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REPORT: CONSUMER DEBT DECREASES 14.6 PERCENT IN FIRST HALF OF 2012



Overall consumer debt fell 14.6 percent to an average of $12,986 in the first half of 2012, according to a report released today by Bills.com. The report found that credit card debt remains the most common type of consumer debt at 53 percent. Nationally, average credit card debt grew 2 percent to $5,600 in the first half of 2012, but peaked in the holiday debt period of January and February at $7,600. The number of both student loans and home loans fell slightly, as did average loan balances. The average home loan balance dropped significantly, falling 11 percent to $149,200, according to the report. The number and size of collections accounts continues to grow with 11 percent of consumers in collections and an 18 percent increase in average collection balances. Read more.

BIG-FOUR BANKS SEE MORTGAGE ORIGINATIONS CLIMB 37 PERCENT IN SECOND QUARTER



Mortgage originations at the big-four banks increased 37 percent in the second quarter from last year because of the expanded Home Affordable Refinance Program, HousingWire.com reported on Friday. Wells Fargo, JPMorgan Chase, Bank of America and Citigroup wrote $205.8 billion in new mortgages in the three months ending June 30, according to their combined financial filings. Originations also increased 7 percent from the first quarter. Wells Fargo continued to lead the way: The San Francisco-based bank wrote $131.9 billion in new loans during the quarter, more than double the originations from the same period last year. Wells Fargo said that 16 percent of those new loans came through the Home Affordable Refinancing Program. Read more.

COMMENTARY: FINDING RECOURSE WHEN INVESTORS ARE CHEATED



Whether it comes to falsifying documents or fudging an interest rate quote, many of the actors of recent financial scandals knowingly cheated in some form or another, but the federal government may need to find new ways of providing some recourse for investors who are victims of fraud, the New York Times DealBook blog reported yesterday. While the JPMorgan derivatives and the Libor scandal have led to much hand-wringing over what regulators should have done, it is Russell R. Wasendorf Sr. and the now-bankrupt futures firm Peregrine Financial Group who probably employed the most blatant forms of cheating. Wasendorf's decision to cheat, as he called it, may well send him to jail for the rest of his life while costing his customers millions of dollars. Any proposal to adopt comprehensive insurance for futures and securities investors is sure to meet significant resistance from investment firms that would have to pay for the programs. However, the commentary advocates for Congress to provide some form of safety net for investors to protect them from fraud. Read the full commentary.

TRUST IN FINANCIAL SYSTEM FALLS BACK TO 2009 LEVELS



Americans' trust in the financial system dropped in June to the lowest point since the financial crisis, the Wall Street Journal reported today. Just 21 percent of Americans trust the financial system, the fewest since March 2009, according to the latest quarterly measure by the Chicago Booth/Kellogg School Financial Trust Index released today. The overall decline was driven largely by a drop in the trust of national banks, which fell two percentage points to 23 percent. Trust in local banks rose four percentage points to 55 percent, while trust in credit unions increased five percentage points to 63 percent. Read more.

For more, be sure to check out ABI's Chart of the Day.

COMMENTARY: WALL STREET MAY BE TOO BIG TO REGULATE



The Barclays interest-rate scandal, HSBC's openness to money laundering by Mexican drug traffickers, and the epic blunders at JPMorgan Chase are all episodes that raise questions of whether the big banks can really be regulated, according to an op-ed in yesterday's New York Times. Some economists in and around the University of Chicago who founded the modern conservative tradition had a surprisingly different take: When it comes to the really big fish in the economic pond, some felt, the only way to preserve competition was to nationalize the largest ones, which defied regulation. One of the most important Chicago School leaders, Henry C. Simons, judged in 1934 that "the corporation is simply running away with our economic (and political) system." The central problem, then as now, according to the op-ed, was that very large corporations could easily undermine regulatory and antitrust strategies. The Nobel laureate George J. Stigler demonstrated how regulation was commonly "designed and operated primarily for" the benefit of the industries involved. And numerous conservatives, including Simons, concluded that large corporate players could thwart antitrust "break-them-up" efforts. Recent history confirms another Chicago School judgment: While a breakup might work in the short term, the most likely course is what happened with Standard Oil and AT&T, which were broken up only to essentially recombine a few decades later. Read more.

