Krebs Daily Briefing 22 September 2015

Thomas L. Krebs, Securities Litigation, Regulation and Compliance Attorney Lawyer (c)2014 Brandon L. Blankenship
Thomas L. Krebs


Evoking Soviet Failure in Afghanistan, Syrian Rebels Foresee a Tough War with Russia

Rebels who have inflicted big losses on Syrian President Bashar al-Assad say Russia’s intervention in support of its ally will only lead to an escalation of the war and may encourage the rebels’ Gulf Arab backers to pour in more military aid. Russia’s deployment is prompting a reassessment of the conflict among insurgents whose advances in western Syria in recent months may have been the catalyst for Russia’s decision. US officials say Russian forces are already arriving. Rebels interviewed by Reuters say they have already encountered stronger government resistance in those areas — notably the coastal heartland of Assad’s Alawite sect — and now predict an even tougher war with Russian involvement. Some see an opportunity in the Russian deployment, predicting more military aid from states such as Saudi Arabia. That signals one of the risks of Russian involvement: a spiral of deepening foreign interference in a conflict already complicated by a regional struggle between Saudi Arabia and Iran. Hoping to galvanize more support, rebels are evoking the Soviet failure in Afghanistan as a model for their struggle, and depicting Russia as a new occupier. But they also say this means the war, already in its fifth year, will go on even longer. “It is in our calculations that the battle will now extend for more years than it would have without the Russians,” said Abu Yousef al-Mouhajer, a rebel fighting in the Latakia area where Russian forces have deployed at an airfield.

Exclusive: ‘Putin’s banker’ Pugachev files $10 billion claim against Russia

Sergei Pugachev, a tycoon once dubbed “Putin’s banker” because of his influence in the Kremlin, has filed a claim against Russia for more than $10 billion after his business empire was carved up when he fell out of favor with President Vladimir Putin. The claim was filed in the Permanent Court of Arbitration in The Hague on Monday, a source close to Pugachev told Reuters on condition of anonymity. Lawyers for Pugachev will outline his claim against Russia on Tuesday in Paris, the source said. It was not immediately possible to get a response from the Russian government. Russia is already fighting a separate ruling by the same court in 2014, which ordered Russia to pay $50 billion for expropriating the assets of Yukos, once Russia’s biggest oil producer and run by Mikhail Khodorkovsky. Pugachev, who helped Putin’s 1999 ascent to Russia’s top job during the last days of Boris Yeltsin’s presidency, fell out with some of Putin’s most powerful allies in the years following the 2008 financial crisis. Since leaving Russia in 2011, Pugachev has accused Putin’s allies of bringing his multi-billion dollar business empire to its knees before picking off some of its best assets, which included major shipyards and a giant Siberian coal deposit. Russia says Pugachev, 52, is wanted for embezzlement and misappropriation of assets after the collapse of his bank, which had gained loans from Russia’s central bank. Pugachev denies those charges. At Russia’s request, Interpol has issued an arrest warrant for Pugachev.

Cameron’s rasher days

LONDON — It’s the first day of the U.K.’s party conference season, when Parliament takes a three-week break so that the main political parties can gather to set their priorities for the year. But Westminster insiders are gripped by only one question: Did Prime Minister David Cameron put his genitals inside the mouth of a dead pig? The extraordinary allegation — unconfirmed, based on an anonymous source — was made by the Daily Mail Monday, in a front-page story based on a forthcoming biography of the prime minister. It sparked a commotion on social media, including countless pig-related jokes. “I’ve never been more pleased to be a vegetarian,” tweeted Tim Farron, the new leader of the Liberal Democrats, whose party conference was completely overshadowed by the unlikely story. The startling claim appears in Call Me Dave, a new book about Cameron written by Lord Ashcroft, a wealthy businessman, pollster and Conservative backer, and Isabel Oakeshott, a journalist and former political editor of The Sunday Times. Excerpts of the biography published in the Mail on Monday alleged that Cameron indulged in “drug taking and debauchery” while a student at Oxford University in the 1980s. In an initiation ceremony at an elite drinking society, Cameron allegedly “put a private part of his anatomy into a dead pig’s mouth,” the authors said. The claim is attributed to an unnamed MP, who first made the allegation “out of the blue at a business dinner in June 2014.” The authors said they were told that there is photographic evidence, but were unable to obtain it. The incident reportedly occurred at a meeting of the Piers Gaveston Society, a secretive university club, whose past members include the actor Hugh Grant. According to an article in Tatler magazine in September 2014, the society is still going and among the coolest on campus. “Their summer ball in the last week of Trinity term is the most sought-after ticket in town,” Tatler reported. At one recent event, guests were driven to a secret location deep in the countryside. “Phones and cameras were confiscated and the location kept secret. Guests arrived to find a live sex show on a stage and a decadent dance tent.” Lord Ashcroft, a billionaire businessman who was one of the Tories’ biggest donors, fell out with Cameron after being passed over for a senior position when they took office in 2010. The Mail portrayed his new book’s explosive allegations as revenge against the prime minister. The Mail, a right-wing newspaper that has never been a strong supporter of Cameron, said in an editorial that it “fought off strong competition from rival newspapers” for the rights to serialize the book. It was a thoroughly-researched, even-handed account by a figure at the heart of the Tory establishment and provided Mail readers “first sight of what is an important, if controversial, anatomy of modern politics,” the newspaper said. The prime minister’s official spokeswoman said: “I’m not intending to dignify this book by commenting on it.”

Inside the astonishing village where about 1 in 90 kids are born girls and become boys at puberty

They call them the “machihembras” — the men who are born as women. The group, who live in Salinas, an isolated village in the south-western Dominican Republic, suffer from a genetic deformity that has stunned scientists. Despite appearing to be girls at birth, they are biologically male and only when they approach puberty do they develop male organs. Johnny is one of the many children affected. While his story may seem extraordinary, cases of little girls turning into boys are so prevalent in the village of Salinas that it is no longer considered abnormal. Johnny, 24, was originally named Felecitia by his parents and brought up as a girl. “I remember I used to wear a little red dress,” he said. “I was born at home instead of in a hospital. They didn’t know what sex I was. I went to school and I used to wear my skirt. I never liked to dress as a girl. When they bought me girls toys I never bothered playing with them. All I wanted to do was play with the boys.” His story will be featured in a new BBC Two series Countdown To Life – The Extraordinary Making Of You, presented by Dr. Michael Mosley. The rare genetic disorder occurs because of a missing enzyme, which prevents the production of a specific form of the male sex hormone – dihydro-testosterone – in the womb. All babies in the womb, whether male or female, have internal glands known as gonads and a small bump between their legs called a tubercle. At around eight weeks, male babies who carry the Y chromosome start to produce dihydro-testosterone in large amounts, which turns the tubercle into a penis. But some male babies are missing the enzyme which triggers the hormone surge, so they appear to be born female. It is not until puberty, when another large surge of testosterone is produced, that the male reproductive organs emerge and their voices deepen. What should have happened in the womb, happens around 12 years later. For Johnny, it happened at the age of seven. He claimed that he had never felt like a little girl and was far happier after he fully became a boy. “When I changed I was happy with my life,” he said. A little boy named Carla is currently going through the same transformation, aged nine. Despite being brought up as a girl, his mother noticed that from the age of five he was more inclined towards the rough and tumble play of boys. He has recently had his hair cut short after wearing plaits. Many decide not to change from their female names, so some men in Salinas have names such as Katherine. Also referred to as the Guevedoces – which translates to “penis at 12” – they were first discovered by Dr. Julianne Imperato an endocrinologist at Cornell University in the 1970s. Further cases have since been seen in the Sambian villages of Papua New Guinea, although the Sambians often shun the children – unlike the Dominicans, who celebrate the change.

“Reality is setting in:” why some ISIS fighters are packing up and going home

Imagine you’re a new ISIS recruit. You’ve been lured to Iraq or Syria with promises of brotherhood and a glorious, apocalyptic battle against Shia and Western infidels. Islamic utopia, you believe, is at your fingertips. But when you get there, it’s nothing like what you’d expected. At best, you’re carrying a gun in a dirty, vicious, inconclusive civil war. At worst, you’re scrubbing toilets — or being fitted with a suicide vest. Wouldn’t you want to get out? There haven’t been waves of mass defections from ISIS, but a few people have left the group. A new report from the International Center for the Study of Radicalisation (ICSR) looks at the cases of ISIS volunteers who’ve grown disillusioned, quit, and survived to tell the story. ICSR’s researchers verified 58 publicly-reported cases between January and August of this year alone. The true number of defectors is likely higher — and the pace of defections from ISIS, according to ICSR, is increasing. To understand what’s going on and what these defections mean for ISIS, I spoke to Peter Neumann, ICSR’s director. Neumann said he believes there’s lot more that the US and other Western powers could do to encourage defections and use them against ISIS. What follows is a transcript of our conversation, edited for length and clarity.

Volkswagen Says 11 Million Cars Worldwide Are Affected in Diesel Deception

FRANKFURT — Volkswagen said on Tuesday that 11 million diesel cars worldwide were equipped with the same software that was used to cheat on emissions tests in the United States. The company issued a de facto profit warning because of the costs of repairing vehicles to comply with pollution standards. The statement was the carmaker’s first admission that diesel cars outside the United States may have the software that led the Environmental Protection Agency to accuse the carmaker of deliberately evading pollution tests. Previously, the company had acknowledged only that the problem affected about 500,000 vehicles in the United States. Volkswagen said it would set aside 6.5 billion euros, or about $7.3 billion, to cover the cost of servicing the affected vehicles “and other efforts to win back the trust of our customers.” The money would be booked in the third quarter, Volkswagen said. The German carmaker said that “a noticeable deviation between bench-test results and actual road use was established” for 11 million so-called Type EA 189 engines. Other diesel cars made by the company have the same engine management software, but it has no effect, Volkswagen said.

How UBS Spread the Pain of Puerto Rico’s Debt Crisis to Clients

UBS had a good thing going in Puerto Rico. The Swiss bank served as an adviser to the commonwealth’s Employees Retirement System, led the underwriting of a $2.9 billion bond issue for the pension agency in 2008, and then stuffed half of those bonds into a family of closed-end mutual funds it sold exclusively to customers on the island. It collected fees at every step. Now, with the U.S. territory in the downward spiral of a government debt crisis, it’s all coming apart for UBS, long the biggest retail brokerage on the island. After UBS helped the government dig itself into a deeper hole and put island customers on the hook for the losses that followed, its Puerto Rico saga has become a cautionary tale of how risks can multiply. Angry customers have filed hundreds of arbitration claims with the Financial Industry Regulatory Authority. They’re seeking more than $1.1 billion in damages from UBS after huge losses in the tax-free bond funds, sold as high-income investments that would preserve their capital, and in the bonds themselves. Three of UBS Puerto Rico’s five offices have closed since 2010, and nearly 60 of the unit’s 140 financial advisers have departed. The bank’s retail brokerage market share on the island has dropped to 33 percent from 48 percent over that period.

You’ve been pronouncing Nutella wrong your whole life…

Well, this is awkward. According to Nutella maker Fererro, the word ‘Nutella’ is not pronounced phonetically – which means we’ve all been saying it wrong. Out loud. In public. For the past 51 years, many of us have assumed the popular hazlenut-chocolate hybrid was spoken as it appeared on the jar, ‘Nut-ell-uh’, but Fererro recently cleared up the confusion on the FAQ’s page of the brand’s website. The astonishing truth is that instead of the first syllable being nut – pronounced as in nut – it’s actually pronounced ‘new-tell-uh’.


The Coming Democratic Crack-Up

Nobody explained the crack-up of the New Deal coalition better than New York Mayor Ed Koch at the 1980 Democratic convention:  When I ran for Mayor, I went up to a Bronx senior citizens center, and I told 200 senior citizens: “Ladies and gentlemen, a judge I helped elect was mugged recently. And do you know what that judge did, ladies and gentlemen? He called a press conference and he said to the newsmen, ‘This mugging of me will in no way affect my decision in matters of this kind.’ And an elderly lady got up in the back of the room and said, ‘Then mug him again.’” It was crime more than any other single issue that drove blue-collar voters in the industrial states from the party of Truman and Johnson to the party of Nixon and Reagan. In 1974—a year of energy shock, inflation, recession, Watergate, Vietnam, and other crises—Americans told pollsters they regarded crime as the single-most important issue facing the country. That year, the Department of Justice introduced a new and more accurate method of collecting crime statistics. It found that 37 million American households—one out of four—had suffered a rape, robbery, burglary, assault, larceny, or auto theft in the previous year. It was crime—and the welfare programs thought to incubate crime—that elected Republicans across the American industrial heartland in the 1990s: governors like Michigan’s John Engler, New York’s George Pataki, Pennsylvania’s Tom Ridge, and Wisconsin’s Tommy Thompson, as well as mayors like Rudy Giuliani in New York City and Richard Riordan in Los Angeles. It was crime that separated New Democrats from Old in the 1980s. Bill Clinton was determined that nobody would Willie Horton him. He backed the death penalty, endorsed longer sentences, and funded local police forces, all with a view to stopping crime by punishing criminals. Then the crime rate fell. It fell suddenly, it fell fast, and it fell far. By 2010, rates of crime against person and property had fallen to levels not seen since the early 1960s. In New York City, crime rates tumbled even lower. The great crime decline reshaped cities, remade the economy, and transformed American politics. As crime declined, the law-and-order issue faded—and the national Democratic party revived.

Pope Francis’s Visit Spells Trouble for Republican Presidential Candidates

New Jersey governor and presidential candidate Chris Christie had no problem disagreeing with the head of his church. “I just think the Pope is wrong,” Christie said during an appearance on CNN’s State of the Union, when asked about Pope Francis’s Cuba policy. The pontiff, who arrives in the U.S. for his first papal visit this week, was a key figure in the re-establishing of diplomatic ties between America and Cuba, a move that infuriated American conservatives and placed Christie, a Catholic, in an awkward spot. “The fact is that his infallibility is on religious matters, not on political ones,” Christie said. He’s not the only one grappling with his faith in this unusual way: upon learning that Francis plans to dedicate a great portion of his upcoming congressional address to the topics of global warming and income inequality, the Catholic half of the Republican presidential field likely suffered low-grade anxiety attacks. Senator Marco Rubio, who will attend, will likely find himself the subject of several cutaway reaction shots. Jeb Bush, John Kasich, Rick Santorum, and Bobby Jindal will likely be watching from afar, waiting for the moment when His Holiness denounces supply-side economics from the podium. In a normal election cycle, with a more traditional Pope, these politicians would fall over themselves to get a photo with the Pontiff. But Francis’s papacy, which also includes secretly brokering a thaw in U.S.-Cuba relations, has led to a new phenomenon: Catholic Republican presidential candidates opposing the Pope on issues, as his statements draw favor with American liberals and moderates but remain anathema to the positions held by the self-proclaimed party of faith. “What’s different this time around is that you have a Pope who’s emphasizing issues that generally play to Democratic strengths,” said Stephen White, a fellow at the Ethics and Public Policy Center, adding that, at the very least, the G.O.P. had advance warning to brace themselves: “We’ve been reminded of that since he first started opening his mouth.” It’s a far cry from the days in the 2004 election, when Catholic bishops called for then-presidential candidate Senator John Kerry to be denied communion for his pro-choice views. These days, however, it’s a Republican point of almost-pride to differ from Francis’s teachings: upon the publication of Francis’s encyclical on global warming, for instance, both Santorum and Bush prominently dismissed the paper, saying that they were not obligated to take their policy positions from the Pope. (That attitude is reflected in Congress, as well: a Catholic Republican congressman announced that he would boycott Francis’s speech due to his views on global warming.) That said, while Kerry’s position on abortion directly contradicted the Church’s teaching, some believe Republicans have a chance at characterizing their differences with Pope Francis as deviations in policy, rather than fundamental breaks. “You can make a proposal on immigration that might not be what the Pope would want, but [say] you’re not anti-immigrant,” White said, using Rubio’s proposal to halt illegal immigration before attempting reform as an example. “You don’t deny that immigrants need to be welcomed, that they need to be cared for, [but] you have a [different] way of going about that.” Threading that needle, however, could prove difficult for the Republican field. “You have a Pope who talks about climate change. You have a Pope who really, really emphasizes care for the poor,” White said. “You have a Pope who speaks often about being open and welcoming of immigrants, and that doesn’t look really good for the G.O.P.”

JPMorgan C.E.O Jamie Dimon Says It’s Pointless to Slash C.E.O. Pay

Cutting C.E.O. pay wouldn’t do much to close the nation’s wealth gap and income inequality, according to a theory from billionaire JPMorgan C.E.O. Jamie Dimon. Dimon told Chuck Todd on NBC’s Meet the Press that lowering executive pay wouldn’t do much to solve the problem. “If you took all the compensation of all the C.E.O.s of the top 500 companies in America it wouldn’t make a dent in this problem,” he said on Sunday, when Todd told him that he would get a bunch of viewer e-mails saying that Dimon is paid too much. The comments come at a time where C.E.O.s are making 300 times more than typical workers, the Economic Policy Institute found. Since 1978, compensation for chief executives has increased by 997 percent. Simon himself became a billionaire in June, and took home $20 millionlast year. With that in mind, it’s no wonder that presidential candidates have been hurling a whole lot of vitriol Wall Street’s way on the campaign trail. Simon, for his part, said on Sunday that he gets it. “You know, we had a crisis. A lot of people got hurt. And the average American looks at what happened and they kind of blame Wall Street which I would—it’s generally true.” He noted, though, that Wall Street has owned up to its mistakes and has done a lot of “great stuff,” too. Dimon made it clear that he wants lower and middle-income households to do better, and that more jobs and education would help with growth. “I think it’s one of the great shames in America that in a lot of low income areas, half the kids don’t graduate high school,” he said. “And I also say among those kids, there might have been an Einstein or aSteve Jobs or a Barack Obama and we will never know.” Dimon did acknowledge that income inequality has gotten worse while speaking at an event in Detroit last week, according to a report from Bloomberg. Despite this, he said things are looking up, things are pretty darn good. “If you go back 20 years ago, cars were worse, health was worse, you didn’t live as long, the air was worse. People didn’t have iPhones.” Sure, the typical American family income may have been $53,657 last year. Nearly 47 million Americans are in poverty, and the federal minimum wage is $7.25. But we have smart phones. They’re even coming out with the iPhone 6S. And cars, they’re cooler too. What a time to be alive.

Empty Floor at Goldman Puts Change on Display

When Goldman Sachs moved into its new tower near the Hudson River in 2009, the sprawling trading desks on the fourth, fifth and sixth floors were some of the most active and lucrative in the world. Now, nearly six years later, the glass-walled sixth floor — stretching much of a city block — has become something of a ghost town, all but empty save for a few still-occupied offices. Goldman’s trimmed-down trading operations are now consolidated on two floors instead of three. The emptying out of the sixth floor this year is a sign of the declining expectations for growth in a financial industry that is being challenged by new regulations and quickly changing technology that is making fewer traders necessary. At an industry conference last week, executives from other big Wall Street banks said they expected their trading revenue to fall roughly 5 percent in the current quarter from a year ago. The reorganization at Goldman’s Manhattan headquarters is particularly notable because the firm is seen as the shrewdest trading house on the Street. While other banks have been shrinking their desks, Goldman — which has not publicly disclosed the emptying-out of its sixth floor — continues to have ambitions for the kind of trading that went on there. The move to consolidate people on the fourth and fifth floors was partly driven by a desire to have traders work in closer proximity to promote collaboration, said Goldman executives, who spoke on the condition of anonymity. Still, revenue growth at the firm has been difficult, and Goldman executives say that because of all the pressures that the firm and the industry are facing, even successful firms have had to economize and rely on technology, rather than humans, wherever possible, leading to reductions on the trading desks that used to occupy the sixth floor.

Scott Walker suspends presidential campaign

Wisconsin Gov. Scott Walker is immediately suspending his presidential campaign to “clear the field” and make it easier for voters to assess the Republican candidates, he announced on Monday evening in Wisconsin, effectively ending a once-promising GOP presidential bid that collapsed amid tepid debate performances and other missteps. Walker said he is making this “difficult decision” because the crowded field of Republicans has become too focused on personal attacks and has lost sight of the important issues that matter most to voters. He said that he reflected on the decision during church on Sunday and decided: “I believe I am being called to lead by helping to clear the field.” When Walker launched his campaign just more than two months ago, he was considered a top-tier candidate. Since then, he has seen his campaign overshadowed by Donald Trump, along with his own misstatements and missteps on the campaign trail. Walker’s backers saw a campaign discombobulated by Trump’s booming popularity and by his provocative language on immigration, China and other issues. They saw in Walker a candidate who — in contrast to the discipline he showed in state races — continued to commit unforced errors, either out of lack of preparation or in an attempt to grab part of the flamboyant businessman’s following.

Why Some People See Ghosts and Other Apparitions

In the 2013 science-fiction thriller, Gravity, Sandra Bullock plays an astronaut who gets stranded in a capsule in space following a catastrophe in which she is the apparent lone survivor. Cold, frightened, and alone, she resigns herself to her fate and shuts down the cabin’s oxygen supply to commit suicide. As she begins to lose consciousness, she is visited (or is she?) by the astronaut played by George Clooney, whom she believed to be dead. He gives her a pep talk and a survival plan—and then he leaves. She eventually realizes that Clooney’s visit did not really happen, but the experience still gives her the strength to continue on. By following “his” plan, she is able to survive what seemed to be a hopeless situation. The movie was science fiction, but the encounter that Bullock’s character has with a “being” who appears in a moment of desperation is a human experience far more common than you might think. Psychologists refer to it as the “sensed presence.” The sensed presence usually happens to individuals who have become isolated in an extreme or unusual environment, often when high levels of stress are involved. These individuals report a perception or feeling that another person is there to help them cope with a hazardous situation. The vividness of the presence can range from a vague feeling of being watched to a clearly perceived, seemingly flesh-and-blood entity such as Clooney’s character in Gravity. This entity might be a god, a spirit, an ancestor, or someone personally known to the observer. Sensed presences usually appear in environments with little variation in physical and social stimulation; low temperature is also a common ingredient. Possible explanations for a sensed presence include the motion of boats, atmospheric or geomagnetic activity, and altered sensations and states of consciousness induced by changes in brain chemistry triggered by stress, lack of oxygen, monotonous stimulation, or a buildup of hormones. There is in fact exciting new evidence (link is external) from a research group led by Olaf Blanke (link is external) demonstrating that it is the precise stimulation of specific brain regions that tricks people into feeling the “presence” of a ghostly apparition. Environmental psychologist Peter Suedfeld also thinks that what we do cognitively changes under these circumstances and may play a role. Suedfeld proposed that we normally spend most of our time attending to and processing external, ambient stimuli from the physical world surrounding us. However, persistent exposure to stimuli that we are evolutionarily unprepared to process, or a lack of change in our surroundings, may cause us to focus more within ourselves, which most of us are much less experienced at doing. Most likely, the experience of the sensed presence is the result of many of these factors interacting at once. Some of the most compelling descriptions of sensed presences come from lone sailors who have experienced hallucinations and out-of-body experiences. In one famous incident, Joshua Slocum, the first person to circumnavigate the globe single-handedly, swore that he saw and spoke with the pilot of Columbus’s ship the Pinta. He claimed that the pilot steered his boat through heavy weather as Slocum lay ill with food poisoning. Many other startling, vivid examples of such apparitions reported by sailors, mountain climbers, and polar explorers are described in a 1987 article by Suedfeld and Mocellin. These include recurring reports by polar explorers that they felt as if someone was following them on their treks; Mt. Everest climbers stranded in snow holes hallucinating rescuers; and survivors of sinking ships counting extra persons in their lifeboats. Although sensed presences are most frequently reported by people in weird or dangerous places, it is not unreasonable to assume that such experiences can happen in more mundane surroundings. For example:

How Genome Sequencing Creates Communities Around Rare Disorders

The last two years have been a whirlwind of good news for Lilly Grossman. She graduated high school and successfully applied for college, where she’ll be majoring in English. She went to her prom and was crowned homecoming queen. She edited her school newspaper. She even visited the White House and met Barack Obama. But the two most important aspects of Lilly’s recent life seem far more mundane to other people. She has been sleeping. And she has been planning for a future that, for the longest time, her parents doubted she would have. Ever since she was a small child, Lilly’s body has been wracked by painful and relentless muscle tremors. At first, they only happened at night, robbing her and her parents of anything but the most fleeting stretches of sleep. Then, they crept into the daylight hours, leaving her with muscle weakness and balance problems, and making her dependent on walkers or wheelchairs. No one knew what was wrong. The family bounced from one physician to another, each one offering a different but equally wrong diagnosis. Her parents, Steve and Gay, compiled a dossier of medical records, thick with the results of unfruitful and often-painful tests. Life was hard, birthdays especially so. With the most likely diagnosis being some kind of mitochondrial disease—a class of conditions that often come with poor prognoses—Steve and Gay felt that the sand was draining from their daughter’s hourglass. Everything changed when the family learned about a study called IDIOM, led by Eric and Sarah Topol at the Scripps Translational Science Institute. IDIOM was an attempt to diagnose people with “serious, rare and perplexing health conditions” by sequencing their entire genomes and uncovering the faulty genes that presumably lay behind their problems. Lilly fit the bill perfectly. She became the first IDIOM volunteer—and its most successful by far. Within Lilly’s DNA, the Scripps team found a mutation in a gene called ADCY5, which is highly active in parts of the brain involved in coordinating movements. Based on these results, Lilly’s doctor decided to try her on a drug called Diamox, which had helped the only other known family with faults in ADCY5 (more on them later). When Lilly tried the drug, she started sleeping soundly for the first time in years. More:

Without Calming Voice, G.O.P. Is Letting Divisive Ones Speak on Muslims

WASHINGTON — When Ben Carson said on Sunday that he would not want to see a Muslim elected president, he did not just reignite a volatile conversation about the role of Islam in American life — he also exposed another fissure between many Republican leaders and elements of the party’s grass roots. In the years since President George W. Bush sought to separate the Islamic extremists behind the Sept. 11 attacks from the millions of practitioners of what he called a religion of peace, many in his party have come to reject the distinction. It is hardly the only point of disagreement between Republican leaders who are determined to reorient the party to win in a changing country, and activists who are uneasy about what they see as threats to their way of life. But the debate over Islam is particularly worrisome for Republicans because it so vividly highlights the vacuum that has been created by the absence of a unifying leader who can temper the impulses of the rank-and-file. The executive director of the Council on American-Islamic Relations called for Ben Carson to withdraw from the presidential race after saying Muslims are not fit to serve as president. But with many conservatives in the Obama years now seeing themselves as under siege, there are significant incentives for would-be leaders to cater to what Mr. Lewis called “their sense of victimhood.”For Democrats, there is an opening to use the criticism of Islam to portray Republicans as intolerant, reinforcing an image that has damaged the party’s brand. “I call on every Republican to denounce Dr. Carson’s disgusting remarks,” Senator Harry Reid, the Democratic leader, said on the Senate floor Monday, posting a photograph on Twitter of the star-and-crescent-bedecked headstone of a Muslim American soldier who died in Iraq. Muslim leaders also denounced Mr. Carson. “My heart was so saddened to hear those words come out of the mouth of an individual who is seeking the highest office in our land,” said Mahdi Bray, an imam and director of the American Muslim Alliance, at a news conference in Washington. “Not only because it’s inconsistent with the United States Constitution, but what do I tell my kids?”

From ‘the Scarlet Whore’ to Pope Francis: A Brief History of America and the Papacy

It would have amazed the Founders that a pope would be willing to speak to Congress—and that Congress would want to hear him, for that matter. Americans were not seeking papal approval as they sought to begin the world anew, in Thomas Paine’s words, and they had their own reasons to keep some distance from Rome (while happily accepting military aid from Catholic monarchies like France and Spain). They were delighted that a wide ocean separated them from Europe’s frequent religious wars, and the first amendment to the Constitution spelled out clearly that “Congress shall make no law respecting an establishment of religion.” The Catholic Church, for its part, had little reason to pay attention to the upstart country. When the United States came into existence, 249 popes had come and gone, and the church had seen huge empires rise and fall—a deep history that helps explain the longstanding mutual ambivalence between two great forces, one new, one old, each aspiring to be the world’s conscience. America has never been simple for the Church. When Columbus made his way across the Atlantic, he found new plants and animals never mentioned by the Bible, and certain key ingredients missing (like grapes, needed to make wine for the Lord’s Supper). In the aftermath of the discoveries, a Spanish pope, Alexander VI, awarded most of the hemisphere to Spain, and set in motion changes that were catastrophic to indigenous peoples. When the 13 colonies were carved out of North America (many with grants stretching across the Spanish domains to the Pacific), their settlers inherited an English distrust of the papacy. Religious tensions were never far from the surface, even during a Revolution that went to some lengths to keep religion out of the new government. The leaders of the Revolution were overwhelmingly Protestant (only one signer of the Declaration was Catholic, Charles Carroll of Maryland), and many still cherished a worldview in which popes were regarded as corruptors of religion. Anti-pope festivals were held in many colonies, especially after the Quebec Act of 1774 terrified the colonists into thinking the British were merging them with the Catholics to the North. Effigies of the pope were paraded around American cities, and flags unfurled which read “No Popery.” Especially in New England, ministers used colorful language to denounce “the Scarlet Whore,” and routinely saw papal interventions into European politics as signs of the apocalypse, which they zealously correlated with the Book of Revelation in their dog-eared Bibles. On October 21, 1774, the Continental Congress sent England a note condemning its support for a Roman Catholic religion that “disbursed impiety, bigotry, persecution, murder and rebellions through every part of the world.” So stood relations between Congress and the pope on the eve of independence.

The Influence of Fiorina at Lucent, in Hindsight

As Carly Fiorina has risen in the polls over the last week, there is renewed focus on her controversial tenure as chief executive of Hewlett-Packard. Yet her career at Lucent Technologies has been treated as little more than a footnote. It shouldn’t be. “My story — from secretary to C.E.O. — is only possible in this country,” Mrs. Fiorina likes to say on the hustings. In between her stint as a receptionist for a real estate company in the late 1970s and her being named Hewlett-Packard’s chief executive in 1999, Mrs. Fiorina worked for nearly 20 years at AT&T and then Lucent, the telephone giant’s spun-off equipment business. It was at Lucent — Latin for “light-bearing” — that Mrs. Fiorina made her name, running several of its divisions and overseeing its successful initial public offering, which at the time was the largest I.P.O in American history. In 1998, she appeared on the cover of Fortune magazine, ranked No. 1 on its inaugural “Most Powerful Women in Business” list. Yet her celebrated tenure at Lucent has been clouded by what happened two years after she left in 1999. The once-highflying business worth more than $250 billion at its peak nearly collapsed in the face of an accounting scandal and the telecommunications bust. The company laid off 50,000 employees in 2001 alone. Today the company, after merging with Alcatel of France, is worth only about $10 billion. Lucent, like some its rivals, artificially burnished its financial performance through vendor financing — lending money to customers so they could buy its products. In 2004, the company settled charges brought by the Securities and Exchange Commission that accused it of perpetrating a $1.1 billion accounting fraud.

