The Senate last week unanimously approved legislation by Judiciary Committee Chairman Chuck Grassley (R-Iowa) and Senator Al Franken (D-Minn.) clarifying Congress’ intent to allow family farmers to more easily reorganize their finances when they fall on hard times, according to a press release on Friday. As a part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Congress passed a provision to address the unique financial situations of family farmers who are reorganizing their assets following bankruptcy. However, a 2012 Supreme Court ruling found that the 2005 law, as written, failed to achieve Congress’ express goal of helping family farmers. Grassley and Franken’s Family Farmer Bankruptcy Clarification Act of 2017 rectifies the Supreme Court ruling by clarifying congressional intent. The Family Farmer Bankruptcy Clarification Act reiterates Congress’ earlier action to enable bankrupt family farmers reorganizing their debts to treat capital gains taxes owed to a governmental unit, arising from the sale of farm assets during a bankruptcy, as general unsecured claims. It also removes the Internal Revenue Service’s veto power over a bankruptcy reorganization plan’s confirmation, giving the family farmer a chance to reorganize successfully.
The White House is considering more than a half-dozen candidates to be the next head of the Federal Reserve, including economists and business people, with a goal of filling out a depleted board with expertise ranging from financial regulation to community banking, Bloomberg News reported yesterday. The breadth of the search goes against the narrative that has taken hold in Washington, D.C., and on Wall Street that the Fed chair nomination is a two-horse race between National Economic Council Director Gary Cohn and current Fed Chair Janet Yellen, whose term expires in February. Some of the other possible contenders include former Fed Governor Kevin Warsh, Columbia University economist Glenn Hubbard and Stanford University professor John Taylor, one of the people familiar said. Lawrence Lindsey, a former economic adviser to President George W. Bush, has been discussed. Former US Bancorp CEO Richard Davis and John Allison, the former CEO of BB&T Corp., have also been considered.
Equifax, one of the three major consumer credit reporting agencies, said yesterday that hackers had gained access to company data that potentially compromised sensitive information for 143 million American consumers, including Social Security numbers and driver’s license numbers, the New York Times reported today. The attack on the company represents one of the largest risks to personally sensitive information in recent years, and is the third major cybersecurity threat for the agency since 2015. Criminals gained access to certain files in the company’s system from mid-May to July by exploiting a weak point in website software, according to an investigation by Equifax and security consultants. The company said that it discovered the intrusion on July 29 and has since found no evidence of unauthorized activity on its main consumer or commercial credit reporting databases.
Sen. Chris Coons (D-Del.), a member of the Senate Judiciary Committee, announced yesterday that a bill he sponsored to extend temporary bankruptcy judgeships has passed the Senate, according to a press release. The bill calls for a five-year extension for 14 temporary bankruptcy judgeships and will create four new bankruptcy judgeships. With this bill, Delaware will retain its one permanent bankruptcy judge, will receive extensions of its five temporary bankruptcy judges and will receive an additional two temporary bankruptcy judgeships for five years to handle the heavy caseload for the district. Article References Bill: S. 1107, the “Bankruptcy Judgeship Act of 2017.”
Hurricane Harvey did extensive damage to parts of Texas and Louisiana. Preliminary estimates show that it might be the most expensive hurricane ever. Additionally, Hurricane Irma is bearing down on the state of Florida with potentially catastrophic results. Millions of people will suffer economic losses as a result. Will these storms have an impact on bankruptcy filings in the affected areas? For this analysis, the four most expensive hurricane events were examined: Katrina, Sandy, Andrew and Ike. Additionally, the four hurricanes that hit Florida in 2004 (Charley, Frances, Ivan and Jeanne) were combined into one event. Total filings for the three years prior to the hurricane were compared to filings in the three years after.
Conclusion of the Article:
The historical data indicates that major hurricanes haven’t had much, if any, impact on subsequent bankruptcy filing levels. Of course, the results of Harvey and Irma may be different – due to the total damage, the number of people affected and amount of uninsured property. Bankruptcy filings are likely to rise in the next few years in most states after falling steadily from late 2010 through early 2017. It remains to be seen if the filing patterns in Florida and Texas will differ from the rest of the country in the coming years.
The Federal Reserve on Friday finalized a new rule that should make it easier to wind down systemically important U.S. banks by creating a safe harbor for financial contracts after a firm defaults, Reuters reported. The decision, unanimously approved by Fed board members, forms part of global post-crisis efforts to end ‘too big to fail’ institutions that are so large and complex they could endanger the entire financial system if they fall into bankruptcy. The rule requires global systemically important banks (GSIBs) to amend the language in common financial contracts so they cannot be immediately canceled if the firm enters bankruptcy. By imposing new legal protections, regulators aim to prevent a run on a GSIB’s subsidiaries that could be triggered if a large number of counterparties rush to terminate their contracts, as occurred in the case of Lehman Brothers in 2008. The new rules would apply to eight GSIBs, including JPMorgan Chase, Goldman Sachs, and Citigroup.
Fannie Mae and Freddie Mac are extending additional relief to homeowners affected by the catastrophic flooding caused by Hurricane Harvey, HousingWire.com reported yesterday. Last week, Fannie and Freddie announced a number of measures that mortgage servicers can take to aid borrowers whose homes were damaged by the storm, including mortgage forbearance and other options. Now, with officials declaring that Harvey dumped more water on Texas than any storm in history, Fannie and Freddie announced today that each of the government-sponsored enterprises is suspending foreclosures and evictions in affected areas. Specifically, each of the GSEs is implementing a 90-day foreclosure sale suspension and a 90-day eviction suspension on borrowers whose homes are located in eligible disaster areas. Freddie Mac also said that it will be working with servicers to ensure that no property inspection costs resulting directly from Hurricane Harvey will be passed on to the affected borrowers.
The White House is expected today to nominate Columbia University law professor Robert Jackson to a vacant slot on the Securities and Exchange Commission, the Wall Street Journal reported. If confirmed, Jackson would fill a Democratic opening at the top U.S. markets regulator. The Wall Street Journal reported in July that the White House was preparing to nominate Jackson. The law requires partisan balance on the five-member commission and the White House has already tapped Hester Peirce, a researcher at the conservative Mercatus Center, to fill a separate, Republican slot. Both nominees will likely advance through the Senate as a bipartisan pair, boosting the likelihood that they both win confirmation this fall. They would join an SEC down to just three members: Democrat Kara Stein, Republican Michael Piwowar, and Jay Clayton, the chairman, who is an independent.
The Trump administration is planning to raise premiums and place tighter loan limits on some borrowers in a mortgage program that helps seniors supplement their incomes, the Wall Street Journal reported today. The U.S. Department of Housing and Urban Development on Tuesday announced the changes in a letter to lenders to the reverse-mortgage program, which allows seniors to take out a loan against the value of their home. The Trump administration feels the changes are necessary to put the program, which is backstopped by taxpayers, on a sounder financial footing. “Given the losses we’re seeing in the [reverse mortgage] program, we have a responsibility to make changes that balance our mission with our responsibility to protect taxpayers,” HUD Secretary Ben Carson said through a spokesman. The modifications won’t apply to borrowers with existing mortgages, but will affect those who take out new loans. Some 650,000 borrowers have outstanding reverse loans insured by the Federal Housing Administration, which is part of HUD.
A federal district court in Atlanta has granted the defendants’ motions for Rule 37 sanctions against the CFPB for its conduct in connection with the defendants’ depositions of CFPB witnesses. To sanction the CFPB, the court struck four counts from the CFPB’s complaint, and with no claims remaining against them, the court dismissed the defendants who sought the sanctions from the case. The underlying case is a CFPB enforcement action filed in April 2015 targeting an alleged debt collection scam that named as defendants not only the debt collectors and their individual principals but various companies alleged to have been “service providers” to the collectors, including payment processors. The CFPB claimed that the payment processors were subject to its enforcement authority as both “covered persons” and “service providers” under the CFPA.