On June 22nd, the Federal Deposit Insurance Corporation ("FDIC") and the Treasury Department issued a final rule on the calculation of the maximum obligation limitation ("MOL"), as specified in the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). The MOL limits the aggregate amount of outstanding obligations that the FDIC may issue or incur in connection with the orderly liquidation of a covered financial company. The new rule is effective July 23, 2012.
On March 15th, the FDIC published for comment a proposed rule that would establish the priority of payments to creditors when the FDIC acts as liquidator for a failed non-bank financial institution. The proposal also would establish the procedures for filing a claim with the receiver and clarifies the receiver's clawback authority. Comments should be submitted within 60 days after publication in the Federal Register, which is expected during the week of March 21.
On January 11th, the Eighth Circuit held that a bankruptcy court properly awarded summary judgment to the bankruptcy trustee in a suit seeking to avoid as a preferential transfer, the pre-petition transfer of a mortgage from the debtor to the bank. Because the bank failed to record the home mortgage prior to the borrower's filing of a Chapter 7 bankruptcy petition, Section 547(e)(2)(C) of the Bankruptcy Code deemed the transfer of the mortgage to have occurred immediately before the debtor filed his bankruptcy petition.
On May 10th, FDIC Acting Chairman Martin J. Gruenberg discussed the FDIC's authority to resolve failing systemically important financial institutions ("SIFIs"). Gruenberg outlined how the FDIC would implement its resolution authority, noting that it would place the institution in receivership, creating a bridge holding company for the SIFI's assets and investments. Shareholders and subordinated and unsecured creditors would be left in receivership, although some of the SIFI's debt would be converted into equity.
FDIC Proposes Rules for the Recoupment of Compensation from Executives of Failed Financial Institutions I hope this does not apply to any of you, but on Tuesday, the Board of Directors of the Federal Deposit Insurance Corporation (FDIC) approved a Notice of Proposed Rulemaking (NPR) to clarify application of the orderly liquidation authority contained in Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act, "Orderly Liquidation Authority" (OLA).
The Senate Banking Committee is considering the establishment of a special bankruptcy court for financial firms as part of its regulatory reform measures. Bankruptcy.
On April 30th, the FDIC issued a final rule that treats a mutual insurance holding company as an insurance company for purposes of Section 203(e) of the Dodd-Frank Act. The new rule clarifies that the liquidation and rehabilitation of a covered financial company that is a mutual insurance holding company will be conducted in the same manner as an insurance company.
On December 23rd, the Third Circuit addressed whether the automatic stay provisions of the Bankruptcy Code prevents a home mortgage lender from accounting for the pre-petition escrow shortage in its post-petition calculation of future monthly escrow payments. The Court concluded that when the terms of the loan allow the lender to escrow taxes and insurance payments, the lender has a pre-petition claim. In re Francisco Rodriguez.
On November 12th, the Third Circuit affirmed both bankruptcy and district court findings that, under the Rooker-Feldman doctrine, federal courts lacked subject matter jurisdiction over a claim seeking rescission of a mortgage filed in an adversarial action in federal bankruptcy court after a state court entered a default foreclosure order on that mortgage. The Third Circuit held further that the entry of summary judgment against plaintiff on her Truth in Lending Act claim was proper.
On February 1st, the Tenth Circuit held that Deutsche Bank failed to establish it was a "party of interest" entitled to relief from a bankruptcy petition's automatic stay. After Deutsche Bank's foreclosure of the Millers' home was stayed by the latter's bankruptcy petition, the bank obtained relief from the stay. On appeal, the Tenth Circuit reversed and remanded. The bank failed to provide the original note to the bankruptcy court and did not provide the original or a copy to the bankruptcy appellate panel.