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BIG U.S. BANKS FACE TOUGHER STANDARDS



The Federal Reserve today outlined a multi-pronged plan to place the nation's largest banks under increasingly stringent capital requirements to guard the financial system from risks posed by "too big to fail" companies, the Wall Street Journal reported today. Fed officials said that they hope to act in the coming months on four separate proposals aimed at the eight largest U.S. firms considered "systemically important" to the global economy, including Goldman Sachs Group Inc., Bank of America Corp. and JPMorgan Chase & Co. Fed Gov. Daniel Tarullo, the agency's point man on regulation, said that regulators could soon propose a higher leverage ratio, which is expected to fall between 5 and 6 percent, for the largest banks. This capital measure gauges equity against total assets and is favored by some regulators as a better measure of a bank's ability to withstand stress. Regulators are also working on a requirement that these banks hold a minimum amount of long-term debt, a separate charge based on a firm's reliance on volatile forms of short-term funding, and a special surcharge agreed upon by international regulators. Read more. (Subscription required.)

COMMENTARY: THE CORKER-WARNER HOUSING REFORM WON'T WORK



The Corker-Warner bill, introduced last week by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.), proposed a new government agency to insure mortgages, but it will only ensure the same loose lending that caused the last financial crisis, according to a commentary in today's Wall Street Journal. The bipartisan bill's intent is to eliminate Fannie Mae and Freddie Mac, the two government-sponsored mortgage giants that cratered in 2008 and were bailed out by taxpayers to the tune of $180 billion. The recent financial crisis was the result of government housing policies. Beginning in 1992, these policies required Fannie and Freddie to lower their underwriting standards so people who otherwise lacked the credit standing or financial resources could purchase homes. Fannie and Freddie could take on the risks of these loans only because of the implicit backing of the federal government. The agency proposed in the Corker-Warner bill will establish a new government agency, the Federal Mortgage Insurance Corp. (FMIC), to insure mortgage-backed securities and wind down Fannie and Freddie. As with Fannie and Freddie, investors in mortgage-backed securities will not have to worry about the quality of the underlying mortgages. A major feature of Corker-Warner is the requirement that the private sector share the insurance risk with the new FMIC. The bill specifies that a private risk-sharer like a bond insurer must take the first losses, no less than 10 percent on any securitized pool of mortgages. This is intended to protect the FMIC against losses, though it works only if the quality of the mortgages remains high. Read the full commentary. (Subscription required.)

NORTH LAS VEGAS EMINENT DOMAIN PROPOSAL FACES PUSHBACK FROM HOMEOWNER



A controversial eminent domain proposal rolled out in North Las Vegas, Nev., to help underwater homeowners with their mortgages is facing pushback from an unlikely party—a homeowner living in the city, Housingwire.com reported yesterday. Gregory Smith sued North Las Vegas, claiming that an eminent domain strategy, proposed locally with the help of consultancy firm Mortgage Resolution Partners (MRP), violates several portions of the U.S. and Nevada State Constitutions. The plan follows a similar pattern that MRP has proposed in other jurisdictions — namely that homeowners who are underwater in the city can be helped by giving local governments the power of eminent domain to seize property rights, thereby allowing officials to grant upside-down borrowers a principal reduction after taking over their loans. In his lawsuit, Smith suggests that this type of intervention into investor property rights violates the Fifth and Fourteenth Amendments of the Constitution, along with various sections of the Nevada Constitution. Furthermore, Smith claims that the proposal disrupts contractual rights granted to all U.S. citizens through the Constitution, as well as the Commerce Clause, which governs interstate commerce. If such a plan were to stick and make it into law, Smith says roughly 5,000 local mortgages would qualify, with MRP targeting loans that are current, underwater and owned by private securitization trusts. This is not the first time MRP has managed to stir up debate in local municipalities: San Bernardino County, Calif., previously debated the strategy before killing off the idea. Read more.

