Krebs Daily Briefing 21 December 2015

International

Inside the Billion-DollarBattle for Puerto Rico’s Future

The money poured in by the millions, then by the hundreds of millions, and finally by the billions. Over weak coffee in a conference room in Midtown Manhattan last year, a half-dozen Puerto Rican officials exhaled: Their cash-starved island had persuaded some of the country’s biggest hedge funds to lend them more than $3 billion to keep the government afloat. There were plenty of reasons for the hedge funds to like the deal: They would be earning, in effect, a 20 percent return. And under the island’s Constitution, Puerto Rico was required to pay back its debt before almost any other bills, whether for retirees’ health care or teachers’ salaries. But within months, Puerto Rico was saying it had run out of money, and the relationship between the impoverished United States territory and its unlikely saviors fell apart, setting up an extraordinary political and financial fight over Puerto Rico’s future. On the surface, it is a battle over whether Puerto Rico should be granted bankruptcy protections, putting at risk tens of billions of dollars from investors around the country. But it is also testing the power of an ascendant class of ultrarich Americans to steer the fate of a territory that is home to more than three million fellow citizens. The investors with a stake in the outcome are some of the wealthiest people in America. Many of them have also taken on an outsize role in financing political campaigns in the aftermath of the Supreme Court’s 2010 Citizens United decision. They have put millions of dollars behind candidates of both parties, including Hillary Clinton and Jeb Bush. Some belong to a small circle of 158 families that provided half of the early money for the 2016 presidential race. More:

http://www.nytimes.com/2015/12/20/us/politics/puerto-rico-money-debt.html

Fake bomb forces diversion of Air France flight

A Paris-bound Air France flight from the tiny East African nation of Mauritius made an emergency landing Sunday in Mombasa, Kenya, because of a suspicious package that turned out to be a fake bomb, authorities said. The Kenya Airports Authority said all 473 people aboard Flight 463 were screened at Mombasa’s Moi International Airport and taken to hotels, while Kenyan authorities combed the plane for clues and other devices, the authority said on Twitter. “The object, believed to be an explosive device has successfully been retrieved from the aircraft,” the authority said. Later, Air France CEO Frederic Gagey said the package, found in a bathroom, was made simply of cardboard and a kitchen timer made to look like a bomb. “We find this behavior stupid,” he said. “It causes damage and is absolutely unacceptable.” Kenyan Interior Minister Joseph Nkaissery told CNN four people had been arrested in connection with the case. The Associated Press and the Kenyan Daily Nation, citing security sources they did not identify because they were not authorized to speak with the press, said six passengers were being held for questioning. CBS News, citing a police official who declined to be identified, said that during the flight a passenger found the package, which looked like a “stopwatch mounted on a box.” The passenger notified the crew, and preparations began to divert the Boeing 777, CBS said. A passenger who spoke to journalists in Mombasa described the scene on the plane. “The plane just went down slowly, slowly, slowly, so we just realized probably something was wrong,” Benoit Lucchini of Paris told CBS and other outlets. “The personnel of Air France were just great, they were just wonderful. So they keep everybody calm. We did not know what was happening.” Air France has been the target of bomb scares and threats at least four times since the Nov. 13 Paris attacks that left 130 dead. On Dec. 8, a Paris-bound Air France flight from San Francisco was diverted to Montreal after an anonymous threat was later determined to be bogus, the airline said. On Nov. 18, a flight from Los Angeles was diverted to Salt Lake City and a flight from Washington was diverted to Halifax, Nova Scotia. Both threats turned out to be hoaxes.

http://www.usatoday.com/story/news/world/2015/12/20/air-france-kenya-bomb-scare/77658778/?csp=breakingnews

Behind the Black Flag: The Recruitment of an ISIS Killer

Hassan Aboud’s practiced baritone belied the malevolence in his words. “Oh Darraji!” he sang. “Our state provided us ammunition and sent us to assassinate you.” That state is the self-proclaimed Islamic State, also known as ISIS or ISIL, the terror group that controls territory in Syria and Iraq and has recently projected violence to Ankara, Beirut, Paris and San Bernardino, Calif. A soft-spoken double-amputee sometimes carried to meetings by fellow gunmen, Mr. Aboud is an Islamic State commander who also directs a network of assassins, including those who killed Darraji, a former subordinate, with bullets and flame. The recording of his singing circulated among past associates this year. A taunting dark requiem, it serves as evidence and confession. Mr. Aboud, who defected from Syria’s rebels to the terrorist group in 2014, was admitting to previously unsolved killings of former friends. “We plucked Adeeb Abbas’s head,” he continued, naming another of his one-time deputies, blasted from a motorcycle by a roadside bomb. “We spilled his filthy blood.” He then vowed to kill more, as a male chorus chanted to those marked to die: “We will liquidate every traitor.” More:

http://www.nytimes.com/2015/12/21/world/middleeast/isis-recruitment-killer-hassan-aboud.html?emc=edit_na_20151220&nlid=53476364&ref=cta&_r=0

