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MORTGAGE DELINQUENCY RATE IN U.S. DECREASES TO 2008 LEVELS



The U.S. mortgage delinquency rate declined in the first quarter to the lowest level since 2008 as lower consumer spending and tighter lending standards resulted in fewer defaults, Bloomberg News reported yesterday. The share of home loans at least 30 days late dropped to 7.4 percent from 7.58 percent in the previous three months, according to a report today from the Mortgage Bankers Association (MBA). The rate peaked at 10.1 percent in the first quarter of 2010 and reached its lowest point since the third quarter of 2008, when it was 6.99 percent. The share of homes that had received a foreclosure notice and had not been seized by banks increased to 4.39 percent, up 1 basis point, or 0.01 percentage point, from the previous quarter, the MBA reported. Read more.

FITCH WARNS BANKS MUST RAISE $566 BILLION IN NEW CAPITAL



The world's largest banks must raise a combined $566 billion to satisfy new capital requirements, Fitch Ratings said today, as the authorities demand that banks hold more cash in reserve to protect against future financial shocks, the New York Times' DealBook blog reported. The figure represents a 23 percent increase on what the banks currently hold in reserve and will most likely reduce return on equity, a critical figure used to gauge a firm's profitability, Fitch said. The banks affected are the 29 "systemically important financial institutions" as designated by the global Financial Stability Board. Read more.

U.S. SENATE PANEL TO LOOK AT DERIVATIVES REGULATION NEXT WEEK



Derivatives regulators are likely to be questioned about their oversight of complex trades at JPMorgan Chase & Co., which resulted in a more than $2 billion loss, at a Senate Banking Committee hearing scheduled for next Tuesday, Dow Jones Newswires reported today. Securities and Exchange Commission Chairman Mary Schapiro and Commodity Futures Trading Commission Chairman Gary Gensler are scheduled to appear at a hearing about implementation of the derivatives regulatory regime laid out in the 2010 Dodd-Frank financial overhaul law. On Monday, the panel's Democratic chairman, Sen. Tim Johnson (S.D.), announced upcoming hearings on financial regulation at which the JPMorgan trades are "expected to be discussed," but not a specific inquiry into the company's loss. Sen. Mike Johanns (R-Neb.) on Tuesday called for JPMorgan Chief Executive James Dimon to come to the Hill for a hearing specifically to look into the trades. The House Financial Services Committee has not yet scheduled a hearing, but Rep. Randy Neugebauer (R-Texas) on Tuesday called for one to look into the losing trades. Read more.

COMMENTARY: THE DANGER WITH BIG BANKS



Taxpayer safety nets such as the FDIC should be available only to banks that are in the loan business, not those in the investment business, according to a commentary in yesterday's Wall Street Journal. In 1970, according to data from the Federal Reserve Bank of Dallas, the five largest U.S. institutions owned 17 percent of banking industry assets; in 2010 that share was 52 percent. As the financial crisis of 2008 showed, the very diversification, structure and size of most of our largest banks put the their assets at tremendous risk, according to the commentary, leaving the government no recourse but to rescue them. Harvey Rosenblum, the Dallas Federal Reserve Bank's executive vice president and director of research, wrote last year that "these rescues have penalized equity holders while protecting bondholders and, to a lesser extent, bank managers." In other words, by protecting people from the consequences of their errors, the bailouts raised the risk that the same errors will be made in the future. Taxpayer safety-net programs, such as the Federal Deposit Insurance Corporation (FDIC), should be available only to banks in business to provide insured deposits, according to the commentary. Financial institutions that primarily provide investment, hedging and speculative services do not deserve protection either by the FDIC's explicit guarantees or by an implicit understanding that taxpayers will bail them out because there is no other alternative. Read the full commentary. (Subscription required.)

MORTGAGE-BOND TRANSPARENCY PLAN MEETS RESISTANCE FROM TRADERS



The Financial Industry Regulatory Authority's (FINRA) latest plan to increase transparency in a corner of the $6.5 trillion mortgage-bond market is meeting resistance from Wall Street’s largest lobbying group, Bloomberg News reported today. Investors and dealers are concerned that the level of detail FINRA proposes to publish on trades of government-backed securities as so-called specified pools will reveal shifts in strategy because individual bonds are often owned by only one holder, according to the Securities Industry and Financial Markets Association. The group is pushing for a "masking" of a bond's unique identifier, known as a CUSIP, as FINRA adds trade-by-trade disclosures including prices to its Trade Compliance and Reporting Engine. Read more.