COMMENTARY: WIELDING DERIVATIVES AS A TOOL FOR DECEIT



Derivatives are not always “financial weapons of mass destruction,” as Warren Buffett famously called them, but they are often weapons of mass deception, according to an editorial in Friday's New York Times. Sometimes, banks use derivatives they create to help their clients deceive the public, according to the editorial, and at other times they enable the banks to deceive those clients. The latest revelation of deception by derivatives came in Italian government documents leaked this week to two European newspapers, La Repubblica and The Financial Times. The Financial Times reprted that it appeared as though Italy had used derivatives in the 1990s to allow it to make its budget deficit seem smaller, thus enabling it to qualify for admission to the euro zone. The report added that it appeared that those derivatives, now restructured, might be exposing Italy to a loss of 8 billion euros ($10.4 billion). Such deception by derivatives is hardly new, according to the editorial. Enron used derivatives called “prepaid forward” contracts to hide debt in a way that made corporate cash flow appear better, something the company thought was necessary to impress the bond rating agencies. The banks have done an excellent job, according to the editorial, of persuading the Financial Accounting Standards Board, which sets the rules, not to mess with them. Rather than force the banks to put the assets and liabilities on their balance sheets, as is required in most other countries, the board has proposed additional disclosures that might make it easier to discern the reality. Read the full editorial.

NEW ABI LIVE WEBINAR ON JULY 15 TO FOCUS ON THE § 1111(b) ELECTION, PLAN FEASIBILITY AND CRAMDOWN ISSUES



Utilizing a case study, ABI's panel of experts will explore issues surrounding a lender’s decision on whether or not to make an election under § 1111(b), plan feasibility and voting. The abiLIVE panel will also walk attendees through the necessary mathematical analyses used to analyze these issues. The webinar will take place on July 15 from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE NORTHEAST BANKRUPTCY CONFERENCE ON JULY 12



The next stop for the ABI Golf Tour is the famed Newport National course in Newport, R.I., in conjunction with the Northeast Bankruptcy Conference on July 12. 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.

ABI IN-DEPTH

NEW ABI "BANKRUPTCY IN DEPTH" ON-DEMAND CLE PROGRAM LOOKS AT PRINCIPLES OF PROPERTY OF THE ESTATE: DEMYSTIFYING EQUITABLE INTERESTS



In this 90-minute seminar, Profs. Andrew Kull of Boston University School of Law and Scott Pryor of Regent University School of Law provide an in-depth analysis of a legal principle that has become, in their words, "a long-lost area of the law": § 541 of the Bankruptcy Code. Seeking to demystify what is meant by "property of the estate" and, in particular, the distinction between legal or equitable interests of the debtor in property, Kull and Pryor describe the legal entanglements that ensue when legal title belongs to one person but the equitable title belongs to someone else. The cost of the seminar, which includes written materials and qualifies for 1.5 hours of CLE, is $95. To order or to learn more, click here.

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!

NEW CASE SUMMARY ON VOLO: MARSHALL V. MARSHALL (IN RE MARSHALL; 9TH CIR.)



Summarized by Lovee Sarenas of the U.S. Bankruptcy Court for the Central District of California

The Ninth Circuit upheld the decision of the district court to affirm three decisions of the bankruptcy court involving the chapter 11 bankruptcy estate of Howard Marshall III and his wife, Ilane, that was appealed by Pierce Marshall. First, the Ninth Circuit held that a party has no due process right to a random assignment of a bankruptcy case absent a showing of bias or partiality by the presiding judge. Thus, assigning the debtor's chapter 11 case to Judge Bufford, who was the presiding judge in the related chapter 11 case of Vickie Marshall, was not an error. The appellate court rendered a broad view of "related cases" as defined under the bankruptcy court's local rule 1015-2(a). The circuit court rejected evidence of bias solely from the bankruptcy judge's adverse decisions in the Vickie Marshall bankruptcy case against Pierce for purposes of 28 USC sec. 455. Without more, the Ninth Circuit opined that decisions based on facts shown or events that took place during the court's decision do not demonstrate bias.

There are more than 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: FURTHER EXAMINATION OF THE CORKER-WARNER BILL

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post takes a closer look at the bill introduced last week by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.). The post finds that the bill's explicit guarantee of backing of risky mortgages is better than the implicit one Fannie and Freddie had, but a more fundamental approach would be to demand that financial actors internalize and capitalize the risks themselves.

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

Law firms should provide support for law student-staffed bankruptcy clinics for consumer debtors.

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.

2013

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 11-14, 2013 | Newport, R.I.

- abiLIVE Webinar

     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.