Blatter and Platini banned by FIFA for eight years

FIFA President Sepp Blatter and European soccer boss Michel Platini were both banned from soccer for eight years on Monday for ethics violations, leaving the global game leaderless as it struggles with a swirl of corruption cases. The pair, who were also fined, had been suspended in October while an investigation was carried out into a 2 million Swiss franc ($2.02 million) payment that soccer’s global governing body made to Platini in 2011, with Blatter’s approval. The decision means that Blatter’s 17 years at the helm of world soccer will end in disgrace, and spells the end of Platini’s hopes of replacing the 79-year-old in a presidential election in February. The Swiss, who spent four decades at FIFA, came out swinging, holding a news conference to tell reporters that he was sorry only that the president of FIFA was being treated as a “punching ball”. “I will fight for me and I will fight for FIFA,” said Blatter, unshaven and with a sticking plaster on his cheek, but defiant. He said FIFA’s Ethics Committee had no right to relieve him of his duties and that he would challenge the decision in FIFA’s Appeals Committee and, if necessary, the Court of Arbitration for Sport in Lausanne, Switzerland, and in the Swiss courts. The committee said it had not found evidence that the payment, made at a time when Blatter was seeking re-election, constituted a bribe, which meant the men were spared potential lifetime bans. More:

http://www.reuters.com/article/us-soccer-fifa-idUSKBN0U40S320151221

Meet ISIL’s Most Dangerous Affiliates

With startling speed, the Middle Eastern terrorist organization known as ISIL has burst into the local news in Western nations, associated with attacks in Paris and now, if indirectly, with the mass shooting in San Bernardino, California. This might have shocked Americans and Parisians for whom the group was long a distant-sounding threat, but for close observers of the organization, ISIL’s global strategy should come as no surprise. In fact, ISIL has pursued an international expansion campaign from the moment it declared its “caliphate” in June 2014. While the group solidifies its proto-state in parts of Iraq and Syria, it also is expanding its would-be caliphate regionally—and preparing for the apocalyptic war it desires with the West. To do that, it’s fostering affiliates in Muslim-majority areas and directing and inspiring terror attacks in the wider world. And for the U.S., this means that defeating ISIL will require not just combatting the group in Iraq and Syria, and countering its messaging and recruitment of foreign fighters. It also will require serious attention to ISIL’s growing affiliates in other nations. How widespread are these affiliates? This is a crucial, if underappreciated part of the challenge ISIL now poses. Our counterterrorism research team has been tracking ISIL’s activity through everything from social media to satellite imagery, and we’ve begun assembling a detailed portrait of ISIL’s formal affiliates in Egypt, Libya, Afghanistan, Pakistan, Yemen, Saudi Arabia, Algeria, Russia and Nigeria. Looking ahead, ISIL also appears to be preparing to establish entities in Bangladesh and Tunisia, where it has launched a spate of attacks, and another in Somalia, where some militants have declared allegiance to ISIL. Its growth strategy is sophisticated and systematic, much like a multinational corporation expanding by acquisition. Rather than build affiliates from the ground up, ISIL co-opts and changes existing militant groups or networks, some of which have splintered from Al Qaeda. Potential affiliates must consolidate factions, select a leader and present a military plan to ISIL’s leadership for approval, according to ISIL’s own standards. ISIL then chooses whether to establish a wilayat, or province, in the affiliate’s operating area. ISIL’s leaders help these affiliates to become more brutal and effective by exporting military training and expertise. ISIL calls for international recruits to reinforce its strongest partners; it also provides military training and funding to some affiliates. The relationship benefits both parties. ISIL gains a responsive global network, while the affiliate receives an influx of capabilities and cash. More:

http://www.politico.com/magazine/story/2015/12/isil-paris-san-bernardino-affiliates-213438#ixzz3uxqEzih4