Oath of office of the President of the United States

While the Constitution does not mandate that anyone in particular should administer the oath, the oath is typically administered by the Chief Justice, but sometimes by another federal or state judge (George Washington was first sworn in by Robert Livingston, the chancellor of the State of New York in 1789, while Calvin Coolidge was first sworn in by his father, a Justice of the Peace and a Vermont notary public in 1923). By convention, incoming Presidents raise their right hand and place the left on a Bible or other book while taking the oath of office. William R. King is the only executive official sworn into office on foreign soil. By special act of Congress, he was allowed to take his oath of the office of the Vice President on March 24, 1853 in Cuba, where he had gone because of his poor health.[1] He died 25 days later. From 1789 through 2013, the swearing-in has been administered by 15 Chief Justices, one Associate Justice, three federal judges, two New York state judges, and one notary public. To date the only person to swear in a president who was not a judge was John Calvin Coolidge, Sr., Calvin Coolidge‘s father, a notary whose home the then-Vice President was visiting in 1923 when he learned of the death of President Warren G. Harding. Sarah T. Hughes is the only woman to administer the oath of office. She was a U.S. District Court judge who swore Lyndon B. Johnson into office on Air Force One after John F. Kennedy’s assassination. The Constitutional language gives the option to “affirm” instead of “swear”. While the reasons for this are not documented, it may relate to certain Christians, including Quakers, who apply this scripture literally: “But above all things, my brethren, swear not, neither by heaven, neither by the earth, neither by any other oath: but let your yea be yea; and your nay, nay; lest ye fall into condemnation” (James 5:12, KJV).[2] Franklin Pierce was the only president known to use the word “affirm” rather than “swear.” Herbert Hoover is often listed to have used “affirm” as well, owing to his being a Quaker, but a newsreel taken of the ceremony indicates that the words used were “solemnly swear.”[3] Richard Nixon, who was also a Quaker, also swore, rather than affirm.[4][5]  There have been two forms of administering, and taking, the oath of office. Under the first form, now in disuse, the administrator articulated the constitutional oath in the form of a question, and modifying the wording from the first to the second person, as in, “Do you George Washington solemnly swear …” and then requested an affirmation. At that point a response of “I do” or “I swear” completed the oath.[citation needed] It is believed that this was the common procedure at least until the early 20th century. In 1881, the New York Times article covering the swearing in of Chester A. Arthur, reported that he responded to the question of accepting the oath with the words, “I will, so help me God.”[6] In 1929, Time magazine reported that the Chief Justice began the oath uttering, “You, Herbert Hoover, do you solemnly swear …”,[7] Hoover replied with a simple “I do”.[8] Under the second, and current form, the administrator articulates the oath in the affirmative, and in the first person, so that the President takes the oath by repeating it verbatim.[citation needed] Franklin Roosevelt, in 1933, stood silent as Chief Justice Charles Evans Hughes recited the entire oath, then repeated that oath from beginning to end himself.[9] By the time of Harry Truman’s inauguration in 1949, the practice was for the Chief Justice to utter the oath in chunks, with the President-elect repeating those chunks, until the oath was completed.[10] Many times the President-elect’s name is added after the “I”; for example, “I, Franklin D. Roosevelt, do … ” Lyndon B. Johnson did not add his name when swearing his first oath of office after Kennedy’s death since he was never asked to say his name; there is evidence that in all other inaugurations since Franklin D. Roosevelt‘s first, the name of the president was added to the oath.[citation needed] Theodore Roosevelt did not use a Bible when taking the oath in 1901.[11] John Quincy Adams swore on a book of law, with the intention that he was swearing on the constitution.[12] Lyndon B. Johnson was sworn in on a Roman Catholic missal on Air Force One.[13] Harry S. Truman, Dwight D. Eisenhower, Richard Nixon, and Barack Obama each swore the oath on two Bibles.[11] Washington took his oath of office with an altar bible borrowed from the St. John’s Lodge No. 1, Ancient York Masons lodge in New York and he kissed the Bible after taking the oath of office.[14][15] Subsequent presidents followed suit, up to and including Harry Truman,[16] but Dwight D. Eisenhower broke that tradition by saying his own prayer instead of kissing the Bible.[17]. More:

First inauguration of Theodore Roosevelt – Just some History

It was decided to conduct the inauguration immediately due to the tragic and politically charged circumstances of the President’s death. The most appropriate site was determined to the Ansley Wilcox House. Approximately 50 dignitaries, family members and cabinet officials gathered in the front library for the inauguration. Federal Judge John R. Hazel prepared to administer the oath. Borrowing Wilcox’s morning coat, Roosevelt did not swear on a Bible,[2] in contrast to the usual tradition of US presidents.[3] There were also no photographs, as inauguration photos were not allowed after a rival photographer unceremoniously knocked down another’s camera, although the room was heavily photographed after the inauguration had concluded.


Some state agencies looking at severe cuts

With the budget for 2016 put in place Thursday, state agencies began to review their General Fund allocations. Many didn’t like what they saw. While the $1.7 billion budget maintains funding for large agencies, such as Medicaid, Mental Health and the state’s trial court system, some agencies saw far more severe reductions. Others with smaller cuts said the cuts fell on critical programs. Even level-funded agencies said rising costs could affect services. • The Alabama Department of Environmental Management said it would raise fees on some permits by as much as 20 percent, and warned the cuts could draw federal scrutiny. • The Department of Senior Services said cuts fell heaviest on a program providing meals to seniors, and that they would work to shift money around to make up the difference. • The Attorney General’s Office said they are trying to prevent the impact on their workforce from a cut the office estimated at $1 million. State agencies receive funding from other sources, including the federal government. But federal funding is targeted for specific purposes, and state funding often determines how much outside money comes into Alabama. The Legislature approved the 2016 budget after more than six months of clashes over how to address a $200 million shortfall. While legislators approved cigarette tax increases and a use tax transfer to address the shortfall, they also imposed cuts on all but six agencies. Legislators said Wednesday they tried to keep cuts to between 4 and 6 percent. “In our opinion, as we talk about right-sizing government, we think that puts on enough pressure without being devastating, to encourage those agencies to downsize,” said Senate President Pro Tem Del Marsh, R-Anniston. But the pressure is crushing for some departments. The Alabama Department of Environmental Management saw its General Fund appropriation cut from $1.2 million to $280,000, a 77 percent cut to its General Fund allocation. Since 2008, ADEM has lost more than 96 percent of its funding from the General Fund. Lance LeFleur, director of ADEM, said the agency will try to make up the loss by increasing the cost of various permits sought by business. Some could increase 20 percent. “They are, in effect, willing to let industry cover the cost of budget cuts,” he said. LeFleur said the cuts could draw scrutiny from the federal Environmental Protection Agency, which is already watching ADEM for “insufficient state-provided funding.”

Can ISIS infiltrate Alabama? Byrne seeks answers on Syrian refugee crisis

Amid concerns that ISIS could infiltrate the U.S. by posing as refugees, U.S. Rep. Bradley Byrne, R-Fairhope, wants to know how the State Department will ensure that ISIS or its sympathizers don’t take advantage of the president’s plan to admit at least 10,000 Syrian refugees into the country. The debate over the handling of refugees is a topic that hits home for Alabama, considering that Mobile houses an affiliate of the State Department’s Refugee Processing Center. The center is likely to play a role in the admittance of Syrian refugees amid a worldwide crisis. “Given this information, I have legitimate concerns about the safety and security of my constituents in Southwest Alabama,” Byrne wrote in a letter Thursday to Anne Richard, the State Department’s assistant secretary for the Bureau of Population, Refugees and Migration. The Mobile congressman made the letter public on Monday. “I would like to know what precautions are being made to ensure these refugees are not affiliated with the Islamic State of Iraq and the Levant (ISIL) or other terrorist organizations,” the congressman added, referring to an alternate name for ISIS. Byrne cited National Intelligence Director James Clapper for his concern. Clapper said he would not “put it past the likes of ISIL to infiltrate operatives among these refugees.” Meanwhile, the Christian Science Monitor said in an editorial that the concerns of ISIS infiltrating the U.S. are overblown. “Experts on IS [Islamic State] and the Syrian migration say this fear is unfounded,” the editorial said. “IS has plenty of easier ways to send people to the West or to find potential recruits already living there. In addition, most Syrian refugees have lived for years in the neighboring countries of Lebanon, Turkey, and Jordan without people in those countries having much concern about militant radicals in their midst.”  The congressman asked Richard what kind of vetting process and security screenings the refugees will undergo, under what criteria refugees will be denied entry and how the U.S. will monitor the refugees. Byrne also wants to know what safeguards will be put in place to ensure national security while the refugees are being admitted and whether Congress will need to authorize additional funding to take in the refugees.

Deaths from highly addictive Fentanyl on the rise in Jefferson County

JEFFERSON COUNTY, AL (WBRC) – The highly addictive pain reliever Fentanyl can be twice as powerful as heroin, and it’s killed nearly six times as many people in Jefferson County this year as it did last year. While heroin deaths are down so far in Jefferson County, Fentanyl deaths have risen at an alarming rate. From January to July of last year, there were seven Fentanyl deaths in Jefferson County. This year, for that same time period, there have been 41 Fentanyl deaths. Fentanyl is most commonly used by cancer patients and normally comes in the form a prescription patch or it’s used directly in hospitals. But it is 30 to 50 times more potent than heroin. Many street drugs are sold by the gram, but Fentanyl is so potent, it’s sold by the milligram. Law enforcement officers are also finding it’s being sold on the black market, coming in from overseas suppliers. Because it’s so similar to heroin, many times drug dealers think they’re getting heroin, but it’s really the deadlier Fentanyl. “The drug enforcement administration is extremely concerned now that we have Fentanyl in our source of supply for drugs streaming throughout Alabama, specifically northern Alabama and Birmingham, that is great cost for those who abuse drugs, it’s also a great cost for law enforcement. It’s very dangerous to actually handle Fentanyl if you do not know it’s Fentanyl, you could literally inhale of few grains of Fentanyl and it’s enough to cause an overdose,” DEA Assistant Special Agent in Charge Clay Morris said. Morris said Fentanyl is not taking the place of heroin; often the same people who use heroin are also using Fentanyl, although they may not realize it.


Alabama One Email Saga: New Details Surface

Following years of regulatory inspections, allegations of fraud and lawsuits, John Dee Carruth, president/CEO of the $598 million, Tuscaloosa, Ala.-based Alabama One Credit Union, said he has proof of a state government conspiracy against him, several of his colleagues and his financial institution. Carruth shared dozens of emails, depositions and other documents with CU Times, which he said is evidence that attorney Justice D. “Jay” Smyth, III conspired with his political friends to force Alabama One to settle lawsuits for millions of dollars. Smyth has denied these allegations, and drama could ensue in a lengthy court battle. Email exchanges discussed or took place between Smyth’s friend and former law partner David Byrne, who is now the chief legal advisor for the governor of Alabama; Alabama Governor Robert Bentley; aides for both of them; State Sen. Gerald Allen (R-Tuscaloosa); Alabama Credit Union Administration Administrator Sarah Moore; an FBI agent; a retired judge and several others. CU Times detailed a few of these emails in a previous article after Carruth and his attorneys provided documentation stating that the Alabama Supreme Court denied Smyth’s request to keep them from being used in the lawsuit. Carruth said he feels the emails prove that Smyth used his connections with Bentley, others in his office and ACUA regulators to settle his lawsuits. Alabama One filed a federal lawsuit June 29 against Byrne, Allen, Moore, Smyth, law firm Albert Lewis Smyth Winter Ford LLC, Lewis, Tuscaloosa attorney Bobby Cockrell, former ACUA Administrator Larry D. Morgan and Doug Key, president/CEO of the $140 million Mutual Savings in Hoover, Ala., who served as a temporary CEO for Alabama One in 2014. Alabama One alleged in the suit it received letters of commendation from the ACUA and NCUA in April of 2013, as well as a positive Examination Report dated Dec. 31, 2013. Morgan suspended Carruth and three other Alabama One employees in February 2014, but reversed the order in March and abruptly resigned. He was replaced by Moore, who issued a cease and desist order April 2 requiring Carruth and other executives to resign. Alabama One fought the order in court. Download a PDF of the ACUA’s cease and desist order. The NCUA said that per agency practice, it could not comment on matters relating to supervision. A number of Alabama One members began filing suit after former member Danny Ray Butler’s arrestover losses they said they had suffered because of loans the credit union made for Butler in their names – suits the credit union has now declared are part of an alleged conspiracy against Alabama One. According to the complaint, Smyth represented five of those lawsuits against Alabama One, et all. The complaint alleged that a suit filed by Jerry and Brenda Griffin, and Sammy and Tommie Colburn, were settled with no monies being paid by Alabama One to the plaintiffs. However, CU Times previously reported, court documents revealed that the Griffin suit resulted in significant cost to the credit union. According to the settlement agreement, the credit union modified the Griffins’ loans and loan terms, renewed or extended loan agreements, made additional loans at advantageous interest rates, canceled debts, released and sold property and improvements, canceled injunctions and refunded bonds, and released claims against the couple. More, Stay tuned to for more details on Alabama state officials’ alleged conspiracy against Alabama One, including Smyth’s side of the story.



As we mentioned last week there was an interesting unsuccessful attempt at a power play in the House by Reps. Ed Henry, R-Decatur, and Will Ainsworth, R-Guntersville, who challenged a ruling by Speaker Mike Hubbard, R-Auburn. Fast-forward a few days and Henry confronts the Speaker again claiming Hubbard had unrightfully prevented him from bringing forward a point of order to dispute what he considered disparaging remarks by Rep. Paul Lee, R-Dothan, who said those who had voted against revenue measures’ should be “ashamed.” Eyewitnesses tell IAP immediately after Speaker Hubbard adjourned the House sine die a screaming and cussing Rep. Henry accosted the Speaker and the two men exchanged chest bumps before being separated by Rep. Corey Harbison, R-Cullman. There were several shouts for security by other legislators. “The speaker has all the power, and he can do what he wants,” Henry said after the incident. “I don’t have to support him”, said Henry.


AL Repro Rights Activists Have ‘Daily Show’ Ally Against Roy Moore

Alabama Supreme Court Chief Justice Roy Moore really wants to rent this house, but a team of dedicated reproductive freedom activists says they’ll do whatever it takes to keep him from succeeding. As they rally to raise $11,000, the Montgomery Area Reproductive Justice Coalition has a big endorsement from Lady Parts Justice, a cabal of writers and comics associated with comedienne Lizz Winstead. Lady Parts Justice calls themselves a “not safe for work, rapid response reproductive justice messaging hub that uses comedy, culture and digital media to sound an alarm about the terrifying erosion of reproductive access.” When BU covered the gathering of Operation Save America (OSA) in Montgomery, Alabama this July, we brought you the story of how one local anti-abortion hectoring and verbal abuse of patients’ families ended up ruining any chance for the OSA group to rent the house next door to the Reproductive Health Services clinic. Weeks before OSA arrived, a flustered woman struck the building, which is the former headquarters of Equality Alabama, with her car. Professional protester David Day had distracted the driver with vicious taunts as she tried to get her children away from him. That incident underlines a key reason why reproductive rights organizers have kept the converted private residence long after the OSA event ended: it’s not just the patients who need protection from the protesters. Their families and friends often need a safe refuge, too. Volunteers have now transformed the Perry Street residence into the POWER (People Organizing for Women’s Empowerment and Rights) House, a safe place for families and companions to wait while women access services at the clinic, where children are not allowed in the waiting area. In a trend also observed at many clinics around the country, protesters at the Montgomery location seem to target companions even more than patients.



From the shadow of death, county official saw the light of Alabama’s people

There are times when politics do not matter. There are moments when all the things that so often bug us and bother us and divide us amount to nothing at all. Now is such a time for Jefferson County Manager Tony Petelos. Now and the last whole year. Oh, what a year it has been. What a life-changing, mind-altering whirlwind of a year. It started, of all the ironic places, at Cooper Green Mercy Hospital, where Petelos went for a meeting one day last year. He knew something was wrong. He felt the pain and stopped at Cooper Green’s urgent care facility before he left. “They told me I needed to see my urologist,” he said. And then it all came pouring out. Petelos learned he had stage 2 bladder cancer, far enough along that it invaded his muscle walls. His whole bladder was removed, and the guy who four years ago prior climbed three miles high to Base Camp at Mount Everest was suddenly unable to walk to his mailbox. And suddenly there was nothing but the numbers. In the last 12 months he seen: Three major surgeries; seven radiations; 15 infections; six emergency room visits; four tubes sticking out his back; one external bladder; and 1,000 expressions of support. Maybe more. And that’s the thing that gets Petelos. Not the pain or the weakness, the recurring surgeries or the rehab. Not the shock or the fear or the life changes such a disease demands. It is the people who stop him as he buys coffee to wish him well and lend him strength. It is the people of all description – white people and black people, Protestants and Catholics and Muslims in the community who lift him with their prayers. It is cards from friends and total strangers. It  is letters that pile up by the hundreds in a basket he keeps at home. “They are praying for me. They tell me their church is praying for me,” he said. “It’s a wonderful feeling. We may not agree on some things, but this is a loving community and a very generous community.” Oh, he didn’t start out being so graceful. His initial diagnosis knocked the stuffing out of him, he admits. “I felt sorry for myself for a couple of days,” he said. “Then I popped out of it. I thought OK, there’s nothing I can do other than get medical help, to accept it and move on.” There was no choice, I guess. None but to stay home and wallow in Judge Judy, to forget about work and purpose and the point he wanted to make four years ago when he took the job at Alabama’s largest and then most messed up county. But he soon watched more TV than he could take. It wasn’t him, and it sure wasn’t the him he wanted to be. So Petelos was back to work. Which is good for Petelos. And good for the county, according to County Commission President Jimmie Stephens, who stops by Petelos’ office most mornings to see how he is doing. “The county runs more smoothly when Tony is here,” Stephens says. Petelos intends to be there a while. He has no plans to call it quits, but he does have a new outlook on the job, on his work, and on the life he no longer takes for granted. “I sleep great at night, then I get up and I come here,” he said. ” I work and I go home and I leave work here. I just don’t let the little things bother me anymore,” he said. Because life is short, he said. Because “we get bogged down in little things.”


Morning Money

WALKER OUT; THE JEB WORLD VIEW — A Jeb Bush donor/fundraiser emails about the exit of the Wisconsin governor: “Running for president is far more difficult in reality than in theory, and the marathon rules of politics still seem to apply. Walker found that out the hard way, and, to his credit, was clear-eyed and cut his losses.

“His donors now have to choose – boring but built to last Jeb, or The Talented Mr. Rubio, who gives great speeches from time to time but has struggled to manage even his basic family finances. Team Jeb will be patient and respectful, but will press the case for Jeb with Walker donors as the only primary candidate who can take on Trump and win.”

Tom Krebs is a securities attorney in Mountain Brook, Alabama.

WHERE DO WALKER’S SUPPOTERS GO? — It’s not like there that many but … GOP strategist Kevin Madden emails: “It’s not a monolithic bloc of support that just shifts toward one other candidate. If you’re Fiorina or Rubio, though, it helps to be rising in the polls as others are dropping out. Also, Kasich could make a play for those voters who were looking for a governor from the Midwest with a reformer reputation.”

WHEN THE MUSIC (AND MONEY) STOPS … POLITICO’s Eli Stokols reports: “Scott Walker decided to end his 2016 campaign Monday after burning through cash and disappointing donors who thought the one-time frontrunner would be one of the last men standing this primary season. …

“The announcement came on the heels of a new CNN poll that showed Walker registering as an asterisk – less than 1 percent – following a second straight lackluster GOP debate performance. Walker spent the day in private meetings before the planned announcement. ‘Finances just aren’t there,’ the Wisconsin governor said on a conference call with staff minutes before his press conference”

LEW HITS CHINA ON EVE OF XI VISIT — Treasury Secretary Jack Lew in a WSJ op-ed: “The signals from Beijing over the last several months have been mixed. Restrictions on the purchase of foreign technology products, and excessively broad reviews for foreign investments, have underscored long-standing questions about China’s business climate. After a period of yuan appreciation, the recent abrupt change to its exchange rate policy led to a 3 percent drop in its value against the dollar and contributed to turbulence in international financial markets …

“Beijing therefore should set its sights on policies that will further their reform agenda, such as targeted fiscal stimulus to boost consumption. Chinese officials also need to demonstrate their intent to allow the yuan to be subject to upward pressure that would drive the currency up, not just down.”

XI DEFENDS MARKET MOVES — WSJ’s Charles Hutzler: “Chinese President Xi Jinping defended his government’s economic stewardship and said that China’s slowing growth and market fluctuations won’t deter needed reforms. In his first interview with foreign media since the Chinese stocks skidded this summer, Mr. Xi told The Wall Street Journal that this summer’s government intervention to arrest the plunge was necessary to ‘defuse systemic risks.’

The rescue was akin to acts taken by governments in ‘some mature foreign markets,’ the president said in written responses to questions submitted by the Journal ahead of his first official state visit to the U.S. On the slowdown that has appeared sharper than both global markets and Beijing expected, Mr. Xi urged foreign investors to take the long view and compared the world’s second-largest economy to a vessel in rough seas.”

DOOMSDAY SCENARIO: NO JOBS REPORT! — Guggenheim’s Chris Krueger: “We continue to assign a 30 percent probability that a compromise cannot be worked out and that the government shuts down on October 1 … We believe that the Health Care/Pharma/Biotech, Tourism, and the Defense sectors all have the most negative risk associated with a partial shutdown given their linkage to federal discretionary spending versus other sectors. … In a government shutdown, the Bureau of Labor Statistics would also shut down, which would halt economic data releases (including the September Jobs Report).

“Given the Federal Reserve’s very busy fourth quarter and data-dependent approach, a government shutdown could influence the behavior of the Fed. We do not opine on interest rates; we are merely pointing out that a data-dependent Fed would literally be without a key public source of data during a potential shutdown.”

ONLY 15 percent CHANCE! — Compass Point’s Isaac Boltansky and Alison Ashburn: “Although well-respected budget observers have increased their odds of a government shutdown [see Collender, Stan], we maintain our view that lawmakers are likely to reach a short-term agreement and believe there is only a 15 percent probability that the government shuts down next week. Political and procedural realties reinforce our view that GOP leadership is committed to punting the spending fight to November or December”

GOP HARDLINERS STAND FIRM — Reuters: “As a possible U.S. government shutdown loomed, the leader of the House of Representatives’ most conservative Republicans vowed … to oppose any stop-gap funding bill that keeps federal money flowing to Planned Parenthood. In a showdown that threatens to jolt financial markets and the economy [not really], Republican leaders were struggling to craft a government funding extension that meets anti-abortion conservatives’ demands to cut off the women’s healthcare group.

“Congress has five legislative days left before the fiscal year ends. On Oct. 1. If no action is taken, funding will run out for ‘non-essential’ agencies and personnel. Republican House Speaker John Boehner has yet to articulate a plan”

REAL ESTATE PORN: FULD COMPOUND SOLD — Business Insider’s Julia La Roche: “Former Lehman Brothers CEO Dick Fuld’s gorgeous Sun Valley, Idaho compound sold last week for a ‘record-breaking’ price at an auction. The winning bidder for the 71.3-acre Big Wood River Estate is an unidentified person from the Pacific Northwest, Concierge Auctions said in a release.

“It’s unclear how much was paid. The minimum bid was $20 million. Concierge Auctions’ said in a statement that it was the most expensive residence ever known to sell at auction, and the highest known price for a residence in Sun Valley. Concierge Auctions previously estimated that the property could fetch from $30 to $50 million.”

WHAT ABOUT FIORINA AND LUCENT? — NYT’s Andrew Ross Sorkin: “As Carly Fiorina has risen in the polls over the last week, there is renewed focus on her controversial tenure as chief executive of Hewlett-Packard. Yet her career at Lucent Technologies has been treated as little more than a footnote. It shouldn’t be. … [H]er celebrated tenure at Lucent has been clouded by what happened two years after she left in 1999. …

“The once-highflying business worth more than $250 billion at its peak nearly collapsed in the face of an accounting scandal and the telecommunications bust. The company laid off 50,000 employees in 2001 alone. Today the company, after merging with Alcatel of France, is worth only about $10 billion.”

GOOD TUESDAY MORNING — Happy birthday to Jenna Wallenstein, who against all logic and reason continues to be my amazing wife. Email me at and follow me on Twitter @morningmoneyben and wish Jenna (@jaw229) a happy bday.

DRIVING THE DAY — Chinese President Xi Jinping arrives in Seattle for a meeting with tech CEOs … Pope Francis arrives in DC … Treasury Secretary Jack Lew this morning will participate in a roundtable discussion on market structure with industry leaders and academics hosted by the New York University Stern School of Business … Bank of America shareholders at 10:00 a.m. vote on whether Brian Moynihan should retain both chairman and CEO titles … Hillary Clinton gives a speech on drug pricing … Redbook chain store sales at 9:00 a.m. expected to rise 1.7 percent …

TENSIONS HIGH AS XI ARRIVES — FT’s Geoff Dyer in Washington and Jamil Anderlini in Beijing: “When Xi Jinping begins a week-long visit to the US in Seattle on Tuesday, the Chinese president will be accorded all the pomp and ceremony of an important world leader. In between Washington state and Washington DC, he will meet a large slice of the American corporate elite and will receive a 21-gun salute and a state dinner at the White House. …

“Beneath the surface, however, Mr Xi will encounter an America that is itching to take a more confrontational approach towards China over both commercial and security issues. From the Pentagon to the justice department, the Obama administration has been preparing tougher steps to take against China over cyber theft of trade secrets and over its efforts to assert more control in the South China Sea. The White House has so far held off approving the measures, in part for fear they might poison Mr Xi’s visit, but is holding them open as a threat.”

IS CHINA STABILIZING? — Bloomberg: “Data culled from China’s most-used search engine, biggest online outlet and main bank-card network are signaling stabilization in the nation’s economy. Three alternative indicators suggest less of a deceleration in the world’s second-largest economy, and reduced risk of a hard landing. That was also the conclusion of a private survey released this week showing little danger of economic collapse after the stock-market plunge and currency devaluation. …

“Online interest in small- and medium-sized enterprises is seeing a rebound in September after recently falling to the lowest level since 2010, according to a preliminary reading of an index developed by Beijing-based Baidu Inc., which handles more than 6 billion searches a day. Baidu tracks how often users click links to smaller companies. … Consumer-price inflation has picked up amid gains in food prices while a three-year streak of factory-gate deflation deepens. An index developed by Alibaba Group Holding Ltd., China’s largest e-commerce company, shows consumer prices quickening more than the government’s official reading”

FED CALL WAS A CLOSE ONE — WSJ’s Michael S. Derby: “Federal Reserve officials who have spoken following last week’s high-profile policy meeting say a rate increase this year remains in the cards. In fact, central bankers say they weren’t far from taking that first step to start raising short-term interest rates. The decision not to raise rates was a ‘close call,’ Federal Reserve Bank of Atlanta President Dennis Lockhart said Monday in Atlanta. Given all the tumult tied to China and other foreign economies and the resulting market churn, he said ‘I thought it prudent to wait’ longer to raise rates.

“Other Fed officials also indicated in recent days the decision was close. The camp advocating caution won over [FOMC], which voted 9-1 on Thursday to keep its benchmark rate near zero … to get a better read on how global economic turbulence and unsettled markets are affecting the outlook. While officials agree rates should rise this year, comments since the meeting show a split on when exactly that should happen.” … The decision not to act was countered by two other policy makers who believe the economy has improved enough for the central bank to begin moving toward a more historically normal policy stance now”

DIMON WON’T DONATE TO CLINTON — New York Post: Hillary Clinton “can’t count on campaign dollars from JPMorgan Chase CEO Jamie Dimon, the billionaire executive said … ‘I am not going to get involved in the politics at this point,’ Dimon said when asked if he would pledge his support, as he did in 2007 and 2008.”

VW TANKS — NYT’s Jack Ewing: “Since the [emission test] news broke on Friday, Volkswagen has scrambled to control the damage. … Volkswagen said it would stop selling the remainder of its 2015 model Volkswagen and Audi diesels and not offer its 2016 diesel cars, which were just arriving in showrooms in the United States. These measures did not stop Volkswagen shares from plummeting more than 20 percent when trading opened in Europe on Monday. …

“The software used to manipulate emissions tests in the United States, and the extensive attempts by Volkswagen to deflect official scrutiny before admitting misconduct this month, suggest that the cheating was not just the work of a few rogue engineers. … German authorities said on Monday that they would conduct their own tests to make sure that Volkswagen diesels were complying with European laws. The European Commission, the administrative arm of the European Union, has contacted Volkswagen as well as the Environmental Protection Agency for details, a commission spokeswoman said.”

INVERSIONS CONTINUE DESPITE TREASURY MOVES — WSJ’s Liz Hoffman and John D. McKinnon: “When Salix Pharmaceuticals Ltd. last October abandoned plans to buy an Irish drug company and move its headquarters overseas, it was chalked up as a win for Washington over ‘inversion’ deals that were structured to avoid U.S. taxes. The victory was short-lived. In the year since the Treasury Department tightened its rules to reduce the tax benefits of such deals, six U.S. companies have struck inversions, compared with the nine that did so the year before. Meanwhile, foreign takeovers of U.S. companies have soared, with similarly draining effects on U.S. coffers. Just six months after calling off its inversion, Salix itself was sold to a Canadian rival, which expects to shave more than $560 million off Salix’s tax bill over the next five years, new documents show. …

“The results highlight the challenge for Washington in holding onto corporate tax dollars amid a global mergers-and-acquisitions boom. U.S. businesses, which are subject to a 35 percent tax rate, are worth more in the hands of more lightly taxed foreign rivals. The savings let overseas buyers offer high prices for those assets, which ramps up pressure on American boards to sell. Sen. Rob Portman (R., Ohio) called the Treasury’s regulations ‘a Band-Aid.’ He added: ‘The U.S. tax code is noncompetitive. Until we fix that, we’ll continue to see American companies leave, one way or another.’”


REDUCING COST OF FUNDS DOESN’T HELP BORROWERS — Per a study by NYU Stern Professor Johannes Stroebel: “Households with the lowest FICO scores had the highest willingness to borrow. Despite lower-cost capital, banks were reluctant to lend to these potential borrowers. The authors estimate that a one percentage point reduction in the costs of funds for banks raises optimal credit limits by only $127 for consumers with low FICO scores. … A bank’s propensity to lend is negatively correlated with a household’s propensity to borrow (i.e., the more likely a household is to borrow, the less likely a bank is to grant additional credit).”

CLINTON TWEETS SLAMS BIOTECH STOCKS — FT’s David Crow: “Hillary Clinton … knocked $15bn from the value of US biotech stocks on Monday by pledging to take on ‘outrageous’ price-gouging in the pharmaceuticals industry. ‘Price gouging like this in the speciality drug market is outrageous. Tomorrow I’ll lay out a plan to take it on,’ Mrs Clinton wrote in a tweet, referring to a company that hiked the price of a medicine for a form of parasitic infection from $13.50 to $750 overnight. … The tweet sent the Nasdaq biotech index down by almost 5 per cent in New York trading. Shares in Valeant, a Canadian pharmaceutical group that has a reputation for implementing steep price hikes, fell by 5.4 per cent. …

“Mrs Clinton’s tweet referred to the case of Daraprim, a 62-year old drug for a life-threatening parasitic infection. It was bought in August by privately held Turing Pharmaceuticals, which immediately raised the price by more than 5,000 per cent. … In an interview with CNBC, Martin Shkreli, Turing’s chief executive, defended the price hike and said the company planned to use the extra revenues to fund research into a better alternative.”

POTUS Events

10:30 am || Receives the Presidential Daily Briefing
4:00 pm || Greets Pope Francis; Joint Base Andrews

All times Eastern
Live Stream of White House briefing at 12:30 pm

Floor Action

The Senate will take a procedural vote on proceeding to the 20-week abortion legislation. Sixty votes will be needed to overcome the procedural hurdle.

The Senate will also likely recess form 12:30 p.m. to 2:15 p.m. for weekly policy lunches.

The House isn’t in session.