REGISTER FOR THE LABOR & EMPLOYMENT COMMITTEE'S "EVOLVING LABOR ISSUES IN CHAPTER 11" WEBINAR



Make sure to mark your calendars for May 23 from 2-3:30 p.m. ET for the ABI Labor and Employment Committee's "Evolving Labor Issues in Chapter 11" Webinar. A panel of experts will be discussing timely developments in several large complex bankruptcy cases, including Hostess, Kodak, Nortel and American Airlines. The expert panel includes Babette A. Ceccotti of Cohen, Weiss & Simon LLP (New York), former chief counsel of the PBGC Jeffrey B. Cohen of Bailey & Ehrenberg PLLC (Washington, D.C.), Marc Kieselstein of Kirkland & Ellis LLP (New York) and Ron E. Meisler of Skadden, Arps, Slate, Meagher & Flom LLP.
Sam Alberts of SNR Denton (Washington, D.C.) will be the moderator for the program. Issues to be discussed include:

• Hostess' efforts to eliminate their multi-employer pension plan contribution liability through motions to reject their labor agreements under Section 1113.

• Kodak's attempt to terminate retiree health benefits.

• The effect of the automatic stay upon efforts by the U.K. Pension Protection Fund and the U.K. Nortel Pension Plan to enforce its powers under the U.K. Pensions Act.

• American Airlines' efforts to reduce legacy costs in bankruptcy.

Click here to register.

COMMENT PERIOD CLOSES MONDAY ON THE U.S. TRUSTEE PROGRAM’S PROPOSED GUIDELINES FOR ATTORNEY COMPENSATION IN LARGE CHAPTER 11 CASES



The U.S. Trustee Program has re-opened the comment period until May 21, 2012, on proposed guidelines for reviewing applications for attorney compensation in large chapter 11 cases ("fee guidelines"). The USTP also scheduled a public meeting for June 4, 2012, at the U.S. Department of Justice in Washington, D.C. on the proposed fee guidelines. Click here for more information on submitting comments or attending the public hearing.

ABI IN-DEPTH

JUNE 5 WEBINAR WILL EXAMINE HOW TO HANDLE AN ADMINISTRATIVELY INSOLVENT ESTATE



Panelists from one of the top-rated sessions at the 2011 Winter Leadership Conference are going to reconvene for an ABI and West LegalEd Center webinar on June 5 titled, "Handling the Administratively Insolvent Estate- What to Do When Your Chapter 11 Goes South." CLE credit will be available for the webinar, which will last from 11 a.m. - 12:30 p.m. ET.

Speakers include:

• Robert J. Feinstein of Pachulski Stang Ziehl & Jones LLP (New York)

• Cathy Rae Hershcopf of Cooley LLP (New York)

• Robert L. LeHane of Kelley Drye & Warren LLP (New York)

Robert J. Keach of Bernstein Shur (Portland, Maine) will be the moderator for the webinar.

The webinar costs $115, and purchase provides online access for 180 days. If you are purchasing a live webcast, you will receive complimentary access to the on-demand version for 180 days once it becomes available. Click here for more information.

LATEST CASE SUMMARY ON VOLO: SENIOR TRANSEASTERN LENDERS V. OFFICIAL COMMITTEE OF UNSECURED CREDITORS (IN RE TOUSA INC.; 11TH CIR.)



Summarized by Summer Chandler of McKenna Long & Aldridge LLP

The Eleventh Circuit reversed the order of the district court, affirmed the liability findings of the bankruptcy court, and remanded to the district court for further proceedings consistent with its opinion. Specifically, the Eleventh Circuit held that the bankruptcy court did not clearly err when it found that certain debtor subsidiary entities (the "Conveying Subsidiaries”) of debtor TOUSA, Inc. (TOUSA) had not received reasonably equivalent value in exchange for the liens they conveyed to secure loans used to pay a debt owed only by TOUSA, such that the liens could be avoided as fraudulent transfers; and (2) the Transeastern Lenders (defined below) who had received loan proceeds secured by such liens were entities “for whose benefit” the Conveying Subsidiaries transferred the liens, such that recovery could be sought from the Transeastern Lenders pursuant to 11 U.S.C. 550(a)(1). Finally, the Eleventh Circuit declined to consider the remedies ordered by the bankruptcy court and matters related to judicial assignment and consolidation because those issues had not yet been considered by the district court and remanded to the district court for further proceedings.

More than 500 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: FURTHER EXAMINATION OF RESCAP'S BANKRUPTCY FILING



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post provides further examination of Ally Financial Inc’s mortgage unit, Residential Capital's (ResCap), bankruptcy filing on Monday.

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 Constitutional scheme of uniform federal bankruptcy is a bad idea; the states should have more leeway to adopt their own different approaches to financial distress, at least for their own individual citizens and companies with purely intra-state operations. 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.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

May

- ABI Labor and Employment Committee's "Evolving Labor Issues in Chapter 11" Webinar

     May 23, 2012



June

- Memphis Consumer Bankruptcy Conference

     June 1, 2012 | Memphis, Tenn.

