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house Bill H.R. 2947

Does Bankruptcy Law Need to be Reformed for Large Financial Institutions?

Argument in favor

This bill is a commonsense, bipartisan fix to bankruptcy law that will let courts resolve the complex bankruptcies of financial institutions that have over $50 billion in assets in an equitable manner.

GrumpyMSgt's Opinion
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04/12/2016
If this would stop big banks from ripping off taxpayers and continuing their bonuses...do it!
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Brett's Opinion
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04/11/2016
I am not usually in favor of more government regulations, but large corporations need to be kept from taking advantage of loopholes in the laws.
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bhiguma's Opinion
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04/11/2016
This piece of legislation streamlines the process for larger financial institutions in the event of bankruptcy. While this is a good step toward preventing an economic collapse as a result of the collapse of a large financial institution, we need to also work to keep large financial institutions accountable for their actions. I believe that we should increase transparency among large financial institutions so that the customers which use them are able to effectively regulate them (customers will pick the financial institutions which operate effectively/without high risk investments). We should also work to ban bailouts of any business or financial institution that goes bankrupt; we need to allow the businesses/financial institutions which operate poorly to fail (let the free market work).
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Argument opposed

There's no need to reform bankruptcy law for dealing with bankruptcies at systemically important financial institutions. Just because a bill has bipartisan support doesn't mean it's a valid policy proposal.

Steven's Opinion
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04/11/2016
Absolutely not, they need tighter reigns not a bigger safety net.
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Lesia's Opinion
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04/10/2016
Seriously? These are the institutions that decimated our economy. Protect them? NO! Prosecute them!
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Sean's Opinion
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04/11/2016
This bill perpetuates the existence of financial monopolies. By extending the safety net for these large corporations we are hurting the American people more. Instead of legislation to protect these large companies we need to bust the trusts.
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What is House Bill H.R. 2947?

This bill would establish a new bankruptcy process for financial institutions that have more than $50 billion in assets. It seeks to assist larger institutions that may be too complex to resolve a bankruptcy under existing law, and would apply to bank holding companies or other corporations that meet both the $50 billion asset threshold and annual revenue requirements.

The new process would be created within Chapter 11 of the bankruptcy code as subchapter five. It would begin with a covered financial institution filing for bankruptcy and the appointment of a bankruptcy judge to oversee proceedings. A bridge company would be created to receive the bank’s property, and could also receive the its unresolved contracts if certain conditions are met. Licenses, permits, and registrations belonging to the financial institution would be transferred to the bridge company — and would be exempt from securities laws. A special trustee would be appointed by the court to hold the financial institution’s equity securities for the institution’s benefit.

A subchapter five case could be converted to a Chapter 7 bankruptcy where the institutions assets are liquidated if a special trustee has been appointed, the court finds that it’d be in the best interest of creditors, and the transfer has been approved.

The Chief Justice of the U.S. Supreme Court would be required to designate at least three district judges in at least four circuits to serve on a panel to hear appeals in subchapter five bankruptcies. The Chief Justice would also be required to designate a panel of at least 10 bankruptcy judges.

Impact

Financial institutions with more than $50 billion in assets; courts; judges appointed by the Chief Justice to oversee these cases.

Cost of House Bill H.R. 2947

$0.00
The CBO estimates that enacting this bill wouldn’t increase spending.

More Information

In-Depth: Prior to a Judiciary Committee hearing on this bill, Chairman Bob Goodlatte (R-VA), sponsoring Rep. Dave Trott (R-MI), Ranking Member John Conyers (D-MI), and Subcommittee Chairman Tom Marino (R-PA) released the following joint statement:

“This bill was carefully calibrated to strengthen our nation’s bankruptcy laws and to ensure that the bankruptcy process is well equipped to resolve companies of all operations and sizes. This legislation enhances the Bankruptcy Code and its ability to resolve financial institutions in an efficient and value-maximizing manner for the benefit of the U.S. and global economies, employees, creditors, and customers.”

This legislation was passed unanimously by the House Judiciary Committee on a 25-0 vote, and has the bipartisan support of four cosponsors — including three Republicans and a Democrat.