Krebs Daily Briefing 21 September 2015

Thomas L. Krebs, Securities Litigation, Regulation and Compliance Attorney Lawyer (c)2014 Brandon L. Blankenship
Thomas L. Krebs


Tsipras returns to power to fight for Greek debt relief

Greek leftist leader Alexis Tsipras will return as prime minister on Monday determined to secure debt relief from the country’s creditors in his “first and most important battle” after scoring an unexpectedly clear election victory. But easing Greece’s debt burden is just one of many items on a dauntingly long “to do” list ranging from how to revive a crippled economy while implementing austerity polices to dealing with the wave of migrants landing on Greek shores. In Sunday’s election voters gave Tsipras and his Syriza party a second chance to tackle Greece’s problems, despite his summer U-turn when he ditched his anti-austerity platform to secure a new bailout deal and avert ‘Grexit’ – a Greek exit form the euro zone. The extent of the win means that, rather than needing a patchwork of partners, Syriza will be able to govern with only a single ally, the Independent Greeks. The small right-wing party was also the junior partner in the Tsipras coalition which governed for seven turbulent months until he resigned last month, forcing the election. With society fractured by years of austerity, Tsipras wants to build a broader consensus as he tries to steer Greece through the tough reforms demanded by the euro zone in the bailout agreement – the country’s third. A presidency source said Tsipras would be sworn in on Monday afternoon. Initially, negotiating debt relief will dominate his agenda, a senior Syriza source said.

Exclusive: The Pentagon Is Preparing New War Plans for a Baltic Battle Against Russia

For the first time since the collapse of the Soviet Union, the U.S. Department of Defense is reviewing and updating its contingency plans for armed conflict with Russia. The Pentagon generates contingency plans continuously, planning for every possible scenario — anything from armed confrontation with North Korea to zombie attacks. But those plans are also ranked and worked on according to priority and probability. After 1991, military plans to deal with Russian aggression fell off the Pentagon’s radar. They sat on the shelf, gathering dust as Russia became increasingly integrated into the West and came to be seen as a potential partner on a range of issues. Now, according to several current and former officials in the State and Defense departments, the Pentagon is dusting off those plans and re-evaluating them, updating them to reflect a new, post-Crimea-annexation geopolitical reality in which Russia is no longer a potential partner, but a potential threat. “Given the security environment, given the actions of Russia, it has become apparent that we need to make sure to update the plans that we have in response to any potential aggression against any NATO allies,” says one senior defense official familiar with the updated plans. “Russia’s invasion of eastern Ukraine made the U.S. dust off its contingency plans,” says Michèle Flournoy, a former undersecretary of defense for policy and co-founder of the Center for a New American Security. “They were pretty out of date.” The new plans, according to the senior defense official, have two tracks. One focuses on what the United States can do as part of NATO if Russia attacks one of NATO’s member states; the other variant considers American action outside the NATO umbrella. Both versions of the updated contingency plans focus on Russian incursions into the Baltics, a scenario seen as the most likely front for new Russian aggression. They are also increasingly focusing not on traditional warfare, but on the hybrid tactics Russia used in Crimea and eastern Ukraine: “little green men,” manufactured protests, and cyberwarfare. “They are trying to figure out in what circumstances [the U.S. Defense Department] would respond to a cyberattack,” says Julie Smith, who until recently served as the vice president’s deputy national security advisor. “There’s a lively debate on that going on right now.” This is a significant departure from post-Cold War U.S. defense policy.

Number of Children Displaced by Boko Haram Surpasses 1.4 Million

More than 1.4 million children have been displaced by Boko Haram extremists operating in Nigeria’s Lake Chad region, but humanitarian funding for the crisis continues to fall short, the United Nations said Friday. “With more refugees and not enough resources, our ability to deliver lifesaving assistance on the ground is now seriously compromised,” said Manuel Fontaine, UNICEF’s regional director for West and Central Africa. UNICEF has received less than a third of the $50.3 million it says it needs for humanitarian response across the region. And the number of displaced only continues to grow. Nigerian President Muhammadu Buhari has called Boko Haram’s defeat a top priority for his administration. The vast majority of the displaced children — 1.2 million of the total 1.4 million — are Nigerian, and were uprooted in the past five months, UNICEF said. More than half of the Nigerians are under the age of 5. An estimated 265,000 displaced children are from Cameroon, Chad, and Niger who have been uprooted as the extremists continue to operate across borders. A multinational task force backed by all four countries, with support from Benin, is working to battle Boko Haram, which upped its extremist offensive in the past two years as it razed villages and kidnapped children from their schools. Boko Haram, which translates roughly to “Western education is forbidden,” first launched its offensive in 2009, and schools have emerged as some of its biggest targets in an ongoing campaign to carve out a stretch of territory ruled by extremist Sharia law in northeast Nigeria and neighboring countries. Buhari, who won the presidential election against incumbent Goodluck Jonathan in March, ran largely on a campaign of increased security. Shortly after taking over the presidency in May, Buhari sacked a number of top military chiefs, and in August gave officials three months to beat back the group. But as the extremists continue to terrorize the entire Lake Chad region, Buhari’s latest deadline offers his military a daunting and largely unrealistic task.

U.S. Soldiers Told to Ignore Sexual Abuse of Boys by Afghan Allies

KABUL, Afghanistan — In his last phone call home, Lance Cpl. Gregory Buckley Jr. told his father what was troubling him: From his bunk in southern Afghanistan, he could hear Afghan police officers sexually abusing boys they had brought to the base. “At night we can hear them screaming, but we’re not allowed to do anything about it,” the Marine’s father, Gregory Buckley Sr., recalled his son telling him before he was shot to death at the base in 2012. He urged his son to tell his superiors. “My son said that his officers told him to look the other way because it’s their culture.” Rampant sexual abuse of children has long been a problem in Afghanistan,particularly among armed commanders who dominate much of the rural landscape and can bully the population. The practice is called bacha bazi, literally “boy play,” and American soldiers and Marines have been instructed not to intervene — in some cases, not even when their Afghan allies have abused boys on military bases, according to interviews and court records. The policy has endured as American forces have recruited and organized Afghan militias to help hold territory against the Taliban. But soldiers and Marines have been increasingly troubled that instead of weeding out pedophiles, the American military was arming them in some cases and placing them as the commanders of villages — and doing little when they began abusing children.

10 Times the Pope and Republicans Didn’t See Eye-to-Eye on International Issues

Since he was elected as the Holy See in March 2013, Pope Francis’s progressive views on everything from immigration to climate change have won him an enthusiastic following in the United States. A poll released by Telemundo on Friday shows that 51 percent of Americans have a positive opinion of Francis, an Argentine whose birth name is Jorge Mario Bergoglio. But while he might be admired by Americans and Catholics around the world, some of Francis’s views put him at odds with Republicans. As the pope prepares to arrive in Washington on Tuesday for a five-day visit that will also take him to New York and Philadelphia, here are 10 issues where Francis and the GOP disagree:

Wine and Exercise: A Promising Combination

The European Society of Cardiology is currently convened in Barcelona for its annual congress, where an abundance of promising heart-disease research has been unveiled. Envious American eyes are on a study of regular wine consumption and its apparent health benefits. Many studies in the past have found that wine drinkers have healthier hearts than abstainers, but the current trial—called In Vino Veritas (In Wine, Truth)—is one of the first studies to actually introduce wine into people’s lives and track its effects on their bodies. Lead researcher Miloš Táborský, head of cardiology at the Palacký University Hospital in Olomouc in the Czech Republic, revealed the study’s results in a presentation over the weekend, saying, “We found that moderate wine drinking was only protective in people who exercised. Red and white wine produced the same results.” For one year, subjects drank “moderate” amounts of wine five days per week. For men, that meant 0.3 to 0.4 liters daily, about two to two-and-a-half glasses. For women it meant 0.2 to 0.3 liters, about one to two glasses. (A more common definition is one glass for women and two glasses for men.) Half of the 146 subjects drank pinot noir, and half drank a white “chardonnay-pinot.” The participants logged any and all alcohol consumption in journals, where they also kept track of their diets and physical activity.


Mark Fuller, Former Federal District Court Judge, Could Be Impeached

A high-level committee of federal judges told Congress this month that lawmakers had reason to consider impeaching Mark E. Fuller, a former Federal District Court judge in Alabama, even though he had already resigned after being arrested and accused of striking his wife. But legal ethicists and scholars said that the committee, the Judicial Conference of the United States, was sending a broader message to a sometimes skeptical Congress that the judiciary was willing to embrace a hard line toward its own, even on matters of misbehavior outside the courtroom and even after a judge has left the bench. The action, experts said, suggested that some of the country’s leading judges wanted to use a forceful demonstration of discipline to try to quell years of misgivings on Capitol Hill. “They didn’t pull any punches,” said Arthur Hellman, a law professor at the University of Pittsburgh who specializes in judicial ethics. “They didn’t try to whitewash it in any way, and I think that’s part of the message they’re trying to convey: If a federal judge does something bad, the judiciary will take steps to force him off the bench.” Mr. Fuller submitted his resignation letter on May 29, about a month after a committee filed a report that led the Judicial Conference to tell Congress that “substantial evidence” existed that Mr. Fuller physically abused his wife, before and during their marriage, at least eight times. Mr. Fuller was also accused of committing perjury when he testified before a panel that investigated the circumstances of his August 2014 arrest. A lawyer for Mr. Fuller, Barry Ragsdale, declined to comment on Friday. Legal analysts say that Mr. Fuller, an appointee of President George W. Bush who faced allegations of partisanship during his handling of the corruption trial of former Gov. Don Siegelman of Alabama, a Democrat, is unlikely to be impeached. Some lawyers questioned whether any proceedings would be constitutional because Mr. Fuller was no longer on the bench. But the Judicial Conference’s secretary, James C. Duff, wrote that the judges had found that the “severity of the misconduct” justified the formal notice to Congress. “In the event that the House of Representatives determines in its sound discretion that impeachment is not warranted, this certification may also serve as a public censure of Judge Fuller’s reprehensible conduct, which has no doubt brought disrepute to the Judiciary and cannot constitute the ‘good behavior’ required of a federal judge,” Mr. Duff wrote. Analysts said the judges may have felt compelled to respond so strongly because the accusations included both spousal abuse and perjury. Speaker John A. Boehner referred the certification to the House Judiciary Committee, which would be responsible for starting impeachment proceedings. But even if Mr. Fuller does not face discipline from Congress, the Judicial Conference’s move is expected to reverberate with judges nationwide. “They want to use this as a teaching moment for the federal judiciary,” said Charles G. Geyh, a law professor at Indiana University who testified during impeachment proceedings against a different federal judge. Members of Congress have long voiced questions about judicial conduct, so much so that in 2004, Chief Justice William H. Rehnquist appointed a panel to evaluate the judicial branch’s approach. Although the panel made recommendations in its public report, questions persisted, and Mr. Hellman said the Judicial Conference’s notice appeared to be a renewed effort to ease Congress’ worries about the effectiveness of judicial discipline. Whether Congress will be satisfied is another question. In May, before Mr. Fuller announced his resignation, Senator Charles E. Grassley, Republican of Iowa, reintroduced a measure to establish an inspector general for the judiciary. “The fact remains,” Mr. Grassley said then, “that the current practice of self-regulation of judges with respect to ethics and the judicial code of conduct has time and again proven inadequate.”

House Republicans Lash Out at Planned Parenthood

WASHINGTON — House Republicans vented their rage against Planned Parenthood on Friday, voting to block all federal financing of the organization, which they accused of profiting from the sale of aborted fetuses for medical research. It was unclear, however, if the vote would be sufficient to mollify hard-right lawmakers who have threatened to force a government shutdown over the abortion issue. Neither the Planned Parenthood bill, which passed 241-187, nor a second anti-abortion measure approved on Friday has any chance of becoming law because of opposition from Senate Democrats and President Obama. But the deep emotion expressed by Republican lawmakers during debate underscored the challenge facing party leaders in the days ahead. “I am honored to stand with my colleagues to try to prevent tax dollars from going to this organization that has now stooped to the practice of trafficking innocent baby parts,” Representative Jody Hice, Republican of Georgia, said in a brief speech. “They say for the purpose of advancing medical research, but we all know that it really — there is no excuse that can possibly be given for the moral bankruptcy of Planned Parenthood. It’s time to defund this while the investigation occurs.” Democrats accused the Republicans of engaging in baseless attacks against Planned Parenthood, which they said provided crucial health care services to women and men, and of again trying to blunt a woman’s right to choose an abortion. “This bill to inflame the passions that is based on false videos, distorted clips, that was part of a coordinated smear campaign all across the country, is being used as a foundation to close the government,” said Representative Kathy Castor, Democrat of Florida. “I hope it doesn’t happen, but it appears that dysfunction in the Republican Congress is going to lead us down that path at the expense of women’s health care.”

Where Are They Now? Robber-Baron Edition

According to Time magazine, 90 percent of all rich families, from the Astors to the Ziffs, lose their fortunes by the third generation. This is remarkable, considering how comparatively easy it is to retain wealth once you have it. A recent analysis suggested that Donald Trump, for example, could be similarly wealthy if he had done nothing but put his eight-figure inheritance into the stock market: “If he’d invested the $200 million that Forbes magazine determined he was worth in 1982 into that index fund, it would have grown to more than $8 billion today.” Conversely, climbing several rungs on the income ladder takes ingenuity, grit, resilience, opportunity, and a heaping tablespoon of luck. Currently, poor children have only a 7.5 percent chance of making it even to the top 20th percentile as adults. Making money is hard; holding onto money when you’re born with it shouldn’t be. And yet, in practice, it is. Which American dynasties have defied the odds and retained their wealth? What have the heirs of the still-flush 10 percent been able to accomplish? And which once famously rich folks squandered it all? Here are the stories of three (or more) generations of three super-rich American families:

Millennials do not like to be categorized.

The Pew Research Center finds they don’t even like the label “millennial.” But for our journalistic purposes, we’ll use it like the Census Bureau — to refer to people born between 1982 and 2000. (And full disclosure: your author fits into this so-called millennial generation.) This summer, millennials officially became the largest population in the country, according to data from the Census Bureau. The sheer size and diversity of this group make it unlike any other. Sure, they don’t always vote in huge numbers, but, when they do, they make a difference. At a Bernie Sanders rally in Manassas, Va. recently, 20-year-old Benjamin Purdy was waving selfie stick in the air while carrying a friend on his shoulders. And, as he waited for the Vermont independent running for the Democratic nomination for president to take the stage, he explained that he’s deeply concerned about economic issues. “One of the main issues for me is prison reform,” said Purdy, a junior at the University of Mary Washington, “and, it’s just sucking so much money out of our budget to put people, especially non-violent, drug-offending criminals in jail for such long periods of time. We could be spending that money maybe lowering tuition costs for college students like me, so it’s a little bit more affordable for us to go to college.” Cassie Harrison, 25, says she’s worried about economic justice and racial justice. She says her generation feels more liberal than older generations. The economy was a common theme among this college-educated crowd that’s come of age in the Great Recession. They’re also worried about equality in general — whether that’s economic or racial. “Civil rights isn’t where it should be for everybody,” said Kelly Beale, a 29-year-old financial analyst. “It’s better, but with the whole Black Lives Matter movement, it’s obvious, that it’s not there yet. And, I feel like we’re not addressing it properly.” Racial justice is also a top priority for 25-year-old Cassie Harrison, who was sitting across the lawn. But, she thinks racial attitudes are changing. She said her generation is more flexible about social norms. “I think we like to question things a little bit more,” Harrison said, “and, so I do think we are a little bit more liberal.” A Pew study backs that up. It found that millennials of all political stripes are far more liberal than the country as a whole. “I’m a registered Republican, but I’m definitely more of a progressive Republican,” said Alex Drechsel at a Donald Trump rally in New Hampshire. “I consider [myself] a millennial Republican.” Dreschel, a business student from a military family, wasn’t supporting Trump; he’s more a fan of Ohio Gov. John Kasich, but he came to see the show with his dad out of curiosity. Alex Dreschel, a business student from a military family, came to this Derry, N.H. Trump rally with his dad out of curiosity. “The Republican party needs to evolve a little bit, so I’m more relaxed on some social issues that other Republicans wouldn’t be,” he said. “My opinion — the Republican Party needs to evolve a little bit,” Dreschel said, “so I’m more relaxed on some social issues than other Republicans wouldn’t be.” Pew’s research suggests that millennials, like Drechsel, who identify with the GOP are actually far more liberal than Republicans of other generations, especially when it comes to immigration and sexual preference. “This is a rather non-judgmental generation,” said Kristen Soltis Anderson, a GOP pollster and author of The Selfie Vote: Where Millennials Are Leading America (And How Republicans Can Keep Up). “They’re not interested in judging others or imposing values on others, and I think, as a result, they sometimes view the Republican Party as espousing a more old-fashioned attitude toward culture.” For example, she says her generation does not see immigration as a cultural threat. “For a lot of older voters, they don’t understand why they have to press “1” for English,” Soltis-Anderson said. “They’re remembering a time before that they wish we could go back to.” She added that where older voters might be angry about immigration, most millennials grew up having a closer association with immigrants. “You’ll see young voters of all stripes saying the system is broken, and it needs to be fixed, but I think it doesn’t come from the same kind of cultural anxiety place, but rather more from a the system seems so broken, why can’t we enforce laws point of view,” Soltis-Anderson said. Despite a campaign season that so far has been dominated by some of that anger, that’s not the dominant feeling among millennials. They’re more disappointed. “Young people tend to be the most optimistic, the least angry and openly hostile toward the political system or either of the political parties,” said Michelle Diggles, an analyst with the center-left think thank Third Way. “I think mainly they’re just shaking their head being turned off by some of the antics.” Analysts said it’s unclear exactly how that disappointment will play in the long run. But given how key young people have been to Democratic success — and how motivated the GOP base is — Democrats will need to figure out ways of keeping them engaged in the post-Obama era.

Dem bill would cut lawmaker pay during shutdowns

Rep. Rick Nolan introduced legislation on Friday to prevent future Congresses from getting paid during government shutdowns. The Minnesota Democrat’s proposal wouldn’t apply to the current Congress, which faces a potential government shutdown on Oct. 1 if lawmakers don’t pass a spending bill in time. The Constitution’s 27th Amendment prohibits any law that changes lawmakers’ salaries during their current terms. Lawmakers can only enact measures that affect future sessions of Congress. Nolan said withholding lawmaker pay would put those serving in Congress on par with other federal employees who would be furloughed in the event of a shutdown. “If hundreds of thousands of other federal employees are to go without their salaries — twisting slowly in the wind in a government shutdown — then the Congress should not be paid either,” Nolan said. “This legislation would require the Congress to work full time — with no salary — during any government shutdown until they pass a bill to fund our government and pay the public employees who go to work on our behalf every day,” he added. Many conservatives want to defund Planned Parenthood in the wake of controversial undercover videos depicting the organization’s use of fetal tissue donations with a spending bill as leverage. But such a measure does not have the votes to surmount a Democratic filibuster in the Senate or President Obama’s veto. Only a handful of legislative days remain for Congress to pass a stopgap funding bill. Neither the House nor Senate currently has plans to vote next week on a bill to avoid a shutdown. Some lawmakers opted to donate their pay to charity during the 16-day shutdown in 2013 over defunding ObamaCare.

What marriage would look like if we actually followed the Bible

Social conservatives who object to marriage licenses for gay couples claim to defend “Christian marriage,” meaning one man paired with one woman for life, which they say is prescribed by God in the Bible. But in fact, Bible writers give the divine thumbs-up to many kinds of sexual union or marriage. They also use several literary devices to signal God’s approval for one or another sexual liaison: The law or a prophet might prescribe it, Jesus might endorse it, or God might reward it with the greatest of all blessings: boy babies who go on to become powerful men. While the approved list does include one man coupled with one woman, the Bible explicitly endorses polygamy and sexual slavery, providing detailed regulations for each; and at times it also rewards rape and incest. Polygamy. Polygamy is the norm in the Old Testament and accepted without reproof by Jesus (Matthew 22:23-32). contains pages dedicated to 40 biblical figures, each of whom had multiple wives. Sex slaves. The Bible provides instructions on how to acquire several types of sex slaves. For example, if a man buys a Hebrew girl and “she please not her master” he can’t sell her to a foreigner; and he must allow her to go free if he doesn’t provide for her (Exodus 21:8). War booty. Virgin females are counted, literally, among the booty of war. In the book of Numbers (31:18) God’s servant commands the Israelites to kill all of the used Midianite women along with all boy children, but to keep the virgin girls for themselves. The Law of Moses spells out a ritual to purify a captive virgin before sex. (Deuteronomy 21:10-14).  More:

Bitcoin Is Officially a Commodity, According to U.S. Regulator

Virtual money is officially a commodity, just like crude oil or wheat. So says the Commodity Futures Trading Commission (CFTC), which on Thursday announced it had filed and settled charges against a Bitcoin exchange for facilitating the trading of option contracts on its platform. “In this order, the CFTC for the first time finds that Bitcoin and other virtual currencies are properly defined as commodities,” according to the press release. While market participants have long discussed whether Bitcoin could be defined as a commodity, and the CFTC has long pondered whether the cryptocurrency falls under its jurisdiction, the implications of this move are potentially numerous. By this action, the CFTC asserts its authority to provide oversight of the trading of cryptocurrency futures and options, which will now be subject to the agency’s regulations. In the event of wrongdoing, such as futures manipulation, the CFTC will be able to bring charges against bad actors. If a company wants to operate a trading platform for Bitcoin derivatives or futures, it will need to register as a swap execution facility or designated contract market, just like the CME Group. And Coinflip—the target of the CFTC action—is hardly the only company that provides a platform to trade Bitcoin derivatives or futures. “While there is a lot of excitement surrounding Bitcoin and other virtual currencies, innovation does not excuse those acting in this space from following the same rules applicable to all participants in the commodity derivatives markets,” said Aitan Goelman, the CFTC’s director of enforcement, in a statement.


Party Rules to Streamline Race May Backfire for G.O.P.

LOS ANGELES — When gloomy Republican Party leaders regrouped after President Obama’s 2012 re-election, they were intent on enhancing the party’s chances of winning back the White House. The result: new rules to head off a prolonged and divisive nomination fight, and to make certain the Republican standard-bearer is not pulled too far to the right before Election Day. But as the sprawling class of 2016 Republican presidential candidates tumbled out of their chaotic second debate last week, it was increasingly clear that those rule changes — from limiting the number of debates to adjusting how delegates are allocated — had failed to bring to the nominating process the order and speed that party leaders had craved. In interviews, Republican leaders and strategists said that rather than having a presumptive nominee by early 2016, who could turn to the tasks of raising money and making the case against the Democratic candidates, it was doubtful that a candidate would be in place before late spring — or even before Republicans gather for their convention in Cleveland in July. And they said they were increasingly convinced that Donald J. Trump could exploit openings created by the party’s revised rules to capture the nomination or, short of that, to amass enough delegates to be a power broker at the convention. “You’ve got a set of unintended consequences that weren’t planned for,” said Richard F. Hohlt, a Republican donor and Washington lobbyist. “So it’s going to be harder for a candidate to get to the magic number, which could open up the process to a convention situation.”


Report: Fuller physically abused woman 8 times, lied under oath

Judicial investigators delivered this week a summary of their report to Congress about former U.S. District Judge Mark Fuller of Alabama, saying although he resigned and was not impeached, they wanted the certification to serve as a public censure of his “reprehensible conduct.” The report concluded that:

  • Fuller physically abused Kelli Fuller at least eight times, both before and after they were married, which culminated in the Aug. 9, 2014 assault that led to his arrest in Atlanta’s Ritz-Carlton hotel
  • He repeatedly lied under oath, saying he had never hit, kicked or punched her
  • He made “false statements to the chief judge of the 11th Circuit in late December 2010 in a way that caused a massive disruption in the District Courts’ operation and loss of public confidence in the court as an instrument of Justice.

Fuller, appointed to the federal bench in 2002, was arrested after an Aug. 9, 2014 incident after his wife made a 911 call to Atlanta police. He was charged with misdemeanor battery. The police report said Fuller’s wife showed evidence of lacerations to her mouth and forehead after the incident, which she told police came came about after she confronted the judge about their marriage and a belief that Fuller was having an affair with a law clerk. “(The victim) stated when she confronted him about their issues, he pulled her to the ground and kicked her,” the police report stated. “(The victim) also stated she was dragged around the room and Fuller hit her in the mouth several times with his hands.” Using a law for first-time offenders, Fuller’s attorney worked out a deal with prosecutors in which the charge was dismissed and Fuller’s record was expunged on the condition that he attended a group counseling session weekly for six months. Fuller was placed on leave after his arrest. After first announcing that he would not resign, in May, he announced that he was resigning effective Aug. 1. Although the letter concerning the report said it contained evidence of at least eight such assaults, the House committee is not releasing the full report because it contains sensitive information about the victims. Barry Ragsdale, an attorney who represented Fuller during the investigation, declined to comment on the letter. Fuller presided over the 2006 trial of former Gov. Don Siegelman and former HealthSouth CEO Richard Scrushy, who were convicted on charges that Scrushy gave Siegelman’s 1999 lottery campaign a $500,000 donation in exchange for a seat on a state board overseeing hospital expansions and renovations.

Alabama Supreme Court says state doesn’t have to recognize lesbian adoption from Georgia

The Alabama Supreme Court on Friday refused to recognize an adoption by a lesbian mother of her three children granted by a Georgia court in 2007. The children now live in Jefferson County. A lesbian rights group, which represented the mother who adopted the children, decried the ruling. “The Alabama Supreme Court’s refusal to recognize an adoption granted eight years ago harms not only these children, but all children with adoptive parents,” Cathy Sakimura  Family Law Director for The National Center for Lesbian Rights. “Children who are adopted must be able to count on their adoptions being final—allowing an adoption to be found invalid years later because there may have been a legal error in the adoption puts all adopted children at risk of losing their forever families.” The case before the Alabama Supreme Court involves two women, identified only as E.L. v. V.L. in court documents. The women had been in a long term relationship and had three children through artificial insemination. The non-biological mother, V.L., adopted the children in Georgia. The biological mother participated in that process and consented in to the adoptions. When the parents later broke up, the biological mother, E.L., kept V.L. from seeing the children, according to V.L.’s attorneys. V.L. sought visitation in Alabama, where the family lives. E.L. opposed her request, arguing that the Georgia adoption was invalid in Alabama. The case was first appealed to the Alabama Court of Civil Appeals. That court ruled in October 2014 that the Jefferson County judge had erred when he granted V.L. visitation rights. But then that appeals court reversed itself in February. The case was then appealed to the Alabama Supreme Court. The Alabama Supreme Court  found in Friday’s ruling that Alabama did not have to recognize adoption by the woman – V.L. – of her partner’s biological children because it found  the Georgia court didn’t properly apply Georgia law. “Although the Alabama Supreme Court recognized that full faith and credit prohibits a state from inquiring into the laws applied by a court from another state, it ruled that Alabama did not have to respect the Georgia court’s adoption because the Court believed that Georgia law did not allow same-sex parents to adopt,” the NCLR wrote in today’s statement. Justice Greg Shaw was the lone dissenter in Friday’s opinion. He argued that Alabama is prohibited from deciding whether the Georgia court correctly applied its own laws, Shaw also stated that the ruling could set a “dangerous precedence” that could call into question the finality of adoptions in Alabama because of any irregularity in a probate court’s decision. Alabama Justice Tom Parker, who was one of the justices concurring in the opinion, went on to argue in a special writing that adoption is a privilege, not a right, in Alabama.

A grim and growing trend: Alabama sees increased cases of drug-dependent newborns

Anastasia Bair arrived last spring in Alabama with a fizzling heroin buzz, one-and-a-half tabs of leftover Subutex and the maternity clothes on her back. For the second time in her third pregnancy, Bair wanted a fresh start. The 27-year-old had been trying to quit heroin since she found out she was pregnant in October, but efforts to go cold turkey ended in painful withdrawal. A November trip to detox began with promise. Bair left with a prescription for the opioid replacement drug Subutex, which held her cravings at bay – for a while. Then she relapsed and starting shooting heroin again. She fled her hometown of Lincoln, Ill., headed for a friend’s place in Cullman – a small Alabama town in the foothills of the Appalachian Mountains, about halfway between Birmingham and Huntsville. Bair’s heroin use began pretty casually, she said. She snorted the drug every now and then. Heroin began appearing all over Lincoln, hawked as an appealing alternative to costly pain pills. “The dealers said, ‘It’s better,'” Bair said. “‘It lasts longer and it’s cheaper.'” After a friend showed her how to shoot up, Bair became hooked, developing a $200- to $300-a-week habit. Bair belongs to a grim and growing trend. Heroin use by women has doubled since 2000, according to the Centers for Disease Control and Prevention. Many of these women are young and some, like Bair, become pregnant while using. More than half of babies born to women who use heroin and other opioids, such as pain pills, suffer from a condition known as neonatal abstinence syndrome – or drug withdrawal.


JOSH MOON: Alabama has a new, awful budget

Alabama has a general fund budget. It is awful. It took three sessions, a lot of in-fighting and threats of essentially leaving the state without courts, prisons or a Medicaid system, but in the end, our lawmakers were able to put together a budget. No, really, it is awful. The budget that lawmakers put together managed to mostly level fund a few big-ticket items, such as prisons and Medicaid, that were already underfunded and cut some other agencies by 5-10 percent. They managed to do this by redefining the word “reserve” to make it sound more like the word “excess.” Because they are awful at governing. The education trust fund budget for the state does have money in a reserve account – an account established by the Republican majority that “stormed” the statehouse in 2010, led by a man who is facing a 23-count felony indictment and a governor whose party mates are trying to toss him out office for potentially misusing state funds. But that account was established to ward off proration and keep the education budget afloat during economic downturns, because we have decides to fund our schools through sales taxes. That is an awfully unreliable funding source. Less than six months ago, many of the lawmakers who voted last week to move $80 million out of the education budget – because whenever I think of the most logical place to get $80 million, Alabama’s public schools come immediately to mind – were discussing ways to better utilize the money in the reserve account so schools could receive the funding they need. What that “excess” money actually got our public schools, which are receiving $700 million less today in funding than they were in 2008, was roughly $4 per pupil in technology money. That’s so awful it doesn’t even buy a decent abacus. But don’t look a gift horse in the mouth – that $4 is the first tech money handed out. In seven years, the state hasn’t funded libraries, technology upgrades or professional development, and it has only partially funded transportation and textbooks. Last November, state schools chief Tommy Bice told lawmakers that the state needed to rehire 355 teachers to bring student-teacher ratios back down to 2008 levels. Instead, lawmakers took $80 million out of the education budget. Because they’re awful at their jobs. A major reason they’re so awful is that the budget “fix” doesn’t actually fix anything. The major new revenue source is a 25-cent tax increase on cigarettes. It’s a non-growth tax. As the price goes up, smokers quit. Or it doesn’t go up enough to make current smokers quit, but it does make future smokers rethink the decision, and in the meantime we’re still left with all of the costs of paying for smokers’ health care. Because it’s an awful habit. So, what will most likely happen is that this will not be a one-time money grab from education. This group of lawmakers will continue to go in and pull money away from public schools while at the same time allowing for more and more charter schools that aren’t nearly as good. Turns out, the AEA was the only thing standing between public education and our state lawmakers sucking money away from schools left and right. Because their views on public education are awfully dangerous. That’s what Gov. Robert Bentley really meant when he said lawmakers had “fundamentally changed” the way the state budgets – that a revenue source came from the education trust fund. But in reality, that’s not at all changing the way this state budgets. From property tax shenanigans to income tax rigging to corporate loopholes you could walk through to raises in teacher insurance rates, we have been balancing the books of this state at the expense of a quality education for all children since Day 1. Because when it comes to realizing the value of a quality education and making it a priority to provide that on an equal level to all children, our lawmakers have historically failed. And they did so again last week. And that’s just awful.