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

    Sept. 18-19, 2013 | New York

- Bankruptcy 2013: Views from the Bench

    Sept. 27, 2013 | Washington, D.C.

October

- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum

    Oct. 4, 2013 | Kansas City, Mo.

- ABI Endowment Football Game

    Oct. 6, 2013 | Miami, Fla.

- Chicago Consumer Bankruptcy Conference

    Oct. 14, 2013 | Chicago, Ill.

November

- Austin Advanced Consumer Bankruptcy Practice Institute

   Nov. 10-12, 2013 | Austin, Texas

- Detroit Consumer Bankruptcy Conference

   Nov. 11, 2013 | Detroit, Mich.

December

- ABI/St. John’s Bankruptcy Mediation Training

    Dec. 8-12, 2013 | New York

SUPREME COURT GRANTS CERT IN NINTH CIRCUIT CASE ON JURISDICTION BY CONSENT



The Supreme Court yesterday granted certiorari in Executive Benefits Ins. Agency v. Arkison (In re Bellingham Insurance Agency) about the scope of the bankruptcy court's powers in the wake of the Court's ruling in Stern v. Marshall. In a Ninth Circuit case that drew attention after Stern was decided, a fraudulent transfer defendant argued the bankruptcy court lacked jurisdiction to enter judgment against it. The Ninth Circuit agreed that the bankruptcy court could not enter a final judgment in a fraudulent transfer action but held that the defendant had consented to the bankruptcy court's jurisdiction through its litigation conduct. The Supreme Court will decide whether parties can consent to bankruptcy court jurisdiction. They will also have to rule on a statutory issue about a gap Stern created in the jurisdictional framework. A potential outcome is that bankruptcy courts will lose the power to hear any fraudulent transfer actions. To read the petition for a writ of certiorari, please click here.

LATE AUTO LOAN PAYMENTS EDGED HIGHER IN 1Q 2013



Banks are increasingly extending auto loan financing to borrowers with less-than-sterling credit, a trend that's contributing to a higher rate of missed loan payments, the Associated Press reported today. The rate of U.S. auto-loan payments late by 60 days or more rose to 0.88 percent in the first three months of the year, credit reporting agency TransUnion said today. That's up from 0.82 percent in the first quarter last year, but down from 1 percent in the last three months of 2012, the firm said. Among subprime borrowers, or those whom lenders deem to be higher credit risks because of their track record of managing debt, the delinquency rate jumped to 5.5 percent in the first quarter from 5.09 percent a year earlier. Read more.

ANALYSIS: HIGH-END HOME LOANS STAGE A COMEBACK



Despite a recent sharp rise in mortgage rates, "jumbo" loans are becoming easier to get, according to a Wall Street Journal analysis on Saturday. Lenders originated $54 billion in such mortgages in the first quarter of 2013, according to Inside Mortgage Finance, an industry newsletter, up from $47 billion during the same period a year earlier. Higher loan volume isn't the only sign of a turnaround. The difference in the rate for a government-backed "conforming" mortgage and a jumbo loan is the narrowest it has been since 2007. Many jumbo lenders also have increased the amount of a home's value they will finance, and some are becoming more flexible in evaluating borrowers with strong credit. Read more. (Subscription required.)

COMMENTARY: HOW SAM ZELL IS SINKING TRIBUNE A SECOND TIME AROUND



Sam Zell is gone from the Tribune Co., but his toxic financial legacy lives on, according to a commentary in Friday's Washington Post. Not only did his debt-fueled purchase of one of the nation’s biggest media companies help precipitate its bankruptcy, costing creditors billions of dollars and wiping out thousands of jobs, but he also left a nasty tax mess behind for Tribune, which exited chapter 11 proceedings on Dec. 31. The Internal Revenue Service has challenged the tax-avoiding way that Zell had Tribune unload Newsday, a Long Island, N.Y., newspaper, and it seems almost certain to challenge the way that Tribune unloaded the Chicago Cubs. By the time the final papers are shuffled, the IRS and local tax authorities will likely seek considerably more than half a billion dollars in taxes, penalties and interest from Tribune from the sales of the Cubs and Newsday. Read more.