- ABI'S "Handling the Administratively Insolvent Estate- What to Do When Your Chapter 11 Goes South" Webinar

     June 5, 2012

- Central States Bankruptcy Workshop

     June 7-10, 2012 | Traverse City, Mich.

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 12-15, 2012 | Bretton Woods, N.H.

- Southeast Bankruptcy Workshop

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

August

- Mid-Atlantic Bankruptcy Workshop

     August 2-4, 2012 | Cambridge, Md.

JUSTICE DEPARTMENT OPENS JPMORGAN INQUIRY



The Justice Department has opened an inquiry into JPMorgan Chase & Co.'s $2 billion-plus trading loss, the Wall Street Journal reported today. The probe is at an early stage and it is not clear what possible legal violation federal investigators may be focusing on. Last week, the Securities and Exchange Commission began its own review of the matter, examining the company's accounting and disclosures to investors. The trading loss has aroused intense scrutiny in Washington, D.C., where some lawmakers have been fighting efforts by big banks to delay or scale back regulations mandated by the 2010 Dodd-Frank financial overhaul. Read more. (Subscription required.)

ANALYSIS: BANKS TREAD A FINE LINE IN TRADING



When JPMorgan Chase revealed its $2 billion loss last week, it looked as though the big Wall Street banks were up to their old tricks, using their government-backed funds to make risky trades in a misguided effort to improve their profits, according to an analysis in the New York Times' Dealbook Blog on Sunday. While few other banks pursue the complex strategies that led to JPMorgan's losses, many traditional lenders regularly buy and sell securities, and make bets with derivatives, as part of their core operations. Financial firms say that such activities allow them to earn a basic return on the deposits they collect and to offset risks on their balance sheets. These widespread trading practices are creating a headache for regulators, who are trying to devise new rules to prevent another financial crisis. Regulators are putting the finishing touches on the so-called Volcker Rule, which would ban banks from making speculative bets with their own money. However, regulators face a dilemma when faced with the question of "what constitutes proprietary trading?" Such activities are easy to spot when financial firms run independent trading units devoted to making profits. Already, most big banks have moved to exit these businesses in preparation for the Volcker Rule. Regulators, however, are having a harder time telling when other trading activities — like market-making and portfolio hedging — cross the line. Big banks, even those with little presence on Wall Street, contend that their trading activities are part of prudent risk-management. Without the ability to invest in bonds and other securities, these companies argue that they would not be able to make loans or extend credit as easily. Read more.

DOJ NOT KEEPING STATS ON FINANCIAL CRISIS CONVICTIONS



The Department of Justice has been short on answers for congressional inquiries looking to find out how many executives have been convicted of criminal wrongdoing related to the financial crisis of 2008-09, as the department said that it does not keep count of the numbers of board-level prosecutions, according to a report today in the Wall Street Journal. In a response earlier this month to a March request from Sen. Charles Grassley (R-Iowa), the Justice Department said that it does not hold information on defendants' business titles. "Consequently, we are unable to generate the [requested] comprehensive list" of Wall Street convictions stemming from the 2008 meltdown, the letter from the Department of Justice to Grassley said. Prof. William Black, a former bank regulator, said that the government used to keep these figures. He points to a 1993 report by the Government Accountability Office on the savings-and-loan crisis of a generation ago. The report said that "30 percent of those prosecuted are the major corporate insiders—CEOs, presidents, shareholders, directors and officers" of the affected firms. Some other law-enforcement agencies are keeping a similar tally for the latest financial crisis. The Securities and Exchange Commission highlights on its website its civil crisis-related enforcement actions against senior corporate officers—a total of 55 so far. Read more. (Subscription required.)

In related news, the House Financial Services Committee will hold a hearing on Thursday titled "Examining the Settlement Practices of U.S. Financial Regulators." Click here to view the witness list.

COMMENTARY: SAYING NO TO STATE BAILOUTS



States that have followed Europe's economic policy model of unbridled spending are getting Europe's economic results: low growth and looming fiscal catastrophe, according to a commentary by Rep. Kevin Brady (R-Texas) and Sen. Jim DeMint (R-S.C.), members of the Joint Economic Committee (JEC), in today's Wall Street Journal. Compared with the 10 U.S. states with the lowest rates of economic growth since 1990, according to a JEC report released today, the states with the highest rates of growth had smaller unfunded pension ratios (by 26 percent); lower debt ratios (by 18 percent); less tax revenue collected (by 22 percent); and lower welfare benefits (by 31 percent). The report also shows that over the last decade, states with no income tax have much higher rates of job growth and population growth than states with the highest income taxes. The fuse on the U.S. debt bomb—which according to the National Bureau of Economic Research may be armed with as much as a $211 trillion fiscal shortfall—may prove to be the states' public-employee pension systems, according to the commentary. Years of overly optimistic growth projections, underfunding and overpromising by politicians, according to the commentary, have rendered many of these public pension systems toxic assets on states' books. Read more. (Subscription required.)