Clinics offer more than just abortion services

Catherine Rampell’s argument in her Sept. 15 op-ed column, “Politics that hurt women,” was specious. If Planned Parenthood wants to ensure it can deliver its contraceptive and other nonabortion services, it does not need GOP support to do so. It can segregate the services into two operations. Then the concerns about Planned Parenthood for killing developing humans can be separated from its other, far less controversial procedures. Of course, Planned Parenthood knows this. So why doesn’t it separate the services? Because the nonabortion services provide some legitimacy to Planned Parenthood as a whole, casting a false moral shadow over its abortion business. As described in the Sept. 10 Metro article “Families worry about Planned Parenthood next to school,” the protests that will inevitably follow the clinic’s opening are cause for concern. But the article highlighted something more disturbing: systematic verbal and violent attacks on abortion clinics so sensational and unrelenting that they drown out the clinics’ important purposes. Just last week, a majority-male Republican panel held a congressional hearing titled “Planned Parenthood Exposed: Examining the Horrific Abortion Practices at the Nation’s Largest Abortion Provider” — without including a Planned Parenthood representative. That’s unacceptable. We need to hear about the countless people who have access to cancer and sexually transmitted disease screenings, family planning and, yes, abortion services. We need to hear about the lives changed and saved by these clinics and take back the conversation.

Governor cites ‘security reasons’ to avoid prayer rally in Alabama city

I’ve got news for you. Birmingham is not Mogadishu. It’s not Kandahar or Baghdad. I have news for the governor of Alabama, too. Birmingham’s streets do not run red with blood as a matter of course. Its people are not savages waiting to strike as you roll in with your Troopers and your big black SUVs. It is quite possible to walk the tree-lined streets each and every day – depending on how stupid you are – without succumbing to overwhelming fear of death and dismemberment. It is. All you need is a little courage. Which is the ironic thing here. Because Gov. Robert Bentley cancelled a trip to Birmingham last week —  where he was supposed to receive the first ever Rosa L. Parks Profile in Courage award from the African Methodist Episcopal Church – because of safety. His office told Bishop James L. Davis he could not come because of security reasons. One more time. He did not come to Birmingham. To receive an award for courage. Because of security reasons. D’oh! It’s not like those AME’s are lying in wait to ambush the governor. Fact is they wanted to praise him for an unlikely act of Alabama political backbone,  for taking down the Confederate Flag outside the Capitol. They wanted to honor him at an interfaith rally at Daniel Payne Community Plaza. Ooh. Scary. I asked the Governor’s office what kind of security concerns there might have been. The office did not respond. But I’ve got news for them. Alabama’s largest city is not the seventh level of hell, overflowing with violence and bristling to take down a governor. Birmingham is not a threat to its fearful leader at all. Unless he is simply ashamed to be seen with those constituents of his. Which is a whole lot more like it. Security concerns are just excuses. Just offensive excuses as the case may be. Fact is the AME rally was also held to draw attention to other issues important to the AME church, such as increasing funding for Medicaid, raising the minimum wage and putting a stop to racism. And that was no doubt the scariest thing of all to this governor of Alabama. He didn’t want to be seen in a throng supporting those issues. He feared being associated with issues that would make him politically uncomfortable . Maybe – ironically – he was too lily-livered to accept an award from the kind of people who would honor him for removing the Confederate Flag. Just call it politics, right? Wrong. Because this if far worse than that. This – on the same day Bentley cut the ribbon on a Hoover health clinic – was a slur and a slap in the face. In the name of security concerns. Hey, if you don’t like the politics, don’t come. I don’t care. If you don’t like that spotlight that comes with the prayer rally, don’t say you will be there in the first place. If you don’t like the people or the issues or the association, stay in Montgomery. But don’t say it has anything to do with security concerns. It is an insult to all who would appear in the name of prayer and courage and racial fairness. Birmingham – like Montgomery, for that matter – already has enough trouble with ill-informed outsiders who fear the very idea of driving through. Don’t blame security reasons for refusing to appear. Just say you are not interested. That, I guess, would require the kind of courage worthy of an award.

Morning Money

SHUTDOWN ODDS INCREASE — Stan Collender in POLITICO: “I’ve been predicting since July that the irreconcilable differences between Democrats and Republicans on several key issues … are much more likely than not to lead to the federal government shutting down when the next fiscal year begins at midnight, Sept. 30. My most recent projection is that there is now a 75 percent chance of a shutdown. First and foremost, there is not enough time to reach a deal …

“[A] short-term CR will be very difficult for any number of reasons, but the controversy over Planned Parenthood is perhaps the biggest one. The dispute over continued funding for the organization has added a hyperemotional element to what already is a hyperpartisan and dysfunctional budget process. … With Congress not likely to have the votes to override a veto, this issue alone could easily bring government operations to a halt on Oct. 1.”

DOES IT REALLY MATTER? — Much of Wall Street thinks it doesn’t, at least not to markets and the economy. The presumption is any shutdown would be short. The real show won’t begin till later this year, this thinking goes, when a CR runs out, the debt ceiling begins to loom and the Fed could be raising rates. That’s the scenario that could make for a less than happy holiday season.

Tom Krebs is  a securities attorney in Mountain Brook, Alabama.

GREEK VOTES EASES EURO TENSION — POLITICO’s Matthew Karnitschnig in Athens: “European leaders can breathe a sigh of relief after Greek voters returned Alexis Tsipras to power in a stronger-than-expected victory that will be read as a popular endorsement of the country’s latest bailout deal. … Preliminary results late Sunday showed Tsipras’ leftist Syriza party with 36 percent of the vote, well ahead of New Democracy, its center-right rival, which garnered about 28 percent.

“The result means Syriza is likely to renew its coalition with the Independent Greeks, a nationalist party that won about 4 percent of the vote. Both parties have committed to support Greece’s latest bailout package. Such an outcome seemed unlikely in recent days. Polls leading up to the vote put the two largest parties neck and neck and signaled that the Independent Greeks might not win enough votes to get into parliament. That would have forced the winner to court smaller centrist parties, a constellation that some worried could prove unstable”

ASIA DIPS — Reuters: “Asian shares followed Wall Street lower on Monday after the Federal Reserve’s decision to keep interest rates at record lows raised fresh concerns about growth globally, particularly in China. … U.S. shares dropped more than 1.3 percent on Friday, after Fed Chair Janet Yellen said on Thursday that the global economic outlook appeared less certain. … U.S. and European debt yields also tumbled, with the policy-sensitive two-year yield US2YT=RR falling to 0.678 after hitting a four-and-a-half year high of 0.819 percent earlier in the week”

CHINA PLAYS DOWN DIFFERENCES AHEAD OF XI VISIT — Bloomberg: “China’s top foreign affairs official played down disputes with the U.S. over shipping lanes and cyberhacking, as President Barack Obama prepares to host counterpart Xi Jinping on his first state visit. … State Councilor Yang Jiechi said in an interview that Xi’s trip would bolster a relationship that has weathered various disagreements in the four decades since Richard Nixon traveled to Beijing. …

“Ties should continue to advance, even as the Obama administration considers retaliation for alleged raids on U.S. computer systems and accuses China of threatening Asia-Pacific stability by building islands in the South China Sea … Xi’s visit comes during a year that has shown the countries’ growing strategic competition alongside their economic dependency, with China set to overtake Canada as the U.S.’s top trading partner. China has also found itself cast by Donald Trump and other Republican presidential candidates as an American jobs-killer after a stock market rout in Shanghai and sudden devaluation of the yuan sparked a global selloff.”

GOOD MONDAY MORNING — Welcome to a huge week for international visitors with both Pope Francis and Chinese President Xi Jingping hitting our shores. If you live in Seattle, DC, Philly or NYC basically don’t leave your house (unless you are lucky enough to be attending any of the events, of course). Email me at and follow me on Twitter @morningmoneyben.

DRIVING THE WEEK — President Xi arrives in Seattle on Tuesday for a tech event and other stops before heading to DC on Friday for a state visit and NYC on Saturday for the UN … Pope Francis arrives in DC on Tuesday, meets with President Obama on Wednesday and addresses a joint session of Congress on Thursday before heading to NYC … Treasury Secretary Jack Lew and Deputy Secretary Sarah Bloom Raskin this afternoon attend the Financial Stability Oversight Council (FSOC) Principals meeting … Jeb Bush today delivers the keynote address at the United States Hispanic Chamber of Commerce (USHCC) National Convention in Houston at 12:45 p.m. CT … Third estimate of Q2 GDP on Friday at 8:30 a.m. expected to be unchanged at 3.7 percent … Bank of America shareholders on Tuesday vote on whether to split the roles of chairman and CEO … Fed Chair Janet Yellen speaks Thursday at UMass Amherst … iPhone 6S and 6S Plus go on sale Friday.

EMMY’S REPORT — Apparently the Emmy’s were on last night.

ALSO TODAY — Wells Fargo hosts a “Real Economy” event at 9am in Charlotte, North Carolina with Senator Thom Tillis, Wells Fargo economist Mark Vitner and a panel of local experts moderated by WCNC’s Sonja Gantt (Harvey’s daughter). J … And at 6:30PM, Fred Ehrsam, Cofounder and President of Coinbase, will be at 1776 for a Fireside Chat called, “Rethinking Money.”

FIORINA RISES — CNN/ORC national poll of 1,006 in 3 days after debate – Among 305 registered Republicans (margin +/- 4.5): 1) Trump: 24 percent, down 8 from early Sept. … 2) Fiorina, 15 percent, up 12 … 3) Carson: 14 percent, down 5 … 4) Rubio 11 percent, up 8 … 5) Jeb 9 percent — same … 6-7) Cruz/Huckabee 6 percent … 8) Rand 4 percent … 9) Christie 3 percent … 10) Kasich 2 percent … 11) Santorum 1 percent … 55-page PDF

SYRIZA GAMBLE PAYS OFF — FT’s Kerin Hope and Henry Foy in Athens: “Alexis Tsipras’s radical left Syriza party secured a clear victory in Sunday’s Greek general election, suggesting his gamble on snap elections after striking a deal on a new €86bn bailout had paid off. With 90 per cent of the votes counted, Syriza was on 35.5 per cent of the vote, giving it 145 seats in the 300 member parliament, well ahead of centre-right New Democracy on 28 per cent and 75 seats. … Mr Tsipras’s win cements his place as the pre-eminent figure in Europe’s far-left anti-austerity movement and is likely to galvanise sympathisers including Spain’s Podemos and Jeremy Corbyn, the hard-left leader of Britain’s Labour party. …

“Mr Tsipras insisted Syriza would govern for a full four-year term, even though his revived coalition with the small nationalist Independent Greeks party (Anel … looks far from stable with only a six-seat majority in parliament. But he warned there would be no easy exit from the country’s six-year recession. His first task as re-elected prime minister will be to implement more tough austerity measures demanded by creditors in return for a new €86bn rescue package.”

WILL EUROPE DO THE RIGHT THING? — Mohamed A. El-Erian on Bloomberg View: “After repeated bungling, Europe suddenly has an opportunity to do the right thing about Greece’s unsustainable debt. It would be a tragedy — for both Greece and Europe — if this opening went to waste. Two recent developments have combined to create this moment: Syriza’s win in elections on Sunday and the flood of refugees into Greece. … when [Tsipras] serves as prime minister this time, he will find that his once-hostile European partners have warmed to him considerably.

FIORINA DEFENDS HP RECORD — NYT’s Amy Chozick and Quentin Hardy: “Carly Fiorina was ready when CNN’s Jake Tapper asked her to respond to criticism about her record at Hewlett-Packard … Looking intently into the camera, Mrs. Fiorina said a prominent venture capitalist who pushed for her firing at Hewlett-Packard in 2005 had recently taken out a full-page newspaper ad saying that he had been wrong to do so and that she had been ‘a terrific C.E.O.’ … What Mrs. Fiorina did not mention was that the ad — which cost roughly $140,000 — was paid for by the ‘super PAC’ supporting her presidential candidacy. The same group, Carly for America, has gathered video footage of the venture capitalist, Thomas J. Perkins, praising Mrs. Fiorina, and it could be used in television or Internet ads in the weeks ahead. …

“The moves are part of an extensive effort by Mrs. Fiorina and her supporters to redefine her rocky business reputation and fend off attacks on her as an unfit and heartless executive. Such accusations helped doom her 2010 Senate campaign in California. … But Mrs. Fiorina’s mission to reshape her business image is colliding with a painful new chapter for the computer maker: Hewlett-Packard announced last week that it would slash as many as 30,000 jobs as part of a restructuring that will divide the tech behemoth into two publicly traded companies, which Mrs. Fiorina’s detractors view as a repudiation of her legacy”

SONNENFELD FIRES BACK — Yale’s Jeffrey Sonnenfeld on POLITICO: “So used to being identified before large audiences as Jerry Seinfeld, I’ll admit that I was surprised to hear my name pronounced correctly. But it was a bit traumatic to hear my professional title, professor and senior associate dean, blurred a bit too closely with that of my widely admired boss, who is the actual dean of the Yale School of Management … Trump did get something right, though: my criticism of Carly Fiorina’s disastrous term as CEO of Hewlett Packard. … Fiorina can attack me all she wants … But no amount of one-liners to Trump, weekend study of Middle Eastern names or ad hominen attacks on a university professor can take someone from gross business leadership failure to leader of the free world …

“Here are the facts: In the five years that Fiorina was at Hewlett Packard, the company lost over half its value. It’s true that many tech companies had trouble during this period of the Internet bubble collapse, some falling in value as much as 27 percent; but HP under Fiorina fell 55 percent”

CRUNCH TIME FOR MOYNIHAN — FT’s Ben McLannahan: “As chief executive of Bank of America over the past five years, Brian Moynihan has sold businesses worth tens of billions of dollars and paid a heavier toll in fines … But on Tuesday in Charlotte, North Carolina, he faces one of his toughest tests yet. At an extraordinary meeting of shareholders, investors in the second-biggest US bank by assets will vote on whether to ratify the board’s decision last October to change its bylaws to hand Mr Moynihan the additional role of chairman. Under Delaware law the bank was entitled to do so without consultation with shareholders but the change upset a lot of institutions, who demanded a say.

“BofA insiders are braced for a bruising encounter. The bank has spent about $150,000 on the services of two vote-soliciting companies … A senior team of executives has also travelled around the world to try to win over top investors. But the way some institutions see it, this was a classic case of a too-big-to-fail bank acting just as it pleases. In bumping Mr Moynihan up to chairman, the board disregarded a binding shareholder vote in 2009, when a majority felt that an independent chair was the best way of guarding against some of the excesses under the old boss, Ken Lewis”

JILL BIDEN NOT OPPOSED TO JOE RUN — POLITICO’s Edward-Isaac Dovere: “The Joe Biden presidential campaign looks like it’s taken one more step closer to reality. Dr. Jill Biden’s spokesman is not denying a report out Sunday from NBC News that has sources saying the vice president’s wife, the key person in the decision-making process, is ‘not an obstacle’ to a run. This appears to be targeted to push back on some previous reports that’s she was opposed to his running, which was seen as potentially the factor that would keep him out of the race.

“‘Of course Dr. Biden would be on board if her husband decides to run for president but they haven’t made that decision yet,’ said James Gleeson, her communications director. People who know the Bidens well point out that whether the vice president lands on a yes or a no on 2016, that decision will be one he makes jointly with his wife, meaning she’d be on board with whatever the decision is. As the vice president’s staff and supporters have spent the past few weeks putting together a preliminary organization and campaign plan, Biden and his wife have also been discussing the possibilities.”

VW ISSUES SWEEPING APOLOGY — WSJ’s William Boston, Amy Harder and Mike Spector: “Volkswagen AG’s crisis over allegedly cheating on U.S. emissions tests deepened, with the German auto maker halting American sales of popular diesel-powered cars and issuing a sweeping apology for violating customers’ trust. It also launched an external investigation. The company could face billions of dollars in fines and the crisis could further weaken Volkswagen Chief Executive Martin Winterkorn’s position. He narrowly survived efforts by a major shareholder to oust him earlier this year and was passed over for the chairman’s job …

“The U.S. is crucial in Volkswagen’s efforts to become the world’s leading auto maker by sales. The German company has built its campaign to grow in the U.S. market on a promise that its clean-diesel engines deliver better performance and low emissions. It is neck-and-neck with reigning sales leader Toyota Motor Corp. and overtook the Japanese car maker during the first half of this year. But the emissions test probes could stall its progress.”

POLITICO’S WHAT WORKS D.C.: Join POLITICO Magazine for the next in their What Works series, focusing on the future of Washington, D.C. Featured speakers include: Nashville Mayor Karl Dean, Delegated Deputy Secretary John King, Department of Education; Karen Mills, former administrator of the U.S. Small Business Administration and senior fellow at Harvard University; and more. Find out more and RSVP here.

POTUS Events

10:00 am || Receives the Presidential Daily Briefing

All times Eastern
Live Stream of White House briefing at 12:30 pm

Floor Action

Pope Francis’s address to Congress—the first ever by a pontiff—will dominate the week.

Tens of thousands are expected to flock to the Capitol as Pope Francis visits Washington, D.C., grinding the Hill to a halt.

Francis is expected to arrive on Capitol Hill around 9:15 a.m. Thursday and will meet privately with House Speaker John Boehner (R-Ohio) before speaking to Congress at 10 a.m.  The House chamber is expected to be at full capacity, with a ticket to see the pope speak considered one of the hottest in Washington.

The Vatican has kept a tight lid on the contents of Pope Francis’s much-anticipated address. But he’s expected to discuss a wide range of topics, such as climate change, income inequality, normalizing U.S. relations with Cuba, the Iran deal, and abortion.

The speech isn’t without controversy. At least one member of Congress is planning to boycott: Rep. Paul Gosar (R-Ariz.), who is Catholic, doesn’t want to potentially have to listen to Pope Francis lecture Congress about the effects of climate change.

But the event will also check off something of a bucket list item for Boehner, who has tried inviting three popes to speak before Congress over his more than 20 years in office and finally succeeded.

After speaking before Congress, the pope also plans to make a brief appearance on the Speaker’s Balcony on the Capitol’s West Front around 10:50 a.m. before departing by 11 a.m.

While the pope’s visit on the Hill will be brief, the uptick in security is expected to shut down most of the roads around the Capitol. It will also likely take hours to clear out the massive crowds from the complex after the visit.


Senate Republicans are putting abortion on the agenda ahead of the pope’s visit.

Senators will spend the early part of the week debating a House-passed bill that would ban most abortions after 20 weeks, even though similar legislation has been ruled unconstitutional at the state level.

Democrats have slammed Republicans for pivoting to the bill—despite a looming deadline to fund the government—suggesting that they are wasting limited floor time on legislation that isn’t expected to get the 60 votes needed to overcome an initial procedural hurdle.

“I guess they want to do that before the pope gets here,” Minority Leader Harry Reid (D-Nev.) said last week. “But it’s not going to change the people, how he feels about the fact that Republicans have ignored poor people in America.”

A similar bill from Sen. Lindsey Graham (R-S.C.) only has 45 cosponsors, and hasn’t attracted a single Democratic supporter.

It’s also likely to split Senate Republicans running for reelection next year, with blue-state Republican Sens. Kelly Ayotte (N.H.) and Mark Kirk (Ill.) not officially backing the Senate version of the legislation.

Spending bill

With only a handful of session days left, congressional Republicans are under a tight deadline to figure out how to fund the government while also navigating a public battle over funding Planned Parenthood before the end of the month.

Sen. John Cornyn (R-Texas) told reporters last week that the Senate could take a vote on defunding the organization in relation to a spending bill, though details on the plan are scarce.

The maneuver, however, would likely fail to gain the 60 votes to overcome a procedural hurdle.

Republican division with the Senate is already on the rise, with Ayotte demanding that Sen. Ted Cruz (R-Texas) explain how he plans to win the government shutdown fight with the president pledging to veto a bill that doesn’t fund the organization.

Meanwhile, House Republicans have yet to outline their strategy and its unclear if the House will vote on any stopgap funding bill on Thursday or Friday.

But Republican leadership gave themselves an insurance policy late last week by adopting “martial law” that allows a fast-track process to consider legislation on the floor.

Deploying the procedure indicates there is at least a possibility a stopgap funding bill – which could include a provision to defund Planned Parenthood at the behest of conservatives – hits the floor this week.

But that would put the House legislation on a collision course with the Senate, as well as the White House.


The Senate will convene at 2 p.m. Majority Leader Mitch McConnell (R-Ky.) said that the while no votes are expected, the Senate will debate the Pain-Capable Unborn Child Protection Act, which bans most abortions after 20 weeks.

The House isn’t in session.

Krebs Daily Briefing 18 September 2015

Thomas L. Krebs, Securities Litigation, Regulation and Compliance Attorney Lawyer (c)2014 Brandon L. Blankenship
Thomas L. Krebs


Vatican Disputes White House Guest List for Papal Visit

On the eve of Pope Francis’s arrival in the U.S., the Vatican has taken offense at the Obama administration’s decision to invite to the pope’s welcome ceremony transgender activists, the first openly gay Episcopal bishop and an activist nun who leads a group criticized by the Vatican for its silence on abortion and euthanasia. According to a senior Vatican official, the Holy See worries that any photos of the pope with these guests at the White House welcoming ceremony next Wednesday could be interpreted as an endorsement of their activities. The tension exemplifies concerns among conservative Catholics, including many bishops, that the White House will use the pope’s visit to play down its differences with church leaders on such contentious issues as same-sex marriage and the contraception mandate in the health care law. The White House didn’t respond to requests for comment on the Vatican’s reaction to the ceremony’s guest list. White House press secretary Josh Earnest told reporters Thursday he was unaware of the names of individuals on the guest list, but cautioned against drawing any conclusions on specific guests “because there will be 15,000 other people there too.” In the last few days, several people have acknowledged or made public their receipt of invitations to the event, which will be held on the White House’s South Lawn on the morning of Pope Francis’ first full day in the U.S.

U.S. sees military talks with Russia on Syria as important next step: Kerry

U.S. President Barack Obama believes that military talks with Russia on Syria is an important next step and hopes they will take place very shortly, Secretary of State John Kerry said on Friday. “The president believes that mil-to-mil conversation is an important next step and hopefully will take place very shortly and help to define some of the different options available to us as we consider next steps in Syria,” Kerry said at the start of talks with United Arab Emirates Foreign Minister Abdullah bin Zayed in London. “Our focus remains on destroying ISIL (Islamic State militants) and also on a political settlement with respect to Syria, which we believe cannot be achieved with the long-term presence of (President Bashar al-) Assad,” Kerry told reporters. “We’re looking for ways in which to find a common ground.”


Carried-Interest Tax Break Divides Again, After Trump Revives the Issue

At first, the capitalists’ lobby dismissed the billionaire Donald J. Trump’s call to end the so-called carried-interest tax break for “hedge fund guys” as an eccentric idea from one of their own. Then Jeb Bush, Mr. Trump’s rival for the Republican nomination, embraced it. Some of Wall Street’s heaviest hitters approved. And predictably, Democrats led by President Obama and the party’s presidential candidates piled on, since the tax-the-rich idea had been theirs to begin with. But far from defeated, the proponents of the carried-interest tax break are rallying to its defense — and counting on the Republican-controlled Congress to have their back.  “It’s been a while since people on the right have had to think about this,” said Ryan Ellis, tax policy director for Americans for Tax Reform, the group founded by Grover Norquist, the self-appointed arbiter of Republicans’ anti-tax purity. Recently, both men wrote columns supporting lower taxes for carried interest: Mr. Ellis in Forbes magazine (its Trump-like lead paragraph: “Taxing carried interest as ordinary income is a really dumb idea”) and Mr. Norquist in USA Today. “Trump started it,” Mr. Ellis said in an interview. “And then what really got it going was the unfortunate decision of the Bush campaign to include it” in Mr. Bush’s new tax plan. “Then it wasn’t just a kooky Trump idea.”

Mr. Ellis’s group is not alone. About a dozen lobbyists for the Private Equity Growth Capital Council, the industry trade group, have been busy trying to inform members of Congress about the economic benefits of private equity firms’ investments, said James Maloney, a spokesman for the group. When Mr. Bush came out in favor of eliminating the carried-interest loophole, the council issued a warning that such a change could spell the end of “decades of America’s commitment to fostering entrepreneurial risk-taking.” “Our concern is that there is a lot of misinformation out there,” Mr. Maloney said.

Fed Leaves Interest Rates Unchanged

WASHINGTON — The Federal Reserve announced on Thursday that it would keep interest rates near zero as officials assessed the impact of tighter financial conditions and slower global growth on the domestic economy. The Fed’s decision, widely expected by investors, showed that officials still lacked confidence in the strength of the domestic economy even as the central bank has entered its eighth year of overwhelming efforts to stimulate growth. “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term,” the Fed said in a statement after a two-day meeting of its policy-making committee, the Federal Open Market Committee. The Fed still plans to raise rates this year, according to new economic projections it also published on Thursday. Thirteen of the 17 members of the committee predicted that the Fed would raise rates at least 0.25 percentage point, and six predicted an even larger increase.

9 questions about interest rates you were too embarrassed to ask

If you’ve paid any attention to coverage of business or finance, you’ve probably seen discussion of the Federal Reserve meeting that’s happening on Wednesday and Thursday of this week. The Fed has to decide whether to “raise interest rates” for the first time in years. The argument around whether or when it should do this tends to get pretty deep pretty fast. What tends to get lost in the shuffle are the most fundamental and important issues: that a somewhat obscure government agency exercises enormous control over the economy by changing the price of money at regularly scheduled meetings. Since the state of the economy ends up influencing everything from your ability to get a new job to the outcomes of presidential elections, that makes these meetings one of the most important events on the calendar. Yet they’re rarely discussed outside specialist circles except by the occasional crank, leaving ordinary people in the dark. See Q/A below:

Everyone’s Juicing

Earlier this month, the Drug Enforcement Administration announced that it had busted 16 underground labs and seized 134,000 steroid tablets and pills, 8,200 liters of injectable steroid liquid (that’s 140 kegs worth), and 1,400 pounds of the raw powder from which steroids are made. In Arizona alone, four labs and 150,000 doses of all types were taken by DEA agents in an undercover operation that spanned 20 states and four foreign countries. There are, clearly, a lot of steroids out in the world. Investigators suspect there are hundreds more labs churning out performance-enhancing drugs. According to the DEA, most of the material used to make steroids isn’t even in the U.S. – it’s in China. As big as it was, the DEA inquiry offers a view through the smallest of keyholes of this illicit business. One reasonable inference from the amount of steroids seized might be: there must be a heck of a lot of athletes who are doping. And that’s true. This month, the British Parliament released a previously unpublished study by the World Anti-Doping Agency that used anonymous surveys to estimate the prevalence of doping at some recent competitions. It estimated that between 29 and 34 percent of the athletes at the 2011 world championships in track and field in Daegu, South Korea used performance-enhancing drugs that season. As many as half of the competitors at the 2011 Pan-Arab Games in Doha, Qatar had recently juiced, the study found. (I was at those Pan-Arab Games, and privy to the barely noted fact that nine gold medals were stripped before the event even ended.) Amazingly enough, world-class athletes are merely the fine layer of frost atop the iceberg’s tip when it comes to the steroid economy. To illustrate, and speaking of ice, take Iceland. As part of this recent operation, a lab was busted there. Iceland sent five athletes total, all skiers, to the last Olympics. (Compare that to nine people who were arrested at the steroid lab.) It’s unlikely that an underground steroid economy in Iceland subsists on elite athletes alone. So who is driving this tremendous market? One answer is non-elite athletes. In years of reporting on performance-enhancing drugs, I’ve frequently been asked why athletes in smaller sports or facing lower stakes would dope, given that there’s little money in it for them. My answer: people like being good at sports, and anyone who has ever scheduled their life around training for a sport, no matter how big or small, would never have to ask that question.


State panel outlaws ‘dark money’ in California political campaigns

The state’s campaign finance watchdog agency on Thursday adopted new requirements that nonprofit groups that contribute through a federal political action committee to support or oppose ballot measures or candidates in California must disclose their donors. “The amendment to this regulation clarifies that so-called “dark money,” originating from nonprofit or other organizations whose donors are not disclosed, is not permitted in California elections,” said Hyla P. Wagner, general counsel for the state Fair Political Practices Commission in a report to the panel. Legislation and previous action by the Fair Political Practices Commission had generally required disclosure of donors where money went to support or oppose candidates and ballot measures in California. But state officials were concerned about a possible loophole that would allow non-disclosure of donors if nonprofits make contributions through federal or out-of-state political action committees, rather than in-state PACs. “It is significant that dark money will not be coming into California,” said Jodi Remke, the commission’s chairwoman, after the vote. “We heard rumblings from various federal PACs and out-of-state committees about this rule not applying to them. This closes a major potential loophole in California’s reporting requirements to stop any kind of undisclosed donors and dark money.” The action implements a change authorized last year by the Legislature in response to an FPPC investigation into the dark-money issue. That probe resulted in fines against two Arizona nonprofits for hiding the true source of funds they put into a campaign to fight Gov. Jerry Brown’s 2012 tax-hike campaign and to promote a measure intended to curtail unions’ political influence. The new campaign finance rules were supported by Gavin Baker of California Common Cause. “There should be no dark money in California,” he told the panel. The panel also voted Thursday to improve its popular program that identifies the top ten donors to ballot measures on the FPPC website. If one of the top ten donors is a group with a generic name that doesn’t indicate who is behind it, the new rules would require it to disclose its top two contributors, according to Jay Wierenga, a spokesman for the commission.

Decisions in Judicial Misconduct Cases to be Posted Online

U.S. courts will publish the outcome of misconduct complaints against judges on their websites, in an effort to “provide for greater transparency,” the federal judiciary’s policy-making arm said Thursday. The country is divided into 12 judicial circuits, each containing a circuit court of appeals and at least one federal trial court. About half of the circuit courts currently publish orders resolving misconduct complaints online; the others make them available to the public only in the office of their circuit clerk, a spokesman for the Administrative Office of the U.S. Courts said. Arthur D. Hellman, an expert on federal courts, has long advocated for publishing misconduct orders online. “As a practical matter, having them only as paper copies in a clerk’s office meant that they were invisible,” said Mr. Hellman, a law professor at University of Pittsburgh. “This is certainly a step forward.” In addition, the Judicial Conference, as the courts’ policy-making arm is called, relaxed the standard for disclosing a misconduct investigation. Previously, a chief judge could divulge the existence of misconduct proceedings only in “extraordinary circumstances” to maintain public confidence in the judiciary’s ability to police its own. The new rule permits disclosure “when necessary or appropriate.” Mr. Hellman had sought this change, too. “When an allegation becomes public, chief judges will be able to respond to media queries with something more than silence or a reference to confidentiality rules,” he said. The Judicial Conference also created new grounds for judicial misconduct: retaliation against a person who makes a complaint or a witness or others involved in the complaint process, and refusing to cooperate in an investigation of a complaint “without good cause shown.” Misconduct complaints are reviewed by the chief judge of each circuit in which they originate. The chief judge can dismiss complaints or convene a special committee to investigate them. The committee’s findings and recommendations are then sent to a judicial council, a permanent committee of judges in each circuit that makes rules and handles other administrative tasks. More than 1,200 complaints were filed against federal judges in 2014, about half by litigants and 38% by prison inmates. Typically, all but a few complaints are dismissed by chief judges, often because they focus on a ruling that disfavored the person making the complaint. (Disagreeing with a judge’s ruling is not grounds for alleging judicial misconduct.)

