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COURT RULING PUTS CLOUD OVER CONSUMER FINANCIAL PROTECTION BUREAU AS WORK SLOWS



A court ruling that cast doubt on the authority of its director has hampered the U.S. Consumer Financial Protection Bureau, slowing some enforcement, impeding recruitment of a second-in-command and delaying joint ventures with the states, Bloomberg News reported yesterday. President Obama last year appointed Richard Cordray director when the Senate was not in session, the same day he made appointments to the National Labor Relations Board. The U.S. Court of Appeals in Washington on Jan. 25 concluded that the NLRB moves were unconstitutional, which could also affect Cordray. The Obama administration has appealed to the Supreme Court. House Republicans have said they will not take testimony from Cordray in the meantime. The Senate cannot move on Cordray’s renomination because Republicans will not permit an up or down vote. A Native American tribe has refused to supply information about its online lending business, claiming Cordray is not a legitimate director. In addition, candidates to be Cordray’s deputy will not pursue the job while his fate is unclear. The bureau’s plans to cooperate on enforcement with state attorneys general under the 2010 Dodd-Frank law also have not panned out, said Greg Zoeller, the attorney general of Indiana. “There has not been the gearing-up on consumer protection that I’d expected because of the cloud over the CFPB’s authority,” Zoeller, a Republican, said in an interview. The headwinds have not stopped the bureau’s work. Since it was established by Dodd-Frank, the agency has obtained $425 million in restitution for consumers and has imposed fines, including $15 million on mortgage insurers over kickbacks. The bureau has also warned banks about the consequences of discriminatory auto lending, released data on consumer complaints and published a study on payday lending. Read more.

SURVEY: NUMBER OF AMERICANS IN FORECLOSURE DOWN 25 PERCENT



Survey data by Lender Processing Services (LPS) shows that the number of Americans in the foreclosure process has fallen by almost 25 percent since April 2012, The Hill reported yesterday. Delinquency rates have also dropped, falling below 6.5 percent for the first time since July 2008. In line with LPS data, the National Association of Realtors reported yesterday that distressed homes – foreclosures and short sales – accounted for 18 percent of sales in April, down from 21 percent in March and 28 percent in April 2012. But while lower foreclosure rates are a sign that the economy and household finances are recovering, economists have blamed the dearth of foreclosures for some of the lackluster gains in the housing market recently. Existing and new home sales have both been constrained by tight inventory, according to experts, driving prices up in markets across the country and stunting a more solid recovery. Read more.

WALL STREET SEEKS DODD-FRANK CHANGES THROUGH TRADE TALKS



U.S. bankers and insurers are trying to use trade deals, which can trump existing legislation, to weaken parts of the Dodd-Frank Act designed to prevent a repeat of the 2008 financial crisis, Bloomberg News reported today. While the companies say that they are seeking agreements that preserve strong regulations and encourage economic growth, their effort is drawing fire from groups who argue that Wall Street wants to make the trade negotiations a new front in its three-year campaign to stop or alter the law. Sen. Elizabeth Warren (D-Mass.) said in a May 7 statement that there are “growing murmurs” about Wall Street’s efforts to “do quietly through trade agreements what they can’t get done in public view with the lights on and people watching.” The U.S. has embarked on three major negotiations aimed at reducing barriers to international commerce, one with the European Union covering most types of trade and investment, and a similar one with Asia-Pacific nations including Japan. A third set of talks, covering only services, is under way at the World Trade Organization. The Coalition of Service Industries, a trade association whose website lists Citigroup Inc., JPMorgan Chase & Co., American International Group Inc. and The Chubb Corp. as members, told the Office of the U.S. Trade Representative in a May 10 letter that “more compatible regulations for services” should be part of the EU deal. In separate letters on the EU and Asia-Pacific pacts, the industry coalition said that negotiators should draft rules limiting what regulators can do in the name of protecting financial stability. The letters also urged using the pacts to curb extra-territorial rules that can reach beyond U.S. borders, like ones currently being considered on financial derivatives. Read more.

COMMENTARY: WHY THE SEC NEEDS "NO-ADMIT" SETTLEMENTS



Last week, in a letter to the heads of the Securities and Exchange Commission, the Department of Justice and the Federal Reserve, Sen. Elizabeth Warren (D-Mass.) criticized the SEC practice of settling its civil litigation without requiring the defendant to admit wrongdoing, according to a commentary in today's Wall Street Journal. Warren said that this practice reduces the Wall Street regulator's leverage and forces it "to settle on terms that are much more favorable to the wrongdoer." Warren's criticism has long been shared by others on Capitol Hill and the courts who believe that "no-admit" settlements let defendants off without sufficient accountability, obscure the public record, and deprive private plaintiffs of the ability to piggyback on admissions to win monetary damage awards. In one prominent case in 2011, Judge Jed Rakoff of the district court in Manhattan took the rare step of refusing to sign off on a $285 million settlement between the SEC and Citigroup, calling it "pocket change" for the bank. That refusal has been appealed, and a decision is expected soon. The SEC and defense lawyers counter that no-admit settlements allow the agency to secure prompt and certain sanctions that are comparable to what regulators could reasonably attain through costly litigation—litigation that the SEC might actually lose. They contend that even without admissions, SEC settlements typically involve greater transparency and accountability than civil settlements by other federal agencies, some of which not only don't require an admission of wrongdoing, but actually allow the settling party to explicitly deny any wrongdoing. Read the full commentary. (Subscription required.)