LATEST ABI PODCAST EXAMINES SUPREME COURT'S DECISION ON THE MEANING OF “DEFALCATION”



ABI's latest podcast features ABI Resident Scholar Scott Pryor speaking with Prof. Keith Sharfman of St. John's University School of Law and attorney Tom Byrne of Sutherland Asbill & Brennan LLP (Atlanta) on the issues surrounding the Supreme Court's unanimous decision in Bullock v. BankChampaign, N.A. In its decision on May 13, the Court held that a defalcation by a trustee requires a finding of gross negligence or some knowledge that what he or she is doing is improper. Byrne was the counsel of record for Randy Bullock, and Scharfman joined fellow professors on an amici curiae brief in support of BankChampaign. Click here to listen to the podcast.

NEW ABI LIVE WEBINAR ON JULY 15 WILL FOCUS ON THE § 1111(b) ELECTION, PLAN FEASIBILITY AND CRAMDOWN ISSUES



Utilizing a case study, ABI's panel of experts will explore issues surrounding a lender’s decision on whether or not to make an election under § 1111(b), plan feasibility and voting. The abiLIVE panel will also walk attendees through the necessary mathematical analyses used to analyze these issues. The webinar will take place on July 15 from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE NORTHEAST BANKRUPTCY CONFERENCE ON JULY 12



The next stop for the ABI Golf Tour is the famed Newport National course in Newport, R.I., in conjunction with the Northeast Bankruptcy Conference on July 12. 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.

ABI IN-DEPTH

NEW ABI "BANKRUPTCY IN DEPTH" ON-DEMAND CLE PROGRAM LOOKS AT PRINCIPLES OF PROPERTY OF THE ESTATE: DEMYSTIFYING EQUITABLE INTERESTS



In this 90-minute seminar, Profs. Andrew Kull of Boston University School of Law and Scott Pryor of Regent University School of Law provide an in-depth analysis of a legal principle that has become, in their words, "a long-lost area of the law": § 541 of the Bankruptcy Code. Seeking to demystify what is meant by "property of the estate" and, in particular, the distinction between legal or equitable interests of the debtor in property, Kull and Pryor describe the legal entanglements that ensue when legal title belongs to one person but the equitable title belongs to someone else. The cost of the seminar, which includes written materials and qualifies for 1.5 hours of CLE, is $95. To order or to learn more, click here.

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!

NEW CASE SUMMARY ON VOLO: SUAREZ V. BARRET (IN RE SUAREZ; 9TH CIR.)



Summarized by James Portman Webster of the James Portman Webster Law Office PLC

The Ninth Circuit affirmed the Bankruptcy Appellate Panel and bankruptcy court's ruling that a state court contempt ruling can be used as evidence that a debt results from a willful and malicious injury and is, therefore, nondischargeable under 11 U.S.C. § 523(a)(6).

There are more than 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: FURTHER ANALYSIS OF IN RE BELLINGHAM INSURANCE AGENCY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post takes a closer look at the questions raised by the Supreme Court yesterday when it granted certiorari in Executive Benefits Insurance Agency v. Arkison (In re Bellingham Insurance Agency).

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

Law firms should provide support for law student-staffed bankruptcy clinics for consumer debtors.

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.

2013

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 11-14, 2013 | Newport, R.I.

- abiLIVE Webinar

     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.

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

    Sept. 18-19, 2013 | New York

- Bankruptcy 2013: Views from the Bench

    Sept. 27, 2013 | Washington, D.C.

October

- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum

    Oct. 4, 2013 | Kansas City, Mo.

- ABI Endowment Football Game

    Oct. 6, 2013 | Miami, Fla.

- Chicago Consumer Bankruptcy Conference

    Oct. 14, 2013 | Chicago, Ill.

November

- Austin Advanced Consumer Bankruptcy Practice Institute

   Nov. 10-12, 2013 | Austin, Texas

- Detroit Consumer Bankruptcy Conference

   Nov. 11, 2013 | Detroit, Mich.