ISIS and the Abuse of History

The rapid rise of ISIS and the attempted establishment of its anachronistic caliphate, along with a seeming omnipresence that has allowed it to wantonly strike out in brutal terrorist attacks abroad, has left many reeling in shock and disbelief. Political commentators have tried to account for the alarming alacrity and sheer audacity of the phenomenon by shining a critical light on the recent history of western intervention in the Middle East. Indeed the emergence of ISIS cannot be understood without taking into account the invasion and occupation of Iraq in 2003; the wanton destruction of the country’s infrastructure in its wake; the dismantling of its military and security apparatus, which left insecurity and power vacuums; the installing of a divisive, sectarian Shiite political administration in Baghdad; and the broader context of decades of western support for Middle Eastern despots and dictators at the expense of their people. The ISIS propaganda machine has been busy capitalising on the unintended consequences of disastrous western foreign policy in recent years to legitimise not just its goals, but its very existence. As historians, however, we must be aware of the context of a much deeper history of western intervention in the Middle East than political commentators suggest, in part because ISIS manipulates a much longer historical legacy of western intervention for its own ends in its propaganda and recruitment efforts. There are numerous examples of ISIS invoking a tendentious reading of history to justify violence and legitimise its world-view, but perhaps the most striking of these can also offer insights into just how precarious its historical narrative really is. – See more at:

http://www.historytoday.com/akil-n-awan-and-warren-dockter/isis-and-abuse-history#sthash.NQvIRC14.dpuf

National

 

JPMorgan to Pay $307 Million for Steering Clients to Own Funds

 

JPMorgan Chase has agreed to pay $307 million to settle accusations that it improperly steered clients to the company’s in-house mutual funds and hedge funds. From 2008 to 2015, brokers and financial advisers in several divisions of JPMorgan gave preference to investment products created by the bank’s asset management division when deciding where to put client money, regulators said on Friday.

In some cases, regulators said, the clients were put into products with higher fees, which earned JPMorgan more money, even when the same JPMorgan product was available for a lower fee.

“The undisclosed conflicts were pervasive,” the head of enforcement at the Securities and Exchange Commission, Andrew J. Ceresney, said in a conference call. The settlement is a black mark for JPMorgan’s asset management division, a business that the company has been aggressively expanding and that has been seen as particularly promising in the new regulatory environment. The bank admitted wrongdoing in the settlement. “We have always strived for full transparency in client communications, and in the last two years have further enhanced our disclosures in support of that goal,” said Darin Oduyoye, a spokesman for JPMorgan’s asset management division. “The disclosure weaknesses cited in the settlements were not intentional and we regret them,” he said. “We remain confident in our investment process and are proud of the way we manage money.” JPMorgan will pay $267 million to the S.E.C. and an additional $40 million to the Commodity Futures Trading Commission. More:

 

http://www.nytimes.com/2015/12/19/business/dealbook/jpmorgan-to-pay-307-million-for-steering-clients-to-own-funds.html?ref=dealbook

 

Hospitality and Gambling Interests Delay Closing of Billion-Dollar Tax Loophole

 

WASHINGTON — In the span of a mere 11 days this month, $1 billion in future federal tax payments vanished. As congressional leaders were hastily braiding together a tax and spending bill of more than 2,000 pages, lobbyists swooped in to add 54 words that temporarily preserved a loophole sought by the hotel, restaurant and gambling industries, along with billionaire Wall Street investors, that allowed them to put real estate in trusts and avoid taxes. They won support from the top Senate Democrat, Harry Reid of Nevada, who responded to appeals from executives of casino companies, politically powerful players and huge employers in his state. And the lobbyists even helped draft the crucial language. The small changes, and the enormous windfall they generated, show the power of connected corporate lobbyists to alter a huge bill that is being put together with little time for lawmakers to consider. Throughout the legislation, there were thousands of other add-ons and hard to decipher tax changes. Some executives at companies with the most at stake are also big campaign donors. For example, the family of David Bonderman, a co-founder of TPG Capital, hasdonated $1.2 million since 2014 to the Senate Majority PAC, a campaign fund with close ties to Mr. Reid and other Senate Democrats. TPG Capital has large holdings in CaesarsEntertainment and helps run a Texas-based energy company, both of which stand to benefit from the last-minute change. “For Senator Reid, it was important, as he represents Nevada, to help the large employers in his state,” said Kristen Orthman, a spokeswoman for Mr. Reid. She noted that Caesars, MGM ResortsInternational and Boyd Gaming, all Nevada-based casino companies, could benefit. A spokesman for Mr. Bonderman said he had played no direct role in pushing the cause, but did not dispute that his company was involved in the discussions with congressional staff members.

