News & Press
Read about recent events, essential information and the latest community news.
Tuesday, January 14 , 2020
Supported by 148 Democrats as of January 13th, H.J. Res. 76 would overturn the Education Department’s 2019 student loan forgiveness rule. This rule established policies for the borrower defense program, and is scheduled to take effect July 1. Democrats have said the rule, which replaces a 2016 Obama administration rule, places the burden on borrowers and limits potential relief. It also provided $11.1 billion less in aid in compared to its predecessor. Overturning the 2019 rule will alleviate those burdens by returning to:
- allowing the department to forgive student loans for students at schools that close, if they don’t enroll in another program within three years;
- allowing automatic discharges for groups and not forcing them to apply individually (as the 2019 rule requires);
- allowing for a longer than three-year statute of limitation on claims;
- and barring schools from requiring student to sign predispute arbitration agreements.
H.J. Res. 76 was introduced on September 26, 2019, and was referred to the House Education and Labor Committee. The House may consider it as soon as January 15th. A simple majority would be required for passage. The White House has made a statement that they oppose the measure, and the president’s advisors recommend he veto H.J. Res. 76.
Tuesday, January 14 , 2020
Sen. Warren’s plan to ease student loan debt would be through administrative authority, and not revolve around Congressional approval. This move to cancel or modify a scope of around $640 billion of student debt would be acted out through the Department of Education. Funded by the Warren Administration’s proposed wealth tax (on household of $50 million or more), this amount would be a fraction of what the campaign estimates would generate $2.75 trillion.
This is currently legal and possible through the Higher Education Act which details that the Department of Education has the discretion “to modify, compromise, waive or release student loans”. She would authorize the Department to provide as much as $50,000 in relief for 95% of student loan borrowers.
Warren also intends to address racial disparities in the education system, increase outreach and relief for borrows, assist in improving the student loan debtors credit history, crack down on predatory lending and end federal aid to for-profit colleges.
This proposal has the potential to eliminate private student loan debt for approximately 42 million Americans. The Warren campaign noted that the American government has tackled much more difficult tasks in the name of big business bailouts, tax giveaways and other such concessions.
Wednesday, January 8 , 2020
Sen. Elizabeth Warren released a plan yesterday to restore bankruptcy protections, in direct opposition to a 2005 law that fellow presidential candidate Joe Biden successfully promoted as a Delaware Senator.
Warren, as a bankruptcy lawyer, opposed and campaigned against the 2005 law from the start, as she believed that it damaged accessibility with increased costs and eligibility requirements only benefit creditors at the cost of working families. Her presidential plan would be to replace the two current main types of bankruptcy with a single system that would be more available to all debtors. Instead of Chapter 7, where individuals have to surrender their property, or Chapter 13, in which multiyear payments are entered into, Warren’s plan would offer a “menu of options” and would be a case-by-case basis whose options include payment plans or surrendering property. This is a big change from the current system.
Her plan actively works to remove some of the hurdles from bankruptcy, such as the following example from Warren: “the same onerous paperwork requirements on a middle-class American filing bankruptcy that it did on a wealthy real-estate developer”. In her plan, student loan debt would be dischargeable (as well as homes and cars), same as other consumer debts. Additionally, it would allow debtors to modify their mortgages (mostly prohibited) and reverse the provision in the 2005 law requiring credit counseling and fees for anyone below the poverty line.
Warren has also vowed to increase accountability for creditors and crack down on bankruptcy practices that the wealthy and big corporations use to shield their assets, stop companies from collecting debts that are no longer valid, and allow people to sue creditors who try to collect debts that have already been discharged.
In summation, the two candidates’ opposing positions on bankruptcy are clear, and Warren’s plan recalls this historical opposition.
Wednesday, September 24 , 2019
Friday, September 20 , 2019
Wednesday, September 18 , 2019
The U.S. Supreme Court is being urged by the Trump administration to grant more presidential control over the Consumer Financial Protection Bureau (CFPB).
The U.S. Supreme Court is being urged by the Trump administration to grant more presidential control over the Consumer Financial Protection Bureau (CFPB). The CFPB was set up in the wake of the 2008 financial crisis to regulate credit cards, mortgages, loans and a variety of other consumer finance products. During the setup of CFPB in 2010, the law denoted that the director could only be removed for “inefficiency, neglect of duty or malfeasance in office”. The administration lawyers are arguing that the Constitution requires the president be able to fire the agency’s director for any reason.
This filing was prompted by an appeal from Seila Law, a California firm, that the CFPB’s structure is unconstitutional, which appears to be an attempted derailment of the CFPB investigation into their sales pitches to indebted consumers. U.S. Solicitor General Noel Francisco agreed that the CFPB’s structure is set up in violation of the constitutional separation of powers. Multiple lower court judges have come to similar conclusions in recent years.
Kathy Kraninger (the current CFPB director) is a Trump administration appointee who was confirmed at the end of 2018. Kraninger noted “My determination that the for-cause removal provision is unconstitutional does not affect my commitment to fulfilling the Bureau’s statutory responsibilities”. She also stated, during her nomination process, “the ultimate question of constitutionality of the Bureau’s structure is one for Congress or the courts to resolve.”
(Click this link to view full Seila petition: https://www.supremecourt.gov/DocketPDF/19/19-7/116040/20190917144324154_19-7%20Seila%20Law.pdf )
Wednesday, September 4, 2019
On September 4th, the United Mine Workers of America President Cecil Roberts denounced Congress’ neglect of bankruptcy laws that favor CEOs over workers. He criticized the lawmakers for failing to protect the workers at bankrupted mining companies. This was following the national attention that the Kentucky miners have received recently for blocking train tracks that transport coal from their bankrupt employer, Blackjewel LLC.
Mr. Roberts noted that “CEO[s] gets millions of dollars for filing bankruptcy. The CFO gets millions of dollars for filing bankruptcy. And then you go down the line…..They call those retention bonuses.” While workers “lose their health care upon retirement. Their benefits shrink if they’re still working. And sometimes the bankruptcy judge says you don’t even get to keep your job.” He laid this at the feet of Congress stating: “Congress has known about this forever and has done nothing about it.”
Thursday, August 29, 2019
Friday, August 9, 2019
House Bill 4181
On August 9, 2019, House Bill 4181 was introduced in the House by Morgan Griffith (R-VA-09) to amend the Internal Revenue Code of 1986. The bill would allow distributions from qualified cash or deferred arrangements, such as 401ks, in the event that the employer files for chapter 11 bankruptcy and the employee is not regularly scheduled for work or paid.
After introduction, H.R. 4181 was referred to the House Committee on Ways and Means. At this time, full text is unavailable.
Thursday, August 1, 2019
Bankruptcy Bill Updates
On August 1, 2019, bankruptcy bills for farmers, businesses, and veterans passed in the Senate.
Wednesday, July 31, 2019
Senate Bill 2405
On July 31, 2019, Senator Bob Mendez (D-NJ) – along with co-sponsors Cory Booker, Elizabeth Warren, Sherrod Brown, and Kirsten Gillibrand – introduced the Christopher Bryski Student Loan Protection Act (S. 2405). The bill, as introduced, establishes additional protections and disclosures for students and cosigners with respect to student loans, and for other purposes. This increases transparency regarding the obligations of co-signers. Specifically, the bill protects students and their families during a time of loss. Under the bill, when the required criteria are met an automatic co-signer release is provided.
Following its introduction, S. 2405 was referred to Committee on Health, Education, Labor, and Pensions. Link to Senate Bill 2405
Tuesday, July 23, 2019
House Bill 3887/Senate Bill 2235
On July 23, 2019, The Student Loan Debt Relief Act of 2019 (H.R. 3887/S. 2235) was introduced. As introduced, the bill – sponsored by Representatives Jim Clyburn (D-SC-06) and Senator Elizabeth Warren (D-MA) – discharges the qualified loan amounts of each individual, and for other purposes. Under the bill, borrowers, with household incomes under $100,000, are eligible to discharge up to $50,000 of student loan debt. For borrowers earning between $100,000 and $250,000 debt would be discharged by $1 for every $3 earned over $100,000. Borrowers earning over $250,000 would not be eligible to discharge their student loans. This bill has the potential to aid 45 million students.
After introduction, H.R. 3887 was referred to the Committee on Education and Labor, and in addition to the Committees on Ways and Means, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. In the Senate, it was referred to the Committee on Finance. Link to House Bill 3887
Tuesday, July 23, 2019
H.R. 3311 – Small Business Reorganization Act of 2019
On July 24, H.R. 3311 was received in the Senate.
Bill Passed (Agreed by voice vote). On July 23, Mr. David Cicilline (Chair) moved to suspend the rules and pass the bill, as amended. H.R. 3311 — “To amend chapter 11 of title 11, United States Code, to address reorganization of small businesses, and for other purposes.”
H.R. 2938 – Honoring American Veterans in Extreme Need (HAVEN) Act of 2019
On July 24, H.R. 2938 was received in the Senate.
Bill Passed (Agreed by voice vote). On July 23, Mr. Cicilline moved to suspend the rules and pass the bill, as amended. H.R. 2938 — “To exempt from the calculation of monthly income certain benefits paid by the Department of Veterans Affairs and the Department of Defense.”
H.R. 3304 – National Guard and Reservists Debt Relief Extension Act of 2019
On July 24, H.R. 3304 was received in the Senate.
Bill Passed [Agreed to by the yeas and nays (2/3 required)]. On July 23, Mr. Cicilline moved to suspend the rules and pass the bill, as amended.
Please follow the link for House Floor Activities Legislative Day of July 23, 2019: http://clerk.house.gov/floorsummary/floor.aspx?day=20190723
Monday, July 22, 2019
Resolution Authorizing Issuance of Subpoenas, Small Businesses, Veteran Benefits, HAVEN Act, and the Family Farmer Relief Act
Tomorrow evening, the House Judiciary Committee is scheduled to consider the following bills under suspension of the rules: H.R. 3311 [Small Business Reorganization Act of 2019], H.R. 2938 [Honoring American Veterans in Extreme Need “HAVEN” Act of 2019], and H.R. 3304 [National Guard and Reservists Debt Relief Extension Act of 2019].
No amendments would be allowed and a two-thirds majority would be required for passage. Having spoken with the Chief Majority Counsel for the Subcommittee on Antitrust, Commercial, and Administrative Law, Mr. Slade Bond, the bills are likely to be passed as introduced.
Thursday, July 11, 2019
Resolution Authorizing Issuance of Subpoenas, Small Businesses, Veteran Benefits, HAVEN Act, and the Family Farmer Relief Act
On July 11, 2019, the House Committee on the Judiciary met for a Full Committee Mark-Up on Resolution Authorizing Issuance of Subpoenas, Small Businesses, Veteran Benefits, HAVEN Act, and the Family Farmer Relief Act.
H.R. 3311, the “Small Business Reorganization Act of 2019,” was Ordered to be Reported Favorably, Voice Vote en bloc [with H.R. 3304, the “National Guard and Reservists Debt Relief Extension Act of 2019”; H.R. 2938, the “Honoring American Veterans in Extreme Need Act of 2019” or the “HAVEN Act”; and H.R. 2336, the “Family Farmer Relief Act of 2019. Link
Monday, July 2, 2019
Oversight of Bankruptcy Law and Legislative Proposals Hearing
Thursday, June 19, 2019
Hearing on Oversight of Bankruptcy Law and Legislative Proposals
Please be advised the hearing has been postponed and rescheduled to take place on Tuesday, June 25, 2019 at 10:00 a.m.
Tuesday, June 18, 2019
House Bill 3311/Senate Bill 1091s
On June 18, 2019, The Small Business Reorganization Act of 2019 (H.R. 3311/S. 1091) was introduced. The bill – sponsored by Representatives Ben Cline (VA) and David N. Cicilline (RI) in the House, and Senator Chuck Grassley (IA) in the Senate – would simplify the process for small businesses to use bankruptcy as a means of reorganization by adding a new subchapter V to Chapter 11. Under the bill, businesses with less than $2.5 million in debt would be able to file for bankruptcy in a more streamlined manner. While in bankruptcy reorganization, a small business would be able to negotiate with creditors while retaining the control of the business, keeping employees on payroll, and suppliers and vendors paid. Other specifics of the bill include: not requiring a committee of unsecured creditors and disclosure statement unless the court orders it for cause, and a standing trustee would be appointed in every small business debtor case to perform duties similar to those by a trustee in Chapter 12 or 13.
HR 3311 l Small Business Reorganization Act of 2019 Fact Sheet
Wednesday, June 5, 2019
House Bill 3102
On June 5, 2019, Representative Peter A. DeFazio (OR) introduced H.R. 3102, the Helping Individuals Get a Higher Education while Reducing Education Debt Act of 2019 (without any co-sponsors). The bill, as introduced, amends the Higher Education Act of 1965 to improve loans, and for other purposes.
After introduction, House Bill 3102 was referred to the Committee on Education and Labor, and in addition to the Committees on the Judiciary, and Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. Link
Friday, May 24, 2019
House Bill 3027
On May 24, 2019, Representative Frederica Wilson (D-FL-24) introduced (without any co-sponsors) H.R. 3027, the Student Loan Borrowers’ Bill of Rights Act of 2019. The bill, as introduced, establishes student loan borrowers’ rights to basic consumer protections, reasonable and flexible repayment options, access to earned credentials, and effective loan cancellation in exchange for public service, and for other purposes.
After introduction, House Bill 3027 was referred to the Committee on Education and Labor, and in addition to the Committees on Ways and Means, the Judiciary, and Oversight and Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. Link
Wednesday, April 16, 2019
Senate Bill 1002
On April 3, 2019, Senator Merkley (OR) introduced S. 1002, the Affordable Loans for Any Student Act, which was co-sponsored by Senators Stabenow (MI), Gillibrand (NY), Baldwin (WI), Blumenthal (CT), Schatz (HI), Cardin (MD), Cortez Masto (NV), Van Hollen (MD), and Wyden (OR).
The bill was introduced to amend the Higher Education Act of 1965, increasing the usage of the Federal student loan income-based repayment plan as well as improve repayment plan options for borrowers. After introduction, the bill was referred to the Committee on Health, Education, Labor and Pensions. Link
Wednesday, April 3, 2019
House Bill 1726
On March 13, 2019, Representative Chris Collins (NY) introduced H.R. 1726, the Protecting Gun Owners in Bankruptcy Act of 2019, which was co-sponsored by Reps. Scott (TN), Latta (OH), and Young (AK). The bills, as introduced, amends title 11 of the United States Code to include firearms in the types of property allowable under the alternative provision for exempting property from the estate. After introduction, House Bill 1726 was referred to the House Judiciary Committee. Link
Wednesday, April 3, 2019
Senate Bill 766
On March 13, 2019, Senator Tillis (NC) introduced S. 460, the PROTECT Asbestos Victims Act of 2019, which was co-sponsored by Senators Grassley (IA), Cornyn (TX), and Crapo (ID). The bills, as introduced, amends title 11 of the United States Code to promote the investigation of fraudulent claims against certain trusts, to amend title 18, United States Code, to provide penalties against fraudulent claims against certain trusts, and for other purposes. After introduction, Senate Bill 766 was referred to the Senate Judiciary Committee. Link
Wednesday, March 6, 2019
House Bill 1557
On March 6, 2019, Representative Cheri Bustos, (IL) introduced H.R. 1557, which was co-sponsored by Reps. Tim Burchett (TN), Elissa Slotkin (MI), and Cynthia Axne (IA). The bill was introduced to amend Title 11 of the US Code to prohibit the payment of bonuses to highly compensated individuals employed by the debtor and insiders of the debtor to perform services during the bankruptcy case. After introduction, the Bill was referend to the Committee on the House Judiciary.
Friday, February 22, 2019
McKinsey to Settle With DOJ Over Disclosures in Chapter 11 Cases
The U.S. Trustee Program (USTP) within the Depart of Justice entered into a settlement agreement with KcKinsey and Company, Inc. The USTP alleged that McKinsey made insufficient disclosures about its clients and investments in entities (disclosures that are required under the Bankruptcy Code and Rules).
Under the terms of the settlement McKinsey agreed to pay $15 million in three cases to remedy inadequate disclosures of connections and to make additional disclosures. This is one of the highest repayments made by a bankruptcy professional for non-compliance with disclosure rules. The USTP has agreed not to bring additional actions based on McKinsey’s past disclosures. The settlement does not impact the rights of any parties or government agencies not participating in the settlement.
Friday, February 22, 2019
Senate Bill 460
On February 12, 2019, Senator Warner (VA) introduces S. 460 which was co-sponsored by Senators Thune (SD), King (ME), Capito (WV), Markey (MA), Roberts (KS), Murphy (CT), Hoeven (ND), Jones (AL), Rounds (SD), Blumenthal (CT), Collins (ME), Tester (MT), Blunt (MO), Hassan (NH), Young (IN), Rosen (NV), Gardner (CO), and Sinema (AZ).
The text of the bill has not yet been released but the bill was introduced to amend the Internal Revenue Code of 1986 to extend the exclusion for employer-provided education assistance to employer payments of student loans. After introduction, Sentate Bill 460 was referend to the Finance Committee.
Friday, February 15, 2019
House Bill 885
On January 30, 2019, Representative Steve Cohen (TN) introduced H.R. 885, the Private Student Loan Bankruptcy Fairness Act of 2019, which is co-sponsored by Reps. Joe Courtney (CT), Danny Davis (IL), Henry Johnson (GA), Jerry McNerney (CA), Gwen Moore (WI), Eleanor Holmes Norton (DC), Eric Swalwell (CA), Dina Titus (NV), Peter Welch (VT), John Yarmuth (KY), Jahana Hayes (CT), Chellie Pingree (ME), and Harley Rouda (CA).
The bill was introduced to modify the dischargeability of debts for certain educational payments and loans. More specifically, adding the following language, “any program for which substantially all of the funds are provided by”. After introduction, House Bill 885 was referend to the House Committee on the Judiciary. Link
Wednesday, February 6, 2019
House Bill 683
On January 17, 2019, Representative Nydia Velazquez (NY) introduced H.R. 683, which was co-sponsored by Rep. Jenniffer Gonzalez-Colon (PR), Rep. Raul Grijalva (AZ), Rep. Rob Bishop (UT), Rep. Andy Biggs (AZ), and Rep. Darren Soto (FL). The bill was introduced to impose requirements on the payment of compensation to professional persons employed in voluntary cases commenced under Title III of the Puerto Rico Oversight Management Economic Stability Act.
The Bill states that in cases commenced under Section 304 of the Act, no attorneys, accountants, appraisers, auctioneers, agents, consultants or other professional persons shall be compensated under section 16 of the Act unless prior to making a request for compensation such a professional person has submitted a verified statement conforming to the disclosure requires of rule 2014(a) of the Federal Rules of Bankruptcy Procedure. After introduction, House Bill 683 was referend to the House Committee on the Judiciary. Link
Wednesday, January 9, 2019
Bankruptcy Watchdogs at U.S. Trustee Office Leashed by Shutdown
The partial government shutdown is affecting some Chapter 11 cases. U.S. Trustee lawyers, who are responsible for establishing creditor committees and organizing meetings between debt holders and bankruptcy companies in corporate bankruptcy cases, are limiting their work. Additionally, some bankruptcy cases have been halted as government lawyers cannot participate during the shutdown. These limitations and halts will continue through the shutdown.
Friday, December 28, 2018
Bankruptcy Bill Aims To Keep More Small Businesses Open
Bankruptcy Bills S. 3689 and H.R. 7190 are expected to be reintroduced in 2019 to add a separate subchapter to the Bankruptcy Code for small businesses. The current Code makes it difficult for small businesses to reorganize and often results in liquidation. This new subchapter would treat small businesses more like individuals than corporate filers.
Under the new legislation businesses must file their reorganization plan within 90 days, and allows small business owners to retain a stake in the company if the reorganization plan is fair and equitable to all classes of claims or interests. It further requires the small business’s disposable income (after ordinary and necessary operating expenses are paid) is applied to the plan over a three to five year period, or a Court will not approve the plan.
The legislation further relaxes the Absolute Priority Rule and appoints a standing trustee in every case to make sure that the reorganization stays on track. To further reduce the burdens and costs on small businesses, the Bill excludes small businesses from filing a disclosure statement.
Tuesday, October 23, 2018
Senate Bill 3584 » On October 11, 2018, Senator Jeff Merkley (D) from Oregon, together with Democratic Senators Debbie Stabenow, Michigan; Kirsten Gillibrand, New York; Tammy Baldwin, Wisconsin; Richard Blumenthal, Connecticut; Brian Schatz, Hawaii; Ben Cardin, Maryland; and Catherine Cortez Masto, Nevada, introduced S. 3584 to amend the Higher Education Act of 1965 as it relates the repayment options for Federal Student Loans. This Bill aims to improve the repayment plan options for borrowers as well as increase the usage of the income-based repayment plan option. After the Bill was introduced, it was referred to the Committee on Health, Education, Labor, and Pensions. Link
Tuesday, October 23, 2018
UPDATE H.R. 6912» On September 26, 2018, Representative John Duncan (TN) introduced H.R. 6912. The bill was introduced to amend Title 11 of the U.S. Code to prohibit the payment of bonuses to highly compensated employees and insiders of the debtor to perform services during the bankruptcy case. After introduction, House Bill 6912 was referred to the House Committee on the Judiciary. Link
Friday, September 28, 2018
H.R. 6912 » On September 26, 2018, Representative John Duncan (TN) introduced H.R. 6912. The bill was introduced to amend Title 11 of the U.S. Code to prohibit the payment of bonuses to highly compensated employees and insiders of the debtor to perform services during the bankruptcy case. After introduction, House Bill 6912 was referred to the House Committee on the Judiciary. The text of the bill has yet to be published. ♦
Wednesday, August 15, 2018
HOUSE BILL 6588 » As previously advised, H.R. 6588 was introduced in the House on July 26, 2018 to amend Title 11 of the U.S. Code. The Bill text has been published and includes the language to modify the circumstances under current law to allow an individual debtor to discharge certain educational loans and educational benefits received by the debtor more than 5 years before the commencement of the bankruptcy case under such title and provides that the amendment shall not apply with respect to a debt for an educational benefit, overpayment, loan, scholarship, or stipend received by a debtor before the effective date of this Act. Link
Wednesday, August 1, 2018
CLLA Members’ Law Firm Wins Federal Lawsuit »
Jim Kozelek and Don Mausar’s (CLLA members and shareholders of Weltman, Weinberg, & Reis, Co., LPA) firm successfully defended itself in the lawsuit filed against it by the Consumer Financial Protection Bureau alleging misleading letters and lack of meaningful attorney involvement. Link
Tuesday, July 10, 2018
New York Southern District Court finds the CFPB Unconstitutional in CFPB v. RD Legal Fund, LLC.
Theodore J. Hamilton, Esq. Wetherington Hamilton, P.A. Tampa, FloridaTo prevent tyranny and protect individual liberty, the Framers of the Constitution separated the legislative, executive, and judicial powers of the new national government. To further safeguard liberty, the Framers insisted upon accountability for the exercise of executive power. The Framers lodged full responsibility for the executive power in a President of the United States, who is elected by and accountable to the people. (Judge Kavanaugh Dissent, PHH Corp v. CFPB, 881 F.3d 75 (D.C. Cir. 2018)) Link
Wednesday, June 20, 2018
2018 National Convention a Success »
PRESS RELEASE For Immediate Release
Commercial Law League and IACC 2018 National Convention and Spring Meeting a Success. Robert A. Bernstein awarded 2018 CLLA President’s Cup
Rolling Meadows, IL 6/19/18 — The Commercial Law League of America (CLLA), in collaboration with the International Association of Commercial Collectors (IACC), held their third annual joint meeting at The CLLA 124th National Convention & The 187th Chicago Spring Meeting on June 6-9, 2018. Link
Monday, June 18, 2018
Bankruptcy Rules and Committee Requests » The Advisory Committee on Bankruptcy Rules is looking for feedback from the public as to whether the current Bankruptcy Rules should undergo a restyling process as the Federal Rules are doing so. Link
Monday, June 18, 2018
Mulvaney Taps Ex-FTC Consumer Chief to Oversee CFPB Rulemaking » Mick Mulvaney, acting Director of the CFPB has appointed Thomas Pahl to oversee the regulatory efforts of the Bureau, including the Division of Research, Markets & Regulation, as well as the Associate and Assistant Director. Link
Monday, June 18, 2018
The Trump CFPB Seen As Shifting To By-The-Book Supervision » Under acting Director of the Consumer Financial Protection Bureau, Mike Mulvaney, the supervisory process of banks and credit unions has been moving along at its usual pace; however there appears to have been a shift in what the examiners have been looking for when they review the books at the financial institutions.
What the examiners are looking for has changed as they are focusing on strict compliance with the laws on the books rather than industry practices that might be legal but could raise UDAAP issues.Under former Director, Richard Cordray, the CFPB was criticized for the examiners looking at broader trends rather than technical violations which at times, “tripped up” businesses that were not violating the existing law. ♦
Monday, June 18, 2018
House Bill 5633 » As previously advised, H.R. 5633 was introduced in the House on April 26, 2018. The text of the Bill has now been published and is known as the HANGUP Act to help Americans never get unwanted phone calls. Link
Thursday, April 12, 2018
CFPB Says Considering If Complaint Process Should Be Changed » The Consumer Financial Protection Bureau has previously announced that it will be seeking feedback on the Bureau’s handling of consumer complaints and inquiries. Acting Director Mick Mulvaney has recently added that the CFPB seeks this feedback to ensure that the agency is fulfilling the “proper and appropriate functions” for which the agency was created in 2011.How the agency has dealt with complaints has been debated since inception. Bank industry groups have argued that making complaints public could allow frivolous complaints to damage the reputation of innocent brands. On the other hand, the consumer advocacy groups pushed for public complaints to warn consumers. ♦
Tuesday, April 10, 2018
Chapter 11 Not Suited for Small Businesses, Senate Panel Told » On March 7, 2018, the oversight subcommittee of the Senate Judiciary held a hearing to discuss proposals to revise the Bankruptcy Code. More specifically, to better facilitate Chapter 11 reorganizations for small and medium enterprises (SMEs). Link
Monday, April 9, 2018
Mulvaney Asks Congress to Wield More Power Over CFPB » In a semi-annual report, Acting Director of the Consumer Financial Protection Bureau, Mick Mulvaney asked Congress to approve major rule changes he is proposing which include giving Congress power over the agency’s appropriations, and calls for an independent CFPB inspector general. Mulvaney acknowledges that many Members of Congress disagree with his proposal, but argues that the Bureau is far too powerful with far too little oversight as evidenced by the enactment of Dodd-Frank.
This announcement has been met with much opposition. Policy Director for the center on Regulation and Markets argued that Congress established the CFPB for the purpose of protecting consumers from abuses, they did not create the agency simply to create regulations for itself. He further argues that subjecting the CFPB to appropriations by Congress would only weaken oversight.
The CFPB is currently working on a proposed rule on debt collectors’ consumer disclosures and communications practices to include robocalls and robotexts as they were the agency’s Number 1 consumer complaint last year. There is also talk of potential changes to the federal mortgage disclosure requirements in the Truth in Lending Act. ♦
Wednesday, April 4, 2018
DeVos Moving Ahead on Overhaul of Student Loan Processing System » The Trump administration is moving forward to overhaul the current online student loan processing and servicing platform. The new program will be known as the Next Generation Financial Services Environment, or better known as NextGen. The upgrade will focus on better customer service and stronger consumer protections while still ensuring students will get the money that they need to pay for a college education. Link
Thursday, March 29, 2018
Senate Bill 2564 » Senator Thomas Tillis (NC) introduced S.2564, which is co-sponsored by Senators Cornyn (TX), Grassley (IA) and Hatch (UT). The official title of the bill is “Protect Asbestos Victims Act of 2018” and was introduced to amend title 11, United States Code, to promote the investigation of fraudulent claims against certain trusts, to amend title 18, United States Code, to provide penalties against fraudulent claims against certain trusts, and for other purposes. After introduction, the Bill was referend to the Senate Committee on the Judiciary. ♦
Tuesday, March 20, 2018
Trump Administration Backs Student Loan Collectors » The Trump Administration and the Education Department are taking steps to shield student loan collection companies from state regulators. Betsy DeVos, Education Secretary, will soon issue a declaration citing that only the federal government, not the states, has the authority to oversee federal student loan servicers and companies collecting on those loans are off limits for state lawmakers and regulators. Link
Tuesday, March 20, 2018
Rules on Student Loans in Bankruptcy to Be Revisited » The Education Department is asking for public comments on evaluating claims of undue hardship. Currently, student loans can be discharged in bankruptcy only if there is an undue hardship, a term that has yet to be defined by Congress and the Department does not have the authority to define it. The Department is aware of their obligation to taxpayers to determine the most effective way to collect on federal student loans, but doesn’t want the federal government expending a lot of energy and money to attempt to collect debts that will never be repaid.
Meanwhile, the House and Senate have both introduced legislation that if passed, would allow private student loans to be discharged in bankruptcy. President of the Center for Academic Renewal, Jenna Robinson, told a Senate committee earlier this month that allowing private student loans to be treated like other loans in bankruptcy will give an incentive to lenders to lend more wisely which would ultimately decrease the private student loans awarded to students who cannot pay them back. ♦
Wednesday, March 14, 2018
Senate Bill 2425 » As previously advised, S. 2425 was introduced into the Senate. The bill has now been published and a copy of the Bill, as introduced is attached for your review. The purpose of the Bill is to amend the Internal Revenue Code of 1986 to repeal the Internal Revenue Service’s private debt collection program. To date, the Bill remains in the Committee on Finance. ♦
Thursday, March 8, 2018
Senate Bill 2518 » On March 7, 2018, Senator Richard Durbin (IL) introduced S.2518, which is co-sponsored by Senators Sheldon Whitehouse (RI) and Sherrod Brown (OH). The bill was introduced to amend title 11, U.S. Code, to improve protections for employees and retirees in business bankruptcies.
After introduction, the Bill was referred to the Senate Committee on the Judiciary. The text of the bill has yet to be published, but will be updated here upon its release. ♦
Friday, March 2, 2018
Senate Judiciary Committee Hearing » A hearing has been scheduled for the Senate Judiciary subcommittee on Oversight, Agency Action, Federal Rights and Federal Courts. The hearing is scheduled for March 7, 2018 @ 2:30 and will focus on “Small Business Bankruptcy: Assessing the System”. Chairman Sasse (Nebraska), will be presiding over the meeting and it can be viewed at in real time. Link
Friday, March 2, 2018
CFPB Requests Info on Consumer Complaint Reporting » According to an emailed statement from the Consumer Financial Protection Bureau, they are seeking information from interested parties on the usefulness of the reporting and analysis of complaints. Additionally, they are seeking specific suggestions and/or bet practices for such reporting.
The Bureau states that it intends to issue separate requests for information on the rule-making process, adopted rules and inherited rules, as well as information on consumer education and inquiries. ♦
Friday, March 2, 2018
Growing Student Debt Could Hold Back Growth » Jerome Powell, Fed Chairman, has acknowledged that while it is important for Americans to borrow to invest in their future, he fears that over time the student loan debt could pose a macroeconomic risk to growth in the United States. Research has shown that borrowing without first making informed decisions has a longer term negative effect on people who cannot pay off their student loans and reminds us that student loan debt cannot be discharged in bankruptcy. ♦
Wednesday, February 28, 2018
House Bill 5082 » On February 23, 2018, Representative Alexander Mooney (WV) introduced H.R. 5082, which is co-sponsored by Representative Vicente Gonzalez (TX). The bill was introduced to amend the Fair Debt Collection Practices Act to exclude law firms and licensed attorneys who are engaged in activities related to legal proceedings from the definition of a debt collector, to amend the Consumer Financial Protection Act of 2010 to prevent the Bureau of Consumer Financial Protection from exercising supervisory or enforcement authority with respect to attorneys when undertaking certain actions related to legal proceedings, and for other purposes.
After introduction, House Bill 5082 was referred to the House Committee on Financial Services. The text of the bill has yet to be published, however once made available I will forward same. ♦
Monday, February 12, 2018
Trump CFPB May Act on Debt Collection As it Pulls Back Elsewhere » Acting director of the Consumer Financial Protection Bureau, Mick Mulvaney recently stated that while the bureau will scale back rulemaking and enforcement in 2018, it will focus on debt collection as complaints continue to climb at the Dodd-Frank agency. One third of those complaints are related to debt collection. The complaints include harassing phone calls, the wrong debt for the wrong person, revealing debts to third parties as well as issues with modern technology such as text messages and social media. In 2016, under the former director of the bureau, a proposal was outlined that aimed to address issues with third-party debt collectors and debt buyers initially and bank and first-party creditors at a later date. Many however doubt that the Trump CFPB will follow the 2016 plan. ♦
Thursday, January 25, 2018
Bankruptcy Filings for 2017 “Flattened Out” » The latest figures from the Administrative Office of the U.S. Courts show that for the 12 month period ending December 31, 2017, bankruptcy filings (789,020 cases filed) were down 0.7% from 2016 (794,960 cases filed). While this is the smallest 12 month percentage decline, records show that this is the lowest number of bankruptcy filings for any calendar year since 2006. However, the American Bankruptcy Institute predicts that as borrowing begins to rise again, so will bankruptcy filings. The total case filings broken down by Chapter show that 2017 had 486,347 Chapter 7 filings; 7,442 Chapter 11 filings; 501 Chapter 12 filings; and 294,637 Chapter 13 filings. ♦
Wednesday, January 10, 2018
Senate Bill 2282 » On January 8, 2018, Senator John Cornyn from Texas, for himself and Senator Elizabeth Warren from Massachusetts, introduced S. 2282 to amend title 28 of the U.S. Code to modify venue requirements in bankruptcy proceedings. The amendment requires debtors to file for bankruptcy in the district where their principal assets, domicile or residents is located restricting an individual debtor from filing in a district on the basis of state of incorporation alone. Link
Wednesday, January 10, 2018
Mortgage Company Dodges Claim After Making 1,000 Phone Calls » Ocwen Loan Servicing LLC allegedly made over 1,000 phone calls to Plaintiff, Elizabeth Geismar without her consent and sought relief for negligence under the Telephone Consumer Protection Act. Ocwen filed to dismiss the claim stating a lack of standing to sue as she did not suffer any injury.
The U.S. District Court for the Northern District of California disagreed with Ocwen’s claim in that Plaintiff’s personal privacy was invaded from persistent phone calls and allowed the claim to proceed. The claim was later dismissed by the Court citing that the loan servicing company was not an active participant in the financed enterprise relating to Plaintiff’s loan, Defendant owed no duty of care to the Plaintiff. ♦
Monday, January 8, 2018
Senate Bill 2267 Update » As previously advised, On December 21, 2017, S. 2267 was introduced in the Senate. Additional information has been published as well the. The Bill was introduced as The Pension Priority Act and referred to the Senate Judiciary Committee thereafter.
The intent of the Bill is to allowing unsecured claims resulting from the termination of an employee pension benefit plan covered under the Employee Retirement Income Security Act for withdrawal liability; for awards pursuant under the Act; for delinquent contributions and obligations under the Act; and other obligations owed to the employee and/or the Pension Benefit Guaranty Corporation. Link