December

- ABI/St. John’s Bankruptcy Mediation Training

    Dec. 8-12, 2013 | New York

SUPREME COURT WILL HEAR BANKRUPTCY CASE INVOLVING CHARGE ON DEBTOR'S PROPERTY



The U.S. Supreme Court yesterday granted certiorari in a case involving the question of whether a bankruptcy court has the power to levy a financial charge against a chapter 7 debtor's residential property, which the debtor claims falls under the homestead exemption, Mealey's Daily News Service reported yesterday. In 2004, Stephen Law filed for chapter 7 bankruptcy in the U.S. Bankruptcy Court for the Central District of California. He listed his home property value as $363,348 and sought a homestead exemption. The chapter 7 trustee, Alfred Siegel, did not object to the homestead exemption, but two years later the trustee moved to surcharge Law's homestead exemption $75,000. Law argued that he was not properly served in the process. The trustee countered that Law defrauded his creditors by filing a phony lien against his home to take value out of the property. The bankruptcy court granted the trustee's surcharge, and Law appealed to the U.S. Bankruptcy Appellate Panel (BAP) for the Ninth Circuit. The BAP reversed the surcharge order, concluding that it was "not warranted." The trustee appealed to the Ninth Circuit U.S. Court of Appeals, which reversed the BAP's ruling and determined that the surcharge was proper. Law then appealed to the Supreme Court, arguing that the Court should reverse the Ninth Circuit's ruling and order the trustee to pay him the $75,000 surcharge pertaining to the homestead exemption. The U.S. Solicitor General suggested that the Supreme Court not hear the case, contending that it did not present the question on which courts of appeals are divided. The case is Stephen Law v. Alfred Siegel, No. 12-5196, U.S. Sup. Read more.

CREDIT CARD DELINQUENCIES DECLINED IN MAY FOR MAJOR LENDERS



Late credit card payments declined for major lenders in May, continuing a steady performance that has been bolstered by recent signs that the U.S. economic recovery is gradually gaining traction, Dow Jones Newswires reported yesterday. Capital One Financial Corp., Discover Financial Services, JPMorgan Chase & Co., Bank of America Corp. and Citi said yesterday that their credit card delinquencies declined in May from April. At the same time, they also said that their net charge-off rates, which measure loans lenders deem uncollectible, fell during the month. American Express Co. said that its delinquency rate stayed flat at 1.1 percent in May while its net charge-off rate declined to 1.9 percent from 2.1 percent in April. Historically, major credit card lenders have experienced delinquency and loss rates of between 3 and 5 percent on average under what analysts consider to be a "normal" economic environment. Read more.

ANALYSIS: LAWMAKERS TO FOCUS ON FUTURE OF FANNIE MAE, FREDDIE MAC



Congress is gearing up to tackle an issue that has been mostly ignored for nearly five years: What to do with Fannie Mae and Freddie Mac, the bailed-out-but-now-profitable mortgage companies, according to an analysis in yesterday's Wall Street Journal. In the Senate, Republicans and Democrats have begun work on a bipartisan bill that would replace Fannie and Freddie within five years with a new "public guarantor" as part of a broader framework designed to gradually ease the government out of its outsized role of backstopping the nation's $10 trillion mortgage market. The effort is being led by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.), although a formal bill has not been introduced. The Corker-Warner proposal would maintain a potentially significant federal role in the mortgage market by replacing Fannie and Freddie with a new system in which private entities would purchase mortgages from lenders and issue them to investors as securities. The bill would allow private entities to purchase an explicit government guarantee to cover catastrophic losses on mortgages issued as bonds from a new guarantor, called the Federal Mortgage Insurance Corp. But the new issuers would first have to raise a significant amount of capital that would take all losses before the federal guarantee would be triggered. The new "FMIC" would oversee the broader market, much like the Federal Deposit Insurance Corp. regulates banks and provides deposit insurance to minimize bank runs. Read more. (Subscription required.)

