownership and some big-ticket purchases because of student debt and underemployment. Student-loan borrowers retreated from home buying in 2013 for the second year in a row, the Federal Reserve Bank of New York said last month. Young adults without student debt have a net worth that’s seven times higher than those who do, a report from Pew Research showed.
http://www.bloomberg.com/news/print/2014-06-05/college-graduates-strugg…

If you were not able to attend ABI's Student Debt Symposium held last Friday at Georgetown University Law Center, you can purchase all sessions from the program on ABI's eLearning site! This unique day-long symposium, funded in part by a grant from the National Conference of Bankruptcy Judges Endowment for Education, featured academics, consumer bankruptcy practitioners, bankruptcy judges, consumers and policy-makers addressing the causes, consequences and possible reform of the student debt problem. Click here to purchase the sessions: http://cle.abi.org/taxonomy/term/2045,1496

Wells Fargo & Co. lost a bid to throw out a lawsuit by Los Angeles in the city’s renewed effort to hold mortgage lenders liable for record foreclosures during the collapse of the U.S. housing market, Bloomberg News reported yesterday. U.S. District Judge Otis Wright II in Los Angeles, without ruling on the merits of the claims, today said the city’s allegations that the bank targeted minority lenders with “predatory loans” were legally sufficient at this stage to proceed with the case. The second-largest U.S. city separately sued Wells Fargo, Citigroup Inc. and Bank of America Corp. last year, saying the three mortgage lenders engaged in discriminatory practices since at least 2004, placing minority borrowers in loans they couldn’t afford and driving up the number of foreclosures in their neighborhoods.

Obama administration initiatives intended to help restrain soaring college costs are facing resistance from schools and from a bipartisan bloc of lawmakers looking to protect institutions in their districts, the Wall Street Journal reported today. Groups representing colleges and universities this week formally opposed the administration's plan to more tightly oversee programs that officials say leave students in steep debt but with weak job prospects. The new rules cover for-profit schools along with career-training programs — those that lead to certificates, but not degrees, in a given field, such as mechanics or cosmetology — at public schools and nonprofits. A bipartisan group in Congress is seeking ways to kill the plan, which the administration wants to have in place by November. (Subscription required.)
http://online.wsj.com/articles/efforts-to-curb-college-costs-face-resis…

Don’t miss tomorrow’s Student Debt Symposium at the Georgetown University Law Center to hear experts, policymakers, consumers and scholars discuss issues surrounding student loan debt and potential remedies. To register, please click here:
http://www.abiworld.org/SDS14/