LATEST BLOOMBERG VIDEO EXPLORES DEWEY CASE AND PROSPECT OF FUTURE LAW FIRM FAILURES



While failed law firms make for notoriously difficult bankruptcy cases, Dewey & LeBoeuf's time in bankruptcy court was quicker and easier than other notable law firms. Joe Samet, head of restructuring at Baker & McKenzie, and Al Togut, founding partner at Togut, Segal & Segal, talk with Bloomberg Law's Lee Pacchia about why Dewey's case went so smoothly compared to others, the prospects for other large law firm failures and how managing partners can keep their firms out of bankruptcy. Click here to watch the video.

ABI LIVE WEBINAR NEXT WEEK WILL FOCUS ON CLASS ACTIONS IN BOTH BUSINESS AND CONSUMER CASES



Class action lawsuits in both chapter 11 and 13 cases are becoming more prevalent. Are you wondering whether your clients’ WARN Act claims would be better pursued against a debtor company in a class action adversary proceeding or in a class proof of claim, or both? If your client has been sued in a debtor’s consumer class action adversary proceeding, do you know the best defenses against class certification? ABI's panel of experts will highlight the case law and explore the potential benefits and pitfalls of class actions by creditors against debtor companies in chapter 11 cases and by debtors/trustees against creditors in chapter 13 cases on May 29 from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

ASSOCIATES: ABI'S NUTS & BOLTS ONLINE PROGRAMS HELP YOU HONE YOUR SKILLS WHILE SAVING ON CLE!



Associates looking to sharpen their bankruptcy knowledge should take advantage of ABI's special offer of combining general, business or consumer Nuts & Bolts online programs. Each program features an outstanding faculty of judges and practitioners explaining the fundamentals of bankruptcy, offering procedures and strategies tailored for both consumer and business attorneys. Click here to get the CLE you need at a great low price!

ABI GOLF TOUR UNDERWAY; NEXT STOP IS CENTRAL STATES BANKRUPTCY WORKSHOP IN JUNE



Rob Schwartz and Scott Gautier are tied at 34 Stableford Points atop the closely bunched leaderboard after the ABI's Golf Tour's first stop at Lake Presidential Golf Club. Next up for the Tour is the famed Bear course at the Grand Traverse Resort at the Central States Bankruptcy Workshop on June 14. Final scoring to win the Great American Cup—sponsored by Great American Group—is based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! There's no charge to register or participate in the Tour, and women are most welcome.

ABI MEMBERS WELCOME TO ATTEND INSOL'S LATIN AMERICAN REGIONAL SEMINAR ON JUNE 13 IN SAO PAULO



ABI members are encouraged to attend INSOL’s Latin American regional seminar in São Paulo, Brazil, on June 13. The one-day seminar has been organized by INSOL in association with TMA Brasil to cover current cross-border insolvency and restructuring topics. The seminar is designed to be interactive and to allow the attendees to discuss and debate about practical issues with speakers who are leading players in the insolvency and restructuring field and with experience in insolvency proceedings involving different countries. The seminar will benefit from simultaneous translation in English, Portuguese and Spanish. For more information and to register, please click here.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: GENTILE V. DEGIACOMO (IN RE GENTILE; 1ST CIR.)



Summarized by Nathaniel Hull of Verrill Dana LLP

The First Circuit BAP dismissed the debtors’ appeal of a bankruptcy court order granting the chapter 7 trustee’s motion to sell real estate that was fully encumbered by a disputed lien for lack of appellate standing. The BAP concluded that the debtors failed to meet their burden of demonstrating that nullification of the sale would be likely to result in an overall surplus in the chapter 7 estate to which the debtors would become entitled once the bankruptcy case is closed.

There are nearly 900 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: STUDENT LOANS MAY NOW BE DISCHARGED MORE EASILY IN BANKRUPTCY IN THE 9TH CIR.

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new post examines the Ninth Circuit Court of Appeals' opinion in Hedlund v. The Educational Resources Institute, Inc. and Pennsylvania Higher Education Assistance Agency, Case 12-35258 (D.C. 6:11-cv-6281AA), suggesting that the opinion (and other pending decisions) may have made it a little easier on some student loan debtors to have their student loans discharged in 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 implement constructive trusts in any case where applicable state law would recognize them.

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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2013

May

- ABI Live Webinar: Consumer Class Actions

     May 29, 2013

June

- Memphis Consumer Bankruptcy Conference

     June 7, 2013 | Memphis, Tenn.

- Central States Bankruptcy Workshop

     June 13-16, 2013 | Grand Traverse, Mich.

- INSOL’s Latin American Regional Seminar

     June 13, 2013 | São Paulo, Brazil

- Charity Golf Tournament

     June 14, 2013 | City of Industry, Calif.

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 11-14, 2013 | Newport, R.I.

- Southeast Bankruptcy Workshop

     July 18-21, 2013 | Amelia Island, Fla.

August

- Mid-Atlantic Bankruptcy Workshop

    August 8-10, 2013 | Hershey, Pa.

- Southwest Bankruptcy Conference

    August 22-24, 2013 | Incline Village, Nev.

September

- ABI Endowment Golf & Tennis Outing

    Sept. 10, 2013 | Maplewood, N.J.

- ABI Endowment Baseball Game

    Sept. 12, 2013 | Baltimore, Md.

- Bankruptcy 2013: Views from the Bench

    Sept. 27, 2013 | Washington, D.C.

October

- ABI Endowment Football Game

    Oct. 6, 2013 | Miami, Fla.

December

- ABI/St. John’s Bankruptcy Mediation Training

    Dec. 8-12, 2013 | New York