States Have Given Out Billions in Unemployment Benefit Overpayments During Pandemic, Watchdog Reports

The government made $6.2 billion in overpayments across two unemployment insurance programs during the first year of the pandemic, according to a watchdog report released on Tuesday, the Washington Post reported. Millions of Americans lost their jobs as the coronavirus slammed the economy in spring 2020, forcing many to rely on jobless benefits and straining state unemployment systems. In March 2020, Congress passed legislation that boosted and supplemented regular unemployment benefits, including a new program called Pandemic Unemployment Assistance (PUA), which extended help to workers left out of their state’s systems. The report by the Government Accountability Office said the Labor Department reported that “states had identified more than $3.6 billion in PUA overpayments from March 2020 through February 2021.” In addition, states identified $2.6 billion in regular unemployment insurance overpayments in the last three quarters of 2020. The report noted that “overpayments are not necessarily a result of fraud, though some may be.” States generally must require people to repay overpayments, but they can also waive that requirement if they find an individual was “without fault.” For instance, in October the Colorado Department of Labor and Employment forgave $1.4 million in PUA overpayments to 9,000 Coloradans after acknowledging that confusing forms for gig workers might have led some people to overestimate their incomes.​​​

Commentary: Federal Reserve’s Mission Creep Abets Congress’s Spending

The suggestion that Congress rein in the Federal Reserve for getting too involved in things that have nothing to do with its mission or monetary policy is a nonstarter. As long as the Fed is helping finance the debt with its massive bond-buying program, Congress will leave the Fed alone, according to a commentary in the Wall Street Journal. As of the end of March, the Fed held 22% of the debt held by the public, compared with 7% before its bond-buying program, which began in March 2009. The Fed also has returned over $1 trillion in interest payments to the Treasury since then. Consequently, the debt is $1 trillion lower than it would have been otherwise. It is wrong to suggest that Congress should require the Fed to target nominal GDP, according to the commentary. Nominal GDP targeting implicitly assumes that the Fed would have to be indifferent regarding the growth rate of output and inflation. But Chairman Jerome Powell and several other members of the Federal Open Market Committee have said they would accept higher inflation for a lower unemployment rate. This is why no central bank has adopted nominal GDP targeting and none ever will. The Fed — irrespective of Congress’s partisan composition — has been Congress’s surrogate since the 2007-08 financial crisis. The 2010 Dodd-Frank Act merely legalized the surrogacy. Congress has artfully used this surrogacy to shield itself from electorate accountability on fiscal policy, according to the commentary.​​​​​​

Weekly Unemployment Claims Increase to 719,000 Americans in Latest Labor Department Report​​​​​

Data from the Labor Department released today showed that 719,000 Americans filed first-time jobless claims in the week ended March 27, Fox Business reported. Analysts surveyed by Refinitiv were expecting 680,000 filings. The prior week’s reading was revised down to 658,000 from 684,000. The increase comes a week after first-time filings fell to their lowest level since the onset of the COVID-19 pandemic. Continuing claims for the week ended March 20, meanwhile, rose to 3.794 million, up from last week’s downwardly revised 3.84 million. Analysts had expected 3.775 million Americans would file for continuing claims.​​​​​

I.R.S. to Begin Issuing Refunds in May for an Unemployment Tax Break

The Internal Revenue Service said yesterday that taxpayers who received unemployment benefits last year — but who filed their federal tax returns before a new tax break became available — could receive an automatic refund as early as May, the New York Times reported. The latest pandemic-relief legislation — signed into law on March 11, in the thick of tax season — made the first $10,200 of unemployment benefits tax-free in 2020 for people with modified adjusted incomes of less than $150,000. (Married taxpayers filing jointly can exclude up to $20,400.) But some Americans had already filed their tax returns by March and have been waiting for official agency guidance. Millions of U.S. workers filed for unemployment last year, but the I.R.S. said it was still determining how many workers affected by the tax change had already filed their tax returns. The I.R.S. confirmed yesterday that it would automatically recalculate the correct amount of benefits subject to taxation — and any overpayment will be refunded or applied to any other outstanding taxes owed. The first refunds are expected to be issued in May and will continue into the summer.