The Economic Case for Funding Planned Parenthood

At last night’s debate the GOP presidential hopefuls called yet again to defund Planned Parenthood, tripping over themselves to show who is most serious about shutting down the organization. Ted Cruz said “absolutely we shouldn’t be sending $500 million of taxpayer money to funding an ongoing criminal enterprise.” Chris Christie, Scott Walker, and Jeb Bush all bragged about defunding Planned Parenthood in their states. Carly Fiorina likened the Planned Parenthood issue to the Iran threat. Kasich argued that governors should be able to strip the organization of funding, and Trump didn’t have much to say about Planned Parenthood but he did promise to “take care of women.” In calling for the defunding of the national reproductive health provider—a move that would place basic healthcare and services, including family planning, out of reach for millions—the candidates are ignoring research that has over and over again show that publicly funded family planning is one of our government’s smartest and most cost-effective public investments. In recent years family planning has joined abortion in conservative crosshairs, but the economic benefits it confers once made it an uncontroversial and bipartisan issue. This is not to say the health benefits aren’t important. They are, and they have been well documented and cited. For decades Planned Parenthood and other reproductive-health providers have—with support from programs such as Medicaid and Title X, the nation’s only program solely focused on making family planning available to all—prevented or provided care for millions of unintended pregnancies, unintended births, abortions, sexually transmitted infections, and cervical cancer. If that’s not enough—clearly, it’s not—the economic benefits of these programs are what should earn them high praise from conservatives. In a Guttmacher Institute study of women seeking contraceptive care at publicly funded clinics, 63 percent of women reported birth control had allowed them to take better care of themselves or their families, and 56 percent said it allowed them to take care of themselves financially. Half reported that it helped them stay in school and complete their education and that it helped them get or keep a job and advance their careers. In a recent poll, 72 percent of Pennsylvania voters said a woman’s ability to control the timing and size of her family impacts her financial stability, and 62 percent believed that laws that made abortion harder to access can negatively impact a woman’s financial security. Polls of voters in New York and Virginia showed similar results.

Would Nancy Pelosi rescue John Boehner?

John Boehner’s future as speaker may well rest in Nancy Pelosi’s hands. If hardline conservatives move to dethrone Boehner in the coming weeks – as many expect — House Democrats will be in the enviable position of deciding whether he stays or goes. If they side with the Ohio Republican or refuse to play ball, the coup will fail. If Democrats side with the Republican rebels, Boehner will be forced out, plunging the House into chaos. In the meantime, Democrats are more than happy to sit back and watch the ongoing public Republican infighting. “Whatever lets them stew in their own juices and whatever lets the temperature of those juices rise is what I think we should do,” said one Democratic lawmaker. While top GOP leaders insist they are still backing Boehner’s leadership – and allies maintain that he can weather the challenge — other Republicans have already started canvassing their colleagues for support in anticipation of a move against the speaker. That’s got some Democrats weighing a list of demands, such as a renewal of the Export-Import bank or the easing of budget caps, they’d want met in return for saving Boehner, even as some would prefer to stay out of the fight entirely.  Minority Whip Steny Hoyer (D-Md.) quipped this week that the fight over Boehner’s speakership is just the most recent example of the chaos within the GOP. “What we’re watching is proof of what I’ve said for a long period of time now: The Republican Party in the House of Representatives and in the United States Senate and throughout the country is a deeply divided party that has resulted, that division, in the dysfunction of America’s board of directors, the Congress of the United States,” Hoyer said. So far, Pelosi and other Democratic leaders haven’t settled on a strategy for how to capitalize on a collapse of Boehner’s powerbase. The minority leader is keeping her cards close – even some of her closest confidantes say they aren’t sure what she’s thinking. The issue hasn’t been brought up during leadership meetings Democrats hosted this week and Pelosi has brushed aside public questions on her plans.

The Dolans, the Clan That Built the Cablevision Empire, Say Goodbye

Starting with 1,500 subscribers on Long Island more than 40 years ago, the Dolan family built one of America’s cable fortunes. But the Dolans also became the family that New Yorkers often loved to hate: the Dolans, whose Knicks frustrated fans over several fallow decades and whose company engaged in bitter fights with networks that led to blackouts and threatened to keep programming like the Oscars and the World Series out of its customers’ reach. Now the fractious, persistent clan that has loomed large over New York City and Long Island for decades is bidding goodbye to the company that caused so much angst, and that made the family rich. On Thursday the Dolans agreed to sell Cablevision, the cable television empire that Charles F. Dolan started 42 years ago, to Altice, a European media company, for $17 billion, including debt. The family sounded almost wistful about the sale. “Since Charles Dolan founded Cablevision in 1973, the Dolan family has been honored to help shepherd our customers and employees through the most extraordinary communications revolution in modern history,” James L. Dolan, the company’s chief executive and Charles Dolan’s son, said in a statement. “Now, nearly half a century later, the time is right for new ownership of Cablevision and its considerable assets.”


UAB professor, survivor of human sex trafficking speaks out

BUTLER CO., AL (WSFA) – It all started when Tajuan McCarty ran away at age 12. By 15, she’d become a victim in one of the most insidious trades in the world. “I lived in Carrollton, Georgia, and the first time I ran away was to Birmingham, Alabama. I am a survivor of trafficking,” she admitted. “He (pimp) told me I could leave anytime I wanted to. Physically I could, but psychologically I couldn’t because there was no place to go,” McCarty went on. McCarty said she had been “sold” in just about every state in the country. “My throat’s been cut, and I have a scar above my right eye. You would know who did this because he is on national television,” she said. “He did it with his championship ring.” She didn’t share the man’s name. Thursday McCarty shared her story with audiences like Department of Human Resources social workers and law enforcement in Butler County and surrounding areas. It’s part of a human trafficking threat training seminar, a chance to give social workers like Carrie Baggett a greater sense on what to look for. “This will teach me to approach people with sincere love, respect and what to look for in people who’ve gone through this,’ said Baggett. Human sex trafficing cases are rare in Butler County, according to the Safe Harbor-Pike Regional Child Advocacy Family Resource Center, but it is widespread across the country. Last year, authorities investigated 37 cases of human sex trafficking in Alabama alone. As the founder of Wellhouse in Leeds, Alabama, McCarty sees it first hand. Wellhouse’s website says it’s dedicated to rescuing women from sexual exploitation from human trafficking. “I opened Wellhouse in 2011 and have seen over 300 girls since then,” said McCarty. McCarty found the courage to escape her enslavement by the time she turned 26. McCarty now holds two Master’s degrees and is an Adjunct Professor for the University of Alabama in Birmingham, according to Wellhouse’s website.

Alabama Federal Judge Lied About Abuse Allegations, Judiciary Reports

Former Alabama federal judge Mark Fuller, who resigned in August amid an ethics investigation into domestic violence allegations, abused his wife on many occasions and lied to investigators about the assaults, according to a letter the Judicial Conference sent this month to Congress. The Judicial Conference, the policymaking arm of the federal judiciary, said there was “substantial evidence” that Fuller physically abused his wife at least eight times, including in August 2014, when he was arrested on domestic violence charges. The conference said Fuller made false statements to the special committee that was investigating the abuse allegations. The Judicial Conference also found that Fuller made false statements to the chief judge of the Eleventh Circuit in September 2010 “in a way that caused a massive disruption in the District Court’s operation and loss of public confidence in the court as an instrument of justice.” The letter, sent on Sept. 11 to House Speaker John Boehner, R-Ohio, and the House Judiciary Committee, didn’t provide details on the 2010 statements. Fuller, reached by phone late Thursday, declined to comment. The lawyer representing Fuller in the judicial ethics investigation, Barry Ragsdale of Sirote & Permutt in Birmingham, Alabama, also declined to comment. The Judicial Conference acknowledged that the U.S. House of Representatives might not take action since Fuller resigned. The conference said at the very least its findings “may also serve as a public censure of Judge Fuller’s reprehensible conduct, which has no doubt brought disrepute to the Judiciary and cannot constitute the ‘good behavior’ required of a federal judge.” A House Judiciary Committee spokeswoman did not immediately return a request for comment, and a federal judiciary spokesman declined to comment. Fuller was arrested in August 2014 after his wife accused him of assaulting her at a hotel in downtown Atlanta. Fuller agreed to a pre-trial diversion program that included a domestic violence intervention program and alcohol and substance abuse assessment. After completing the program, his arrest was expunged in April, according to NLJ affiliate publication The Daily Report. The federal judiciary began its own ethics investigation soon after Fuller’s arrest. Fuller notified President Barack Obama in late May that he would resign in August. The Judicial Council of the U.S. Court of Appeals for the Eleventh Circuit issued an order in June that said Fuller’s conduct “might constitute one or more grounds for impeachment.” The council referred the matter to the Judicial Conference. Fuller’s resignation took effect on Aug. 1. The Judicial Conference said in its letter to Congress that “in a case with less egregious and protracted conduct,” a judge’s resignation might make any further action unnecessary. But the conference judges decided to refer the matter to Congress “given the severity of the misconduct outlined below, together with a finding of perjury.”

Move over Marco Rubio: Alabama Senator has history’s worst attendance record

Leave it to Donald Trump to take a direct swing at an opponent during Wednesday’s Republican presidential debate. After Sen. Marco Rubio commented on Trump’s lack of foreign policy knowledge, the GOP frontrunner shot back by saying the Florida Senator had missed more votes than almost any other lawmaker. “You have to understand, I am not sitting in the United States Senate with, by the way, the worst voting record there is today,” Trump said. “No. 1, I am not sitting in the United States Senate. I am a businessman doing business transactions.” Rubio said he didn’t have the best attendance record, mostly due to time he’s spent away while campaigning for the presidency. The Tampa Bay Tribune’s PolitiFact found that Rubio has missed more votes than any other Senator this year – 77 of 263 roll call votes to be exact – for an absentee rate of 29 percent. Over the course of his career, however, Rubio has an absentee rate of 10.9 percent, putting him behind another GOP presidential hopeful, Sen. Ted Cruz of Texas, who missed 11.3 percent of the votes. Those absentee rates may raise eyebrows – President Barack Obama’s absentee rate during this Senate career was 24.2 percent, by the way – but they pale in comparison to the most truant senator of all time: Maryon Allen of Alabama. Maryon Allen:  Allen, a former staff writer for The Birmingham News, married Alabama Lt. Gov. James “Jim” Allen in 1964. Jim Allen was elected to the U.S. Senate in 1968, where he served until his sudden death from a heart attack on June 1, 1978. A week later, Gov. George Wallace appointed Maryon Allen to succeed her husband in the Senate. She also took his two Senate assignments: Agriculture, Nutrition and Forestry and Judiciary, where she was the first female member. Her most notable vote was in support of proposed legislation that would have allowed states to ratify the Equal Rights Amendment but it was her lack of votes that Allen is most remembered for. GovTrack lists Allen as having the worst voting record in the history of the U.S. Senate. From the time she was appointed to the post in June until she lost a Nov. 7 special election for a permanent seat to Donald Stewart, Allen missed 155 of 356 roll call votes held in the Senate. In all, Allen was absent for 44 percent of all votes. After she left politics, she wrote for the Washington Post and later returned to Alabama. Allen, 90, lives in Birmingham.

10 cool Birmingham food festivals and events to put on your fall 2015 calendar

The changing of the season brings cooler weather and even cooler food festivals in Birmingham. The fall season kicks off in earnest today the three-day Saint George Middle Eastern Food Festival, as well as Sunday’s fourth annual Trucks by the Tracks food truck rally at Railroad Park. Here is a list of some big Birmingham food events to put on your autumn calendar. See list at link below:


Crazy Talk at the Republican Debate

Eleven presidential candidates had three prime-time hours on the national stage on Wednesday to tell the American people why they should lead the country. Nobody forced them to be there. They were there freely, armed with the best arguments they and their policy advisers had come up with, to make their cases as seasoned politicians, business leaders and medical professionals — the Republican Party’s “A-Team,” as one of them, Mike Huckabee, said at the outset. And that, America, is frightening. Peel back the boasting and insults, the lies and exaggerations common to any presidential campaign. What remains is a collection of assertions so untrue, so bizarre, that they form a vision as surreal as the Ronald Reagan jet looming behind the candidates’ lecterns. It felt at times as if the speakers were no longer living in a fact-based world where actions have consequences, programs take money and money has to come from somewhere. Where basic laws — like physics and the Constitution — constrain wishes. Where Congress and the public, allies and enemies, markets and militaries don’t just do what you want them to, just because you say they will. Start with immigration, and the idea that any president could or should engineer the mass expulsion of 11 million unauthorized immigrants. Not one candidate said that a 21st-century trail of tears, deploying railroad cars, federal troops and police dogs on a continental scale, cannot happen and would be morally obscene. Ben Carson said, “If anybody knows how to do that, that I would be willing to listen.” They accepted the need to “control our borders” with a 2,000-mile fence. Even Senator Marco Rubio of Florida, once an immigration moderate, endorsed the fence. Mr. Carson actually suggested two fences, for double security, with a road in between. Do these people have to be sent to the Rio Grande Valley to see how ludicrous a border fence — over mountains, vast deserts, remote valleys and private property — would be? And it won’t solve the problem they are railing against, which doesn’t exist anyway. Illegal immigration has fallen essentially to zero. More:

The Insiders: How did the ‘outsiders’ do in last night’s GOP debate?

Before last night’s CNN debate, a narrative had been developing that the “outsiders” were the favorites in the GOP race. Multiple commentators had noted that the current leaders — or at least the movers — in the race were all non-politicians: Dr. Ben Carson, Carly Fiorina and Donald Trump. And with those three candidates leading or near the top in the polls, they were all under the microscope and expectations were high. So here is my take on how the “outsiders” performed at last night’s debate. Carson’s performance is the easiest to critique. He is a gracious, dignified soul. However, at this stage in the race, there doesn’t seem to be much demand for those qualities. And in watching Carson, I was reminded of the classic line delivered by Jeff Spicoli in the movie “Fast Times at Ridgemont High.” Frustrated by a slow driver while weaving in and out of traffic, Spicoli declares, “People on ‘ludes should not drive.” Well, they probably shouldn’t debate, either. I’m not suggesting Carson uses drugs, but he lacked energy, as Trump would say. His campaign needed a spark of energy before last night’s event, and now he needs a spark more than ever. The doctor’s slow-moving performance hurt him. I was expecting better. A quick read of the morning news suggests Carly Fiorina was the big winner of the debate. She was prepared and poised. She had some intelligent things to say and she cowed Trump with her sharp comment to him about the insulting remarks he had made to Rolling Stone magazine about her appearance. She also delivered some notable lines about abortion that will live on in Campaign 2016. Assuming Hillary Clinton is the Democratic nominee, Clinton will be confronted with the image of “a fully formed fetus on the table, its heart beating, its legs kicking, while someone says ‘We have to keep it alive to harvest its brain.’” That is powerful stuff, and it was a 10 with the GOP’s pro-life activists. My wife has been telling me that Fiorina can connect with voters, and last night she proved that. Fiorina is a credible person and she did a lot to establish herself as a credible candidate. And Donald Trump continued to be Donald Trump. He came across as shallow, narcissistic, immature and gratuitously insulting, and there was no discernible effort to be anything else. Trump’s debating style at times reminded me of the first Bush-Gore debate in 2000. Trump’s grunts, sighs, eye-rolling and overall body language were all Gore-esque. His posturing bordered on creepy and was a distraction. Campaigns are marathons. I can’t imagine that his act will wear well — and I don’t think he has another act. On stage, Trump has less of a personality and more a series of compulsions that leave him without a useful filter or a measured presence. I find it gets kind of tiresome after a while. If his style doesn’t adapt, he is going to start losing support. So my takeaway from last night is that of the three so-called “outsiders,” Carson and Trump didn’t do themselves any good, and only Fiorina scored any points. So will this really be the year of the outsider? I’m reminded of something Joe Klein of Time magazine once said, something along the lines of, “Over time, politicians tend to make the best politicians.” We are beginning to enter the real 2016 political season, and I agree.


Morning Money

FED HOLDING PATTERN A RISK FOR DEMS — POLITICO’s Ben White: “The Federal Reserve’s decision on Thursday to keep interest rates unchanged could wind up being very bad news for Democrats. The odds now favor a rate hike later this year, just as the presidential campaign kicks into high gear. And if it does not come then, the first hike in a decade could come in 2016, possibly sparking market turmoil and slowing the economy as the party begins to make its case for holding the White House for a third term.

“Some analysts also believe the Fed is now putting itself in a position where it will have to react to rising inflation — should it materialize — which is often a very difficult and painful thing for a central bank to do. ‘You would think that by staying so accommodative it would help the job market and President Obama and the Democrats,’ said James Paulsen, chief investment strategist at Wells Capital Management.

“‘But the risk here is they wait too long and create more uncertainty and that leads to a bigger financial event that ultimately destroys Democrats’ chances. I think they are missing an opportunity here to have a smoother glide path and better outcomes down the road.’”

Tom Krebs is a securities attorney in Mountain Brook, Alabama.

POSSIBLE UNFORCED ERROR — “‘It would be bad for Democrats if the Fed makes an unforced error and raises rates when conditions don’t warrant. Whenever the Fed does that, markets freak out,’ said Austan Goolsbee, a professor at the University of Chicago and former top Obama economic adviser. ‘If you are saying it would be bad news for Democrats if the Fed moves too soon and moving too soon happens later in the election cycle, that has merit. If the Fed is simply data dependent and the world has improved enough that everyone feels it can deal with a rate rise, then it would have no effect.’”

“The Fed’s decision not to raise rates at the September meeting simply starts the clock to a possible rate increase as soon as next month. In her press conference on Thursday, Yellen made clear that October is a possibility … Yellen remains in a very difficult spot. Unemployment is at 5.1 percent, close to what economists think of as full employment, and some signals including job openings and the pace of new hires suggest wage growth could soon pick up speed. But the labor force participation rate remains at just 62.6 percent, a 38-year low, and overall inflation is well below the Fed’s 2 percent target.”

MORE REACT — Rep. Keith Ellison (D-Minn.) in an email to MM: “Our economy is still too fragile for the Fed to raise interest rates. Wages remain flat and our global market is in turmoil. I’m relieved that the Fed did the smart thing because too many people have yet to really feel the recovery, and raising the interest rate now would just delay or eliminate any chance of the recovery being felt by all Americans.”

GOP REACT — A Hill GOP aide for emails MM: “It’s been a telling week: the poverty rate remained unchanged for the fourth straight year and the Fed is still scared of raising rates. Good luck to Hillary if she wants to run on Obama’s economic policies.”

NO ELECTION IMPACT? — BPC’s Aaron Klein emails: “While markets digest the impact of an interest rate move by the Fed in real time, and in many cases before the Fed even moves, the effects on the real economy have a significant lag. Evidence of the lag effect on actual economic growth vary from 3 months to 3 years, with impact felt most strongly 6 months to a year or more after the raise. … In addition to the lag effect of monetary policy on the real economy, voters are usually thinking about the economy of the summer or spring before the election.

“In 1992 the economy grew by 3.6 percent yet voters were still angry about the recession of 1991. Considering both the lag of monetary policy on the real economy and the lag of voter perception of the economy gives a different perception on the impact of the Fed’s decision today and election 2016.”

HAS DONALD TRUMP STALLED? — POLITICO’s Ben Schreckinger reports: “After a summer of spectacle and saturation coverage, signs are accumulating that for the public and the media, the onset of Trump fatigue has begun. Mentions of Trump on both television and radio have been trending downward for a month from their post-Fox debate high. His share of Twitter conversation relative to other candidates has declined in recent weeks, and his odds in political prediction markets have dipped in the hours since Wednesday night’s debate.”

NEUGEBAUER WON’T RUN AGAIN — Rep. Randy Neugebauer emails MM: “Since 2005, I have had the privilege of serving on the House Financial Services Committee. I am thankful for my colleagues, and especially my friend and fellow Texan Chairman Hensarling, for the trust they have placed in me. It has been a real honor to chair the Oversight and Investigations Subcommittee, the Housing and Insurance Subcommittee, and now the Financial Institutions and Consumer Credit Subcommittee.

“We set out this Congress to pursue an aggressive regulatory relief agenda for community financial institutions, bring awareness to the threat of cyber-attacks, and ensure consumers have the freedom to choose the financial products that best fit their needs. Though I have announced I will not seek reelection, I remain committed to leading the Subcommittee to the final gavel of this Congress. I am proud of what my colleagues and I have been able to accomplish, and I look forward to the work we have left to do.”

GOOD FRIDAY MORNING — Congrats on reaching the end of a very long and newsy week. Email me tips to and follow me on Twitter @morningmoneyben.

DRIVING THE DAY — Treasury Secretary Jack Lew this afternoon “will meet with think tank and advocacy group leaders at Treasury to discuss the state of the economy and Treasury priorities for the fall” … Index of leading indicators at 10:00 a.m. expected to rise 0.2 percent … ICAC holds a meeting on digital currency at noon in the Rayburn House Office Building Room 2237 …

STILL NO SHUTDOWN AVOIDANCE PLAN — POLITICO’s Jake Sherman and Anna Palmer: “The same Republicans who campaigned on doing away with legislative crises are careening toward government shutdown in less than two weeks with still no concrete plan to stop it. It’s not that Speaker John Boehner’s (R-Ohio) leadership team is hiding their best hand. They have no trick up their sleeve, no ace in the hole — pick your cliché. Nearly everyone in House and Senate leadership recognizes a simple reality: At some point in the next two weeks, they will move on a bill free of provisions to strip Planned Parenthood of its government funding.

“It just depends how long it takes, how painful it is and whether Boehner and Senate Majority Leader Mitch McConnell’s (R-Ky.) team stumbles into their second government shutdown in three years. Twelve days remain until the government runs out of money, but the House and Senate are scheduled to be in session for just a fraction of that time. The showdown over Planned Parenthood is the epitome of crisis-fueled legislating. Senior Republican lawmakers and aides increasingly believe that the funding fight will come down to three-day dash — Sept. 28 through Sept. 30, the final day of the fiscal year”

FIORINA’S HP PROBLEM — NYT’s Josh Barro: “At Wednesday’s Republican presidential debate, Carly Fiorina defended her record as C.E.O. of Hewlett-Packard. She was fired in 2005, and Donald Trump, among others, has criticized her performance. The early 2000s were a tough time for the tech industry, she said, and yet, ‘despite those difficult times, we doubled the size of the company, we quadrupled its topline growth rate, we quadrupled its cash flow … The key undermining word in that statement is ‘topline.’ What shareholders really care about is the bottom line, or profit.

“As Mr. Trump correctly pointed out on Wednesday, Mrs. Fiorina’s strategy to quickly grow H.P.’s top line was to buy another large company, Compaq … That deal was widely criticized at the time because it got H.P. a big increase in sales but little profit. Revenue from personal computers barely exceeded the company’s cost to make and sell them. … The idea behind H.P.’s purchase of Compaq was that, by getting a bigger slice of the P.C. market, the company could find economies of scale, get better prices on parts and raise its profit margins … But the merger did not produce the expected improvements in profits.”

DIMON: SLASHING CEO PAY WON’T FIX INEQUALITY — Bloomberg’s Claire Boston Hugh Son: “Life is getting better for the U.S. middle class despite mounting income inequality, thanks to improvements in technology and cars, according to JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon. Slashing CEO pay wouldn’t help, he said. … ‘It is true that income inequality has kind of gotten worse,” Dimon said, noting that he does want things to get better for low- and middle-class households.

Still, “you can take the compensation of every CEO in America and make it zero and it wouldn’t put a dent into it. What really matters is growth.” Dimon, 59, spoke at an event held by the Detroit Economic Club. JPMorgan committed last year to investing $100 million toward the city’s revitalization”


CHEAP MONEY CAN’T FIX IT ALL — WSJ’s Ian Talley: “Central bankers have injected roughly $8 trillion into the global economy since the financial crisis. In return, the world has remained in a low-growth rut. The Federal Reserve cited market turmoil and a weak economic picture overseas in deciding Thursday not to back off from one of the most aggressive global monetary policies in decades. Whenever the Fed moves to raise interest rates, one lesson remains: Cheap money alone can’t solve the world’s economic ills.

“The Fed noted positive developments at home, including increased household spending and business investment, but worried conditions overseas could restrain U.S. growth and put further downward pressure on near-term inflation. … Instead of using the breathing room of low interest rates to revamp their economies, governments around the globe have failed to enact longer-lasting policy overhauls as they try to combat an array of demographic and other challenges”

SUPER DOVISH — NYT’s Nelson D. Schwartz: “The Fed … appeared surprisingly hesitant to raise interest rates, experts said on Thursday, following months of anticipation on Wall Street, in Washington and in corporate boardrooms around the country that a move was imminent. … [S]everal analysts said the language in the rate-setting committee’s statement suggested that officials were even more cautious than they had thought. ‘It felt like a dovish result with a dovish statement,’ said Carl R. Tannenbaum, chief economist at Northern Trust in Chicago. ‘Before this meeting, there was a supposition that they’d set the table for a future move. I didn’t see any silverware in this announcement, and I think October is off the table.’”

FED LOOKS ABROAD — Mohamed A. El-Erian in the FT: “When push came to shove — and in a break with history during a non-crisis period for the global monetary system — Fed officials decided to allow international issues to play a decisive role in the determination of domestic interest rates … First, and foremost, central bankers seem worried that a rate hike now could inadvertently fuel further financial volatility abroad, accelerating the retreat of investors from risk assets. This ‘quantitative tightening’ would add to general financial market instability, undermining the key notion that central banks are both able and willing to repress financial volatility.”

House Financial Services Chair Jeb Hensarling on Bloomberg TV: “Well I think we’d like to see the Fed getting back to more sustainable, organic, market-based interest rates. As we all know, these are unsustainable interest rates and now we’ve probably had the longest tease in Federal Reserve history and so-called ‘forward guidance,’ clearly there’s not much guidance in forward guidance.”


GOLDMAN TO ADVERTISE ON SNAPCHAT — Buzzfeed’s By Matt Zeitlin: “Goldman Sachs is coming to Snapchat. The investment bank will begin advertising at some colleges Friday, with short video ads appearing in Campus Stories on Snapchat. While Goldman Sachs largely avoided the public eye prior to the financial crisis and its branding in Rolling Stone as a ‘great vampire squid wrapped around the face of humanity’, it has been branching out into social media and even podcasts lately. But the Snapchat ads are still a major leap for the firm. …

“The ads are part of Goldman’s recruiting efforts and are meant to reach students both at schools where Goldman does on-campus recruiting and where they don’t, Rubin said. ‘We’re very focused on campus recruiting, they’re all using these platforms, with Snapchat being on one of the biggest platforms for millennial use.’ The ads will appear for users at some of the around 50 schools that have access to Campus Stories.”

PERELMAN OUT AT CARNEGIE HALL — WSJ’s Gregory Zuckerman and Jennifer Smith: “Financier Ronald O. Perelman, who this year became chairman of the board of trustees of Carnegie Hall, told fellow board members on Thursday that he will leave his position next month amid an ongoing clash among leaders of the New York institution … At a meeting of the Manhattan music hall’s executive committee, Mr. Perelman said he wouldn’t stand for reelection to the post next month …

“Board members at the meeting said they would pursue an inquiry into Mr. Perelman’s accusations in an email Wednesday that the venue was being operated with a lack of transparency and that the process of approving ‘related-party transactions’ didn’t include sufficient oversight .. Mr. Perelman expressed frustration at the meeting and said he no longer wanted to hold the position, these people said. A spokeswoman for Carnegie Hall had no immediate comment.”

POLITICO’S WHAT WORKS D.C.: Join POLITICO Magazine for the next in their What Works series, focusing on the future of Washington, D.C. Featured speakers include: Nashville Mayor Karl Dean, Delegated Deputy Secretary John King, Department of Education; Karen Mills, former administrator of the U.S. Small Business Administration and senior fellow at Harvard University; and more. Find out more and RSVP here.

DEBRIEF FRIDAY PREVIEW: Every Friday, the Agenda’s Debrief catches you up on the policy conversation for the week ahead. In two minutes. This week on the Friday Preview: the Pope, China, and the Budget. Watch it here:

The newest installment of POLITICO Magazine’s “What Works” series explores how Portland is intent on lessening their carbon foot print as it leads the way in passive construction in the U.S. From the outside Mayor Charlie Hales’ first term might appear to have been a huge success but back home Portland residents are increasingly voicing concerns that their green city is losing its pride of place. Read more about Portland’s passive house movement

POTUS Events

10:00 am || Receives the Presidential Daily Briefing
2:05 pm || Meets with members of the President’s Council of Advisors on Science and Technology; Roosevelt Room
5:25 am || Delivers remarks on criminal justice reform; South Court Auditorium
All times Eastern
Live Stream of White House briefing at 12:45 pm

Floor Action

The House voted Thursday to give GOP leaders flexibility next week in fast-tracking a spending bill to avoid a government shutdown.

Democrats protested over the move, known as martial law, which allows the House to consider a rule that establishes procedural guidelines for debating legislation on the same day it is produced by the House Committee on Rules.

Under normal circumstances, the House must wait a day before conducting a floor vote on a rule reported out of the committee.

House GOP leaders routinely deploy martial law around tight legislative deadlines. However, Democrats have not always forced the House to conduct a roll-call vote to adopt it.

Four Republicans joined all Democrats in opposing the rule change in the 237-187 vote: Reps. Justin Amash (Mich.), Mo Brooks (Ala.), Walter Jones (N.C.) and Thomas Massie (Ky.).

The authority to fast-track legislation to the floor will apply on the two days the House is in session next week, Sept. 24 and 25. Government funding will expire on Oct. 1, meaning the House and Senate have a dwindling number of days left to avert a shutdown.

The House was originally scheduled to be in recess all of next week, but changed plans after Speaker John Boehner (R-Ohio) announced that Pope Francis would address Congress on Sept. 24.

House Appropriations Committee Chairman Hal Rogers (R-Ky.) said a stopgap funding bill is “ready to go,” but awaits an expiration date and floor time decided by GOP leaders.

Conservatives and establishment Republicans remain at odds over how to defund Planned Parenthood in the wake of controversial undercover videos depicting the organization’s use of fetal tissue donations.

Without action by Congress, the government will shut down on Oct. 1.

Krebs Daily Briefing 17 September 2015


What if the Islamic State Won?