“SUBJECTING BUSINESS PROJECTIONS TO SCRUTINY IN VALUATION DISPUTES” WEBINAR TO BE HELD ON JULY 30!



Reassembling the speakers from the highest-rated panel at the New York City Bankruptcy Conference this year, ABI will be holding a live webinar on July 30 at 11 a.m. ET titled, "Subjecting Business Projections to Scrutiny in Valuation Disputes." Panelists include:

• Moderator David Pauker of Goldin Associates, LLC (New York)
• Martin J. Bienenstock of Proskauer (New York)
• David M. Hillman of Schulte Roth & Zabel LLP (New York)
• Bankruptcy Judge Robert E. Gerber (S.D.N.Y.)

The panel will address:

• How much deference should management projections be accorded?
• How do you determine whether projections are unrealistically optimistic or pessimistic?
• What is the relevance of "market consensus?"
• How do management’s incentives impact projections?

The webinar is available to ABI members for $75 and is approved for 1.0 CLE hours in Calif., Ga., Hawaii, Ill., N.Y. (approved jurisdiction policy) S.C. and Texas. CLE approval is pending in Del., Fla., Pa. and Tenn. To register, please click here.

ABI IN-DEPTH

ABI RECEIVES APPROVAL TO BECOME AN ACCREDITED NEW YORK CLE PROVIDER



The New York State Continuing Legal Education Board recently approved ABI to become an accredited New York continuing legal education (CLE) provider for live educational events. The approval is retroactive to July 2, 2012 through July 2015. Practitioners who attended ABI's Northeast Bankruptcy Conference from July 12-15 are eligible to receive New York CLE credit. If you have any questions or would like further clarifications, please contact ABI's Continuing Education Manager Jannine J. Henderson via e-mail at jhenderson@abiworld.org or by calling 703-894-5966.

LATEST CASE SUMMARY ON VOLO: SEARCH MARKET DIRECT INC. V. JUBBER (IN RE PAIGE; 10TH CIR.)



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

The Tenth Circuit affirmed the lower court ruling that the confirmed chapter 11 plan was proposed in good faith and was fair and equitable. A proposed competing plan could not have been confirmed because it was not feasible, according to the court. The Tenth Circuit also ruled that the automatic stay was violated when the debtor sold an Internet domain name to a creditor after filing for bankruptcy. Turnover of the domain name to the bankruptcy estate was an appropriate remedy for the stay violation.

More than 570 appellate opinions are summarized on Volo typically 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: SEVENTH CIRCUIT'S TAKE ON § 365(n) OF THE BANKRUPTCY CODE



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines special protections afforded to a licensee of intellectual property in a recent Seventh Circuit decision concerning § 365(n) of the Bankruptcy Code in Sunbeam Products Inc. v. Chicago American Manufacturing LLC.

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

The anti-modification rule for home mortgages in chapter 13 should be repealed, subjecting mortgage debts to bifurcation like any other secured claim.

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

IS YOUR ABI MEMBERSHIP PROFILE CURRENT?



Keeping a current profile will allow you to benefit from one of ABI's most important services - networking. When you update your profile, you are putting your most valuable information in the membership directory. Be sure to include your areas of expertise, firm information, education and join any other committees that are of interest. Click here to update your profile.

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.

July

- Southeast Bankruptcy Workshop

     July 25-28, 2012 | Amelia Island, Fla.

-Valuation Webinar, July 30 at 11 a.m. ET

August

- Mid-Atlantic Bankruptcy Workshop

     August 2-4, 2012 | Cambridge, Md.

September

- Complex Financial Restructuring Program

     September 13-14, 2012 | Las Vegas, Nev.


- Southwest Bankruptcy Conference

     September 13-15, 2012 | Las Vegas, Nev.

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

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

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.