Both Ms. Orthman and the spokesman for Mr. Bonderman said it would be wrong to presume his contributions to Mr. Reid had played any role in the help his companies received. More:

 

http://www.nytimes.com/2015/12/21/us/politics/hospitality-and-gambling-interests-delay-closing-of-dollar1-billion-tax-loophole.html?emc=edit_th_20151221&nl=todaysheadlines&nlid=53476364&_r=0

 

A New Investment Opportunity: Helping Ex-Convicts

Every year, the government spends billions of dollars on programs designed to help America’s neediest citizens. In many cases, whether these programs work is anyone’s guess. Less than $1 out of every $100 of federal government spending is “backed by even the most basic evidence that the money is being spent wisely,” wrote Peter Orszag, the former head of the Office of Management and Budget, and John Bridgeland, the former director of the White House Domestic Policy Council, in a 2013 piece in The Atlantic. In their article, Orszag and Bridgeland advocate for a “moneyball for government,” arguing that an era of fiscal scarcity should force Washington to become more results-oriented. A new partnership among New York State, 40 private investors, and a nonprofit called the Center for Employment Opportunities seeks to apply this sort of thinking to an area of policy that has been particularly resistant to interventions: lowering the recidivism rate in an era of growing prison populations. The investors, including private philanthropists and former Treasury Secretary Larry Summers, have put up a total of $13.5 million to fund an expansion of the work that an organization called the Center for Employment Opportunities (CEO) already does with people coming out of prison. CEO’s model is simple:  It prepares people who have criminal records for the workplace, gives them up to 75 days of temporary employment, and then helps them find jobs of their own. With the $13.5 million, CEO will work with an additional 2,000 clients, targeting the highest-risk people. But the expansion of the program isn’t charity: The project is a so-called “Pay for Success” initiative, modeled after social-impact bonds, which were first used in the United Kingdom five years ago. The basic idea is that investors fund a program that has a promising approach, putting in place extensive data-collection points so that they can track the program’s results. The investors are betting on the idea that the program can do a better—and less expensive—job of providing a given service than the status quo. If they’re right, and the program meets certain expectations—in this case the benchmarks for success are to reduce recidivism by eight percent and increase employment by five percent—the government will have saved money in less prison spending. The government then pays back the investors with its savings. If the program succeeds, investors can earn a return. If it exceeds those goals substantially, investors can get a bigger return, which in this case is capped at 10 percent. The state at no point spends more money than it would have spent incarcerating the 2,000 individuals anyway. More:

http://www.theatlantic.com/business/archive/2015/12/reducing-recidivism/421323/

 

Islam Is All-American

 

As American Muslims find themselves at the center of a heated debate over religious freedom, it’s important to remember that our nation’s founders contemplated these very issues since before the creation of the United States. “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the Pursuit of Happiness.” So begins the preamble of the Declaration of Independence, adopted by the Continental Congress on July 4, 1776, which announced that the American colonies regarded themselves as a new nation. The new nation would struggle to make that proposition a reality for all, including African slaves, women, and other religious and ethnic minorities. In times of real or perceived danger, this proposition has been tested: In 1882, for example, the Chinese Exclusion Act, a sweeping prohibition on the immigration of Chinese workers, was passed in the wake of anti-Asian hysteria. In 1919 and the 1950s, the “red scare” caused many innocent Americans to be unfairly accused of being communist sympathizers. American Jews, Catholics, and Mormons faced decades of prejudice and often violence. After Pearl Harbor, over 120,000 Japanese-American citizens were forced from their homes and placed in camps. Today, it’s the five to seven million Americans who happen to be Muslim who have been stereotyped and demonized. GOP presidential candidate Donald Trump has called for the registration of all Muslim Americans, the warrantless surveillance of all Muslim places of worship, and a ban on all Muslim travel and immigration, “They’re not coming to this country if I’m president,” he said this week in the Republican presidential debate in Las Vegas. “We have a problem in this country: It’s called Muslims. We know our current president is one. You know he’s not even an American…when can we get rid of ’em?” one of Trump’s supporters bellowed at a campaign rally in New Hampshire in September. Trump encouragingly nodded along: “We need this question,” he agreed, and promised that “we’re going to be looking at that and plenty of other things.” Such vitriolic sentiment stands in stark contrast to the unifying message of the most recent GOP occupant of the White House, President George W. Bush, in whose administration I was honored to serve for both terms. During the 2000 campaign for example, Bush praised the faith of Americans who regularly attended a “church, synagogue, or mosque,” met with Muslim American supporters across the country, and visited a prominent Islamic center in Michigan — the first major presidential candidate from either party to do so. The GOP convention in Philadelphia was the first in either national party’s history to feature a Muslim prayer. And after Muslim American community leaders expressed their civil liberties concerns regarding a provision of Clinton’s 1996 immigration enforcement legislation, Bush publicly promised to repeal the provision in the second presidential debate with Vice President Al Gore.