Analysis: Some of America’s Wealthiest Hospital Systems Ended Up Even Richer, Thanks to Federal Bailouts

Last May, Baylor Scott & White Health, the largest nonprofit hospital system in Texas, laid off 1,200 employees and furloughed others as it braced for the then-novel coronavirus to spread. The cancellation of lucrative elective procedures as the hospital pivoted to treat a new and less profitable infectious disease presaged financial distress, if not ruin. The federal government rushed $454 million in relief funds to help shore up its operations. But Baylor not only weathered the crisis, it thrived, according to an analysis in the Washington Post. Like Baylor, some of the nation’s richest hospitals and health systems recorded hundreds of millions of dollars in surpluses after accepting a substantial share of the federal health care bailout grants, their records show. But poorer hospitals — many serving rural and minority populations — got a tinier slice of the pie and limped through the year with deficits, downgrades of their bond ratings and bleak fiscal futures. A few systems, including the for-profit chain HCA Healthcare, returned federal funds when they saw they had skirted their worst-case scenarios. But most spent the aid and held on to any leftover money and new grants to cover anticipated pandemic costs this year because hospital executives fear more case spikes. Much of the lopsided distribution was caused by the way the Department of Health and Human Services based the allotment of the initial bailout funds on hospitals’ past revenue. That favored institutions with well-off patients who have private health plans over those that rely on lower-paying government insurance, which is what many poor people use.

CFPB Reverses Pandemic Flexibilities, Vowing Enforcement

The Consumer Financial Protection Bureau (CFPB) announced yesterday that it is rescinding seven of its temporary policies put in place to protect consumers during the pandemic, Housing Wire reported. The seven rescissions will be effective today, with the government agency noting that it intends to exercise the full scope of its supervisory and enforcement authority provided under the Dodd-Frank Act. In one of its key decisions, the CFPB said that it will roll back its leniency on reporting Home Mortgage Disclosure Act data. In March 2020, the CFPB announced it would no longer require certain lenders to report quarterly information under HMDA; however, now the agency is instructing all financial institutions to do so beginning with their 2021 first-quarter data due by May 31. The CFPB also said it is withdrawing its signature from several statements that allowed for flexibilities for lenders to work with consumers who were affected by the pandemic. In its withdrawal from the Statement on Bureau Supervisory and Enforcement Response to COVID-19 Pandemic, the CFPB said that “it believes that companies should have had sufficient time to adapt to the pandemic and should now be able adequately to comply with the law and respond to enforcement actions or supervisory activities without the flexibility afforded under the statement.”

Commentary: You Had Me at ‘Has Never Filed for Bankruptcy’

What does it mean to gather “verified” data on potential romantic partners? There’s something to be said for the idea that intimacy is based on having discretion to share information with others — on deciding how much of yourself to reveal to someone, and when, and how — as trust builds in a relationship, according to a commentary in the New York Times. Match Group — which owns dating and hookup platforms including Tinder, OKCupid and Match.com — is trying to make it easier to obtain data on potential partners. The company announced this month that it would help users run background checks on potential dates. Tinder users will be the first to receive the feature, which will allow them (for a fee not yet determined) to obtain public records on a match, based only on first and last name, or a first name and phone number. That data, provided by a nonprofit company called Garbo, will include “arrests, convictions, restraining orders, harassment, and other violent crimes” in order to “empower users with information” to protect themselves. Garbo’s website also indicates that it accepts evidence submitted directly by users, “including police reports, orders of protection and more,” though it’s not clear whether this feature will be integrated into its arrangement with Match. Potential partners sometimes deceive each other, in ways both trivial and significant. So it’s no surprise that many people already take steps to check up on others before meeting in person: doing searches of names on Google, perusing social media profiles, even in some cases running formal background checks. It’s laudable that Match Group wants to prevent its platforms from propagating sexual violence, and it’s attractive to try to fix the problem with technology. But we should be clear about the trade-offs, according to the commentary. Technological measures that make us seem more secure might not always be as effective as they seem — and they can introduce a host of concerns around privacy, equity and the process of trust-building required for true intimacy to develop.

