On September 15, 2008, Lehman Brothers declared bankruptcy, an event considered by many to mark the beginning of the credit crisis of 2008–2009 and the unprecedented public policy responses that followed. Much has been written about the multiple contributing factors to the crisis, ranging from predatory lending to Federal Reserve interest rate policy.
Date
6/22/2017
Action
Testimony of Keith Noreika, Acting Comptroller of the Currency, before the Senate Committee on Banking, Housing, and Urban Affairs.
Key Provisions
The Comptroller made a series of recommendations for regulatory reforms directed at promoting economic growth and reducing regulatory burden. He stated that the OCC’s recommendations are consistent with the Treasury Report.
Key recommendations include:
February 25, 2018
Treasury Issues Report on Dodd-Frank Orderly Liquidation Authority
Treasury Issues Report Recommending Adoption of Reforms to Dodd-Frank Orderly Liquidation Authority and a New Chapter 14 of the Bankruptcy Code for Significantly Systemic Financial Companies
SUMMARY
The US Commodity Futures Trading Commission’s years-long litigation against the former CEO of MF Global Holdings Ltd. has concluded with a settlement. After the brokerage firm MF Global went bankrupt in a 2011 liquidity crisis, the CFTC sued CEO Jon Corzine for dipping into nearly $1 billion of segregated client funds in an effort to obtain badly needed liquidity. The settlement requires Corzine to pay a $5 million fine out of his own pocket, rather than from insurance.
The U.S. Bankruptcy Code gives debtors access to powerful rights and remedies that are not available under non-bankruptcy law. As a balance to these extraordinary powers however, a debtor may lose some or all control over its own affairs under certain circumstances. One of the rights that the debtor “puts into play” when it files bankruptcy is the attorney-client privilege (the Privilege).
The infamous history of MF Global is closer to ending after the administrator for the bankrupt holding company filed a proposed notice of settlement that, if approved, would provide a payment of US $132 million to resolve most outstanding litigation against the company and individual former officers by certain customers and other creditors. The funds would come from insurance proceeds from policies maintained on behalf of the former officers of MF Global that were named as defendants in the litigation, including John Corizine, former chief executive officer.
The Commodity Futures Trading Commission has amended its bankruptcy rules (17 C.F.R. Part 190) to create a new “account class” for cleared over-the-counter (OTC) derivatives for purposes of calculating customer “net equity” and “allowed net equity” in the event of the bankruptcy of a futures commission merchant.
The Commodity Futures Trading Commission has announced that it will amend its Regulation 190.04(d)(2) regarding the operation of a commodity broker in bankruptcy. Currently, a bankruptcy trustee is prohibited, immediately upon the commencement of the commodity broker’s bankruptcy case, from processing any new trades on behalf of customers of the commodity broker, with limited exceptions.