News

2.5 Million More People Potentially Exposed in Equifax Breach - ABI

Equifax said yesterday that millions more people were affected by the credit bureau’s data breach than Equifax initially estimated, the New York Times reported today. The company increased its estimate on the number of Americans whose personal information was potentially exposed to 145.5 million, some 2.5 million more than it had previously disclosed. The additional accounts were found during a forensic review by Mandiant, a cybersecurity firm hired by Equifax to investigate the attack, according to a company statement. The material that was stolen included names, Social Security numbers, birth dates, addresses and, in some instances, driver’s license numbers.


Stressed retail industry plunging deeper into junk territory, S&P says - CNBC

The percentage of U.S. retailers with high-risk CCC ratings has doubled since the beginning of the year, according to a new report by S&P.  Eighteen percent of U.S. retail ratings are in the CCC range, as the industry continues to grapple with increased competition, changing shopping patterns and steep discounts to attract shoppers. A CCC rating indicates that an obligation is vulnerable to nonpayment and that the ability to pay the obligation could hinge on whether business conditions are favorable.  Along with the restaurant industry, retail and restaurants comprise the most distressed industry in the U.S., with roughly 21 percent of retail and restaurant companies now viewed as distressed by the S&P.  As peers face downgraded ratings, retailers' attempts to refinance debt and avoid bankruptcy may be challenged, warns the credit rating agency.


Credit Counseling and Financial Education Requirements for Bankruptcy Filers Temporarily - ABI

The U.S. Trustee Program (USTP) yesterday announced a temporary waiver of the federal statutory requirements for credit counseling and personal financial management education for consumer bankruptcy filers in the District of Puerto Rico and the District of the U.S. Virgin Islands, due to the effects of Hurricanes Irma and Maria, according to a press release. The Bankruptcy Code permits U.S. Trustees to waive the credit counseling and financial education requirements within a judicial district where approved agencies and providers are not reasonably able to provide adequate services. Acting U.S. Trustee Guy Gebhardt made this determination with respect to the District of Puerto Rico and the District of the Virgin Islands. The waiver applies to bankruptcy cases filed on or after September 28, 2017.


Senate Approves Amended Bill to Up Bankruptcy Fees, Add Judges - ABI

The Senate on Wednesday night passed a scaled-back version of a bill that would up bankruptcy fees for some filers, extend 14 bankruptcy judgeships and add four new ones, sending the measure back to the House, Law360 reported yesterday. Revisions to the House-passed Bankruptcy Judgeship Act of 2017 passed the Senate by voice vote on Wednesday. Specifically the bill would add four five-year bankruptcy judgeships and extend 14 temporary ones in Delaware, Florida, Virginia, Maryland, Michigan, Nevada, North Carolina and Puerto Rico for an additional five years. Here is the engrossed amendment of the Bankruptcy Judgeship Act of 2017.


How the Bankruptcy System Is Failing Black Americans - ProPublica

According to an analysis of consumer bankruptcy filings nationwide, the U.S. Bankruptcy Court for the Western District of Tennessee stood out, both for the stunning number of cases in which debtors were unable to get relief and for the reasons why, according to a ProPublica commentary yesterday...  Nationally, the odds of black debtors choosing chapter 13 instead of chapter 7 were more than twice as high as for white debtors with a similar financial profile. And once they chose chapter 13, the study found, the odds of their cases ending in dismissal — with no relief from their debts — were about 50 percent higher. Meanwhile, the $0-down style of chapter 13 bankruptcy practiced in Memphis, long common across the South, is quietly growing in popularity elsewhere. Chicago in particular has seen an explosion of chapter 13 filings in recent years. A recent study found that the “no money down” model is becoming more prevalent, prompting concerns that it is snaring increasing numbers of unsuspecting debtors and ultimately keeping them in debt.


Puerto Rico oversight board ‘appreciates’ offer of creditor support - Reuters

Puerto Rico’s federally appointed financial oversight board said on Wednesday that it “appreciated the expression of support from creditors” of the island’s bankrupt power utility, after those creditors earlier offered a $1 billion loan and a discount on a portion of existing debt.  The board will “carefully consider” those proposals, Natalie Jaresko, the board’s executive director, said in a statement.  “We are moving with a great sense of urgency to assess the island’s immediate rebuilding and longer-term needs for transforming the electricity sector.”


SEC Draws Scrutiny for Slow Response to Hack - ABI

Many of the most senior officials at the Securities and Exchange Commission remained unaware of a 2016 hack of the agency’s computer system for months after it occurred, raising questions about how the breach was initially handled, the Wall Street Journal reported today. The SEC’s new chairman, Jay Clayton, uncovered the extent of the hack only after he launched a wholesale review of the agency’s cybersecurity vulnerabilities in the spring, according to a statement he released this week. The SEC’s other commissioners learned about the hack in recent days. A former chief operating officer wasn’t told about the intrusion when it was detected last year. The pace of discovery and the way that information was disclosed is likely to increase scrutiny of an agency that in recent years has pushed financial firms to gird against attacks and urged public companies to tell shareholders about the risks of cyber[-]intrusions.


Analysis: A Surprise Bump in Bad Card Loans - ABI

Credit card lenders are seeing delinquencies creep up again after a brief respite in the spring, the Wall Street Journal reported. Capital One Financial, Synchrony Financial and Alliance Data Systems have all seen delinquencies rise as a percentage of total loans over the past several months, after they declined slightly earlier this year. All three focus on lending to less-creditworthy borrowers, with Synchrony and Alliance Data specializing in store-branded, private-label cards. At Capital One, loans over 30 days delinquent in its domestic credit card portfolio ticked up to 4 percent of total loans in August from 3.5 percent in April, monthly data from the company shows. Over the same period, this ratio rose to 4.5 percent from 4.1 percent at Synchrony, and to 5.3 percent from 4.7 percent at Alliance Data.


CFPB Deal Could Mean Relief from Wall Street’s Worst Student Loans - ABI

Hundreds of thousands of Americans in debt from the worst batch of student loans Wall Street ever bundled could see their balances cut under a tentative agreement the feds have struck with a little-known firm that effectively owns more than $8 billion in securitized student debt, Bloomberg News reported on Friday. The tentative deal, which has not yet been finalized, would resolve a years-long investigation by the Consumer Financial Protection Bureau into consumer lawyers’ allegations that debt collectors for the 15 trusts that hold that debt have flooded courts with sloppy lawsuits against tens of thousands of borrowers accused of having defaulted. Those trusts, the National Collegiate Student Loan Trusts, are collectively one of the nation’s largest owners of private student debt. Their preliminary settlement with the CFPB was reached by their ultimate owner, VCG Securities LLC, a Florida-based investment firm led by Donald Uderitz. If finalized, it would require the payment of “large sums” in restitution to borrowers and civil penalties to the U.S. government, according to a summary of the proposal filed in a separate court case.


Cruz Pushes Dodd-Frank Repeal as Key Tax Reform Plank - ABI

As the White House courts Senate Democrats as it tries to pick up additional support for the Republican tax reform effort, Sen. Ted Cruz (R-Texas) is risking alienating his colleagues across the aisle by promoting a repeal of the Dodd-Frank Act through the fast-track reconciliation process, MorningConsult.com reported today. Cruz yesterday laid out goals for what he said was meaningful GOP tax reform. The Texas Republican urged his party to take advantage of Congress’ reconciliation process to use a simple Senate majority to repeal Dodd-Frank, which he called one of the “most damaging pieces of legislation in modern times.” Cruz said that removing Dodd-Frank’s regulatory impact on small lenders is a key element for a pro-growth tax overhaul.