Biden's Infrastructure Plan Sets Off Capitol Hill Scramble on Spending, Taxes

The Biden administration’s rollout of a sweeping $2.25 trillion infrastructure plan is setting off a scramble by Democrats on Capitol Hill to get the bill across the finish line, The Hill reported. Passing the bill — which includes massive spending on transportation, broadband, the nation’s water supply and manufacturing — will be a months-long slog laced with potential pitfalls as Democrats lean on their razor-thin majorities in both chambers. Unlike the recent coronavirus debate, where Congress passed a $1.9 trillion package just weeks ago, Democrats won’t be able to rally around a public health emergency to unify their members. And there are already signs that Biden and congressional leadership could face headaches from different factions in the party. If Biden can pick up GOP support, it will be a big win after going it alone on COVID-19 relief and will allow him to tout the bipartisan dealmaking skills he talked up during the presidential campaign. But so far, top Republicans are signaling they aren’t likely to support his plan, particularly if it’s all pieced together as one package. Biden called Senate Minority Leader Mitch McConnell (Ky.) this week to discuss his proposal, the Republican senator disclosed to reporters yesterday. But McConnell said he was “not likely” to support the final product, comparing it to a “Trojan horse.” “It's called infrastructure, but inside the Trojan horse is going to be more borrowed money and massive tax increases,” he said. Biden’s proposal includes raising the corporate tax rate from 21 percent, a level decided by Republicans in 2017, to 28 percent. Top GOP senators have warned it would be tough to get any Republicans to vote for raising taxes, even as they’ve also panned the idea of paying for a large infrastructure package through deficit spending.

ASM Spotlight: Get an Insider’s Perspective of Key Economic and Insolvency Issues at the “Politics, the Economy and Insolvency: Updates from D.C.” Session

ABI’s Annual Spring Meeting returns April 12-22, bringing top bankruptcy practitioners, judges and academics together via an enhanced virtual platform to discuss the top issues facing the profession. An esteemed panel of public policy and insolvency experts will gather on the “Politics, the Economy and Insolvency: Updates from D.C.” session to share their insights and answer questions relating to the most recent federal stabilization programs, including updates to the PPP program, relief for municipalities and other relief provisions. The panelists will also discuss the administration's priorities and additional potential congressional action. Sure to be part of the discussion are student loans, the Consumer Bankruptcy Reform Act and the SBRA. Panelists include:
 
    •    Sen. Joe Manchin (D-W.Va.) (Invited)

    •    Hon. Jim Moran, former Congressman from Virginia, of Nelson Mullins Riley & Scarborough LLP

    •    Hon. Bill Shuster, former Congressman from Pennsylvania, of Squire Patton Boggs

    •    Aaron Cutler of Hogan Lovells

    •    Karol K. Denniston of Squire Patton Boggs

 
Moderator: Teadra Pugh of Bloomberg Law.

Evolve and grow your practice by registering for ABI's Annual Spring Meeting today!

Submissions for Asset Sales Committee’s “Asset Sale of the Year” Award Due Monday!

Submissions for the ABI Asset Sales Committee’s 3rd Annual Asset Sale of the Year Award are due Monday, April 5! Criteria for submissions include:

• Completion of a sale that was strategic and provided stakeholders with value;
• A display of excellence across the full spectrum of the sale process, from the initial targeting through pursuit, structuring and financing to complete a transaction;
• A sale that reflects a high level of professional expertise in the design of the transaction, and that tested creativity and skill in completing the transaction; or
• A sale of strategic or legal significance and impact (winning entries might focus on overcoming challenges to complete the sale, innovative financial engineering, and motivating agreement across multiple stakeholders)

Eligibility
A bankruptcy sale (via either § 363 or a plan) that closed between January 1 and December 31, 2020.

At least one professional involved in the sale must be a member of the Asset Sales Committee as of the nomination deadline. Self-nominations are permitted.

Click here for more information.

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