 

http://foreignpolicy.com/2015/12/18/one-nation-under-allah-american-muslim-obama-trump/?utm_content=bufferfb2a6&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer

 

What Happened to the Common Core Debate?

 

The Common Core was expected to be a ubiquitous subject on the campaign trail in 2016. The education standards had, over time, become a political football as conservatives condemned them as federal overreach. It’s so far hardly been the case. Governors in the race, like Jeb Bush, have backed away from using the term because of its negative connotation among the electorate, even if he still stands by the standards. Should he gain traction moving into the presidential primary it might become more relevant as early-voting states—and other governors, like Chris Christie—grapple with the standards. The Common Core State Standards Initiative, known as the Common Core, is a set of academic standards for mathematics and reading for all ages. State school chiefs and governors collaborated to develop the standards, but since its rollout in 2009, it’s become a point of contention. A common criticism being that the standards aim to nationalize education, although they’re applied at the state level and weren’t ever explicitly mandated by the federal government. Forty-two states, the District of Columbia, and four territories have adopted the Common Core. Christie, the governor of New Jersey and a Republican presidential candidate, agreed to adopt the standards in 2010, but has since dropped his support. “The truth is that it’s simply not working,” he said earlier this year. The critique of the Common Core in part stemmed from the Obama administration’s Race to the Top initiative, which encouraged states to implement high standards, among other reform strategies, in exchange for grants. The competition at the root of Race to the Top sparked frustrations, as it gave the impression that the federal government was imposing the standards on the states, said Tamara Hiler, the policy advisor for education at Third Way.

The Common Core appeared to be at the forefront of issues to be tackled by presidential candidates come 2016. A year ago, The Washington Post had a headline that read “Common Core might be the most important issue in the 2016 Republican presidential race. Here’s what you need to know about it.” More:

 

http://www.theatlantic.com/education/archive/2015/12/what-happened-to-the-common-core-debate/421305/

 

Buy the Americana, hand your data to the GOP
From the photo of a blue “God Bless America” T-shirt at the top of the page to the barely visible disclaimer at the bottom, the online store called Delaware Crossing is blazing a new trail in political fundraising and data-gathering. Some political operatives also call it deceptive. The Americana-themed website sells goods seemingly designed to cross any partisan boundaries: a Declaration of Independence scarf, an Honest Abe tote bag, cuff links and mugs emblazoned with “USA,” and a flask “brought to you by the XXI Amendment” — as in the one that ended Prohibition. The site also offers a deal any consumer would welcome: free shipping in return for an email address. But the words at the bottom, in tiny white type on a light-blue background, make it clear that the store sits solidly on one side of the political divide: “Paid for by the NRCC,” it says, with a link to House Republicans’ campaign website. Online stores hawking polo shirts and mugs are nothing new among political groups, of course, and have become ubiquitous among nearly every 2016 presidential campaign — from Jeb Bush’s $75 guacamole bowl to Bernie Sanders’ “Babies for Bernie” bib. But Delaware Crossing, launched last month with next to no fanfare by the National Republican Congressional Committee, breaks new ground by selling merchandise with no explicit partisan ties — something neither political party has tried before. It’s a new way to raise money and gather the email addresses and other voter data that power modern campaigns, and both Democratic and Republican consultants say the store could bring in people who haven’t responded to more traditional fundraising asks. Then, once voter have donated or given their email address once, they are much more likely to respond to future campaign requests. More:
http://www.politico.com/story/2015/12/gop-campaign-website-data-gathering-delaware-crossing-216957#ixzz3uxe886um

 

Hip-Hop Stars Support Mississippi Rapper in First Amendment Case

 