MUNICIPAL DEBT MARKET SEEN AS MORE INTERESTED IN FOMC THAN DETROIT



The $3.7 trillion U.S. municipal market looked beyond Detroit's default on some of its debt payments yesterday and instead remained focused on any signals as to how the Federal Reserve may scale back its stimulus measures, Reuters reported yesterday. Detroit Emergency Manager Kevyn Orr on Friday, who said that the financially troubled city faces even odds of a bankruptcy filing, announced a moratorium on some of the city's principal and interest payments, including a $39.7 million payment on $1.43 billion of pension certificates of participation, which he said was due last Friday. Orr also said that holders of Detroit's unsecured debt would be paid less than 10 cents on the dollar, although some creditors would get more based on revenues. About $11.5 billion of the city's debt is unsecured and $7 billion is secured, according to Orr, who aims to meet with creditors over the next 30 days. But the muni market yesterday did not dwell on Orr's plan, said Josh Gonze, co-manager of six municipal debt mutual funds with $10 billion in assets at Thornburg Investment Management in Santa Fe, N.M. "We knew this day was coming," Gonze said, noting Detroit's insured general obligation bonds traded on Monday at 94 to 98 cents on the dollar depending on coupon and maturity. Instead, Orr's plan opens up opportunities for distressed-debt investors and for picking up Detroit's essential services bonds, Gonze added. As dramatic as Orr's proposals may be, the muni market is more interested in cues regarding the potential end of easy-money policies that come out of the Federal Open Market Committee (FOMC) – the Federal Reserve’s policy-setting body – this week, said Billy Schmohl, a vice president at muni market-focused broker-dealer Alamo Capital in Walnut Creek, Calif. Read more.

NEW ABI LIVE WEBINAR ON JULY 15 WILL FOCUS ON THE § 1111(b) ELECTION, PLAN FEASIBILITY AND CRAMDOWN ISSUES



Utilizing a case study, ABI's panel of experts on July 15 will explore issues surrounding a lender’s decision on whether or not to make an election under § 1111(b), plan feasibility and voting. The abiLIVE panel will also walk attendees through the necessary mathematical analyses used to analyze these issues. The webinar will take place from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE NORTHEAST BANKRUPTCY CONFERENCE ON JULY 12



The next stop for the ABI Golf Tour is the famed Newport National course in Newport, R.I., in conjunction with the Northeast Bankruptcy Conference on July 12. 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 IN-DEPTH

NEW ABI "BANKRUPTCY IN DEPTH" ON-DEMAND CLE PROGRAM LOOKS AT PRINCIPLES OF PROPERTY OF THE ESTATE: DEMYSTIFYING EQUITABLE INTERESTS



In this 90-minute seminar, Profs. Andrew Kull of Boston University School of Law and Scott Pryor of Regent University School of Law provide an in-depth analysis of a legal principle that has become, in their words, "a long-lost area of the law": § 541 of the Bankruptcy Code. Seeking to demystify what is meant by "property of the estate" and, in particular, the distinction between legal or equitable interests of the debtor in property, Kull and Pryor describe the legal entanglements that ensue when legal title belongs to one person but the equitable title belongs to someone else. The cost of the seminar, which includes written materials and qualifies for 1.5 hours of CLE, is $95. To order or to learn more, click here.

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!

NEW CASE SUMMARY ON VOLO: DAILEY V. MOSTOLLER (IN RE DALEY; 6TH CIR.)



Summarized by Faisal Delawalla of Burr & Forman LLP

The decisions of the bankruptcy court and the district court were reversed by the Sixth Circuit. The circuit court ruled that the debtor is entitled to a statutory presumption that his IRA is tax-exempt. Though the debtor was granted a lien in his IRA to Merrill Lynch, the circuit court found that the debtor did not use his IRA to obtain credit from Merrill Lynch.

There are more than 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: FURTHER ANALYSIS OF LAW V. SIEGEL

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new blog post examines the Supreme Court's grant of certiorari yesterday in the case of Law v. Siegel, which involves a debtor asking the Court to review the decision of a bankruptcy court to surcharge his homestead exemption under section 105.

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

Law firms should provide support for law student-staffed bankruptcy clinics for consumer debtors.

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.

2013

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 11-14, 2013 | Newport, R.I.

- abiLIVE Webinar

     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

- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum

    Oct. 4, 2013 | Kansas City, Mo.

- ABI Endowment Football Game

    Oct. 6, 2013 | Miami, Fla.

- Chicago Consumer Bankruptcy Conference

    Oct. 14, 2013 | Chicago, Ill.

November

- Austin Advanced Consumer Bankruptcy Practice Institute

   Nov. 10-12, 2013 | Austin, Texas

- Detroit Consumer Bankruptcy Conference

   Nov. 11, 2013 | Detroit, Mich.

December

- ABI/St. John’s Bankruptcy Mediation Training

    Dec. 8-12, 2013 | New York