More than 50 analysts at US Central Command have recently said that claims of the so-called Islamic State’s weakness have been greatly exaggerated. If analysts’ allegations are correct, maybe it’s time to start asking the question everyone seems intent on avoiding: What happens if IS can’t be defeated? Do we then have to acknowledge the possibility of an IS victory? We’re not talking about a global “convert or die” type of victory that would see the world consumed by the apocalyptic ambitions of IS’s megalomaniacal leadership. Instead, what would a more plausible kind of “agree to disagree” or at least “agree to be mortal enemies” victory look like for IS? Perhaps something much more pragmatic, like being able to effectively govern the territories they already control and successfully protect the borders of their so-called caliphate. From a certain perspective IS is already doing just that. They already carry out the essential day-to-day asks of any state: paying municipal salaries, issuing travel documents, and running schools and hospitals. However, once this kind of administration becomes the status quo, defeating IS becomes less about targeting leaders or shattering terror networks than about destroying an entire system of political and military governance: no small task. “They [IS] are building redundancies into the system,” Will McCants, author of ISIS Apocalypse and director of the US Project on US Relations with the Islamic World at the Brookings Institution, told VICE News. “They are giving field commanders and governors much more freedom and leeway, so even if you lose the caliph [Abu Bakr al Baghdadi] you don’t necessarily lose the caliphate.” Most observers now agree that defeating IS will be more challenging —and less likely —as the months and (now) years grind on. The longer the group survives against the international coalition that has so visibly formed against them, the more credibility they can build as a movement, and the greater their ability to attract foreign fighters, radical ideologues, and local auxiliaries. Nick Heras, an associate fellow at the Jamestown Foundation and a Middle East researcher at the Center for a New America Security, told VICE News, “fundamentally speaking, [IS] has already achieved the first phase of victory, surviving for over a year with an intense multi-national US-led coalition against it. They held on to most of their territorial gains in Iraq and expanded their territory in Syria.” To build on this success, all IS really has to do in order to become fully victorious is just hold on to what they’ve already done — as an economy that can generate revenue to support its fighters, as a theological movement that can legitimize the caliphate’s political ambitions and, most importantly, as a military organization that can continually expand and acquire new territory. “The second phase is now for ISIS to completely co-opt the Syrian revolutionary movement,” said Heras, who explained that the group can only succeed as a religious movement when every other insurgent group has made bay’ah (sworn allegiance) to IS, even those affiliated with al Qaeda such as Jabhat al Nusra. Given the amount of territory IS currently administers, that’s not an utterly insane or completely impossible scenario. According to the Syrian Observatory for Human Rights, after the capture of the ancient city of Palmyra in May, IS now controls nearly half of Syria’s territory (although far less of its population). Which is not just vital for IS’s expansionist ideology; it also suggests that Syria’s revolutionary movement might still swing fully in the direction of IS, as in Iraq. And even though the US-led coalition has a strategy to ultimately “degrade and defeat” IS, it relies on a strategy of airstrikes and military assistance that doesn’t address the political catastrophes that IS exploited in the first place — including sectarianism, factionalism, and a lack of representative government. Nor does this strategy align with the regional priorities of the other countries involved in the conflict. According to an intelligence report given to VICE News by Verisk Maplecroft, a global risk management company based in the UK, the diverging interests in the Middle East among countries such as Iran, Saudi Arabia, Jordan, Turkey, Russia and the US has significantly reduced the possibility of uniting together to defeat a group such as IS. More:

Miami’s ‘Scarface’ Pad Has New Resident: A Billionaire Ex-President in Exile

Just outside downtown Miami, in a luxury condo building made famous by the 1980s hits “Scarface” and “Miami Vice,” a billionaire ex-president is holed up in exile.Ricardo Martinelli– scion of Panamanian landholders and an ex-Citigroup banker — was Latin America’s most popular president a few years ago, a leader who was just as likely to make headlines for helping his country win an investment-grade rating as he was for his lavish personal spending and extravagant parties. Yet as Panama’s Supreme Court was opening probes earlier this year into his role in alleged phone-tapping and corruption scandals that drained millions from government coffers, Martinelli skipped town. A separate investigation is now underway in crisis-torn Brazil, home to a company that won concessions for mega-projects in Panama during Martinelli’s 2009-2014 tenure, and one was also carried out in Italy. A silver-haired, portly 63-year-old, Martinelli spends much of his time in Miami’s waterfront Brickell neighborhood defending his public record, maintaining his innocence and hinting at a possible political comeback. He’s on Twitter constantly, tweeting opinions and announcements to his legion of 557,000 followers. When he sat down for a recent interview at a Miami cafe, he was in a combative mood, lashing out at political enemies and rattling off his administration’s accomplishments — surging growth, falling unemployment and construction of Central America’s first subway. “We put Panama on the map,” he boasted. And then he laid out what essentially form the two central points of his response to the probes: Ricardo Martinelli has been a very rich man for a very long time; and rivals are using the investigations to weaken him. Now it may seem strange for a politician caught in the middle of a corruption probe to be drawing attention to his wealth, but there’s a certain logic to the argument. Why would an already rich man steal from his country, he asks. The ex-president has a net worth of $1.1 billion, according to Bloomberg Billionaires Index. Top among his assets is the majority stake in grocery-store chain Super 99, with over $700 million in annual revenue. He also claims interests in banking, real estate, cement, media, energy and sugar, and owns a plane, two helicopters and a yacht.

Post-Earthquake Tsunami Alerts for Chile and Hawaii

A magnitude-8.3 earthquake struck central Chile Wednesday night, shaking buildings and sending aftershocks rippling through the region within minutes. Chile has issued a tsunami alert for the country’s entire coast, and cities along the water have been evacuated.  The United States has issued a tsunami watch for Hawaii. A potential tsunami could reach Chile in the next few hours, and Hawaii by 2:30 a.m., CBS News reports. At least two people are dead and 10 are injured in Chile as a result of the quake, the AFP reports. The AP says several buildings have collapsed in the city of Illapel. A couple hours after the quake hit, the National Weather Service issued a tsunami advisory for several coastal cities in California:


Substance Made a Comeback in Second GOP Debate

Attitude met substance on a California debate stage Wednesday night. And if substance didn’t win, it at least made a comeback. For two months, the Republican presidential race has been dominated by Donald Trump, whose approach has been to boast about his leadership style—“I’m a winner, I’ll negotiate great deals”—while skirting past detailed policy discussions. The remainder of the field was left fuming, talking about Mr. Trump and seeing media coverage flow his way. What they weren’t doing was talking about their agendas. That changed in the debate at the Reagan presidential library in California. While many of the questions posed by the CNN moderators began with a recitation of comments Mr. Trump has made, which left him still at the center of the conversation, his competitors managed to launch a conversation that, for the first time in weeks, got beyond the Trump orbit. Sen. Marco Rubio got limited face time but made the most of it, explaining, for example, why he wouldn’t support President Barack Obama when he proposed limited airstrikes against Syrian President Bashar al-Assad’s troops: “If the United States military is going to be engaged by a commander-in-chief, it should only be engaged in an endeavor to win. And we’re not going to authorize use of force if you’re not put in a position where they can win.” Former Florida Gov. Jeb Bush got his first chance on a debate stage to explain his immigration plan in detail and talk about judicial appointments. Ohio Gov. John Kasich got to explain his record in Ohio, as well as his determination to run an upbeat campaign that will give people “a sense of unity” in which he won’t attack others. Retired surgeon Ben Carson got to explain his health plan. Sen. Ted Cruz got multiple chances to strike a tough tone on Iran. Indeed, the other candidates seemed to relish the chance to not talk about Mr. Trump. And, after having endured his criticisms of their records, energy, styles and even appearances, to begin striking back. Mr. Bush asked Mr. Trump to apologize to his Mexican-born wife for saying she influenced his thinking on immigration. (Mr. Trump declined.) But nobody got a better chance to return fire than debate-stage newcomer Carly Fiorina, and she made the most of it. The former Hewlett-Packard chief executive came in the Trump cross-hairs when he criticized her appearance. Asked to respond, she looked straight ahead and declared: “I think women all over this country heard clearly what Mr. Trump said.” More substantively, the conversation revealed some meaningful differences among the candidates on national-security issues. All are opposed to the new nuclear deal with Iran, but, while Mr. Cruz, for one, said it would go out the window on his first day as president, Mr. Kasich demurred, saying he’d put a higher priority on working with allies to figure out whether and how to get out of the agreement. But the surprise of the night may well have been Ms. Fiorina, who moved as deftly across the foreign-policy issues as did any of those on stage with more political experience, speaking with confidence about issues as disparate as Russian President Vladimir Putin, relations in Iran, ties with Israel and the fight against Islamic State. On some issues, Mr. Trump held his own as well. On others, he was notably vague. Asked how he would handle Mr. Putin, for example, he said: “I would talk to him. I would get along with him. I believe—and I may be wrong, in which case I’d probably have to take a different path, but I would get along with a lot of the world leaders that this country is not getting along with.” Such generalities may not matter to Mr. Trump’s many new fans, who seem to relish the idea that he transcends policy debates and ideological differences. Indeed, he again reassured his followers and skeptics alike that knowledge matters less than strength: “I will know more about the problems of this world when I sit” in the Oval Office, he declared.

Uninsured Numbers Drop as Poverty Rate Holds Steady

WASHINGTON — The number of people without health insurance dropped last year by 8.8 million, to a total of 33 million, but there was no statistically significant change in income for the typical American household, the Obama administration said Wednesday. Median household income in the United States was $53,660 last year, theCensus Bureau reported. In addition, it said, there was no meaningful change in the official poverty rate — 14.8 percent in 2014. About 46.7 million people were in poverty, the bureau said. This was the fourth consecutive year in which the number of people in poverty was not statistically different from the official estimate for the prior year. In its annual report on income, poverty and health insurance coverage, the Census Bureau said that the percentage of people without insurance was 10.4 percent last year, down from 13.3 percent in 2013. Much of the change was attributable to changes made by the Affordable Care Act, officials said. In the last two years, the Obama administration has issued a steady stream of upbeat reports showing a big expansion of coverage and a sharp reduction in the number of uninsured. To support its claims, the administration has cited estimates by the Urban Institute, the RAND Corporation, the Gallup organization and the Centers for Disease Control and Prevention, among others. None of those estimates were as reliable or authoritative as the census data. The Census Bureau found increases in both private and government coverage. From 2013 to 2014, it said, the overall rate of insurance coverage increased for all racial groups and for Hispanics, who may be of any race. The increase was comparable for blacks, Asians and Hispanics (just over 4 percentage points) and lower for non-Hispanic whites (2.1 percentage points). The lack of any significant change in median household income, after adjustment for inflation, was somewhat surprising to experts, who had expected to see some modest growth in income because of improvements in the economy last year.

Blankfein Says Thought of Trump Finger on Button ‘Blows My Mind’

Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said he hopes Donald Trump’s popularity indicates voters are looking for someone willing to negotiate across the aisle. That doesn’t mean he wants it to be Trump. “I can find fault with some of the things that seem wacky to me that he says,” Blankfein, 60, said Wednesday at a breakfast in New York sponsored by the Wall Street Journal. “It’s hard to imagine his finger on the button. That blows my mind.” Blankfein has long maintained that U.S. voters err by backing candidates who vow not to compromise. The self-proclaimed Democrat hasn’t said who he’ll support in 2016, only saying that he’s looking for a moderate who can be flexible in the pursuit of getting things accomplished. “Trump comes along and talks the language of deals,” Blankfein said. “Nobody who is listening to him thinks he’s ideologically stuck on the most extreme position.” Still, Blankfein said he may be allowing his hope for moderation to color his view of Trump’s appeal. “I’d like it when somebody comes along and says ‘Hey, I’m going to go there, and I’m going to get the best deal for my set of positions, but I’m going to deal,”’ Blankfein said. “I don’t know that he’s saying that. In fact, I know he’s not saying that, so maybe I’m allowing my fantasy” to project onto Trump, he said. While Blankfein said he thinks current election coverage is overdone given there’s still more than a year until votes are cast, he did say Wednesday’s Republican debate should be “much more interesting” than whether the Federal Reserve decides to raise interest rates Thursday. Democratic candidate Hillary Clinton is suffering from voter fatigue with her front-runner status and may gain more support as the election approaches, Blankfein said.


Regulating Trading Practices – Introduction: Standardization, Self-regulation, and State Intervention


High-frequency trading, dark pools, front-running, phantom orders, short selling—the way securities are traded ranks high among today’s regulatory challenges. Thanks to a steady stream of news reports, investor complaints, and public investigations, it has become common-place, both in financial and in academic circles, to call for the government to intervene and im-pose order. The regulation of trading practices, one of the oldest roots of securities law and still a regulatory mystery to many people, is suddenly the talk of the town. How and why the leading jurisdictions regulate trading practices is best understood by looking back in time. Two key developments mark the beginning of today’s regulatory regime: the rise of exchanges and the standardization of trading. Markets with features of an exchange first appeared at the end of the Middle Ages when merchants founded permanent institutions where they could meet, chat, and trade (eg, in Amsterdam or Frankfurt). Other exchanges emerged under mercantilism (for instance, in Berlin and Paris), still others as late as during industrialization (such as the London and the New York Stock Exchange). Over time, those who met at the exchanges began to establish rules, either by tacit custom or explicit enactment, to standardize and thereby facilitate their trading. They decided, inter alia, who is given access to the exchange (for example, traders, broker-dealers, market-makers), which items are admitted to trading (such as stocks, bonds, and commodities), how transactions are concluded (bilaterally or through intermediaries, in periodic auctions, or in continuous trading, etc), and what provisions they are subject to (general terms and conditions, usages, customs, Börsenusancen). The significance of this standardization process can hardly be overrated. In fact, that selected individuals deal in negotiable items following specific routines turned out to be the decisive feature to distinguish exchanges from other markets and fairs. Due to the identity of those setting the rules and those subject to them, trading on exchanges became one of the first examples of ‘self-regulation’ in the financial sector. It is true that hardly any exchange has ever enjoyed pure self-regulation because state intervention dates back to the earliest days of trading. Famous examples include a Dutch decree forbidding naked short selling (1610), an English Act restraining stock brokers and dealers (1697), as well as three Prussian orders excluding certain securities from trading (1836, 1840, 1844). But until about a century ago, legislators around the world remained principally silent, and most trading rules arose from self-regulation. What followed can be described as a global movement away from self-regulation towards state intervention and supervision. The landmark statutes were the German Börsengesetz (1896),6 the US Securities Exchange Act (1934), and the UK Financial Services Act (1986).8 Originally, most statutory provisions focused on the organization of the exchanges rather than on the process of trading. Over time, however, a hybrid system emerged with more and more government rules that directly police certain trading practices, most recently high-frequency trading and other forms of algorithmic trading. By now, the trend towards state control has long reached the exchange’s very heart, the trading process, and those who invented the exchange, the traders. It will therefore be a recurring question throughout the Chapter, in almost all subsections, who is best prepared to address the regulatory problems that arise from trading: the government from afar or the traders on-site. While much has changed since merchants started standardizing trading practices in the Middle Ages, finding the right balance between state intervention and self-regulation has remained the principal challenge. More:

13 newly released CIA presidential briefs from the 1960s you’ll want to read

After decades of stiff resistance, the CIA on Wednesday released about 2,500 President’s Daily Briefs and similar reports delivered to Presidents John F. Kennedy and Lyndon Johnson during a nearly eight-year span in the 1960s. The briefings detail the evolution of the war in Vietnam and responses to such events as the Cuban Missile Crisis and the Six-Day War in the Middle East. The mass release Wednesday came despite past vows from the CIA to fiercely defend the secrecy of PDBs. Then-CIA Director George Tenet declared in 2000 that no PDB should be released “no matter how old or historically significant it may be.” Former Tenet spokesman Bill Harlow said it was curious that the Obama Administration was touting transparency with regard to other administrations’ decisions. “Cynically, I might say this administration is all for openness and transparency as long as it’s for somebody else’s administration,” Harlow said. “They don’t mind releasing documents from 40 or 50 years ago as long as they don’t have to do that with their own documents.” About 20 percent of the content of the newly released PDBs was redacted, mostly to protect human intelligence sources or signals intelligence capabilities.  “The historical record would be better with that stuff,” said Columbia University political science professor Robert Jervis, who saw some of the unredacted documents as chairman of the agency’s historical advisory panel. “On the other hand, we don’t see the redactions as stacking the deck. They’re certainly not trying to save the CIA or the U.S. government embarrassment. They’re not burying their mistakes. … I think they are too conservative, but if you were sitting in their job, you might take that position as well.” Here is a look at 13 key briefings from the release.

Google and Obama Administration Face Off Over Privacy at Tense Hearing

The Obama administration and Google Inc.GOOGL +0.13% squared off on Capitol Hill on Wednesday over whether the government should be allowed to compel online service providers to turn over customers email content without a criminal warrant. The Securities and Exchange Commission‘s enforcement director, Andrew Ceresney, told the Senate Judiciary Committee on Wednesday that the warrant requirement required by federal law is “impeding the ability of the SEC and other civil law enforcement agencies to investigate and uncover financial fraud.” In testimony, he pushed for a looser standard that would allow the SEC and other agencies conducting civil probes to use their subpoena power to seek emails.  [Ceresney] told a U.S. Senate committee the SEC is refraining from issuing subpoenas to internet service providers in order to obtain emails for active probes. “I can’t talk about the details of ongoing investigations, but I can say there are a number of investigations in which, if we were exercising our authority … to obtain emails from (internet service providers), we would do that,” he told the [Senate committee]. Ceresney’s comments came in response to renewed efforts in Congress to modernize an outdated 1986 law designed to protect the privacy of Americans’ digital communications. Google’s head of law enforcement and information security, Richard Salgado, vehemently disagreed with the SEC, saying doing away with the warrant requirement would threaten constitutional privacy protections. “It makes little sense, however, to enact a bright-line, warrant-for-content standard while simultaneously creating a new carve-out that would eviscerate that bright-line rule,” he stated in written testimony at the same hearing. Mr. Salgado added: “The power to compel providers to disclose the content of users’ communications should be reserved for criminal cases. Congress should be deeply skeptical of efforts to draft around the Fourth Amendment, which is what some governmental entities are asking it to do.” The Electronic Communications Privacy Act, the law in question, requires the government to obtain a judge-approved warrant to access emails or text messages less than 180 days old. The law, though, imposes no such requirement on communications older than 180 days. That 180-day rule was shot down in 2010 by a federal appeals court, which declared it unconstitutional. After that ruling, Google and other technology companies required a search warrant to access email and other customer content. The committee also heard from the head of the Justice Department’s Office of Legal Policy, Principal Deputy Assistant Attorney General Elana Tyrangiel, who echoed Mr. Ceresney’s remarks on Wednesday. “Personal privacy is critically important to all Americans—including those of us who serve in the government,” she told senators. “The Department remains concerned, however, about the effect a blanket warrant requirement would have on its civil operations…Lacking warrant authority, civil investigators enforcing civil rights, environmental, antitrust, and a host of other laws would be left unable to obtain stored communications content from providers.”

GM pays $900 million in U.S. criminal settlement over ignition switches


General Motors Co (GM.N) has agreed to pay $900 million and enter a deferred prosecution agreement to end a U.S. criminal investigation into its handling of defective ignition switches in many of its vehicles and which are linked to 124 deaths. The automaker admitted to failing to disclose to its U.S. regulator and the public a potentially lethal safety defect with the switches that kept airbags from deploying in some vehicles. It also admitted to having affirmatively misled consumers about the safety of vehicles affected by the defect. The settlement was disclosed in papers filed on Thursday in Manhattan federal court.

How ‘Caddyshack’ Explains the Presidential Race

During the 2012 campaign, Mitt Romney was repeatedly dogged by negative stories about his personal wealth. There was the car elevator. There was Cookiegate. Four years earlier, John McCain—hardly anyone’s idea of a typical plutocrat—got hammered for not being able to remember how many houses he owned. It was an issue for Steve Forbes before him and for George H. W. Bush before him. Republicans are already trying to use the many millions accumulated during Bill Clinton’s post-presidency as a cudgel against Hillary. Although it’s true that great wealth confers considerable advantages in politics, in terms of optics, it can also prove a meaningful handicap. Except when it doesn’t. Donald Trump is richer than any of the aforementioned candidates, and his wealth, far from being a handicap, is a central rationale for his campaign. It’s what proves (in theory) that he knows what he’s doing. It’s what proves that he’s not a “loser,” like—well, pretty much anyone Trump is inclined to put down. (Can you imagine if Romney had slung that word around so recklessly?) There’s a reason that Trump’s wealth is not an issue for him, and that reason can be summed up in a single word—as it happens, the title of a single Harold Ramis comedy: Caddyshack. Pretty much everyone in America would like to have more money, obviously. What they don’t want is to think that wealth would fundamentally change who they are. This is a basic democratic credo. Most Americans don’t want to be rich so that they can develop a taste for fancy French cuisine to be enjoyed over polite repartee with their fellow snobs at the country club. They want to be rich so they can do whatever they want and never have to take crap from anyone. They don’t want to be Judge Smails, in other words; they want to be Rodney Dangerfield. (Yes, technically Al Czervik, though the character is essentially an extension of Dangerfield’s longstanding persona.) That’s where Trump comes in. Leave aside the ugly nativism, and he’s basically a real-life Czervik: rich, yes, but an aggressive anti-snob who says whatever the hell he pleases and misses no opportunity to stick it to the establishment. The GOP is Bushwood Country Club (Bushwood!) and Trump the obnoxious interloper who, owing to his wealth, can’t be tastefully ignored. (Jeb Bush is the closest obvious parallel for Judge Smails, given the name and how resolutely Trump has set out to harass him; readers can decide for themselves who fit best as Ty Webb, Carl Spackler, and the gopher.) Indeed, one line of Czervik’s, in which he’s dissing Bushwood to Judge Smails, seems a remarkably apt metaphor for Trump’s evident view of the Republican Party as presently constituted: “This whole place sucks. That’s right, sucks. Only reason I’m here is maybe I’ll buy it.”

GOP Candidates, Asked to Name Iconic American Women, Cite Foreigners and Their Relatives

CNN’s Jake Tapper asked the 11 candidates in Wednesday night’s main-event Republican presidential debate which woman they would want to put on the $10 bill. In other words, “name any historically important female American.” Here are their answers:

  • Rand Paul: Susan B. Anthony.
  • Mike Huckabee: His wife.
  • Marco Rubio: Rosa Parks.
  • Ted Cruz: Rosa Parks (but on the $20; he’d keep Hamilton on the $10).
  • Ben Carson: His mother.
  • Donald Trump: His daughter or Rosa Parks.
  • Jeb Bush: Margaret Thatcher.
  • Scott Walker: Clara Barton.
  • Carly Fiorina: Wouldn’t change the bill.
  • John Kasich: Mother Theresa.
  • Chris Christie: Abigail Adams.

Forty-five percent of those people are not historically important female Americans.

Alabama lawmakers pass budget, send it to governor

Alabama lawmakers passed the state budget tonight, possibly ending a six-month stalemate over how to fund state government for the fiscal year that begins in two weeks. The plan, boosted by a cigarette tax increase and money moved from education, would close most of a projected shortfall in the money going to state agencies. It goes to Gov. Robert Bentley, who said he would not sign it tonight. The House passed the budget by a vote of 70-21. The Senate had passed it earlier tonight by a vote of 23-9. Both chambers voted to end the special session tonight. Lawmakers approved about $166 million in new revenue for the General Fund, covering most of a projected $200 million shortfall. They voted to raise the cigarette tax by 25 cents a pack, generating an estimated $70 million a year, and to move $80 million in use tax revenue from the Education Trust Fund to the General Fund. New taxes on pharmacies and nursing homes would generate a total of about $16 million a year for Medicaid. Sen. Arthur Orr, R-Decatur, the Senate budget chairman, said the budget would protect critical state services for the elderly, children, the mentally ill and Medicaid recipients. It would also provide level-funding for the state court system and for prisons, plus additional money needed for reforms intended to reduce prison crowding. “All those services being level-funded was a great achievement, I think, by the Legislature, to get that done,” Orr said. Other agencies were generally cut by about 5.5 percent, although that varied, Orr said. The budget would spend $1.76 billion from the General Fund, a reduction of about $83 million, or 4.5 percent from this year. Orr said the plan was a “much, much better” than a spending plan that passed during the regular session in June, which Bentley vetoed, and one that failed to pass in the first special session in August. Those budgets, without new revenue, would have slashed spending by about $200 million. Many Democrats criticized the Republican-led budget plan, saying that it falls short of the reforms needed to fund state services in the long run. “We’ll be back here next year with the same problem,” Rep. John Rogers, D-Birmingham, said. “We haven’t done anything to stop the real bleeding.” Most Democrats opposed the tax increases and plan to move money from education that closed much of the budget shortfall. They have pushed unsuccessfully for a vote on a state lottery and for the governor to expand Medicaid under the Affordable Care Act.

“Call Before You Dig” into Federal Funds, Hubbard Businesses Prosper from PSC Advertising

MONTGOMERY—Since becoming Speaker of the House in 2011, Mike Hubbard (R-Auburn) has found many ways to make government pay. One way is by having state agencies purchase goods and services from his various companies. One such agency is the Alabama Public Service Commission (PSC). Before Hubbard took control of the state’s budget process, the PSC had never spent over $2500 on advertising. Since Hubbard became Speaker the PSC budget has increased by 1400 percent. In 2008 and 2009, the PSC spent a total of $402.85 on advertising. In 2010 that number grew to $2255.20 for the “Call before you dig” program. This program has been around for decades. It is a way to alert and inform contractors as well as homeowners where underground utility lines are buried before a digging project begins. This “helps prevent injury, expense and penalties.” Similar advertising dollars were allocated for advertising in 2011 budget, that would have been passed in 2010 by the Democratic-controlled legislature. However, the following year, under the budget written by the Republican supermajority, the advertising budget for the PSC increased to $36,330.00 with $36,200.00 spent with companies that are a part Hubbard’s business affiliates. In 2012, according to, the PSC placed advertising with Crimson Tide Sports Marketing and IMG College, LLC, in the amount of $36,200. According to the Administrator of Gas Pipeline Safety, Wallace R. Jones, Sr. the funding for the PSC advertisement was part of a federal grant. In 2003, according to Mike Hubbard’s wikipedia page he sold the multi-media rights to Auburn University athletics to (ISP) International Sports Properties, then ISP was purchased by IMG in October of 2010. Hubbard is a beneficiary of the success of his partner company. In 2013, the PSC contracted $43,500 for advertising with $32,200 going to Hubbard-related companies. Each year, after taking control of the state budgeting process, PSC has been a regular customer of Hubbard’s partners. It is interesting to note that Hubbard’s advertising money with the Gas Pipeline Safety Fund dovetails with his contract to represent the Southeast Alabama Gas District.

New Ethics Chief Has Close Ties to Hubbard

MONTGOMERY— There are growing concerns that new Ethics Chief Tom Albritton’s close ties to Speaker Mike Hubbard’s wife’s family, may have figured into his appointment as Ethics Director, and also led to the opinion that would provide reasonable doubt in the upcoming Hubbard trial. A sea of controversy has risen following the suspect ethics opinion giving Rep. Patricia Todd (D-Birmingham) the right to lobby on behalf of her employer, an opinion that was cited in Hubbard’s latest motion to have his 23 felony charges dismissed. Hubbard argues that this proves he has a right to lobby just like Todd. Hubbard is accused of lobbying the Legislature and the Executive Branch. Albritton, who oversaw the writing of the Todd opinion, has a long history with the Sorrells family, Susan Sorrells Hubbard’s family. Before advancing to the chief caretaker of Alabama’s ethics laws, Albritton was a partner in the three person law firm of Albrittons, Clifton & Moody, P.C., based in Andalusia. Judy Sorrells Moody is a partner in the law firm with Albritton, and is also the sister of Susan Sorell Hubbard. Making her Mike Hubbard’s sister-in-law. Alabama Governor Robert Bentley appointed Moody District Court Judge of the 22nd Judicial Circuit of Alabama, on April 1, 2014.  One of Albritton, Clifton & Moody’s biggest clients is MSJ Trucking, which was started by Hubbard’s father-in-law, Harold Sorrells, the father of Susan Sorell Hubbard and Julie Sorrells Moody. Susan is listed with the Secretary of State as the company’s incorporator.  Their father, Harold Sorrell started the trucking company, and has also served as the chairman and member of the Alabama Ethics Commission. Albritton closing ties to Hubbard has raised eyebrows in the legal community, especially given the Todd opinion. Hal is a partner at Bradley Arant. Of course, Hubbard has a history of keeping business in the family. As reported by this publication in December 2013, Hubbard’s $12,000.00 a month contract with the Southeast Alabama Gas District (SEAGD) leads back to a Sorrells’ family connection.  Harold Sorrell is the brother of Peggy Ann (Sorell ) Henderson. Peggy is married to John Jake Henderson. Greg Henderson the head of  SEAGD is the son of Peggy and Jake Henderson, making Greg Henderson and Susan Sorrell Hubbard first cousins. Albritton also has other high level government contacts. His brother Ben works in the Civil and Administrative Law Division of the Attorney General’s office.

Senator proposes resolution on morning football games

MONTGOMERY — An Alabama state senator Wednesday tried to introduce a resolution to encourage the state’s universities not to start football games before noon. “I think going forward it’s important that the managers of the universities across this state start to consider the fans,” said Sen. Trip Pittman, R-Daphne. Pittman came to the podium during a lull in debate over the state’s budget. “The reason for this could be two fold,” Pittman joked. “For one, Auburn doesn’t play well before noon.” Auburn beat Jacksonville State 27-20 in overtime on Saturday, a close game that many observers said was an embarrassment for the Tigers, then ranked sixth in the nation. That game began at 11 a.m. Pittman is a University of Alabama graduate, according to his campaign website. Pittman said his real reason for proposing the resolution — which would be nonbinding even if it passed — was to urge schools to consider the needs of the fans, who don’t want to rise that early on a Saturday. He said early games are often driven by contracts intended to get a game on television. “Every game does not have to be on TV,” he said. At least one lawmaker criticized Pittman for bringing up the resolution while senators are still trying to pass a budget. “We have a ridiculous ability to come into this chamber and talk about football,” said Sen. Paul Bussman, R-Cullman. Senators recessed before Pittman could officially introduce his resolution. They’re expected to reconvene at 1 p.m. to debate a budget bill.

Projects in Alabama’s Black Belt to receive $11.5 million in federal funds

The Delta Regional Authority along with officials from the state of Alabama will announce more than $11.5 million in federal dollars for projects in Alabama’s Black Belt. Gov. Robert Bentley and Alabama Department of Economic and Community Affairs Director Jim Byard will take part in the Thursday morning announcement at Alabama State Capitol. The investments are made through the Delta Regional Authority States Economic Development Assistance Program, which invests in basic public infrastructure, transportation infrastructure, workforce development and business development projects in the 252 counties and parishes of the eight-state Delta region. “Federal investments are important for these projects because a minimal investment of state funds can bring a large return in federal dollars and result in a greater economic impact for the Delta Region in Alabama,” according to a release from Bentley’s office.

Alabama judge asks not to have to wed same-sex couples, rejects ‘license to engage in sodomy’

Washington County Probate Judge Nick Williams on Wednesday afternoon asked the Alabama Supreme Court for an order that will protect him and others who refuse, based on their religious beliefs, to issue marriage licenses to same-sex couples. The order would defy the U.S. Supreme Court’s ruling in June that legalized gay unions. Williams filed the petition for declaratory judgment or protective order in light of the recent jailing of a Kentucky clerk for refusing to issue same-sex marriage licenses. “The jailing of Kentucky clerk Kimberly B. Davis put at immediate risk the liberty interest of all faithful and religiously sincere public officials in Alabama whose office has responsibility for making decisions as to whether to give sanction and honor to homosexual relationships to include the issuance of a license to engage in sodomy,” according to the petition filed on Williams’ behalf by Montgomery attorney Jack B. Hinton.



Beat Alzheimer’s for the Gipper by Bill Frist

Tonight, when Republican candidates, vying for the White House, debate one another at the presidential library and final resting place of President Ronald Reagan, they should honor his memory and address the illness that claimed his life and the lives of 700,000 Americans annually: Alzheimer’s disease, the sixth-leading cause of death in our nation. Reagan was a true patriot. He led this country with boldness and tremendous strength. His optimism helped fuel our country’s continued ascent to greatness, even during difficult times. Just five years after leaving the White House, on Nov. 5, 1994, Reagan issued a letter to the American public announcing, “I have recently been told that I am one of the millions of Americans who will be afflicted with Alzheimer’s disease.” That was more than 20 years ago, and this frightening disease is only becoming more prevalent. As baby boomers (now 51 to 69 years old) age, more Americans are at risk of developing the disease than ever before. None of us will be untouched. According to new research released at this summer’s Alzheimer’s Association International Conference in Washington, more than 28 million baby boomers will develop Alzheimer’s between now and the middle of this century. This mounting epidemic is poised to not only destabilize millions of American lives but also bankrupt Medicare and drive deficit spending to new highs. Alzheimer’s is already America’s most expensive disease, costing the country more each year than cancer or heart disease. It’s also the only one of top 10 causes of death that does not have a treatment to prevent, cure or even slow progression. As more and more boomers retire, the disease’s cost to Medicare will more than quadruple in just over a generation, with Medicare projected to spend $589 billion annually in 2050 on people with Alzheimer’s. Put simply, Medicare spends nearly one in five dollars on people with Alzheimer’s today. By 2050, Medicare will spend nearly one in three dollars, encompassing 31 percent of Medicare’s budget. That’s nearly a twofold increase. In fact, Alzheimer’s makes treating other diseases more expensive, as most individuals with Alzheimer’s suffer from more than one chronic condition. For example, a senior with diabetes and Alzheimer’s costs Medicare 81 percent more than a senior who only has diabetes. The United States is approaching a level of indebtedness we haven’t seen since World War II, with Medicare already accounting for a huge chunk of our long-term debt. Any solution to this cost problem will be incomplete if it fails to address our country’s costliest illness. That’s why I have issued a charge to our 2016 presidential hopefuls to make a War on Alzheimer’s a top health care priority. We must better support families struggling with this disease; we must find ways to solve the financial challenges our health care system is facing; and we must spur innovation to slow or cure the disease by making Alzheimer’s disease research funding a priority. Significant federal investments to combat cancer, heart disease and HIV/AIDS have all led to dramatic advancements in patient care and successful treatments for each. By continuing this long-standing American tradition of investing in research and innovation, the next president of the United States could reduce the threat of Alzheimer’s together with the national debt. Twenty years after Ronald Reagan’s death, Alzheimer’s continues to be a growing health care crisis in our country. On Wednesday night, GOP candidates should honor the memory of Reagan and make Alzheimer’s disease a focal point of the debate.


Morning Money

GOP DEBATE REACT: FIORINA WINS — Well, that sure was long. The highlight of the nearly 17 hour affair was Carly Fiorina ripping into Donald’s Trump’s comments on her looks. “I think women all over this country heard very clearly what Mr. Trump said,” Fiorina said to thunderous applause. Trump, clearly not getting it, responded: “I think she’s got a beautiful face and I think she’s a beautiful woman.” That was not the only blood drawn from Trump. Jeb Bush went after him, alleging he tried to use contributions to the former Florida governor to get casino gambling in the state.

Trump again stumbled badly on substance, giving rambling answers on how we would handle Syria, Russia and Vladimir Putin and saying he didn’t really need to know all the “Arab names” that Hugh Hewitt asked him about in a recent radio interview. Will any of it matter? Who knows? Trump still dominated in the Drudge Report online poll asking who won the debate. Trump could probably sacrifice a goat on stage and still win these kind of polls. Jeb Bush did OK but probably not enough to move his numbers or cheer up his donors. And Margaret Thatcher on the $10? Yikes.

Marco Rubio was very strong again — stronger than Bush — but it didn’t seem to do much for him last time. Chris Christie and John Kasich both had a couple good moments, though Christie’s argument that Trump and Fiorina’s business records don’t matter was ridiculous. It’s pretty much all that matters about them. The rest … who really cares? Fiorina did take some heat from Trump on her Hewlett-Packard record (firing back over Trump company bankruptcies.) And if the former CEO rises in the polls, her record of shareholder value destruction (and layoffs) will become a very big topic.

FIORINA-MENTUM? — POLTICO’s Gabriel Debenedetti: “In a race that lately has turned on who is the most convincing outsider … Fiorina staked a forceful claim on Wednesday night that a political newcomer need not be blustery to be sharp, and need not be uninformed about policy to be fresh and appealing … Fiorina cast herself as far better-informed on the issues than Trump and more forceful than Carson.

“She combined her own brand of Trumpian putdowns with a far more detailed command of policy, crisply detailing her approach to bolstering allies, country by country, in the Middle East. Appearing in the main-card debate for the first time after a strong performance in the undercard of the first debate, she commanded voters’ attention early on by responding sternly, and unflinchingly … to Trump’s attacks on her appearance.”

MORE ON TRUMP AND THE GAMBLING thing from POLITICO’s Ben Schreckinger:

BUSINESS BRAWL — POLITICO’s Kyle Cheney reports Trump and Fiorina “took turns thrashing each other’s business records, each accusing the other of running their companies into financial disaster.”

EVERYTHING IS AWFUL — POLITICO’s Mike “Happy Days” Grunwald on the grim picture the GOP candidates (especially Trump) paint of 2015 America.

WAY BACK MACHINE — Fortune’s Carol J. Loomis on the HP-Compaq merger and Carly Fiorina from 2005:

DEBATE TURNS TO POLICY … TRUMP VANISHES — WP’s Dan Balz: “Something unusual happened here Wednesday when the Republican presidential candidates met for their second debate: For the first time since he joined the race … Trump wasn’t the commanding presence on the stage. … [P]articularly when the discussion shifted from what Trump has said about the others to issues of domestic and foreign policy, the candidate who has dominated the summer and leads the polls was far less a force. … Over three hours of lively, entertaining and at times angry debate, Trump was put on the defensive as much as he tried to stay on the offensive.

“Whether that will change the course of the nomination battle won’t be known for some weeks. After the last debate, despite missteps, Trump rose rather than fell. But Wednesday showed that his rivals are ready to engage him, when necessary, both from long distance and to his face.”

REAL TALK ON TRUMP — POLITICO’s Glenn Thrush: “The Trump joy ride is over, and the race looks to get a lot more competitive as he tries to transform his castle made of bombast into a truly functional campaign.”

NOW ON TO MORE IMPORTANT STUFF: FED DAY! — The moment is finally at hand when the Fed will maybe, possibly but probably not raise interest rates one quarter point (hide the women and children!) … HFE’s Jim O’Sullivan: “Uncertainty about this month’s FOMC meeting is about to end, but don’t expect uncertainty about Fed policy to disappear. If officials stay on hold, the ‘will they or won’t they?’ debate will merely shift to the October 27-28 meeting. If they tighten, there will most likely be no move in October but there could be one again in either December or January.”

EVERYONE CHILL — Mohamed A. El-Erian: “Let’s take a deep breath: It shouldn’t matter that much whether the Federal Reserve decides this week to raise interest rates by 25 basis points, or possibly even less. And the prospect of an increase certainly shouldn’t produce dire warnings about another ‘Lehman moment’ that would lead to global economic and financial calamity. … [T]he historic nature of the decision hardly justifies the excitement and emotion, or the predictions of earth-shattering consequences.”

ECONOMISTS: FED WILL STAND PAT — Reuters: “The U.S. Federal Reserve will hold fire a bit longer on its first interest rate rise in nearly a decade, according to a little over half of economists in a Reuters poll who only last week narrowly predicted the Fed will pull the trigger on Thursday.”

FED HIKE EXPLAINER — A new memo from Third Way looks at the potential effects of a rate hike, at home and abroad”

GOOD THURSDAY MORNING — There is a very real chance the GOP debate is actually still going on. Email me at and follow me on Twitter @morningmoneyben for Fed updates and occasional dog pictures.

DRIVING THE DAY — Fed makes the call at 2:00 p.m. followed by Chair Janet Yellen’s presser … Senate Banking has a hearing on the nomination of Adam Szubin to be Treasury undersecretary for terrorism and financial crimes … House Financial Services has a Dodd-Frank hearing at 10:00 a.m. and another at 2:00 p.m. on “Strengthening U.S. Leadership in a Turbulent Global Economy” featuring Treasury Undersecretary for International Affairs Nathan Sheets …

SPOTTED IN DC — An alert reader emails: “A larger than life Alexander Hamilton mascot has been making the rounds and was recently outside The Hamilton advocating to save the $10 bill.” Ted Cruz advocated for keeping Hamilton in last night’s GOP debate, offering the best answer to that question. He’d put Rosa Parks on the $20 and dump Andrew Jackson.

FED TV — All the business networks will go wall-to-wall on the Fed. … CNBC “will have special coverage of the Fed Decision throughout CNBC’s Business Day programming tomorrow including a special edition of “Power Lunch” and “Closing Bell” entitled “CNBC Special Report: Decision on Interest Rates” (1pm-4pm ET).” Guests incline: Joe Sullivan, Legg Mason Chairman & CEO; Brian Rogers, T. Rowe Price Group Chairman; Jeffrey Gundlach, DoubleLine Capital LP Chief Executive Officer and many many more.

Per Bloomberg: “Bloomberg Television’s coverage of the Federal Reserve’s much-anticipated policy meeting begins at 6:00am ET, with a special report surrounding Fed Chair Janet Yellen’s news conference. Bloomberg’s Special Report: The Fed Decides with hosts Kathleen Hays and Tom Keene will air on Bloomberg TV and Radio at 2:00pm ET. The special will include live reports from the policy meeting, trading floors, Bloomberg World Headquarters in New York and insights from guests” including Alan Krueger, Mohamed A. El-Erian, Jeb Hensarling and lots of others.

Per FOX: “FOX Business Network … will present special coverage of the Federal Reserve interest rate decision tomorrow, September 17th. Starting at 1pm/ET. FBN’s Neil Cavuto, Maria Bartiromo, Stuart Varney and Lou Dobbs will co-anchor FOX Business Special Report: Fed Rate Decision”

FIRST LOOK: INVESTORS WORRIED ABOUT TURBULENCE — Per release going out today from the Center for Audit Quality: “While U.S. retail investors continue to have robust confidence in U.S. capital markets, they are increasingly leery of those abroad, according to the Center for Audit Quality’s (CAQ) 2015 Main Street Investor Survey. … According to the survey, 73 percent of Main Street investors have confidence in U.S capital markets, holding steady from 2014 levels and up 12 percentage points from the post-crisis low.”

THE LOOMING CLIFF — POLITICO’s Burgess Everett: “Republicans have maneuvered all year to avoid a fiscal cliff in 2015. Now it looks like they’re going to get a Denali-sized one. With the nation’s borrowing authority set to lapse as early as November, and money to keep the federal government and road construction projects funded increasingly likely to run dry around the same time, the end of 2015 increasingly has the makings of a very unhappy holiday season for Washington.

“Indeed, the ongoing inertia of Congress could produce a year-end scramble on those big-ticket items, as well as the looming expiration of billions in tax breaks. That’s bad news not just for lawmakers’ hopes of an early Thanksgiving break.”

MORE HEADACHES FOR MARY JO WHITE — Bloomberg’s Robert Schmidt David Michaels: “U.S. Securities and Exchange Commission Chair Mary Jo White is facing pressure to recuse herself from picking the next head of the regulator that polices accountants because of a potential conflict with her husband’s legal work. White is in the midst of weighing candidates to head the [PCAOB] … a little-known watchdog whose chairman makes more than $670,000 a year and has great sway over the industry.

“The Center for Effective Government, an advocacy group, said White should step aside because her husband, John White, sits on an official advisory group to the audit board. While the position is unpaid, it gives John White regular access to top PCAOB officials. His law firm, Cravath, Swaine & Moore, highlights the role in marketing materials.”

THE BIG DEAL: ALTICE TO BUY CABLEVISION — NYT’s Michael J. de la Merced and Andrew Ross Sorkin: “Cablevision has agreed to sell itself to Altice, an acquisitive European telecommunications giant, for about $17.7 billion, including debt … It is the latest deal to reshape the broadband and cable television landscape. … The transaction would further realign an industry already in upheaval as cable and telecom companies seek greater scale and negotiating power with content providers.

“But the takeover of Cablevision — one of the last trophies of the American cable industry and the longtime province of its founding family, the Dolans — could also draw significant concern from regulators, particularly as control of the telecom market shrinks to fewer and fewer players. … Charter Communications, a cable operator with ties to the billionaire John C. Malone, has already agreed to buy Time Warner Cable after its archrival Comcast failed to complete a deal. AT&T recently completed a $48.5 billion takeover of the satellite television operator DirecTV.”


WALL STREET SAYS NO — WSJ’s Min Zeng and Ira Iosebashvili: “Wall Street is skeptical that the Federal Reserve has room to raise short-term interest rates Thursday, underscoring persistent doubts about the health of the global economy and financial markets following seven years of easy policy … Some of the biggest names in the financial industry say a rate rise now would be unwise. And some executives whose firms would benefit from higher rates nevertheless don’t expect an increase Thursday

“Some say doing so would risk a repeat of central-bank moves that have drawn criticism, such as the European Central Bank’s decision to raise interest rates in 2008, just before the acute stage of the financial crisis, and the Fed’s decision to tighten policy in 1937, a move some commentators say added years to the Depression”

THE CLIFFHANGER — NYT’s Binyamin Appelbaum: “Yellen, the Federal Reserve chairwoman, faces a crucial moment on Thursday when the Fed’s policy-making committee announces whether the time has come to start raising interest rates.
Liberal activists, economists and some policy makers are pressing hard for Ms. Yellen to continue the Fed’s stimulus campaign … At the same time, Ms. Yellen faces growing internal pressure to start raising rates from Fed officials who are concerned about froth in financial markets and about maintaining control of inflation.

“Analysts say the decision will further sharpen Ms. Yellen’s priorities as perhaps the most powerful economic official in the world. … For much of the summer, the Fed seemed on track to announce after this meeting of the Federal Open Market Committee that it would raise its benchmark interest rate for the first time since the financial crisis. … Then China swooned and markets skittered downward, and Fed officials started wondering aloud whether it might make sense to wait at least a few more weeks, if not longer”

BLANKFEIN: DON’T DO IT! — FT’s Ben McLannahan: “Lloyd Blankfein has added to a chorus of voices advising the US Federal Reserve to hold off from pushing up interest rates, saying that ‘the data just isn’t there’ to justify any tighter monetary conditions. The advice from the Goldman Sachs chief executive, among the longest serving at the biggest US banks, comes on the eve of one of the most keenly awaited policy decisions by the central bank since it last raised rates nearly a decade ago. …

“Mr Blankfein said that such a move would be a mistake, as it would undermine the Fed’s insistence that economic data is its primary policy consideration. ‘Everybody has visibility on everything; if a decision [to increase rates] gets made it’s not because there’s a tsunami of evidence of a quickening of the recovery, or a tightening of labour or an acceleration of inflation — it is almost a question of wanting to get over that hurdle, he said. Such ‘soft’ factors should not trump ‘hard data evaluation,’ he added. ‘And the data evaluation isn’t compelling an interest-rate rise at this point.’”

POLITICO’S WHAT WORKS D.C.: Join POLITICO Magazine for the next in their What Works series, focusing on the future of Washington, D.C. Featured speakers include: Nashville Mayor Karl Dean, Delegated Deputy Secretary John King, Department of Education; Karen Mills, former administrator of the U.S. Small Business Administration and senior fellow at Harvard University; and more. Find out more RSVP here.

POTUS Events

10:00 am || Receives the Presidential Daily Briefing
11:00 am || Meets with Secretary of State Kerry
11:45 am || Meets with the three men who prevented a terrorist attack on a train in France
2:45 pm || Meets with Senate Democratic Leader Reid and House Democratic Leader Pelosi
4:45 pm || Holds a fundraiser for Senate Democrats; Washington

All times Eastern
Live Stream of White House briefing at 12:30 pm

Floor Action

The Senate will vote Thursday on a push to link Israel and American hostages to the Iran nuclear deal.

Senators are expected to take a procedural vote at 11 a.m. on Senate Majority Leader Mitch McConnell’s amendment that would block President Obama from lifting sanctions on Iran until after Tehran publicly recognizes Israel’s right to exist and releases Americans currently held in the country.


McConnell brought up the vote after Democrats twice blocked the Senate from moving forward with a resolution of disapproval on the Iran deal.


The vote could be politically tough for Democrats, and Sen. Dick Durbin (D-Ill.) said Wednesday that he was still trying to figure out if they would have the 41 votes needed to block the amendment.


But Sens. Charles Schumer (D-N.Y.) and Ben Cardin (D-Md.), who oppose the Iran deal, will join supporters in voting “no” on moving forward with McConnell’s amendment. The switch could make it harder for Republicans to get the 60 votes needed to overcome the procedural hurdle.


Senators could also take a third procedural vote on a resolution disapproving the Iran deal. Sixty votes would also be needed to move the resolution of disapproval forward, and Democrats have twice blocked the legislation.


The votes come ahead of Thursday’s deadline for Congress to pass a resolution on the Iran deal. While House lawmakers have called on McConnell to use the “nuclear option” to bypass the 60-vote requirement, the Republican leader has suggested that he doesn’t support the tactic.


Meanwhile, House lawmakers will take up legislation that would mandate fines for frivolous lawsuits. The Obama administration said Wednesday that it “strongly opposes” the legislation, calling it “unnecessary and counterproductive.”


Votes in the House are expected between 2:30 p.m. and 3:30 p.m., with final votes between 4:15 p.m. and 5:15 p.m.



Questions and Answers to Help Your Organization Understand ACA Reporting Requirements

The IRS has a series of Questions and Answers that helps employers understand the Affordable Care Act reporting requirements that apply to them.

The health care law requires applicable large employers to file information returns with the IRS and provide statements to their full-time employees about the health insurance coverage the employer offered.  An applicable large employer is an employer that employed an average of at least 50 full-time employees on business days during the preceding calendar year.

Here are three questions and answers that address specific situations that might apply to your organization.

Is an ALE member that sponsors a self-insured health plan required to file Form 1094-C and Form 1095-C if the ALE member has no full-time employees?

Generally, yes.  An ALE member that sponsors a self-insured health plan in which any employee or employee’s spouse or dependent has enrolled is required to file Form 1094-C and Form 1095-C, whether or not that employer has any full-time employees and whether or not that individual is a current employee or a full-time employee. For an individual who enrolled in coverage who was not an employee in any month of the year, the employer may file Forms 1094-B and 1095-B for that individual.

Is an employer that is not an ALE member required to file under the Affordable Care Act if the employer sponsors a self-insured health plan that provides minimum essential coverage?

No; however, such an employer is subject to the reporting obligations under the Affordable Care Act. An employer that is not an ALE member that sponsors a self-insured health plan in which any individual has enrolled is not subject to the reporting requirements of ACA. Such an employer will generally satisfy its reporting obligations by filing Form 1094-B and Form 1095-B.

Is an ALE member required to report under the Affordable Care Act with respect to a full-time employee who is not offered coverage during the year? 

Yes.  An ALE member is required to report information about the health coverage, if any, offered to each of its full-time employees, including whether an offer of health coverage was – or was not – made. This requirement applies to all ALE members, regardless of whether they offered health coverage to all, none, or some of their full-time employees.  For each of its full-time employees, the ALE member is required to file Form 1095-C with the IRS and furnish a copy of Form 1095-C to the employee, regardless of whether or not health coverage was or was not offered to the employee. Therefore, even if an ALE member does not offer coverage to any of its full-time employees, it must file returns with the IRS and furnish statements to each of its full-time employees to report information specifying that coverage was not offered.

For the full list of questions and answers about reporting requirements for employers, see our Reporting Offers of Health Insurance Coverage by Employers page on The IRS website is also the place to find questions and answers for a wide range of ACA topics for individuals, employers and other organizations.

Krebs Daily Briefing 16 September 2015

Thomas L. Krebs, Securities Litigation, Regulation and Compliance Attorney Lawyer (c)2014 Brandon L. Blankenship
Thomas L. Krebs


King Felipe VI and his commoner queen.

He’s young and handsome and boasts a family tree with six centuries of kings and queens. She’s smart and glamorous and doesn’t have a drop of blue blood. They are the very model of a modern royal couple. William and Kate? No, King Felipe VI and Queen Letizia of Spain, who arrive in Washington this week for their first official visit — without the frenzied media mob that follows the British monarchy. There are no breathless morning television countdowns, no stakeouts for their trips to Mount Vernon or the White House. They could walk the streets of Georgetown, where he attended graduate school, without turning a single head. But Spain’s new king and queen are sexier, slightly scandalous, and more interesting than the squeaky-clean Duke and Duchess of Cambridge. Felipe was the cherished royal son expected to marry a nice Catholic princess — until he defied his parents for a love match. Letizia is the first Spanish commoner to become queen, a feat even more remarkable when you realize that she was a celebrity journalist with an ex-husband and a live-in boyfriend before meeting her prince. The couple will meet with President Obama and Senate leaders on Tuesday (which happens to be the queen’s 43rd birthday), open an American-Spanish scientific conference at Georgetown University, meet with American chief executives who do business in Spain, and head to Florida to celebrate the 450th anniversary of St. Augustine. They’re the standard feel-good duties of 21st-century royalty: pretty pictures, business development, warm words about friendship and cultural ties. The visit comes after a rocky first year on the throne: After 39 years as king, Felipe’s father, Juan Carlos, abdicated last year amid questions of royal excess and infidelity. One of his sisters is about to go on trial for tax fraud. And his country is crawling back from a crippling economic crisis. The question is whether these two mortals — one a descendant of Ferdinand and Isabella, the other the granddaughter of a taxi driver — can save the fragile Spanish monarchy.

From Jihad to Jewelry Making: Inside Nigeria’s Secret Prison for Former Boko Haram Fighters

Usman Balami once commanded hundreds of Boko Haram jihadists in attacks on police stations and banks. Now serving time at a prison complex in northern Nigeria, he says he is a changed man. “In the past, I would have loved to die as a martyr,” said the 34-year-old, after changing out of a yellow goaltender’s jersey following a morning soccer match. In a nearby room, a group of former insurgents strung together beaded necklaces in a jewelry-making class. About 100 miles away in another government facility, Fatima Bukar prayed that she can move on as well. Each day at midnight, the hour in which she believes God is listening most intently, she rises in the hostel where soldiers are keeping watch over hundreds of women rescued from Boko Haram. The group held Ms. Bukar and her daughter hostage in a forest clearing for nearly five months. “I pray that Allah can turn them back into good people,” said the 27-year-old. “If not, Allah should destroy them.” Boko Haram has become Nigeria’s collective trauma. The insurgency has swept thousands of boys and men into its ranks, often at gunpoint. It has snatched several thousand more girls and women, many of them raped nightly for months. Continued fighting has left more than 25,000 people dead and more than one million people without homes, Ms. Bukar among them. Now, in these two high-walled camps, survivors from both sides of the conflict are coming to terms with the scars of the six-year insurgency that has redefined their lives. It is the start of a long reckoning for Nigeria. The conflict rumbles on across the country’s northeast, with suicide bombings killing scores each week. But there are tentative signs of a healing and a shift in government policy. Thousands of hostages have escaped or been freed after the Nigerian army raided the forests where Boko Haram once held sway. Two months ago, meanwhile, Nigeria began to offer weary Boko Haram fighters safe passage in exchange for prison sentences with the kind of psychosocial counseling Mr. Balami attends. The question for the government of newly elected President Muhammadu Buhari is what to do with this mass of young people who have either been failed by the state, or at war with it. Already, hundreds of Boko Haram members are in detention, said Fatima Akilu, the director of behavioral analysis at the office of Nigeria’s national security adviser. Forty-seven more have taken up the government’s safe-passage offer.

How Pope Francis Became the People’s Pontiff

Two summers ago my friend Agustín, an Argentinean graduate student on pilgrimage in Rome, filed into the papal-audience hall near St. Peter’s Basilica for a group photograph with Pope Francis. The pilgrims, a hundred in all, were put in four rows; those in the front row would meet the Pope. Then Francis strode in, smiling broadly. Scrapping protocol, he insisted on greeting all the pilgrims, one by one, the way Agustín had seen him do back when he was Archbishop Jorge Mario Bergoglio of Buenos Aires. Finally, Agustín’s turn came. “Buenos días,” Francis said, looking him in the eye, and Agustín explained that he was about to get married. “Congratulations,” said the Pope, “and look, if some dishes fly in your house, don’t worry about it.” “And I said to myself, What? The Pope?,” Agustín recalls. Instead of a papal blessing, here was some man-to-man advice—the Pope, of all people, telling him not to worry if there was some everyday strife in his marriage. Unexpected, and yet utterly in character for the man we have come to know simply as Francis—the frank and unaffected Jesuit who has become one of the most famous and most beloved people on the planet. In the months after his March 2013 election, following the sudden resignation of Benedict XVI, he was regarded as a surprising Pope: the Pope who refused to move into the 16th-century Apostolic Palace, had his old black shoes replaced by the cobbler instead of buying fancy new papal slippers, and opened his door to three homeless men and a dog named Marley (after Bob Marley). In his second year he was thought to be a revolutionary Pope—a change agent bent on re-starting long-stifled conversations on contraception, divorce and re-marriage, and sexual orientation: as the Pope of “Who am I to judge?” Now he is just the Pope, and he is so at ease in his white cloak that it seems he was meant to be Pope all along. Now he has gotten many of us wondering what might have been if he—who was said to be second in the balloting—had been elected after John Paul II’s death, in 2005, instead of Joseph Ratzinger, who became Benedict. Now, making sense of Francis isn’t a matter of figuring out what he thinks or whether he is for real. It’s a matter of seeing him for what he is. And what is he? He is a free man, that’s what he is. Somehow he has stayed true to himself and to the core Catholic message and has kept free of the pomp of the papacy, the crush of celebrity, and the expectations of the global Church. “He doesn’t ‘play’ the Pope,” says Archbishop Claudio Maria Celli, head of the Pontifical Council for Social Communications. “He is who he is.” He’ll ride in the Popemobile with the protective glass down, no matter the security risk. He’ll establish a shelter for homeless people near St. Peter’s Square. He won’t stop speaking off the cuff and he won’t insist that all the cardinals agree about everything. With 1.2 billion members, the Church is a tumultuous household, and he isn’t going to worry about a few flying dishes. More:

Anheuser-Busch InBev Approaches SABMiller on Possible Takeover

LONDON — Anheuser-Busch InBev said on Wednesday that it had approached SABMiller about a potential takeover, in a deal that would combine the world’s largest beer makers into a global giant. Such a deal, if it passed antitrust muster, would bring some of the world’s most popular beers under one roof, including Budweiser, which is made by Anheuser-Busch InBev, and Miller Lite, from SABMiller. But any deal between the brewing giants would most likely face significant regulatory scrutiny on both sides of the Atlantic, given the breadth of brands the two companies control. The office of Europe’s powerful antitrust chief, Margrethe Vestager, the European Union competition commissioner, had not been officially notified of the proposed deal as of Wednesday afternoon, and it had no comment on the matter. News of the takeover approach sent SABMiller’s stock soaring by 23 percent in midday trading in London on Wednesday, raising the company’s stock market value to about $93 billion.


Remember Jade Helm 15, the controversial military exercise? It’s over.

The military exercise Jade Helm 15 generated enough conspiracy theories this year that it garnered mockery on late-night television, commentary from presidential candidates and reaction from the Texas governor. The basic thrust of the concerns: The military was laying the groundwork for martial law — if not now, then sometime in the future. The exercise will end quietly Tuesday, however. Carried out in parts of Texas, Mississippi, Louisiana and Florida, it will conclude after two months of operations, said Suzanne Nagl, a spokeswoman for Army Special Operations Command, which oversaw it. “At this time, we do not have any lessons learned to share since we have not yet conducted an after-action review of the exercise, but we do believe the exercise overall was a success,” Nagl said in an e-mail. As initially detailed in planning documents, the exercise was to include elite service members from four military branches. It eventually was reduced to include 200 Special Operations forces and an additional 300 support personnel for most of the exercise, with about 700 hundred members of the Army’s 82nd Airborne Division traveling to Texas to train as part of Jade Helm for about five days in August. The story began garnering attention in March, after planning slides for the exercise, likely prepared for government officials in Texas, began circulating online. They labeled Texas, Utah and a section of southern California as hostile territory, and New Mexico as uncertain territory leaning hostile. The military has routinely held training exercises like Jade Helm in the past. But this one took on a life of its own before it even began. An informational meeting attended by citizens and local government officials in Bastrop, Tex., in April generated national attention after several people accused the federal government of preparing for a takeover. Texas Gov. Greg Abbott (R) ordered the Texas State Guard, a militia he oversees, to monitor the exercise. He said he did so to address the concerns of Texans, but was mocked by some critics for giving voice to conspiracy theories. Notably, comedian Jon Stewart ripped Abbott by saying he was catering to “Lone Star lunatics” in a segment on Comedy Central’s “The Daily Show.”  “Oh dear Lord,” Stewart said. “Yet another waste of Texas funds that could have been spent on actual threats, like your infamous chainsaw massacres. Texas, it’s not that I don’t find it adorable that your governor thinks your State Guard could take on the United States military. It’s like a little dog growling at a big dog, or an 8-year-old picking a fight with the Predator.” Republican presidential candidates also weighed in, with Sen. Ted Cruz (R.-Tex.) saying he wanted more information from the Pentagon and former Texas Gov. Rick Perry telling Texas residents they should trust the military. Gawker reported last week that the Texas State Guard saw an increase in recruiting after Abbott’s decision. Guard officials called it a “great opportunity,” Gawker reported, citing e-mails obtained through the Freedom of Information Act.

Donald Trump vs. the Club for Growth, explained

Many Republicans and conservatives have criticized Donald Trump since he rose to first place in the polls — but for two months, none of them put up serious cash to try to stop him. On Tuesday, that changed. The Club for Growth — an anti-tax, anti-spending conservative pressure group — announced it would spend $1 million on anti-Trump ads in Iowa. Here’s a look at one, which says Trump has a “very liberal” record and is “playing us for chumps,” and calls him “just another politician.” This is the first significant anti-Trump ad buy, and the political world will watch with bated breath to see if it helps knock Trump out of the lead in Iowa — and also to see how Trump, who hasn’t run paid TV ads yet, will respond to a challenge on the airwaves. But it’s no surprise that the Club for Growth is taking the lead. For months now, Trump and the club — which is mainly funded by wealthy investors and financiers — have been at each other’s throats, publicly feuding on Twitter. On the surface, the dispute is about what happened in a meeting months ago in which the club’s president asked Trump for a $1 million donation. In reality, though, the feud gets to the heart of why the billionaire’s candidacy is so dangerous to the conservative electoral coalition. The club’s mission has long been to push the GOP far to the right on economic issues — slashing taxes and spending as much as possible. But Trump has pledged to protect Social Security and Medicare spending, and says the wealthy should be taxed more. That makes his candidacy incredibly dangerous to both the club and the current orthodoxy on tax and spending issues that exists across the GOP — an orthodoxy that the club helped bring about, and tries to enforce.

The court battle over once-missing U.S. soldier Bowe Bergdahl’s actions is about to begin

One of the U.S. military’s highest profile court cases in decades will open Thursday with prosecutors dissecting Army Sgt. Robert “Bowdrie” Bergdahl’s decision to walk away from his combat outpost in Afghanistan in 2009, potentially paving the way for a trial and prison time for a soldier who was held captive by insurgents for more than five years. Bergdahl, 29, faces charges of desertion and misbehavior before the enemy. He was recovered in Afghanistan by the United States in May 2014 in a controversial prisoner swap approved by the Obama administration in which five Taliban officials detained at the military prison at Guantanamo Bay, Cuba, were transferred to supervised release in Qatar. If convicted, Bergdahl faces up to life in prison. The proceedings at Joint Base San Antonio – Fort Sam Houston in Texas, known as an Article 32 hearing, are expected to last at least two days and lay out new evidence against the soldier. A military lawyer overseeing the hearing will then make recommendations to the senior officer overseeing the case, Gen. Robert B. Abrams, about whether to proceed to a court-martial trial in coming months. Bergdahl’s defense team will be given time to cross-examine witnesses and challenge the government’s case. The case remains deeply emotional for many who have served in the military and consider it a personal affront for someone to walk away from their comrades in a combat zone. His critics argue tha Bergdahl put lives in danger from the moment he left his post on June 30, 2009, and needs to be held accountable. “If Bergdahl gets off scot-free, it would be an atrocity for anyone who has served with him, and anyone who has served honorably over the last 200 years,” said former Army Spec. Joshua Cornelison, 26, who was deployed with Bergdahl’s platoon as a medic. “Whatever the maximum punishment is, that’s what he should get.”

Lawmakers promise best behavior for Pope Francis’s visit

Lawmakers are expected in the coming days to receive protocol guidance ahead of Pope Francis’s Sept. 24 address to a joint session of Congress. The guidance comes amid fears that the first-ever papal address to Congress could spark a State of the Union-like atmosphere given the pontiff’s politics, where one-half of the chamber stands to cheer on the pope while the other sits on their hands, grim-faced. Francis is famous for making political audiences uncomfortable, and his calls for global leaders to reduce inequality and to act on climate change might sound like an address by President Obama to some Republican lawmakers. At the same time, the pope’s opposition to abortion rights could make some Democrats uncomfortable and lead to GOP cheers, especially given the charged debate over federal funding for Planned Parenthood that’s threatening to trigger a government shutdown at the end of the month. Lawmakers interviewed by The Hill ahead of Francis’s visit predict nothing of the sort. They insist Democrats and Republicans will be conscious to not politicize the speech, and say they will avoid the kinds of theatrics familiar to State of the Union audiences. “Congress will be on its very best behavior on this occasion,” said Rep. Charlie Dent (R-Pa.). Lawmakers anticipate they won’t applaud or cheer based on political preferences. “Showing any type of partisan division, that hadn’t even occurred to me,” remarked Rep. Joe Wilson (R-S.C.), who famously shouted, “You lie!” after Obama, in an address to Congress, said his healthcare proposals wouldn’t apply to illegal immigrants. Thousands are expected to visit Washington during the pope’s three-day visit, which will culminate with his speech to lawmakers. Capitol Police on Monday announced tight security measures, and the government will advise employees to telework from home to avoid traffic snarls. It’s not just addresses by presidents that have caused partisan divisions to emerge in Congress — previous high-profile speeches by world leaders to lawmakers have sparked intense reactions in the past. Most recently, House Minority Leader Nancy Pelosi (D-Calif.) used forceful gestures to highlight her displeasure with Israeli Prime Minister Benjamin Netanyahu’s controversial address to Congress in March. As Netanyahu criticized the administration’s nuclear deal with Iran, Pelosi remained seated during standing ovations and made sure the people around her — and those watching from the press row — could see her disagreement. When Nelson Mandela addressed a joint session in 1990, just months after his release from a South African prison, then-Sen. Jesse Helms (R-N.C.) and then-Rep. William Dannemeyer (R-Calif.) skipped the speech in protest.Francis has a history of catching political audiences off guard. In 2004, while serving as archbishop of Buenos Aires, Francis called for open political dialogue and accused the Argentine government of intolerance during an annual national Mass as then-President Néstor Kirchner sat in the audience. Kirchner broke with tradition and stopped attending the Mass after that episode. And in 2014, Francis used his Christmas address to offer a scathing critique of the Vatican bureaucracy, saying that some senior members of the Catholic Church’s leadership suffer from a “spiritual Alzheimer’s.” The State Department has outlined guidance for lawmakers meeting with the pope. A handshake is considered acceptable, but only if the pope initiates it. Consequently, lawmakers who score seats along the center aisle will have to hold back and refrain from embracing Francis before the cameras like they might do with the president at a State of the Union address. The State Department further advises attendees in a papal audience to dress conservatively and in dark colors. Women’s shoulders and elbows must be covered, with hemlines falling below the knees. The dress code guidance is especially noteworthy for members of the House, whom Speaker John Boehner (R-Ohio) has publicly admonished on multiple occasions for not dressing appropriately for votes. Nonetheless, members of Congress say they are eager to be part of the papal audience. Rep. Luis Gutiérrez (D-Ill.) openly admitted that he often watches State of the Union addresses on television in his office or arrives to the House chamber late, unlike some lawmakers who reserve aisle seats with coats and purses hours ahead of time. That won’t be the case this time for Gutiérrez, who is Catholic. “I’m going to get here really, really early,” he said.

What College Football Means in the South

One of the great virtues of the South is the assumption that football is important. When my father and I decided to attend every game Ole Miss played that year, no one thought it was odd that we were spending months going to football games. In the South, organizing a life around college football games seemed like a perfectly reasonable endeavor. The love of college football and its importance in life’s scheme are natural for a Southerner but difficult for the uninitiated to grasp. When I first moved to New York City in the 1980s, it was not a happy time in the city’s fortunes. Everyone talked about crime, the way Alaskans talk about bears, or ski patrollers discuss avalanches. But I loved it. Like generations of expats in a foreign land, I fell into a crowd of fellow countrymen: southerners and mostly Mississippians. Every fall weekend, we would slide into a deep, predictable funk. We wanted to watch football—real football. At some point before each weekend, a depressing series of phone calls would commence among southern expats over the scarcity and quality of the football options on New York City television. “Holy Cross versus Harvard? Can you believe it? My high school played better football.” It was much as I imagine growing up in a culture with wonderful, distinctive food—India or the Szechuan Province of China—and moving to a drab place where the only options were awful strip-mall restaurants that were all the more insulting for their claims to authenticity: “Real Indian” or “Genuine Chinese.” They called these sad Northeastern college efforts “football,” but it was hardly a creature of the same species. Once a few of us dragged up to see Columbia play, and we left before the half. It wasn’t just what was happening on the field; it was the entire experience. The few students who condescended to come seemed more interested in the mocking hipness of playing at being football fans. Some actually read books during the game. This was like bringing a six-pack to church to get through the sermon.


Scathing report released on outgoing U.S. Marshal Art Baylor

MONTGOMERY, AL (WSFA) – The Office of Inspector General released a scathing summary of misconduct on Tuesday regarding outgoing U.S. Marshal, Art Baylor in the U.S. Marshals Office in Montgomery. The report states that Baylor created a “hostile work environment, low morale and a poorly managed office.” The report goes on the say that Baylor acted in intimidating and demeaning ways toward his employees. The report list examples of Baylor challenging subordinates who disagreed with him by using vulgar language, sexually charged comments about the opposite sex and anatomical gestures. The report states that Baylor put employees under unnecessary stress and demonstrated poor judgment. The report also cites that Baylor failed to report a harassment charge that was filed against one of his employees to officials in Internal Affairs, which is protocol. Baylor, who started serving as Marshal on Sept. 9, 2010, announced his pending retirement on Sept. 8. Before being appointed as Marshal, by President Barrack Obama, Baylor served as the Montgomery Police Chief. Baylor stated last week that he would not comment further on his pending retirement, but said he was exploring other career options.

Neil Patrick Harris rolls with the Crimson Tide; watch him suit up as Big Al on his new NBC variety show

Neil Patrick Harris was Big Al at Alabama’s season opener against Wisconsin in Dallas. No, really. The multi-talented actor strolled the sidelines and stands as the Crimson Tide mascot, unbeknownst to a couple he’d surprise later on his show. The host of the brand new NBC variety show “Best Time Ever” surprised Tuscaloosa couple Teresha and Oronde Hamilton during a segment called “Best Days of Your Life” in which he followed the couple to three different places to appear on camera without them knowing. To open the segment, Harris walked through his audience and told a select few facts about them they didn’t know he knew. He stopped at the Hamiltons, revealed he knew Oronde had his hair cut twice weekly and then invited them on stage for more. They revealed their hometown and belted a nice “Roll Tide!” before Harris told them he knew they were staying at the Plaza hotel in New York because he actually opened their car door and took their bags as soon as they arrived. The host was in disguise. “Being from Tuscaloosa, you must be huge Alabama football fans?” Harris asked, while they confirmed yes. “Did you guys make it to the season opener against Wisconsin?” They did, and Harris then revealed he attended the game, too. In the next clip, you see Harris wearing a crimson Alabama polo before he says “Roll Tide” and it cuts to him wearing none other than the Big Al mascot suit (which also has a camera inside). Harris then goes to the couple’s section in AT&T Stadium during the game to give them hugs and appear on the jumbotron with them during the kiss cam segment. The host also revealed he actually attended the couple’s wedding in Tuscaloosa. He even photobombed several of their wedding photos and ate some of their wedding cake. “Best Time Ever” airs on NBC on Tuesdays at 9 p.m. central time. Watch the segment below:

Bill to abolish marriage licenses dies in Alabama House

A bill to abolish marriage licenses in Alabama and replace them with marriage contracts failed tonight in the House of Representatives. The House voted 53-36 in favor of the bill. But it required a two-thirds vote for approval because it was not part of the governor’s call for the special session. Rep. Jim Hill, R-Odenville, who sponsored the bill in the House, said the intent was to address some problems that have arisen since the U.S. Supreme Court ruling legalizing same-sex marriage, with some probate judges deciding not to issue marriage licenses at all. “This would not require them to issue the marriage license but would allow the individuals to sign the contract and record it in the probate court just as you record a deed with the probate court,” Hill said. Hill said current law says that probate judges “may” issue licenses, but that the bill would have changed the law to say probate judges “shall” record the marriage contracts. He said that would clarify what the law requires. Rep. Patricia Todd, D-Birmingham, the Alabama Legislature’s first openly gay member, questioned whether the change would matter to probate judges who claim religious objections to same-sex marriage. “What is the difference between handing me a piece of paper for a license vs. accepting a piece of paper from me for a marriage contract?” Todd asked. Rep. Marcel Black, D-Tuscumbia, said he thought the law would be challenged in court if the bill passed, resulting in legal costs for taxpayers. Rep. Juandalynn Givan, D-Birmingham, said Alabamians who married under a contract might run into problems when they had to provide proof of marriage in other states. “This bill makes absolutely no sense,” Givan said. “There is no rhyme or reason for this bill.” Hill said the marriage contracts would be recognized in other states. He said he did not know of any other states that record marriage contracts, rather than issue licenses. The bill, by Rep. Tim Albritton, R-Bay Minette, had passed the Senate by a vote of 26-2.



Will the Alabama GOP ever ask Mike Hubbard to just go?

Dear Chairwoman Terry Lathan, Alabama Republican Party, Does Alabama have a Republican problem or do Republicans have a Mike Hubbard problem? Only you know the answer. Only you know because you must decide. Almost a year ago, a grand jury indicted Hubbard on 23 felony ethics charges. Some of those counts include breaking laws that Hubbard and other Alabama lawmakers helped pass. When the indictment became public, rather than accepting Hubbard’s resignation, the Alabama Republican Party …Just accepted Hubbard? It seemed that way, especially as GOP lawmakers from around the state crowded around Hubbard in an Auburn press conference to show their support. That’s right, the GOP majority that was supposed to change everything in Montgomery suddenly looked a lot more comfortable with a leader under indictment than Democrats ever did. But things didn’t stop there. In emails included in court documents, Hubbard can be seen joking with colleagues, including former governor Bob Riley, about who it was who passed all these crazy laws against public corruption. He can be seen giving advice to the Rileys about how to get around the state’s restrictions on lobbyists. He can be seen soliciting things of value from lobbyists and their clients. It was painfully embarrassing, and that evidence alone should have been enough for Alabama Republicans to find someone else to lead the GOP supermajority in the Legislature. But that didn’t happen, either. Again, they accepted it as normal and appropriate. Of 105 lawmakers in the Alabama House, 99 (including members from both parties) voted to make Hubbard the House speaker again. For the record, five House members were absent, and only the loquacious and discommodious Alvin Holmes cast a vote for somebody else — himself. When Holmes is your voice of reason, things have gone seriously awry. Last week, Hubbard again cheapened the Republican claim to moral superiority. A court in Lee County unsealed a motion by Hubbard, the speaker of the Alabama House, in which Hubbard argued he has a right, guaranteed by the United States Constitution, to be a lawmaker and a paid lobbyist at the same time. To be fair to Hubbard, he has had help from the Alabama Ethics Commission distorting the law to suit his self-interest. In August, the commission gave an opinion to Rep. Patricia Todd, a Democrat from Birmingham, saying that she could act as a principal (the lobbyist’s boss or client) and a lawmaker at the same time. Now Alabama Attorney General Luther Strange and the state DAs’ association are raising hell, as they should. Because what that means, if Hubbard and the commission don’t stand corrected, is that there will be a legal means of bribery in Alabama. Want Alabama lawmakers to vote a certain way? Just hire them as your lobbyists. Alabama ethics laws will be, as the AG and DAs said in a legal analysis to the commission, a dead letter. From Hubbard’s court filing, we can see that the speaker isn’t just saying this is regrettably the way Montgomery works. Rather, he believes this is the way it is supposed to work. You couldn’t find greater hypocrisy than that if somebody caught Roy Moore on Grindr. And again, the statehouse GOP accepted it. Not only that, some of them are aiding and abetting him, at least politically. Rep. Jack Williams has introduced a bill, which passed the House on Friday, that would let Hubbard solicit money from special interests to pay for his legal costs. Another bill, introduced by Rep. Mac McCutcheon, would allow some of Hubbard’s nearest and dearest, to sit on an all-powerful star chamber committee that would exercise executive control of state investigators and prosecutors — the same ones investigating and prosecuting state lawmakers. Let’s be clear, there are plenty of Alabama Republicans who have opposed Hubbard, including your predecessor, Bill Armistead. As chairman, Armistead investigated whether Hubbard had enriched himself when he — Hubbard — had been party chairman, and there’s reason to believe those complaints were the genesis of the state’s case against Hubbard now. But waiting for the courts to do their work isn’t enough anymore, because Hubbard is doing damage to the Alabama Republican Party and Alabama. And you can’t take the high road when you travel in the gutter. So you have a decision to make. Do Republicans have a problem with Mike Hubbard? If not, then Alabama has a problem with the GOP.

Parker Griffith: The people suffer while Montgomery burns

There is a saying in rural Alabama that applies perfectly to the current situation with Governor Robert Bentley. “The water won’t clear up until we get the hogs out of the creek.” In spite of the fact that I ran against Robert Bentley, and that he sent his paid spokeswoman, Rebekah Caldwell Mason, out to call me a liar when I challenged his veracity, I take no pleasure as the mob drags him and his personal life through the mud. The media’s preoccupation with the governor’s personal life is unseemly. The real damage, however, is being done to the people, small businesses and precious institutions of Alabama. During the campaign, I said Governor Bentley has lied his way into office by promising a vote on a state lottery and then allowing four years to pass without making it happen. He repeated that lie during last year’s campaign. What none of us knew at the time was the bigger lie that was being told through his silence about the state’s financial condition. Shortly after he was sworn in for his second term he was confronted by the mess his lies and obfuscations had created within state government. In his blind lust for power, Governor Bentley allowed an aggressive cancer to grow within state government. That fiscal cancer now threatens to set back Alabama for a generation because the governor lacks the power, political or moral, to lead our state. Our schools, as well as the students, parents, teachers and education professionals who depend upon them, face years of underfunding and neglect. Tens of thousands of people who could have access to health care instead clog our emergency rooms or suffer in silence because Bentley and his cronies refuse to pull down hundreds of millions of dollars from the federal government to provide health care. Rural hospitals gasp for air in the arid summer heat and try to find a way to stay in business. Jobs are scarce for the people of Alabama. Those who are lucky enough to have a job face stagnant wages and poor prospects for the future. The aforementioned expansion of Medicaid would help hospitals, help struggling Alabamians and create tens of thousands of jobs all over Alabama. If Alabama were a business the banks would come and shut it down and it wouldn’t be because of some personal peccadillo of the CEO. There are smart, sober people in this state who can, and who should, step forward and seize the reins of power and lead Alabama to the light. I would like to tell you that the Alabama Democratic Party would step up and help but that institution has also been hobbled by ineffective and feckless leadership. We all know the leadership won’t come from the Tea Party which is merely a front group for industrialists who want to make Alabama America’s Mexico where cheap wages and lax government oversight allows them to make obscene profits at the expenses of our working people. We need a revolution in Alabama. Democrats and Republicans in the legislature should band together and force Governor Robert Bentley to resign. Those same Democrats and Republicans should then join together with Lieutenant Governor Kay Ivey to right the good ship Alabama. The news media in this state also has a role to play. Dissecting the marriage of a failed governor may sell newspapers and draw Internet clicks but the Fourth Estate also bears some responsibility for this mess and, therefore, some responsibility for getting Alabama back on track. A quick vote on a state lottery, an expanded relationship with the Poarch Creek Indians, expansion of Medicaid, the very issues I campaigned on last year, would create jobs, begin to fix our budget problems and set Alabama on an upward path. Without these actions, we will face the long, slow, tortured dismantlement of the life and governorship of the hapless Robert Bentley. During the campaign last year I learned that the hatred of President Obama was so great that people would still vote Republican even when they agreed with me on the issues I put forth. They often justified their decision to support Bentley by saying he was “A good Christian man.” Even the most ardent, Obama-hating Republican must now surely agree that was a poor rationale upon which to base their vote. So Alabama remains in a backwater, punishing the poor, the children and the elderly while leaving church on Sunday morning feeling superior to their neighbors and denying the facts that confront them daily. The people suffer while Montgomery burns. Alabama, there is no cavalry coming over the hill. We are on our own. It’s time to get the hogs out the creek so the water will clear up. That means the time has come for Democrats, Republicans, Independents, Christians and Druids alike, to join together in once voice and say, “Enough is enough.” The first step is the removal of Governor Robert Bentley from office.

Morning Money

DEBATE NIGHT IN AMERICA — Get the popcorn ready. Tonight’s second GOP debate (8:00 p.m. on CNN) should provide plenty of drama with rivals trying to go after persistent front-runner Donald Trump. They should have bigger opportunities with the debate focused in part on foreign policy, not a Trump strong point. But the billionaire is excellent at deflecting incoming fire and blustering through questions he doesn’t like while attacking questioners as unfair, which is rarely a bad strategy. People close to Jeb Bush say the former Florida governor won’t hesitate to take on Trump on substance but will not get dragged into mud slinging. The Bush theory of the case is that Trump will eventually fade and Jeb will be there at the end possibly with one or two others. So he won’t be looking to throw Hail Mary passes tonight.

The debate will also give retired neurosurgeon Ben Carson, rising in the polls as a non-politician alternative to Trump, an opportunity to add to his momentum. The highest pressure will be on Wisconsin Governor Scott Walker, who is rapidly plunging in the polls (see below) and losing donor confidence. It will also be a big moment for Ohio Governor John Kasich who is currently running third in New Hampshire, according to the RCP polling average, and getting a closer look from establishment types as an alternative to Bush.

WALKER’S LAST STAND? — POLITICO’s Daniel Strauss: “Scott Walker needs to reassure his supporters and his donors. And Wednesday’s debate might be his last chance. … After a sleepy performance in the first Republican presidential debate that fueled a steep slide in his standing with voters, the governor’s team has pushed him to prepare. Round Two will be different, according to sources inside Walker’s camp.

“He won’t stop talking before his time is up, as he did at that first debate — a decision that left some of his top backers scratching their heads. He will be more assertive, according to people who have been briefed. And he won’t just answer the moderators’ questions but instead pivot to his personal story. And anything less could spell trouble.”

THE INTERLOCUTOR — POLITICO’s Todd S. Purdum profiles Hugh Hewitt: “Like Megyn Kelly, who challenged Trump in the last GOP debate about his past statements on women (prompting a crude sexist backlash from Trump and enmeshing him in a feud with Fox chief Roger Ailes to boot), Hewitt may be the most dangerous kind of interlocutor for The Donald: a smart, unimpeachable conservative who asks hard, fair, real questions that can’t be dismissed with a snarling ‘You’re Fired!’ putdown.”

DEBATE PREP: WHAT ABOUT THE MILLENIALS? — McGraw Hill Financial Global Institute has partnered with S&P Capital IQ’s Global Market Intelligence (GMI) to “develop a list of questions reflecting the divergent priorities of each generation. Boomers are being forced into risky equities given low treasury yields, Gen Xers are slowing dropping out of the labor force, and Millennials are buried under student debt. Will GOP candidates address these issues tonight?

TRUMP MAIL BAG — Pretty massive response to my “Wall Street freaks out over Trump story.” Most emails and Tweets were along the lines of “Wall Street is clueless and has no idea what’s going on in ‘real’ America.” Here’s a sampling:

Heidi Mann: “I find it very funny and telling that a CEO can’t understand the phenomenon of Trump. I think that, in it of itself, is WHY Trump is sooo appealing! F the establishment that is why we are in the messed up state we are in. Career elites scratching their heads, now that’s RICH.”

Dan Oster: “Perhaps, the interviewee who’s never met anyone who supports Trump should take the chance that he might scuff his Alden’s and go meet a few. He might then become less concerned about The Donald and more worried about the torches and pitchforks”

John Wildin: “What an exciting time for the average person in America. Trump is exposing our corrupted system and the establishment types are still in denial. … Trump says some of the most ridiculous things I’ve ever heard, but he is a man of principle and he says what HE thinks, not what his ‘owners’ want him to say. I don’t agree a lot with what he says but I totally agree on how he presents it. I will vote for him. And do it with pride.”

William [no last name given]: “Trump is Right! – Undocumented immigrants ‘have to go’ … America’s language, culture and sovereignty have been trashed and raped.”

Betty Waller: “We hope [Trump] won’t win, but we do appreciate his voicing the concerns of the American people. No one else seems to listen … My husband and I do not want Trump as president. We would want Dr. Ben Carson if we had our way. We are tired of politicians being controlled by big money and of remaining silent once they get into office.”

RAND PAUL VS THE FED — In a WSJ op-ed with Mark Spitznagel, Rand Paul writes: “The recent tumult in U.S. equity markets has prompted many analysts to urge the Fed to postpone any increase in interest rates. This advice assumes that rock-bottom interest rates are balm for a weak economy, with the only possible side effect being price inflation. Yet it is the Fed’s artificially low interest rates that set up the economy for the 2008 crisis, not to mention previous crises.

“The ‘doves’ are right to point out that higher interest rates will lead to a repricing of many securities, aka a crash. But years of near-zero interest rates have made this inevitable. Continuing on the current course will only allow structural distortions caused by these interest rates to fester and an inevitable reckoning that will be much worse than seven years ago.”

FED DOOMSDAY SCENARIOS — Bloomberg’s Alexandra Scaggs Ye Xie offer a list of what could go wrong when the Fed raises rates: “Developing countries that rely on foreign capital to finance their current account deficits are expected to face trouble, since higher rates in the U.S. would threaten to siphon that capital away. In a report last month, Morgan Stanley identified Brazil, Indonesia, South Africa and Turkey as the riskiest. UBS AG also listed Ukraine, Egypt and Venezuela as the most vulnerable, based on their debt and strength of finances. …

“The rise of computers and the decline of Wall Street’s bond dealers as traditional middlemen has changed the nature of trading Treasuries in unpredictable ways. Last October’s “flash crash” in Treasury yields is just one example. Some analysts and strategists say a rate increase could have the potential to trigger even more volatility.”

GOOD WEDNESDAY MORNING — Email me tips (and debate reactions) at and follow me on Twitter @morningmoneyben.

DRIVING THE DAY — Fed begins its momentous policy meeting that will probably end without much happening (but maybe something will!) … Second GOP debate begins at 8:00 p.m. (with the largely irrelevant undercard at 6 p.m.) … FDIC Vice Chairman Hoenig speaks at the Exchequer Club of Washington DC about the leverage ratio and derivatives. … Consumer Prices at 8:30 a.m. expected to drop 0.1 percent headline and rise 0.1 percent core

HP TO SLASH 30K JOBS — WSJ’s Robert McMillan: “Hewlett-Packard Co. outlined plans to cut another 25,000 to 30,000 workers as it prepares to split into two separate businesses, but the company signaled it was finally nearing the end of a brutal period of layoffs. … The Palo Alto, Calif., company’s latest staff reductions are part of a plan to cut $2.7 billion in annual costs and prepare its offspring to better complete in a world that has moved past the big computers and PC networks that fed its growth last decade.

“The resulting companies will be leaner and better positioned to compete in new markets such as cloud computing, H-P believes. … The staff reductions represent about 10 percent of H-P’s 300,000-person workforce, which peaked at 350,000 four years ago following its acquisition of Electronic Data Systems Corp. Its sales fell to $111.5 billion in its fiscal 2014 from $127.2 billion in fiscal 2011.”

INSIDE THE BROKER RAID GAME — Bloomberg’s Neil Weinberg: “A new arbitration case alleges that Oppenheimer & Co. crossed the line into slander, conspiracy and theft of trade secrets in a client raid that began unraveling over a three-day weekend earlier this summer. … The Oppenheimer matter — told through arbitration and court filings, letters and e-mails — provides a vivid study of an old practice that is coming under increasing strain.

“On the Friday afternoon just before Memorial Day, an investment adviser with a small firm called Euro Pacific Capital composed a short note to his chief executive: He was resigning, effective immediately. The adviser, Steve Savoy, pressed ‘send’ from inside an Oppenheimer office in Saddle Brook, New Jersey, according to Euro Pacific, launching a plan weeks in the making. Euro Pacific claims in its arbitration complaint that Savoy had left with confidential client lists that he and his new boss used to contact scores of people over the holiday weekend. Letters announcing Savoy’s move, with tabbed and highlighted Oppenheimer account-transfer forms, allegedly sat ready for FedEx delivery”


MUCH ADO ABOUT NOTHING? — WSJ’s Min Zeng and Chiara Albanese: “Investors may be mixed on what the Federal Reserve will do with interest rates this week. But they are more aligned on what they expect to happen next with rates: not much. Many investors are looking beyond Thursday … Regardless of the central bank’s decision, many investors expect anemic global growth will keep rates subdued in the long term.

“‘The first rate hike should matter to nobody so long as markets are reassured that further hikes will only be very gradual in nature,’ said Mark Dowding, senior portfolio manager at BlueBay Asset Management, which managed $60 billion as of end-July. ‘The financial markets may do better if they get the hike out of the way and get the monkey off their back.’ .. With the much anticipated rate decision finally close at hand, stocks rose Tuesday and bond prices fell, suggesting bond investors were protecting themselves in case of a Fed increase. The Dow Jones Industrial Average on Tuesday rose 1.4 percent, or 228.89 points, to 16599.85 on news of resilient U.S. retail sales and a rush to close bearish bets ahead of the Fed meeting”

FED HAUNTED BY MISTAKES — NYT’s Neil Irwin: ‘History is rife with [central bank] mistakes … But since the global financial crisis, when major central banks have erred, it has been overwhelmingly — perhaps exclusively — in the direction of excessive fear of inflation and complacency about growth. That is the reality that haunts the Fed as its leaders begin a two-day meeting Wednesday …

“If they elect to move — futures markets gave it a 28 percent probability as of Tuesday — it would be a bet that they are getting the timing right, in contrast with international counterparts who have repeatedly moved prematurely and regretted it, or previous moments when the Fed has made hawkish noises prematurely.”

THE GREAT ESCAPE … WON’T BE EASY — FT’s Sam Fleming and Robin Wigglesworth: “Engineering the great escape from near-zero interest rates will present the Federal Reserve with a universe of challenges. A key one is ensuring short-term market interest rates obediently head where the Fed wants to see them. … Achieving this is going to be a daunting feat for a central bank facing a financial sector that has changed radically following the crisis.

“Markets specialists at the New York Fed have for two years been extensively road-testing a new toolkit aimed at setting short-term rates in this new world, but success will only be judged when lift-off actually occurs. … Some analysts argue the operation could lead to unexpectedly choppy movements in financial markets. … The Fed needs new levers because of the creation of trillions of dollars of extra bank reserves through its quantitative easing programme. The Fed cannot use its traditional tool of varying the supply of reserves to banks to steer rates: there is simply too much money sloshing around the system”

Tom Krebs is a securities attorney in Birmingham, Alabama.


BIDEN’S TROUBLING STUDENT DEBT HISTORY — IBT’s David Sirota and Matthew Cunningham-Cook: “As a senator from Delaware — a corporate tax haven where the financial industry is one of the state’s largest employers — Biden was one of the key proponents of the 2005 legislation that is now bearing down on students … That bill effectively prevents the $150 billion worth of private student debt from being discharged, rescheduled or renegotiated as other debt can be in bankruptcy court.

“Biden’s efforts in 2005 were no anomaly. Though the vice president has long portrayed himself as a champion of the struggling middle class — a man who famously commutes on Amtrak and mixes enthusiastically with blue-collar workers — the Delaware lawmaker has played a consistent and pivotal role in the financial industry’s four-decade campaign to make it harder for students to shield themselves and their families from creditors, according to an IBT review of bankruptcy legislation going back to the 1970s.”

G.E. TO SHIFT 500 US JOBS ABROAD — POLITICO’s Will Brunelle: “General Electric will shift about 500 U.S. jobs … to overseas locations as it bids for $11 billion in new projects, the company announced early Tuesday. The projects require a contractor that can secure export financing, G.E. said, which makes accepting the jobs from the United States impossible. … G.E. announced the job transfers in a press release, which lamented the fact that the U.S. is the only ‘major economy’ in the world not to currently have an export-import bank. …

“The jobs will be moved to France, Hungary and China. The company will also move 100 additional jobs in its Texas-based gas turbine division as a result of the Ex-Im Bank’s deauthorization. ‘With no U.S. export financing available, GE must pursue non-U.S. options. Many of these [export credit agencies] have requirements similar to the U.S. Ex-Im Bank’s that production and jobs must be invested in-country to qualify for financing. This will result in the loss of thousands of U.S. jobs — both at GE and at our suppliers,’ the release said.”

VITTER/WARREN BACK GSE PAY BILL — Per release: “The United States Senate unanimously passed legislation to cap the salaries of the CEOs of Fannie Mae and Freddie Mac modeled on H.R. 2243, the Equity in Government Compensation Act of 2015, as introduced by U.S. Representative Ed Royce (R-Calif.). U.S. Senator David Vitter (R-La.) and U.S. Senator Elizabeth Warren (D-Mass.) are coauthors of the Senate version of the bill, S. 2036, which is also named the Equity in Government Compensation Act of 2015.”

POTUS Events

10:00 am || Receives the Presidential Daily Briefing
11:30 am || Delivers remarks to members of the Business Roundtable and answers questions; Washington
2:50 am || Visits with wounded warriors at the Walter Reed National Military Medical Center; Bethesda, Maryland

All times Eastern
Live Stream of White House briefing at 1:00 pm

Floor Action

Senate Majority Leader Mitch McConnell (R-Ky.) plans to force Democrats to walk the line on the Iran nuclear agreement, teeing up a vote on a contentious amendment on the deal.

The Republican leader scheduled a procedural vote on an amendment that would block President Obama from lifting sanctions against Iran under the nuclear deal until Iran publicly supports Israel and releases Americans currently held in Iranian prisons.


Under Senate rules, the vote would occur Thursday, which is also the deadline for Congress to pass legislation on the Iran nuclear agreement.


The procedural hardball comes after Democrats blocked a resolution of disapproval on the deal from overcoming a procedural hurdle for a second time. Opponents of the agreement were largely expected to fall short of the 60 votes needed to move forward.


The Kentucky Republican warned Democrats ahead of Tuesday’s vote that if they blocked the resolution that he would file his amendment, saying that “my strong preference is for Democrats to simply allow an up-or-down vote on the president’s Iran deal.”


“But if they’re determined to make that impossible, then at the very least we should be able to provide some protection to Israel and long-overdue relief to Americans who’ve languished in Iranian custody for years,” he added.


The procedural vote — where McConnell will also need 60 votes to move forward with his amendment — could put Democrats in a tough spot.


An amendment from Sens. Marco Rubio (R-Fla.), who is running for president, and Tom Cotton (R-Ark.) earlier this year on linking Iran’s support of Israel to the nuclear deal effectively shut down debate on the review legislation passed in May.


Republicans and Democrats, at the time, acknowledged that if successful the amendment would have either derailed the review legislation or killed the nuclear agreement because Iran likely wouldn’t agree to it.


Amendments on American hostages also weren’t allowed to be brought up for a vote on the review bill earlier this year.


Democrats ripped McConnell’s tactics on Tuesday, suggesting that the Senate needs to move on to other issues including how to fund the government.


“The Republican leader has threatened to us, ‘we lost and we’re going to make you suffer,'” Minority Leader Harry Reid (D-Nev.) said. “The Republicans have lost. They lost this measure, and we should move on to something else.”


It’s unclear what impact McConnell’s amendment will have, even if gets the 60 votes needed to overcome a procedural hurdle. Senators would need to get unanimous consent to speed up votes to meet the deadline to pass legislation on the Iran deal, and the amendment is being offered to the resolution of disapproval that Senate Democrats have twice blocked.


The Kentucky Republican also filed cloture, for a third time, on the resolution of disapproval.