WASHINGTON - (04/15/05) -- A decade-long odyssey ended Thursdaywhen the House overwhelmingly voted passage of the bankruptcyreform bill. This is the second time the credit union-backed billhas been passed by Congress but it died in 2000 when then-PresidentClinton refused to sign it into law. This time, President Bush haspromised to sign the bill. "To say that this is long overdue wouldbe an understatement," John McKechnie, chief lobbyist for CUNA,told The Credit Union Journal, of the 302-126 vote. The bill willenact a means-based bankruptcy system, preventing those debtors whohave some financial means to repay debts form filing a Chapter 7 toerase all debts, and relegating them instead to a Chapter 13financial reorganization. Those with insufficient assets or incomecould still file a Chapter 7. Those with income above the state'smedian income who can pay at least $6,000 over five years - $100 amonth - would be forced into Chapter 13. Credit unionrepresentatives say the mean-based system will help credit unionscollect as much as much as 15% on debts owed by bankruptcy filers,an estimated $65 million a year in increased collections for creditunions. "This means that somewhere between ten-andfifteen-percentof the money credit unions discharge could go back into the creditunion system. You're talking about a lot of dollars," said MurrayChanow, a lobbyist for NAFCU. The bill also includes two other maincredit union priorities, mandatory financial education for allbankruptcy filers, and the continued ability of credit unions andtheir members to enter into reaffirmation, or voluntary repayment,agreements during bankruptcy. The new law is scheduled to takeeffect six months after the President signs it.
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The Cleveland-based bank is projecting steady growth in net interest income even as credit losses remain manageable. But Chairman and CEO Chris Gorman also said that he thinks a recession is likely.
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The first-quarter increase involved commercial real estate loans, including some problematic multifamily loans and an office credit, but none of the criticized loans were to consumers, officials at the Dallas company say. Further CRE deterioration is anticipated.
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The Detroit-based company is exploring ways to make more consumer auto loans without running afoul of stricter capital standards that are expected from the Federal Reserve. Possible approaches include more securitizations and the use of credit risk transfers.
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The House Financial Services Committee also sent to the full House two bipartisan bills, including one that would prevent large banks from opting out of having to recognize Accumulated Other Comprehensive Income in regulatory capital.
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Charge-offs and nonperforming loans rose at the Georgia bank in the first quarter. But it blamed the problem on one large client and said the matter has been resolved.
April 18 -
Amid healthy first-quarter loan growth and improving credit quality, Discover Financial Services slashed its profits by $800 million to offset remediation costs from a 16-year period when it overcharged certain merchants.
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