WASHINGTON — Musical tastes at the Supreme Court run toward opera. On Monday, a glittering array of hip-hop stars will try to expand the justices’ musical horizons. In a brief supporting a Mississippi high school student who was disciplined for posting a rap song online, artists including T. I., Big Boi and Killer Mike will explain to the justices that rap music is a political and artistic juggernaut that deserves attention and First Amendment protection. “The government punished a young man for his art — and, more disturbing, for the musical genre by which he chose to express himself,” their brief says. The rappers urged the justices to hear an appeal from Taylor Bell, who was a high school senior when he was suspended and sent to a different school for posting a song on Facebook and YouTube that drew attention to complaints of sexual misconduct by two coaches. “Following a long line of rappers before him,” the brief said, “Bell saw an opportunity to confront injustice.” T. I.’s hits include collaborations with Justin Timberlake and Rihanna. Big Boi is a member of the hip-hop duo Outkast. Killer Mike is a performer and political activist whose collaboration with the rapper El-P, “Run the Jewels 2,” was on many 10-best lists last year. Despite their prominence, their brief seemed to assume that the justices know little about hip-hop. Of Killer Mike it said, “It probably is worth noting that he has never actually killed anyone.” It is indeed a good bet that most of the justices have other musical preferences. “My colleagues are all enamored of opera,” Justice Sonia Sotomayor said at the University of Tulsa last year. In an interview, Killer Mike took a dim view of the Supreme Court, saying it had gutted the Voting Rights Act. But he held out hope that the justices would treat the violent images in Mr. Bell’s song no differently than they would similar ones in folk, country, reggae — or opera. “Anyone who is learned in law,” Killer Mike said, “is capable of separating art and lyrics, whether you agree with them or not, and actual human behavior. I think the courts understand it when it’s Johnny Cash. I think they understand it when it’s Robert Nesta Marley.” It is true that Johnny Cash did not actually shoot a man in Reno just to watch him die. Bob Marley did not actually shoot the sheriff. Treating rap lyrics differently, Killer Mike said, “persecutes poor young men based on their class and color.” Mr. Bell, who raps as T-Bizzle, is now 22 and still pursuing a career in music. He sounded stunned on hearing the names of the stars who have come to his aid. “It makes me feel like a kid in a candy store,” he said. The case started in 2011, when Mr. Bell was a senior at Itawamba Agricultural High School in Fulton, Miss. (The school has been in the news before. In 2010, it canceled a prom rather than let a lesbian student attend with her girlfriend.) After several female students said they had been subjected to sexually charged comments and unwanted touching from two male coaches, Mr. Bell recorded a song to address the complaints. He did so away from school, at a professional studio, over the school’s winter vacation. The song is angry, catchy and full of profanity and violent images. “Looking down girls’ shirts, drool running down your mouth,” Mr. Bell sings of the coaches. “Going to get a pistol down your mouth.” School officials disciplined Mr. Bell, saying he was guilty of harassment, intimidation and, as they put it in an appellate brief, “threatening two named educators with gun-related violence.” Mr. Bell said the officials had badly misunderstood his point. More:

 

http://www.nytimes.com/2015/12/21/us/politics/hip-hop-stars-support-mississippi-rapper-in-first-amendment-case.html?emc=edit_th_20151221&nl=todaysheadlines&nlid=53476364

 

State/Local

 