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

November

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

ANALYSIS: TROUBLED HOME EQUITY LOANS LOOM ON THE HORIZON



Even a strong recovery is unlikely to rescue many homeowners who are struggling under the weight of multiple mortgages, the New York Times reported today. At Wells Fargo, for example, in the quarter ended March 31, nearly 44 percent of the bank's home equity borrowers paid only the minimum amount due. The Office of the Comptroller of the Currency published in its spring 2012 "Semiannual Risk Perspective" that almost 60 percent of all home equity line balances would start requiring payments of both principal and interest between 2014 and 2017. The amounts owed in these lines of credit climb significantly in coming years. While $11 billion in home equity lines are starting to require principal and interest payments this year, the amount jumps to $29 billion by 2014, the office said. That is followed by a surge to $53 billion in 2015 and $73 billion in 2017. For 2018 and beyond, it is $111 billion. The properties backing many of these loans are no longer worth the amounts borrowed on them. In the first quarter of 2012, the top four banks held $295.1 billion in revolving residential lines of credit, according to Amherst Securities. Using data from the Federal Reserve, Amherst said that Bank of America held $101.4 billion; Wells Fargo, $93.3 billion; JPMorgan Chase, $84.4 billion; and Citigroup, $15.9 billion. As a result, the risks to borrowers cited in the comptroller's office report will also be faced by their lenders. Read more.

"UNDERWATER" MORTGAGE REFINANCING GROWS, BUT CRITICS PRESS FOR MORE ASSISTANCE



The number of homeowners refinancing their mortgages under a revamped federal program grew in May, but critics are still pressing a federal regulator to do more, the Wall Street Journal reported today. For the first five months of 2012, more than 78,000 homeowners who owe more than 105 percent of their property's value have refinanced using the government’s Home Affordable Refinance Program (HARP). That was up from about 60,000 in all of 2011, the Federal Housing Finance Agency said in a report yesterday. In May alone, 21,605 homeowners who owe more than 105 percent of their home's current value completed refinances through HARP. That was up from 15,371 in April and only 4,168 in May 2011. However, relatively few homeowners who are deeply "underwater"—meaning they owe more on their properties than their homes are worth—have completed the refinancing process. Only about 11,000 homeowners who owe more than 125 percent of their home's value have refinanced under HARP to date. Those numbers may rise further since a method to package those loans into mortgage-backed securities became available on June 1. Nevertheless, critics and analysts note that some of the biggest lenders are only refinancing their existing borrowers. They also say that the HARP rules make it hard for borrowers to refinance their loans with new lenders, causing consumers to pay higher-than-necessary rates. Read more. (Subscription required.)

ANALYSIS: NEBRASKA, NOT CALIFORNIA, IS THE OVERALL LEADER OF MUNICIPAL COLLAPSES



Quirks in local, state and federal law have made Nebraska home to almost one-fifth of the more than 220 chapter 9 bankruptcies filed in the U.S. since 1981, according to a nationwide review of federal court records, Bloomberg News reported yesterday. California, with more than 20 times Nebraska's population, is second, followed by Texas and Alabama. California may soon add to its total, as San Bernardino is considering whether to seek court protection this week. The main difference between Nebraska and other states is the kind of governmental bodies that file for bankruptcy: No town, city or county has sought court protection in the state. All 45 of Nebraska’s chapter 9 cases were by special tax districts, most of them owned by residential subdivision developers who used property-tax revenue to pay for streets, sewers and other infrastructure. Read more.

HSBC EXECUTIVES GRILLED IN U.S. SENATE AMID MONEY LAUNDERING ALLEGATIONS



HSBC Holdings Plc executives were grilled by lawmakers over claims that bank affiliates gave terrorists, drug cartels and criminals a portal into the U.S. financial system by failing to guard against money laundering, Bloomberg News reported today. Irene Dorner, president and chief executive officer of HSBC North America Holdings Inc., and other executives appeared in front of the Senate's Permanent Subcommittee on Investigations today at a hearing following the panel’s 335-page report that described a decade of compliance failures by Europe's biggest bank. One of the executives, David Bagley, HSBC's head of group compliance, said at the hearing that he would resign. London-based HSBC enabled drug lords to launder money in Mexico, did business with firms linked to terrorism and concealed transactions that bypassed U.S. sanctions against Iran, Senate investigators said in the report. "The problem here is that some international banks abuse their U.S. access," Senator Carl Levin (D-Mich.), who heads the subcommittee, said at the start of the hearing. “The end result is that the U.S. affiliate can become a sinkhole of risk for an entire network of bank affiliates and their clients around the world playing fast and loose with U.S. rules." Read more.

