NEWS AND ANALYSIS
REPORT: SHARP DROP IN U.S. HOMES LOST TO FORECLOSURE IN FEBRUARY
Though the nation's foreclosure woes persist, new data from RealtyTrac Inc. show they are easing amid a resurgent housing market, rising home prices and efforts by some states to buy homeowners more time to avoid losing their homes, the Associated Press reported today. The number of U.S. homes repossessed by lenders last month fell 11 percent from January and declined 29 percent from February last year, tumbling to the lowest level since September 2007, RealtyTrac said today. Some states continued to see sharp increases in homes lost to foreclosure last month, including Washington, Wisconsin and Iowa. But home repossessions declined both on an annual and monthly basis in a majority of states, including past foreclosure hotbeds such as California, Georgia and Arizona. All told, 45,038 U.S. homes completed the foreclosure process in February, less than half of the 102,000 homes lost to foreclosure in March 2010, when home repossessions peaked, according to the firm's records, which go back to January 2005. Read more.
COMMENTARY: FANNIE, FREDDIE AND THE GOVERNMENT'S HOUSE OF CARDS
The nascent housing price recovery is restoring health to Fannie Mae and Freddie Mac, the two government-sponsored enterprises that contributed so much to the crash of 2008, according to a commentary in today's Wall Street Journal. Both had earnings in 2012 and thus will not need money from the U.S. Treasury to cover operating losses, which is in contrast to the preceding three years when they cost the taxpayers over $180 billion. When Fannie and Freddie were losing money, Congress had a strong incentive to privatize or liquidate them, according to the commentary. The Obama administration proposed three options, the third of which was to restore them to the public-private status that fueled their rapid expansion in the late 1990s and early 2000s—and contributed to their downfall. Now that these GSEs promise to become cash cows able to palliate the government's budgetary distress, the government's talk about "resolving" them is more subdued, according to the commentary. The latest monthly Federal Reserve survey reported that "home prices rose amid falling inventories across much of the country." The GSEs' business in mortgage-backed securities is thriving, with Fannie having issued $865.5 billion of these instruments in 2012. The disturbing thing about this rosy scenario is that the entire home mortgage industry—not only Fannie and Freddie—has been effectively nationalized, according to the commentary. Read more. (Subscription required.)
ANALYSIS: AFTER FINANCIAL CRISIS, PROSECUTORS NAVIGATE TRICKY WATERS
Despite the recent political finger-pointing, the fact remains that few executives have been held responsible for when their companies engaged in misconduct, the New York Times DealBook blog reported yesterday. Despite the fear of charging a large bank with a crime, the Justice Department has tried to show its mettle recently in cases involving the manipulation of the London interbank offered rate (Libor). Its solution to the problem has involved having foreign subsidiaries of global banks plead guilty to a charge, rather than the whole entity. At a Senate Banking Committee hearing, Treasury Undersecretary David S. Cohen acknowledged that regulators had not aggressively pursued the individuals "who are responsible for the conduct that has resulted in fines and penalties against the institution itself." Although a few lower-level traders have been charged, the settlements involving large banks over Libor manipulation have not involved any real costs to senior executives, and HSBC’s money-laundering case involved neither a corporate guilty plea nor any direct action against the individuals responsible for long-running practices. Read more.
JOBLESS CLAIMS AT FIVE-YEAR LOW
A measure of jobless claims widely followed by economists fell to a five-year low, the latest sign that the labor market is slowly improving, the Wall Street Journal reported today. The four-week moving average of jobless claims, which smooths out weekly volatility in new unemployment claims, sank to 346,750, the lowest level since March 2008, the Labor Department said today. Meanwhile, the weekly number of U.S. workers filing new applications for benefits fell more than economists forecast, declining by 10,000 to a seasonally adjusted 332,000 for the week ended March 9. The Labor Department reported last week that employers added 236,000 jobs in February while the unemployment rate moved down to a four-year low of 7.7 percent. Read more. (Subscription required.)
CONSUMER SPENDING INCREASED IN FEBRUARY
The Commerce Department reported yesterday that retail sales rose 1.1 percent in February from the prior month, seasonally adjusted, thanks in large part to robust gains for cars and building materials and at Internet stores, the Los Angeles Times reported today. Consumers did feel the pinch from higher fuel prices; sales at gasoline stations jumped 5 percent last month from January. After excluding consumer spending for gas and cars, so-called core retail sales increased 0.4 percent in February, and this measure was revised up to 0.3 percent for January from the previously estimated 0.1 percent. Car and home sales are benefiting from pent-up demand as well as low interest rates, and that is supporting business at other retailers. Sales at building material and garden supply stores rose 1.1 percent in February from the prior month. Read more.
For more on consumer spending, be sure to visit yesterday’s post on ABI’s Chart of the Day.
IPHONE AND IPAD USERS: THE ABI JOURNAL APP IS AVAILABLE NOW!
The wait is over! With the new ABI Journal iPad app, sponsored by KCC, each new issue will be sent automatically to your device, ready to read at your convenience. Download the app for free from the Apple iTunes store (link below) to your iPad and/or iPhone. Once it's installed, open the app and you will be prompted to log in (see below). (You only have to provide this information once, then the app will recognize you each time you open it.)
