30 June 2014

The Question Is: "What Are Student Loans and Detroit?"

I've always liked Jeopardy so my continued fascination with coming up with a question to connect sometimes trivial bits of data is not evidence of drawing closer to the status of geezer. The single data point for the title question of this post is, "Stuff on which Melissa Jacoby has been quoted."

A few days ago I posted about newly introduced legislation that would return dischargeability of private student loans to its pre-2005 status. The substance of my argument came in turn from a post by University of North Carolina law professor Melissa Jacoby who went so far as to say there was even some political momentum for the change.

Not so fast, a Washington-insider correspondent reports: "None of the student loan legislation will pass in the regular order." And, if not in this term, certainly not after a new, more-Republican Senate is seated in January. (Although, for the foundation of an argument why Republicans might want to throw a bone to the middle class, read a piece by Pete Spiliakos here.)

As for Professor Jacoby's connection to Detroit, go to to Bloomberg Law and read "Some Financial Creditors Say Detroit ’Grand Bargain’ Discriminates in Favor of Retirees" by Nora Macaluso. (Warning: behind paywall.) This piece does a credible job of explaining the concept of "unfair discrimination" and why its prohibition by the Bankruptcy Code presents a problem for confirming Detroit's plan over the objection of Syncora. (For a much longer version of the argument download my Municipal Bankruptcy article here.)

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