Media:

Summary by Eric Revell
(Photo Credit: Flickr user Falcon_33)

AKA

Financial Institution Bankruptcy Act of 2016

Official Title

To amend title 11 of the United States Code in order to facilitate the resolution of an insolvent financial institution in bankruptcy.

bill Progress


  • Not enacted
    The President has not signed this bill
  • The senate has not voted
      senate Committees
      Committee on the Judiciary
  • The house Passed April 12th, 2016
    Passed by Voice Vote
      house Committees
      Committee on the Judiciary
      Antitrust, Commercial and Administrative Law
    IntroducedJuly 7th, 2015

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    If this would stop big banks from ripping off taxpayers and continuing their bonuses...do it!
    Like (8)
    Follow
    Share
    Absolutely not, they need tighter reigns not a bigger safety net.
    Like (15)
    Follow
    Share
    I am not usually in favor of more government regulations, but large corporations need to be kept from taking advantage of loopholes in the laws.
    Like (6)
    Follow
    Share
    Seriously? These are the institutions that decimated our economy. Protect them? NO! Prosecute them!
    Like (6)
    Follow
    Share
    This piece of legislation streamlines the process for larger financial institutions in the event of bankruptcy. While this is a good step toward preventing an economic collapse as a result of the collapse of a large financial institution, we need to also work to keep large financial institutions accountable for their actions. I believe that we should increase transparency among large financial institutions so that the customers which use them are able to effectively regulate them (customers will pick the financial institutions which operate effectively/without high risk investments). We should also work to ban bailouts of any business or financial institution that goes bankrupt; we need to allow the businesses/financial institutions which operate poorly to fail (let the free market work).
    Like (5)
    Follow
    Share
    This bill perpetuates the existence of financial monopolies. By extending the safety net for these large corporations we are hurting the American people more. Instead of legislation to protect these large companies we need to bust the trusts.
    Like (5)
    Follow
    Share
    This sounds like it would actually hurt consumers since it would shield the failing institution even more.
    Like (4)
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    Let's make sure that too big too fail is NEVER again. Fail them.
    Like (4)
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    Lots of money sounds complicated.
    Like (3)
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    Not a solution to the problem. Look to leaders like Teddy Roosevelt and FDR and follow their example. Too big to fail? Break them up.
    Like (3)
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    Good idea
    Like (2)
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    why should the American people pay for Veterns problems they had before they started in uniform. I just watched a friend for mine get a lot more than I did when I had cancer , He smoked and I did not. He had free check ups and free free free, what its wrong with the system is people comment crimes to get to be thrown in Jail so the tax payer can pay for their problems. Not fair one damn bit. Let them pay their own way if it is their habits that get them sick not the tax payer. PERIOD. I love the men and woman who serve this is a fact but facts are facts.
    Like (2)
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    This is well reasoned and proactive legislation. Consider this a bowshot over "too big to fail". The ten member panel of experienced financial bankruptcy judges should leverage vast experience. There should be strong provisions for bonus recapture and suspension privileges as well as aggressive penalties for fiduciary negligence.
    Like (2)
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    The process seems to make sense. Any company shouldn't have an easy bankruptcy and bail out.
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    The government, and ultimately tax payers, should not have to pay to bail out multi-million or multi-billion dollar entities when the file for bankruptcy. Maybe the CEOS with their obscenely large salaries should pay off the debt of their company.
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    The secret is probably in the fine print!! Anything put forward by the GOP will surely only benefit the corporations!! Since when have they done anything for the people!!!
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    Here is where the Republican Party jumps in bed with big banking. The RNC should be raising Cain about this bill instead of giving a smile, wink and a nod. This is the kind of thing that really pisses off Republican supporters. Knock it off Republicans, we are onto this kind of stuff.
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    Hopefully this Bill will prevent FUTURE BAILOUTS
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    It's important to establish a process for bankruptcy that applies to "too big to fail" institutions. This is much more attractive than pumping more "stimulus" money into them instead.
    Like (1)
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    Absolutely. Trump is the perfect example how the current bankruptcy laws benefit huge businesses.
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