REGISTER FOR THE LABOR & EMPLOYMENT COMMITTEE'S "EVOLVING LABOR ISSUES IN CHAPTER 11" WEBINAR



Make sure to mark your calendars for May 23 from 2-3:30 p.m. ET for the ABI Labor and Employment Committee's "Evolving Labor Issues in Chapter 11" Webinar. A panel of experts will be discussing recent developments in several large complex bankruptcy cases, including Hostess, Kodak, Nortel and American Airlines. The expert panel includes Babette A. Ceccotti of Cohen, Weiss & Simon LLP (New York), former chief counsel of the PBGC Jeffrey B. Cohen of Bailey & Ehrenberg PLLC (Washington, D.C.), Marc Kieselstein of Kirkland & Ellis LLP (New York) and Ron E. Meisler of Skadden, Arps, Slate, Meagher & Flom LLP.
Issues to be discussed include:

• Hostess' efforts to eliminate their multi-employer pension plan contribution liability through motions to reject their labor agreements under Section 1113.

• Kodak's attempt to terminate retiree health benefits.

• The effect of the automatic stay upon efforts by the U.K. Pension Protection Fund and the U.K. Nortel Pension Plan to enforce its powers under the U.K. Pensions Act.

• American Airlines' efforts to reduce legacy costs in bankruptcy.

Click here to register.

U.S. TRUSTEE PROGRAM RE-OPENS COMMENT PERIOD ON PROPOSED GUIDELINES FOR ATTORNEY COMPENSATION IN LARGE CHAPTER 11 CASES



The U.S. Trustee Program has re-opened the comment period until May 21, 2012, on proposed guidelines for reviewing applications for attorney compensation in large chapter 11 cases ("fee guidelines"). The USTP also scheduled a public meeting for June 4, 2012, at the U.S. Department of Justice in Washington, D.C. on the proposed fee guidelines. Click here for more information on submitting comments or attending the public hearing.

ABI IN-DEPTH

JUNE 5 WEBINAR WILL EXAMINE HOW TO HANDLE AN ADMINISTRATIVELY INSOLVENT ESTATE



Panelists from one of the top-rated sessions at the 2011 Winter Leadership Conference are going to reconvene for an ABI and West LegalEd Center webinar on June 5 titled, "Handling the Administratively Insolvent Estate- What to Do When Your Chapter 11 Goes South." CLE credit will be available for the webinar, which will last from 11 a.m. - 12:30 p.m. ET.

Speakers include:

• Robert J. Feinstein of Pachulski Stang Ziehl & Jones LLP (New York)

• Cathy Rae Hershcopf of Cooley LLP (New York)

• Robert L. LeHane of Kelley Drye & Warren LLP (New York)

Robert J. Keach of Bernstein Shur (Portland, Maine) will be the moderator for the webinar.

The webinar costs $115, and purchase provides online access for 180 days. If you are purchasing a live webcast, you will receive complimentary access to the on-demand version for 180 days once it becomes available. Click here for more information.

LATEST CASE SUMMARY ON VOLO: MCNEAL V. GMAC MORTGAGE, LLC (IN RE MCNEAL; 11TH CIR.)



Summarized by Melissa Youngman of McCalla Raymer, LLC

The Eleventh Circuit held that a wholly unsecured junior lien on a chapter 7 debtor's home may be "stripped off" pursuant to Section 506(d) of the Bankruptcy Code.

More than 500 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: FURTHER INSIGHT ON HOW THE SUPREME COURT MAY APPROACH CREDIT BIDDING IN THE RADLAX CASE



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A blog post provides further insight on a few approaches that the Supreme Court may take on the credit-bidding issues presented in the RadLAX case.

Hear a discussion of the RadLAX post-argument featuring lead counsel David Neff by clicking here. ABI will hold a webinar on the Court’s decision as soon as it is announced in late June.

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 Constitutional scheme of uniform federal bankruptcy is a bad idea; the states should have more leeway to adopt their own different approaches to financial distress, at least for their own individual citizens and companies with purely intra-state operations. 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.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

May

- ABI Labor and Employment Committee's "Evolving Labor Issues in Chapter 11" Webinar

     May 23, 2012



June

- Memphis Consumer Bankruptcy Conference

     June 1, 2012 | Memphis, Tenn.

- ABI'S "Handling the Administratively Insolvent Estate- What to Do When Your Chapter 11 Goes South?" Webinar

     June 5, 2012

- Central States Bankruptcy Workshop

     June 7-10, 2012 | Traverse City, Mich.

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 12-15, 2012 | Bretton Woods, N.H.

- Southeast Bankruptcy Workshop

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

August

- Mid-Atlantic Bankruptcy Workshop

     August 2-4, 2012 | Cambridge, Md.