Each available issue will show up automatically in the onscreen library. Simply download the issue you wish to read and access it anytime, even when you're not connected to the Internet. With the app, you can:
• take notes or leave comments
• share individual pages to social media
• bookmark favorite pages
• search for key phrases in all online issues
Unlock the power of this terrific new app* today. Download the app here.
USERNAME: Your email address (it must be the one that ABI has on file for you)
PASSWORD: abijournal
*The app is not available for Android devices at this time.
Go to journal.abi.org to access ABI Journal archives, submission guidelines and more!
LATEST BLOOMBERG "BILL ON BANKRUPTCY" VIDEO: HOW PURCHASERS OF AMR STOCK MADE A KILLING
Someone who bought stock in American Airlines last year already made a killing. Stock that could have been bought in November for less than 40 cents a share is now trading above $4, for reasons explained on the video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. Click here to watch.
DON'T MISS ABC'S FREE EVENT, "THE AUTO BANKRUPTCIES: CHECKING THE REARVIEW MIRROR," ON MARCH 22!
ABI members are encouraged to register for the American College of Bankruptcy's "The Auto Bankruptcies: Checking the Rearview Mirror" on March 22 at Boston College Law School in Newton, Mass. The afternoon event will feature key players looking back at the events that led to GM and Chrysler being placed into bankruptcy and the lessons that have been learned from the cases. Panelists include:
• Corinne Ball of Jones Day (New York), who served as lead bankruptcy counsel to Chrysler.
• Matthew A. Feldman of Willkie Farr and Gallagher LLP (New York), who served as chief legal advisor to the Obama administration's Task Force on the Auto Industry.
• Hon. Arthur J. Gonzalez, a Senior Fellow at New York University School of Law and formerly the Chief Bankruptcy Judge for the U.S. Bankruptcy Court for the Southern District of New York, who presided over the Chrysler chapter 11 proceedings.
• Harvey R. Miller of Weil, Gotshal & Manges LLP (New York), who served as lead bankruptcy counsel to GM.
The moderator will be Mark N. Berman of Nixon Peabody LLP (New York).
Registration for the afternoon event is free, so be sure to sign up today before it reaches capacity!
HOTEL BLOCK FOR ABI'S ANNUAL SPRING MEETING ALMOST SOLD OUT! REGISTER TODAY!
The hotel block at the Gaylord National Resort and Convention Center in National Harbor, Md., is almost sold out for ABI’s 2013 Annual Spring Meeting! Held April 18-21, 2013, ASM features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various “tracks,” including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. More than 16 hours of CLE/CPE is offered in some states, along with ethics credit totaling 3 hours, making the cost only about $50 per credit. In addition, committee sessions will drill down on other topics to provide you with the most practical and varied CLE/CPE experience ever. Sessions include:
• 17th Annual Great Debates
• Mediation: An Irrational Approach to a Rational Result
• Creditors’ Committees and the Role of Indenture Trustees and Related Issues
• Current Issues for Financial Advisors in Bankruptcy Cases
• The Individual Conundrum: Chapter 7, 11 or 13?
• The Power to Veto Bankruptcy Sales
• Real Estate Issues in Health Care Restructurings
• How to Be a Successful Expert
• The Ethical Compass: Multiple Ethical Schemes Applicable to Financial Advisors
• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes
• And much more!
The Spring Meeting will also feature a field hearing of the ABI Commission to Study the Reform of Chapter 11, a report from the ABI Ethics Task Force, a luncheon panel discussion moderated by Bill Rochelle of Bloomberg News, and a Final Night Gala Dinner featuring a concert by Joan Jett and the Blackhearts!
Make sure to register today!
ABI IN-DEPTH
NEW BANKRUPTCY PROFESSIONALS: DON'T MISS THE NUTS AND BOLTS PROGRAM AT ABI'S ANNUAL SPRING MEETING! SPECIAL PRICING IF YOU ARE AN ASM REGISTRANT!
An outstanding faculty of judges and practitioners explains the fundamentals of bankruptcy in a one-day Nuts and Bolts program on April 18 being held in conjunction with ABI's Annual Spring Meeting. Ideal training for junior professionals or those new to this practice area!
The morning session covers concepts all bankruptcy practitioners need to know, and the afternoon session splits into concurrent tracks, focusing on consumer and business issues. The session will include written materials, practice tip sessions with bankruptcy judges, continental breakfast and a reception after the program. Click here to register!
LATEST CASE SUMMARY ON VOLO: VASSALLE V. MIDLAND FUNDING LLC (6TH CIR.)
Summarized by Jim Morgan of the Enterprise Law Group
The Sixth Circuit Court of Appeals reversed the decision of the U.S. District Court for the Northern District of Ohio approving a class action settlement and certifying a nationwide class. The Sixth Circuit found that the settlement was not fair or reasonable because it provided preferential treatment to the class representatives and only perfunctory relief to the unnamed class members. The Sixth Circuit further held that class certification was inappropriate because the class representatives were inadequate and that a class action was not a superior method of resolving the controversy.
There are more than 800 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: BIG BANKS SHOULD BREAK UP VOLUNTARILY
The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post said that megabanks may be able to fight off regulatory forces demanding their corporate downsizing, but a voluntary break up may be the only way to sway public opinion their way.
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
As a result of the RadLAX decision, the right to credit-bid will likely chill bidding at auctions, as potential purchasers may be dissuaded from participating in the bidding process.
Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
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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