CONSUMER BANKRUPTCY FILINGS HIGHEST MONTHLY TOTAL SINCE 2005 OVERHAUL
U.S. consumer bankruptcy filings reached 126,434 in July, the highest monthly total since BAPCPA was implemented in October 2005, according to ABI, relying on data from the National Bankruptcy Research Center (NBKRC). The July 2009 consumer filing total represented a 34.3 percent increase nationwide from the same period a year ago, and an 8.7 percent increase over the June 2009 consumer filing total of 116,365. Chapter 13 filings constituted 28.3 percent of all consumer cases in July, slightly above the June rate. “Today’s bankruptcy filing number reflects the sustained and growing financial stress on U.S. households,” said ABI Executive Director Samuel J. Gerdano. “Rising unemployment on top of high pre-existing debt burdens is a formula for higher bankruptcies through the end of this year.” Click here to review the monthly bankruptcy filing charts.
REPORT: MORTGAGE MODIFICATION PROGRAM SLOW TO ASSIST STRUGGLING HOMEOWNERS
The Treasury Department reported that only about 9 percent of eligible borrowers have received trial modifications under the Obama administration’s effort to help struggling homeowners, the Wall Street Journal reported today. Participating mortgage servicers, which receive government payments for modifying loans, have had “uneven” success at rescuing borrowers, Treasury acknowledged, as a wave of foreclosures continues to pummel the U.S. housing market. Bank of America Corp. and Wells Fargo Bank have started trial modifications for only 4 percent and 6 percent, respectively, of the eligible mortgages in their servicing portfolios, Treasury reported. Meanwhile, JPMorgan Chase & Co. has started trial modifications for 20 percent of eligible loans. The administration is feeling heat from lawmakers on Capitol Hill, as its foreclosure-prevention effort has failed to meet expectations. A major component of the plan devotes $75 billion of financial-rescue funds to pay incentives to mortgage servicers, borrowers and investors that agree to modify loans. When it announced the program amid fanfare in February, the administration said it would help as many as 4 million borrowers avoid foreclosure. Officials say they are still on track to reach that goal. However, just 235,247 trial modifications have been started since the program was launched. Meanwhile, foreclosures are accelerating amid ongoing weakness in the labor market. U.S. foreclosure activity in the second quarter was up 11 percent, according to a July RealtyTrac report. Click here to read the Treasury Department’s full report.
ANALYSIS: DUELING PUBLIC INTERESTS IN POLICING RESCUED FIRMS
The Securities and Exchange Commission is walking a fine line as the nation’s top Wall Street cop at a time when the economic crisis has left the U.S. government as the part-owner or controller of an unprecedented array of financial companies, the Washington Post reported today. Protecting investors on the one hand could mean harming taxpayer-owners on the other, while some troubled firms could wind up paying penalties with taxpayer money from the federal bailout. Late last month, the SEC was poised to file suit against a subsidiary of Alabama-based Regions Financial for selling nearly $1 billion in troubled investments. However, the agency faced a dilemma: Regions was on the list of the nation’s most troubled large banks and had received $3.5 billion in taxpayer aid. SEC officials considered that filing suit to force Regions to buy back the troubled investments could hurt the bank. The agency eventually decided to file. On Monday, the SEC faced another awkward question: How should it pursue cases when government officials may have played a role in alleged wrongdoing? The agency charged Bank of America with violating securities laws for hiding from investors plans to pay billions of dollars in bonuses to employees of Merrill Lynch, the troubled investment bank it bought. The charges, which Bank of America settled, intensified concerns on Capitol Hill that the Treasury Department and the Federal Reserve may have been involved in efforts to avoid the disclosure of facts that could have derailed the deal. Read more.
SCHUMER: SEC WILL SEEK FLASH-TRADING BAN
Sen. Charles Schumer (D-N.Y.) said today that the head of the Securities and Exchange Commission has personally promised him she will seek to ban the practice of flash trading, the Wall Street Journal reported today. Flash trading, which routes stock trades through private liquidity pools before being sent to other exchanges for filing, has come under fire from Schumer and other critics recently amid fears it places some market participants at a disadvantage. The ban will come as part of a broader look at dark pools — electronic trading venues where money managers trade large blocks of shares anonymously — and high-frequency trading, he said. SEC Chair Mary Schapiro said today that she has instructed SEC staff to explore “an approach that can be quickly implemented to eliminate the inequity that results from flash orders.” Read more. (Subscription required.)
CONSUMER SPENDING RISES IN JUNE
American consumers spent more in June than in May, according to a Commerce Department report released today, increasing their spending for the second straight month while saving a bit less, even as incomes fell sharply, the Associated Press reported today. The Commerce Department said that consumers boosted their spending 0.4 percent in June, though personal income fell 1.3 percent after rising by the same amount in May, when incomes were boosted by one-time payments from the Obama administration’s stimulus package. The department said the personal savings rate fell to 4.6 percent in June after jumping to 6.2 percent in May, which had been the highest since February 1995. Real disposable income tumbled 1.8 percent in June, the largest decline since last June, the Department said. Read more.
SUMMER CLE SALE!- SAVE $50 ON REGISTRATION FOR ABI’S UPCOMING CONFERENCES!
Not yet registered, but warming to the idea of attending one of ABI’s popular summer conferences to earn CLE while networking with your colleagues at a desirable location? Take advantage of this sizzling offer to save $50 off the registration rate at one of the following upcoming conferences:
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NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: DURBIN’S RENEWED CRAMDOWN PUSH
The Bankruptcy Blog Exchange is a free ABI service that tracks 31 bankruptcy-related blogs. A recent post discusses Senate Majority Whip Dick Durbin’s (D-Ill.) renewed interested in pushing for mortgage cramdown legislation this year.
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.