How Speaker Hubbard’s Prosecutor Brought Stand Your Ground to Alabama

PELL CITY, ALABAMA – The use of Alabama’s “stand your ground” law is becoming more common in courtrooms across the state, and it all began with the help of William Van Davis, now the Acting Attorney General in the felony ethics prosecution of Speaker of the House Mike Hubbard, R-Auburn. So called “stand your ground” laws gained nationwide fame in relation to the George Zimmerman’s 2013 defense in the shooting death of African-American teenager Trayvon Martin in Florida. Years earlier – in 2006 – Alabama had passed its own version of the expansive self-defense legislation, which removes any responsibility to retreat as opposed to using deadly force for necessary self-protection. Until, 2010, though, that law wasn’t really used in the Yellowhammer State – until then, questions of self-defense typically went all the way to to trial, where the jury would be asked to decide the question of whether the defendant’s use of force was reasonable. Then, five years ago, enter W. Van Davis and Pell City Attorney Erskine Ramsay Funderburg. Davis and Funderburg, who saw a similar strategy being used in Florida courts, decided to employ the new 2006 provisions in the defense of a man who shot a relative. Davis and Funderburg asked Jefferson County Circuit Court Judge Tommy Nail for a hearing to decide whether their client was immune from prosecution because of the new “stand your ground” provisions in Alabama law. Judge Nail granted the hearing, ruled in the defendant’s favor, and the case was dropped. That was likely the first ever immunity hearing under “stand your ground” in Alabama, but definitely not the last. Immunity hearing have become more and more frequent lately, and the legal lines have become more and more gray, something Funderburg has acknowledged. “It has had unintended consequences,” Funderburg said, citing cases where in the Sunshine State where allegedly drug dealing defendants charged with murder attempt to use the law to their advantage because the victim is unable to testify. As for W. Van Davis, as Acting Attorney General, he likely won’t be answering questions on the issue anytime soon, but his role in the strategy’s foundations in Alabama are undeniable. “Before that [Davis’ case] we hadn’t heard of anyone using it. You’ve got more criminal defense attorneys using it now,” one Birmingham criminal defense lawyer has said. He says he’s begun using Davis’ strategy in his cases, too. Over twenty states have “stand your ground” statutes similar to Alabama’s.

http://alpolitico.com/how-speaker-hubbards-prosecutor-brought-stand-your-ground-to-alabama/

 

Retirement Systems of Alabama Latest Political Scrum

 

Retirement Systems of Alabama (RSA) is the administrator of the pension fund for employees of the state of Alabama. It is headquartered in Montgomery. David G. Bronner is the chief executive officer.

Under Bronner’s tenure, RSA has made a number high profile, large investments designed to enhance the return on pensioner’s core retirement funds. Its best known development, and almost certainly most successful, is theRobert Trent Jones Golf TrailThis is a chain of eleven golf course complexes throughout the state. Since the early 2000’s, RSA has been ranked among the 20 largest internally funded pension funds in the world. See legislator comments at link below. There is a very large sum of money at work inside the Retirement Systems of Alabama. It’s recent return on investment has been poor. From a medium and longer term  perspective, the RSA’s track record appears to be acceptable and within expected ROI ranges. Thus, one key question appears to be: “Is this just ‘a bad year’ in the market? Or, is this low 1% ROI a symptom of some larger issue?”. The larger, and almost certainly most critical, question is:  “How does the $15.2 billion pension shortfall in Alabama’s retirement system get brought into balance?” The legislators mentioned above – along with many others – seem intent on attempting to answer those questions. What happens beyond that milestone is yet to be seen. However, at this point, it appears the entire Retirement Systems of Alabama matter may well turn into the latest political scrum. If you are a Alabama state pensioner, you would be wise to stay closely tuned to this process, and exercise your voice to the appropriate parties as needed.

 

http://cullmantoday.com/2015/12/19/retirement-systems-of-alabama-latest-political-scrum/

 

Finance Director Threatens State Employees Who Speak with Media

 

MONTGOMERY—Acting Finance Director Bill Newton warned department heads to inform State personnel not to speak to the media, and report any contact to him immediately, or else.

On Thursday afternoon, Dec. 8, alreporter.com published an investigative report chronicling the failing implementation of the accounting software known as STAARS—the story was later updated on Dec. 9. Newton issues a directive concerning contact with the media on Dec. 10. In his directive, Newton issues a not-so-subtle threat to all employees stating, “Every media inquiry shall immediately be made known to the Finance Director. Any employee of the Department not authorized to communicate with the media shall refer any inquiry from the media to the Director. No employee of the Department of Finance shall initiate contact with the media or issue any communication that could reach the media concerning the operations, personnel, policies and activities of the Department of Finance or state government, unless the Director has given specific authority for such communication. Any inquiry not from the media that seeks information regarding the Department, shall be referred to the Legal Division to determine if the inquiry can be processed as a ‘Request To View Public Records’ or should be referred to the Director.”

SEE DIRECTIVE  He concludes with, “A violation of this policy shall immediately be reported to the Director.”

