All items from Credit Slips

Monday was our last day of classes. This semester I taught a seminar about the role of consumer credit in the United States' economy and society through the lens of consumer bankruptcy (primarily utilizing data and papers from various iterations of the Consumer Bankruptcy Project; find info about the seminar, which was designed by Katie Porter, here). Fittingly, the final project was to write a proposal for an empirical study of an important and under-studied issue regarding consumer credit and/or bankruptcy. A couple students honed in on the lack of research regarding the make-up of credit card debt that debtors seek to discharge through bankruptcy. Is the debt incurred for everyday necessities, such as groceries and gas to drive to work? Is a sizable portion for medical expenses? Or is the debt incurred for 3D televisions, designer suits, and other luxuries?

Posted 10 weeks 3 days ago

Received the automated call to my cell phone yesterday morning, whereupon my phone recorded a 45 second message. Not only am I approved for a payday loan in the amount of up to $1,500, I apparently previously applied for a payday loan, and given that "as of April 2014, our lenders have lowered their requirements for loan qualification, I am now approved" (emphasis added). (I did not apply for a payday loan, ever, for the record.) All I need to do is go to this handy website and enter my pre-approval/promo code, which was provided to me twice during the call. The call ended by assuring me that there were no hidden fees to get my loan and congratulating me again.

Posted 11 weeks 3 days ago

Still looking for a conference to attend this May? Come to beautiful Santa Fe and learn the latest and greatest about teaching consumer law. This conference features speakers from around the world. More specifically, On May 30–31, the Center for Consumer Law at the University of Houston Law Center, in cooperation with the University of New Mexico and the National Association of Consumer Advocates, will present the only international conference dedicated to the teaching of consumer law.
More than 25 presenters will discuss issues related to teaching consumer law, establishing a consumer law program, as well as substantive issues regarding U.S. and international consumer law. Registration is still open but don't delay. A Conference brochure and Registration form is available here.  The Conference will be held at the Hilton Santa Fe Plaza Hotel, in historic Santa Fe, New Mexico. Santa Fe is truly “the city different,”and according to some, is the #2 travel destination in the U.S. Here is a guide to Santa Fe we have prepared.

Posted 12 weeks 21 hours ago

The Community Affairs Officers of the Federal Reserve System invite paper submissions for the ninth biennial Federal Reserve System Community Development Research Conference, to be held on April 2-3, 2015 in Washington, D.C. The Federal Reserve System Community Development Research Conference is a unique event that aims to bridge the gap between research, policy and practice on key issues facing the country.
High-quality and emerging research is presented in a dialogue with policymakers and community practitioners who can utilize the lessons gleaned from research. The 2015 conference seeks to inform a robust public conversation about economic mobility. Profound economic forces, most recently those associated with the Great Recession, have challenged the financial stability and optimism of families, the prosperity of communities, and the sustained growth of the U.S. economy.
These challenges have led to widespread public debate over whether and how the prospect of economic mobility (moving up the economic ladder) has changed in the U.S. Conference organizers hope to use the broad theme of economic mobility to advance our understanding about how people and communities get ahead, where impediments exist, how factors such as inequality play a role, and what has changed over time. To add to this dialogue, the Federal Reserve invites original, high-quality research from a range of disciplines that can inform and affect how policy is formed and how community practice is carried out.

Posted 12 weeks 22 hours ago

In a recent Washington, DC study conducted by the National Foundation for Credit Counseling, study participants were asked to rank things they’d be embarrassed to admit and given five categories from which to choose. In addition to credit card debt, the options included age, weight, bank balance, credit score or none. The thing these consumers ranked as most embarrassing to admit was their credit card balances. See the actual stats in the article link above. Coming in a strong second was their credit score. I found this surprising as I’d much rather talk about my credit than my (advancing ) age, for example. But I am not typical. Are you?
A spokesperson from the NFCC explained the significance of he study as follows: “Since consumers revealed that the two facts they’d be most embarrassed to admit are related to credit, it is obvious that they are not comfortable with how they are currently managing their money.”

Posted 12 weeks 22 hours ago

About a month ago, smart folks zeroed in on a single clause in Russia's two-year $3 billion loan to Ukraine. The December 2013 loan was documented as an ordinary-looking eurobond, apart from a promise by Ukraine to keep its debt under 60% of its GDP. No other Ukrainian bond had the debt/GDP clause, which naturally looked awkward when the sole bondholder started hacking at the denominator of the debt/GDP fraction (Crimea, about 3% of GDP; east and south, about 45%).

Posted 12 weeks 1 day ago

Captcha FakeIf you are a long-time reader of Credit Slips, first thank you. Second, you probably noticed we were off the air earlier in the week. Our blog hosting service, Typepad, was the victim of a criminal denial-of-service attack. According to TechCrunch, Typepad even received a ransom note offering to stop the attacks if payment was received. Although it was frustrating to be down for such an extended period, Typepad did a great job of keeping its customers informed about the situation, and I wish them the best as they recover from this attack.

Posted 12 weeks 4 days ago

Why doesn’t payday lending violate the FTC’s Credit Practices Rule (16 C.F.R. 444.2)?  That’s what I’m trying to figure out.  
The Credit Practices Rule prohibits taking or receiving directly or indirectly an assignment of wages in most circumstances.  (None of the exceptions appear applicable to the payday lending context.) The FTC has gone after some payday lenders for taking a formal direct assignment of wages, but that's an usual term for payday loans. Rather, I'm more interested in the question of an indirect wage assignment. I think there's a pretty good case that a payday loan is an indirect assignment of wages:

  • A payday loan is called a “payday loan”—it’s designed to ensure repayment from the borrower’s wages;
  • the loan’s maturity is usually designed to match with pay periods;
  • usually the only “underwriting” is verification of the borrower’s employment;
  • the loan is “secured’ with either a post-dated check or authorization for an ACH debit with the date set for…payday.  

That sure looks to me like an indirect assignment of wages—the loan is designed to enable the lender to be repaid from the borrower’s wages without having to go to court and get a judgment and a garnishment order (i.e., a judicial wage assignment).  

Posted 12 weeks 5 days ago

Some thoughts on GM, successor liability, 363 sales, and due process – over at Dealb%k.

Posted 12 weeks 5 days ago

On Monday, lawyers for NML and Argentina (with a cameo by lawyers for the US Department of Justice) were before the Supreme Court arguing about the scope of a US court's power to order discovery in aid of execution. (Here's the transcript; here's a good summary of the argument itself.) This case is about the proper interpretation of the Foreign Sovereign Immunities Act (FSIA) and is unrelated to the pari passu litigation. The question, in a nutshell, is whether a creditor that holds a money judgment from a US court can obtain broad discovery into the nature and location of the sovereign's assets worldwide. Bear in mind that the US court can only enforce its judgment by allowing the creditor to execute on commercial assets located in the United States; it has no power to reach assets overseas. But NML wants to use the information it uncovers during discovery to identify assets in other countries that might be subject to seizure under the law of those countries. Let's call this the "discovery case" to distinguish it from the "pari passu" case.

Posted 12 weeks 5 days ago