Click here to read the prepared witness testimony.

CAPITAL ONE SEES CREDIT CARD DELINQUENCIES INCREASE IN JUNE



Capital One Financial Corp. said that delinquencies at its U.S. credit card business rose in June, reversing a four-month decline, while charge-offs eased, MarketWatch.com reported yesterday. Capital One's 30-day delinquency rate for U.S. credit cards edged up to 3.16 percent last month from 3.14 percent in May, according to a filing with the Securities and Exchange Commission. At its international credit card business, the rate increased to 4.84 percent from 4.83 percent a month earlier. Auto-loan delinquencies fell to 5.55 percent from 5.76 percent. Read more.

ABI IN-DEPTH

“SUBJECTING BUSINESS PROJECTIONS TO SCRUTINY IN VALUATION DISPUTES” WEBINAR TO BE HELD ON JULY 30!



Reassembling the speakers from the highest-rated panel at the New York City Bankruptcy Conference this year, ABI will be holding a live webinar on July 30 at 11 a.m. ET titled, "Subjecting Business Projections to Scrutiny in Valuation Disputes." Panelists include:

• Moderator David Pauker of Goldin Associates, LLC (New York)
• Martin J. Bienenstock of Proskauer (New York)
• David M. Hillman of Schulte Roth & Zabel LLP (New York)
• Bankruptcy Judge Robert E. Gerber (S.D.N.Y.)

The panel will address:

• How much deference should management projections be accorded?
• How do you determine whether projections are unrealistically optimistic or pessimistic?
• What is the relevance of "market consensus?"
• How do management’s incentives impact projections?

The webinar is available to ABI members for $75 and is approved for 1.0 CLE hours in Calif., Ga., Hawaii, Ill., N.Y. (approved jurisdiction policy) S.C. and Texas. CLE approval is pending in Del., Fla., Pa. and Tenn. To register, please click here.

LATEST CASE SUMMARY ON VOLO: PEARSON EDUCATION, INC. V. ALMGREN (8TH CIR.)



Summarized by Sarah Smegal of Bartlett Hackett Feinberg P.C.

The Eighth Circuit Court of Appeals affirmed the orders of the bankruptcy court striking the appellants' demand for a jury trial on the amount of damages in relation to copyright infringement claims and denying an award of attorney's fees sought pursuant to 17 U.S.C. Sect. 505.

More than 550 appellate opinions are summarized on Volo typically 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: REACTIONS TO THE CREDIT CARD SETTLEMENT



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post looks at reactions to a proposed deal, announced late on Friday, that would transfer almost $7.5 billion from the credit card networks to merchants. In exchange for that payoff, Visa and MasterCard will get a wide-ranging release from future litigation.

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

The anti-modification rule for home mortgages in chapter 13 should be repealed, subjecting mortgage debts to bifurcation like any other secured claim.

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

IS YOUR ABI MEMBERSHIP PROFILE CURRENT?



Keeping a current profile will allow you to benefit from one of ABI's most important services - networking. When you update your profile, you are putting your most valuable information in the membership directory. Be sure to include your areas of expertise, firm information, education and join any other committees that are of interest. Click here to update your profile.

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.

July

- Southeast Bankruptcy Workshop

     July 25-28, 2012 | Amelia Island, Fla.

-Valuation Webinar, July 30 at 11 a.m. ET

August

- Mid-Atlantic Bankruptcy Workshop

     August 2-4, 2012 | Cambridge, Md.

September

- Complex Financial Restructuring Program

     September 13-14, 2012 | Las Vegas, Nev.


- Southwest Bankruptcy Conference

     September 13-15, 2012 | Las Vegas, Nev.

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

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

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.

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy