American Bankruptcy Institute Update

May 24, 2005

In This Issue

Highlights

Legislation Update

House Hearing Addresses Predatory Mortgage Lending Practices

Two House Financial Services subcommittees held a joint hearing today on possible legislative solutions to abusive mortgage lending practices. A bill, co-sponsored by Financial Services Housing Subcommittee Chairman Bob Ney (R–Ohio), and Financial Services Capital Markets Subcommittee ranking member Paul Kanjorski (D–Pa.), would create uniform national standards for curbing abuses in the subprime mortgage market. The Ney–Kanjorski measure would pre-empt state predatory lending laws. Regina Lowrie, president-elect of the Mortgage Bankers Association, called for a well-conceived federal anti-predatory lending law that sets forth strong consumer protections and objective and reasonable compliance standards. “A uniform national standard will strike the right balance between preserving capital access and fighting abusive lending practices,” said Lowrie. Opponents of the Ney–Kanjorski bill argue it would replace effective state predatory lending laws with a weak federal standard. “A federal law, no matter how carefully crafted, will never be adequate to address predatory lending in all parts of the country,” said Joseph Smith Jr., North Carolina Commissioner of Banks. Opponents are backing a competing bill by Reps. Brad Miller (D–N.C.) and Melvin Watt (D–N.C.) and House Financial Services ranking member Barney Frank (D–Mass.). The Watt–Miller–Frank bill would create a national standard modeled on North Carolina’s anti-predatory lending statute, but it would allow states to enact stronger predatory lending laws. View witness testimony.

Asbestos Shares Jump after U.S. Senate Judges Deal

Shares of companies with asbestos liabilities rose sharply today after the U.S. Senate settled an unrelated battle over judges, allowing work to progress on a proposed asbestos victims’ compensation fund, Reuters reported. Senate Judiciary Chairman Arlen Specter (R–Pa.) said he would seek to capitalize on the good feelings being generated by the judges compromise to get legislation creating the $140 billion fund voted out of his committee this week. The judiciary panel resumes work on the asbestos bill tomorrow.

Fourteen senators struck a deal across party lines last night to avert a Senate discussion over whether to eliminate a procedural rule allowing the Democratic minority to block President Bush’s judicial nominees. While the negotiations continued in the Senate on Monday, Senate Minority Leader Harry Reid (D–Nev.) had warned Democrats would doom the asbestos bill if they lost their procedural rights on judges. The Judiciary Committee has already had four working sessions on the legislation, some of which were cut short because of the fight over judges. The bill has seven publicly declared supporters on the committee, but at least three more are thought to be possible supporters. Ten are needed to get the legislation approved by the Judiciary Committee.

Feinstein Introduces Legislation to Educate Credit Card Holders about Minimum Payments Trap

Sen. Dianne Feinstein (D–Calif.) introduced legislation last week to educate credit card holders about the impact of making only minimum monthly payments on credit card debt. “The credit card debt problem facing our nation is significant,” Sen. Feinstein said. “Individuals get six, seven, or eight different credit cards, pay only the minimum payment required, and many end up trapped in debt. That happens in case after case. I believe that this bill is an important step in providing individuals with the information needed to act responsibly, and it does so with a minimal burden on the industry.”

Feinstein’s bill, S. 1040, would require card issuers to provide a generic description of how long it would take to pay off balances of $1,000, $2,500 and $5,000 and how much it will cost if the cardholder makes only minimum monthly payments. A slightly less detailed warning is already required by the bankruptcy reform law enacted last month. Alternatively, Feinstein’s bill says card issuers could provide all customers with individual projections for how long it will take them to pay off their balance if they make minimum payments. For more information, see Sen. Feinstein’s press release on S. 1040.

Credit Card Management Releases Study on 2005 Bank Card Profitability

Credit Card Management’s recently released annual bank card profitability study found that large issuers posted a collective after-tax return on assets of 3.7 percent, up from 2.5 percent in 2003. The issuers earned $21.44 billion last year, a 51 percent jump from $14.24 billion in 2003. Low funding costs, greater consumer use of plastic and timelier payments from cardholders facilitated the increase in earnings. Issuers sought to expand their markets, stepping up their mailing of card offers and moving into new merchant sectors such as the $125 billion quick service restaurant arena. “A consumer's card is becoming more of a spend vehicle than a lend vehicle,” says Paul Grill, a partner with Linthicum, Md.–based First Annapolis Consulting. For more information, visit Card Forum.

Audioconference to Present ASMís Judgesí Roundtable

ABI will present the third in a series of “Best of ABI” audioconferences, the Best of 2005 Annual Spring Meeting live audioconference, “Judges’ Roundtable – The New Bankruptcy Law,” to be held on June 29, 2005 at 3:00 pm (EDT). Faculty members are: John Feeney (D. Mass.), Linda Riegle (D. Nev.), David Houston (N.D. Miss.) and Mary Walrath (D. Del.). This panel of experienced judges from four different judicial circuits discusses coming significant changes in business and consumer bankruptcy. For more information about the program or to register, visit ABI World.

Register for ABI’s Teleseminar Series on the New Bankruptcy Law

Register for ABI’s webinar series examining details of the new bankruptcy law. The first program on business bankruptcies will be held on June 15 and will feature new small business rules, expansion of reclamation claims, broadened preference defenses, trade creditor strategies, new grounds for the appointment of a trustee, single-asset cases and limits on exclusivity. Confirmed faculty are:

  • Andrew Caine of Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC (Los Angeles)
  • Alec Ostrow of Stevens & Lee PC (New York)
  • Michael Richman of Mayer, Brown, Rowe & Maw LLP (New York)
  • George Singer of Lindquist & Vennum PLLP (Minneapolis, Minn.)
  • Deborah Thorne of Barnes & Thornburg LLP (Chicago)

The first program of the consumer bankruptcy series will be held on June 23 and will cover mandatory credit counseling, means testing for chapter 7, other changes in chapter 7 practice, attorney verification and sanctions, dismissal, limits on the automatic stay and new creditor notice requirements. Confirmed faculty are:

  • Prof. Jean Braucher of the University of Arizona College of Law (Tucson, Ariz.)
  • James Cossitt, attorney and counselor at law (Kalispell , Mont.)
  • Stuart Gold of Gold Lang & Majoros PC (Southfield , Mich.)
  • Hank Hildebrand of Lassiter Tidwell & Hildebrand PLLC (Nashville , Tenn.)
  • Bob Waldschmidt of Howell & Fisher (Nashville, Tenn.).

There are a total of three programs devoted to the details of consumer practice under the new law and three business programs. The final session will be a judges’ roundtable. View the full teleseminar schedule of the 90-minute programs or register online.

Register by Friday for Central States Bankruptcy Workshop and Save!

More than 350 are already registered to attend the 12th Annual Central States Bankruptcy Workshop, June 16–19, 2005, at the Grand Traverse Resort and Spa, in Traverse City, Mich. Register my Friday, May 27 and save $50 off the late registration fee. The event will feature a special reform update presented by U.S. Trustee Program Acting Director, Clifford J. White III, plus Immediate Former Director, Lawrence A. Friedman. All workshop presentations will incorporate the new legislation. Learn the latest on the auto supplier industry, post-petition transfers, preclusion issues, secured property in chapter 7, client control & education in consumer cases, claims objections, case administration, forbearance agreements, the consumer credit and mortgage industries, conversion issues between chapter 7 and chapter 13, Supreme Court, Sixth and Seventh Circuit case review and a special judges roundtable discussion. Register online today.

Latest Job Postings at ABI Career Center

Check out the ABI Career Center. The Center is a one-stop site for job seekers and employers in the insolvency community. Career Center resources are available free to both employers and job seekers. New positions are featured daily. The latest listings include: