Volcker Rule Conformance Period Clarified

On April 19, 2012, the Federal Reserve Board announced its approval of a statement clarifying that an entity covered by section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the so-called “Volcker Rule,” has the entire two-year period provided by the statute to fully conform its activities and investments, unless the Board extends the conformance period. In general, the Volcker Rule requires banking entities to conform their activities and investments to the prohibitions and restrictions included in the statute on proprietary trading activities and on hedge fund and private equity fund activities and investments.

Section 619 required the Board to adopt rules governing the conformance periods for activities and investments restricted by that section, which the Board did on February 9, 2011. However, the Board has since then received a number of requests for clarification of the manner in which this conformance period would apply and how the prohibitions will be enforced. The Board is issuing this statement to address this question.

The Board’s conformance rule grants entities covered by the Volcker Rule a period of two years after the statutory effective date, which would be until July 21, 2014, to fully conform their activities and investments to the requirements of section 619 of the Dodd-Frank Act and any implementing rules adopted in final under that section, unless that period is extended by the Board.

The Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and the Commodity Futures Trading Commission (the “agencies”) plan to administer their oversight of banking entities under their respective jurisdictions in accordance with the Board’s conformance rule. The agencies have invited public comment on a proposal to implement the Volcker rule, but have not adopted a final rule.

 Source:  --> http://www.cftc.gov/PressRoom/PressReleases/pr6238-12

Study Shows Chapter 7 Debtors Represented by an Attorney Are “Almost Ten Times More Likely to Receive a Discharge” of their Debts

In my work as a bankruptcy attorney, I attend Chapter 7 “341 hearings” with my clients. That’s the typically routine and fairly short meeting with the bankruptcy trustee that everyone filing bankruptcy attends  a month or so after their petition is filed. Because these are public meetings, I can observe the people who file bankruptcy without an attorney, and there are many cases that prove how dangerous it is to file a Chapter 7 bankruptcy without an attorney. The question of whether hiring an attorney is really necessary or even helpful is discussed in a book that was recently published, Broke: How Debt Bankrupts the Middle Class. In the compilation of scholarly articles, one of the chapters focuses on “pro se” filers (those without attorneys). The author, Asst. Professor Angela K. Littwin of the University of Texas School of Law, analyzed data from the Consumer Bankruptcy Project, “the leading [ongoing] national study of consumer bankruptcy for nearly 30 years.” She concluded, “that pro se filers were significantly more likely to have their cases dismissed than their represented counterparts.”

In another closely related study from last year, Prof. Littwin concluded that “17.6 percent of unrepresented debtors had their cases dismissed or converted” to Chapter 13, [while] only 1.9 percent of debtors with lawyers met this fate.”  Even after controlling for other factors such as “education, race and ethnicity, income, age, homeownership, prior bankruptcy, whether the debtor had any nonminimal unencumbered assets at the time of the filing,” “represented debtors were almost ten times more likely to receive a discharge than their pro se counterparts.” In her carefully understated and scholarly appropriate way, Prof. Littwin concluded that “there may always be additional unobservable factors for which I cannot control… [b]ut this analysis suggests that filing pro se dramatically escalates the chance that a Chapter 7 bankruptcy will not provide a person with debt relief.”

Update on Cap-Subject H-1B Petitions

The USCIS has just informed the AILA that 22,323 cap-subject H-1B petitions have been received as of April 4, 2012. Approximately 25% of these cases are for U.S. advanced degrees.  Based on this announcement, approximately 17,000 of the 65,000 “regular” H-1B cap-subject petitions have been filed and 5,500 “Masters” H-1B cap-subject petitions. Last year, the USCIS reported that 17,400 Regular H-1B Cap-subject numbers had been used through June 29, 2011. It took about 4 and one-half months for the remaining 47,600 “regular” H-1B slots to be filled. If this year’s pace were to equal last year’s pace, that would mean that the H-1B numbers would be exhausted by mid-August. However, this year’s demand seems certain to be greater than that. Last year 15,000 “regular” H-1B cap-subject H-1Bs were filed in the final month (November 2011). If the November 2011 demand is a reasonable metric for usage projection, this year’s H-1B cap would be reached approximately June 1, 2012.

Healthcare Legislation In Supreme Court Today

Today, the Supreme Court convened for the second of three days to hear arguments on the healthcare legislation signed into law by President Obama two years ago. The court is set to determine the extent of congressional power. At the heart of the controversy is the individual mandate, which requires individuals to purchase health insurance by 2014.

No past Supreme Court decisions are completely on point, leaving many observers to speculate about how the ideologically divided justices will decide the limits of congressional power to address society's raising health insurance costs. Today’s legal arguments will focus on the extent of Congress’s power granted to it by the Constitution. The two specific powers at issue in the case, are set out in Article I, Section 8, concern the regulation of interstate commerce and the imposition of taxes.  

            

THE ARGUMENTS

U.S. Solicitor General Donald Verrilli, the Obama administration's top lawyer at the court, will argue that the individual mandate flows naturally from Congress' authority to regulate commerce. He notes congress’ long-standing authority to regulate the insurance field. In his brief to the justices, Verrilli said the law addressed an existing problem in the healthcare market brought on by the uninsured consuming healthcare they cannot afford. He said unaffordable health insurance annually leads to $43 billion in uncompensated healthcare, much of which is passed on to people with insurance. The administration estimates that such "cost-shifting" adds $1,000 a year to a family's insurance policy. The Obama administration frames the issue as such: may Congress decide, in fashioning a comprehensive response to a national crisis in the health care market, to regulate how people pay for the health care they will almost inevitably need?

            
The challengers, including 26 of the 50 states and a small-business trade group, contend Congress exceeded its authority to regulate commerce with that so-called individual mandate. At the heart of the legal controversy is the mandate that most people obtain health insurance by 2014 or pay a tax penalty. Representing the 26 states is Washington lawyer Paul Clement, formerly a solicitor general under George Bush. He relies upon a slippery slope argument. Clement deems the mandate "unprecedented" and said it could lead to limitless intervention by Congress in people's lives. He frames the legal issue as one of individual liberty. May the federal government, he asks, compel individuals not engaged in commerce to buy a product from private companies?

           

 SOURCES

1. Adam Liptak, Hard Questions From Justices Over Insurance Mandate, N.Y. Times, March 27, 2012, at http://www.nytimes.com/2012/03/28/us/hard-questions-from-conservative-justices-over-insurance-mandate.html?_r=1&hp.

2. Editorial, Getting to the Merits, N.Y. Times, March 27, 2012, at A26

3. Joan Biskupic and James Vicini, Supreme Court Divided Over Obama Healthcare Law, Reuters U.S. Edition (March 27, 2012), http://www.reuters.com/article/2012/03/27/us-usa-healthcare-court-idUSBRE82L1CJ20120327.

4. Robert Reich, Health Care Jujitsu, Huffington Post (March 27, 2012), http://www.huffingtonpost.com/robert-reich/single-payer-health-care_b_1381382.html.

5. Lee Ross, Swing Justice Poses Tough Questions on Obamacare at Supreme Court Hearing, Fox News (March 27, 2012), http://www.foxnews.com/politics/2012/03/27/swing-justice-poses-tough-questions-on-obamacare-at-supreme-court-hearing/.

Legislation to Eliminate New York and Delaware’s monopoly on Corporate Bankruptcy

Legislation to eliminate New York and Delaware’s monopoly on Corporate Bankruptcy was introduced in 2001 when Enron filed for bankruptcy in New York, the state of its incorporation instead of its hometown in Houston, Texas, where its principle place of business was located. Much like the 50% of corporate Chapter 11 cases filed in Delaware and New York combined, the two states reap economic benefits for the legal community.  Bloomberg reports that Delaware derives about $100 billion from its Bankruptcy docket alone.  70 percent of the largest 200 coroporations who filed for Bankruptcy since 2005 did so in New York and Delaware. 

Currently, federal law allows companies to file in either the state of their principle place of business or in the state of their incorporation.  For tax consequences, a majority of businesses are incorporated in New York and Delaware despite their lack of nexus to the states.  This encourages businesses to engage in forum shopping, selecting the state to file for Bankruptcy in the state which provides them with the most benefits including state exemptions.  Additionally, filing in New York and Delaware also creates an inefficient use of resources: flying company representatives out to appear in court, disparity in costs of litigation, and greater Court fees etc…

Legislation was at a standstill in 2001 and again in 2005 as a strong opponent of the law was Vice President Joe Biden who was at the time chaired the Senate Judiciary Committee.  Currently, the legislation has been re introduced by U.S. House Judiciary Chairman, Lamar Smith R-Texas in July 2011 in the Bankruptcy Venue Reform Act of 2011. 

See “Playing on the Home Court” Curriden, Mark. ABA Journal, March 2012.

Maximizing Tax Refunds in a Chapter 13 Bankruptcy Case

While Chapter 13 gives you more flexibility about what you can do with your current income tax refund, Chapter 13 does impact your future years’ refunds. If one files for Chapter 7 bankruptcy after the beginning of the year, and you’re still due a tax refund on the year that just passed, the trustee is going to be interested in that refund. It’s your money that the government is simply holding for you until you claim it, even if you haven’t yet filed your tax return, or don’t even know the amount of the refund.  Whatever the amount, it’s still considered your asset—you just haven’t yet claimed it or calculated the amount by filing the tax return. So unless that refund fits within an exemption, or is small enough to not be worth the trustee’s trouble, the trustee is going to get that refund.

In a Chapter 7 case, non-exempt assets simply go to the trustee to be distributed to creditors according to a very rigid formula.  By contrast, In Chapter 13, you may be able to use that refund in two very beneficial ways.

First, you may be able to get permission to use the refund, or a part of it, for a necessary, one-time expense. A standard example is a critical vehicle repair needed to be able to commute to work. The expense usually needs to be an extraordinary one, over and beyond what would be included in your standard monthly budget.

Second, to the extent that you are required to pay the refund over to the trustee, in a Chapter 13 case you usually have somewhat greater control over where that money will go. Your attorney might be able to explicitly earmark, through a specific provision in your Chapter 13 plan, where the trustee pay some or all of that refund. More likely, in certain cases, with careful wording of your plan, your attorney may be able to nudge that money in a particular direction that may be more favorable to you. For example, a vehicle that you need to keep could be paid off faster than otherwise, thus taking away from that creditor any grounds for objecting.    

One positive aspect of Chapter 7 is that it’s heavily focused on what assets you have a right to as of the moment your case is filed. Chapter 13, however, is by its nature also interested in your future income, and in many instances, future tax refunds are considered future income. Thus, your Chapter 13 plan has to account for the tax refunds that you would be receiving during the years that you are in the case. In general, this means that you must turn over your tax refunds to the trustee to be paid out according to the terms of your plan.

If you usually receive large tax refunds, your withholdings could be adjusted so that you can put that money to use for your regular living expenses. This is particularly helpful if your budget is tight. Doing so would reduce the size of the refunds going to the trustee, thereby minimizing this problem.

• In some situations, you may be allowed to use that year’s tax refund for a new special expense, such as or a new vehicle repair.
•  Even if the refunds go to the trustee during the course of your case, sometimes the extra funds being put towards your Chapter 13 plan finishes the case faster, in other cases it may result in important creditors being paid more quickly, and sometimes the refunds may enable you to pay off the plan within the mandatory maximum deadline.

If you’re still paying off your plan, remember to send your case trustee a copy of your tax returns along with any refunds that may be due in April. Neglecting to do so may jeopardize your bankruptcy. Consult an experienced Bankruptcy attorney for proper instructions if you haven’t already done so.

The Obama administration will begin to shut down a controversial program that deputized local police officers to act as immigration agents

WASHINGTON – The Obama administration will begin to shut down a controversial program that deputized local police officers to act as immigration agents. Immigration and Customs Enforcement (ICE) officials trained local officers around the country to act as their agencies' immigration officers, whereby working either in jails or in the field, officers can check the immigration status of suspects and place immigration related holds on them. The program, known as 287(g), reached its peak under President George W. Bush, when 60 local agencies signed contracts with ICE to implement it. But that trend slowed significantly under President Obama, as only eight agencies have signed up since he took office, and none since August 2010. In their new proposed budget for the upcoming year, Department of Homeland Security (DHS) officials say they will not sign new contracts for 287(g) officers working in the field, resulting in an estimated savings of $17 million. In its budget request, DHS officials instead will focus on expanding Secure Communities, a program that checks the fingerprints of all people booked into local jails against federal immigration databases, whereby the followup work in such cases, if required, is done by ICE agents, rather than local police. 

Source: http://www.examiner.com/border-and-immigration-in-los-angeles/dhs-cutting-287-g-to-favor-secure-communities

US Consulate in Mumbai to process visa applications of South Indians form Jan 9, 2012 onwards

The newly designed complex brings in all the US Government offices in the city to one location. The workload of processing US visa applications have now become centralized in Mumbai. South Indians will have to send in their visa applications to Mumbai, and not to Chennai. With President Barack Obama signing an Executive Order to boost tourism in the US from emerging countries like India and China, American Embassys recently annouced that streamlining of the visa application process will be its priority. "We want to make it easier for travelers to apply for a  visa to visit the United States," James Herman, Minister-Counselor for Consular Affairs in New Dehli, said, adding that over the last five years, the US mission increased staffing by over sixty percent and opened two new consulates in Hyderabad (in 2009) and Mumbai (in 2011). Noting the importance of Indian travelers to the US, Herman said Indians represent the highest volume of work visa travelers to his country and the second highest number of foreign students there. He said 2011 was a record year for H1B work visas—over 68,000 processed by Consular Team India alone and"we continue to support the people-to-people ties which define the growing partnership between our nations."

Source: http://news.brunei.fm/2012/01/21/india-getting-visa-to-us-to-be-made-easier/

How New Yorker Homeowners Are Impacted by the $26 Billion Settlement Signed by the NY Attorney General

The long-awaited joint federal-state settlement with the major banks for their alleged fraudulent documentation and processing of mortgages and foreclosures was announced on Thursday, February 9. Will it help you, and if so, how?

1. Who is included in this settlement?

• The five big banks are currently signed on: Bank of America, Wells Fargo, J.P. Morgan Chase, Ally Financial and Citigroup.  Only mortgages owned and held by them are directly affected.  Negotiations continue with nine other mortgage servicers, which if successful could bring the total amount of money involved to $30 billion.
• 49 states joined in the settlement; only Oklahoma did not. New York was the last to sign on because Attorney General, Eric Schneiderman, wanted to ensure that his office could continue their investigation into fraudulent/criminal mortgage practices.
• Mortgages held by Fannie Mae and Freddie Mac—consisting of the majority of U.S. mortgages—are NOT covered. This maybe upsetting to some, but not surprising. The U.S. Congress may be the most realistic avenue for holding them accountable for betting against homeowner mortgages.

2. What does this settlement resolve and what is open for further negotiation and litigation? In other words, what liabilities are the banks escaping from for their $26 billion?

• The claims against the banks that are released in this settlement are limited to mortgage servicing and foreclosure claims. Claims for a variety of other alleged wrongdoing are not covered and so remain open to being pursued by the federal and state regulators, investors, and homeowners. Claims related to the securitization of mortgage-backed securities are NOT covered, and those against or involving MERS (Mortgage Electronic Registration Systems).
• Individuals’ rights to bring their own lawsuits or to be part of a class action against any banks for any claims are not affected by this settlement. This could be very important for New York homeowners, because this State has ample legislation and case law encouraging homeowners to defend against foreclosure as individuals.
• The settlement does not limit any potential criminal liability for individuals or financial institutions, and provides no immunity from prosecution.

3. How does the settlement help you if your mortgage is held by one of these five banks?

• If you need a mortgage loan modification, these servicers will be required to offer principal reductions, for first and second mortgages, to a value of up to $17 billion. This is where the bulk of the settlement funds are earmarked.
• If you’re current on your mortgage but your home is worth less than the mortgage, $3 billion of the settlement is to provide refinancing relief.
• If your home has already been foreclosed, $1.5 billion will be paid out by the banks as a penalty against them–around  $2,000 per homeowner–without you needing to show any damages or releasing any claims against the bank.

4. Where do you go for more information and to find out whether you will be helped in any of these ways?

• Go to the new settlement website for current and upcoming information about it:

http://www.nationalmortgagesettlement.com