 

http://www.alreporter.com/finance-director-threatens-state-employees-who-speak-with-media/

 

The weird thing you need to know about Montgomery

 

There is something weird you need to know about Montgomery and, no, it has nothing to do with what lawmakers are doing in Alabama’s capital city. You probably know that the city of Montgomery is located in Montgomery County. What you may not realize is that the two aren’t named for the same person. Montgomery – the county – was created April 6, 1816 by the Mississippi Territory General Assembly. It was named for Major Lemuel Putnam Montgomery, a Tennessee attorney who fought in the Creek War. Major Montgomery died March 27, 1814 and was the first U.S. soldier killed at the Battle of Horseshoe Bend, which took place near present-day Alexander City. So, that’s Montgomery County. But then there’s the matter of the city of Montgomery. It’s not named for Putnam. Montgomery – the city – was founded Dec. 3, 1819, about two weeks before Alabama became a state. It is named for Gen. Richard Montgomery, a Revolutionary War officer who led the attack on Canada and was killed in the battle of Quebec. In 1822 Montgomery – the city – was named the seat of Montgomery – the county. The city became the state’s permanent capital in 1846; the capital of the Confederacy in 1861; and the capital of the civil rights movement in the 1950-60s. And the rest, they say, is history.

 

http://www.al.com/news/index.ssf/2015/12/the_weird_thing_you_need_to_kn.html#incart_river_home

 

State buys first piece of coastal land with BP money, but lags behind other Gulf states in restoration

 

Five years after the BP oil spill, Alabama has taken a first step toward permanently protecting its coastal marshes. It’s a small step, one that came only after years of hesitation from the state’s top officials. But it has finally happened. A tiny slice – less than half a percent — of the roughly $2 billion coming to the state was spent to purchase about 900 acres of land along the coast in Mobile County. These newly protected lands fit in the priority zones for coastal protection highlighted by AL.com in an April series – “How the secrets were spilled” – that marked the five-year anniversary of the BP oil spill. To be labeled one of the five priority zones, an area had to have a sizeable piece of coastal marsh, and a large and intact maritime forest that could provide high ground for the marsh to retreat to as sea levels rise. The best chunk of the new land fits into a priority area AL.com labeled “the Fowl River Corridor.” Here’s how we described it in the How the secrets were spilled series:  “This might be the preeminent prize in all our waters, a coastal river with two mouths, miles apart, each supporting vibrant marshes. Entering Fowl River at its mouth on Mobile Bay and traveling south to its other mouth on the Mississippi Sound, you pass through marshes unrivaled in Alabama for sheer acreage and species abundance. Home to osprey, bald eagles, yellow-crowned night herons and precious few homesteads, the marshes here are a biological dynamo…  If there were one chunk of marsh to save in Alabama, it would probably be this one. It is the engine that feeds the exceptionally productive waters of Portersville Bay, Heron Bay and much of Mobile Bay.”

While the new land is an important acquisition and safeguards a rare forest type, the story behind the purchase highlights the challenges ahead as state politicians, environmental interests and the feds clash over how to spend the windfall. But more on that later. First, a pat on the governor’s back for protecting a small piece of one or our rarest habitats. The new property lies at Fowl River’s mouth on Mobile Bay. There, shallow, brackish bayous cut a maze-like trail through ninety-three acres of marshland. The marsh is surrounded by several hundred acres of a most unusual forest type, one almost non-existent along the shores of Mobile Bay or anywhere else on the Gulf Coast.  More:

 

http://www.al.com/news/index.ssf/2015/12/state_buys_first_piece_of_coas.html#incart_river_index

 

Alabama Patriots, NRA, ALFA endorse Shelby for re-election

U.S. Sen. Richard Shelby, R-Ala., picked up the endorsement this week of the Alabama Patriots, a tea party group with more than 1,000 members across the state. The endorsement came a week after Shelby received the backing of the NRA; he’s also endorsed by the Alabama Farmers Federation. Shelby is running for re-election in 2016, and is facing four challengers in the March 1 Republican primary.

Danny Joyner, commander of the Alabama Patriots, said Shelby was the only contender in the election to reach out to the group for its endorsement. The Alabama Patriots only considers candidates for an endorsement if they formally request one, but Joyner conceded it was highly unlikely that any of the challengers would have gotten his group’s backing over Shelby, who has served 37 years in the Senate.

“In this case, [the endorsement] was easy with the senator because he already had a Heritage [Action] rating of 99 percent,” Joyner told AL.com, referring to the conservative group.  “He’s done so much over the years. I want the state of Alabama to have the best political leadership in Washington for us. Shelby and [junior Alabama Sen. Jeff] Sessions give us that and I think Alabama is on the move.” Shelby, who has an A+ lifetime rating from the NRA, got the powerful gun rights group’s backing last week. The head of NRA’s PAC, Chris Cox, wrote a letter of endorsement that said Shelby has “consistently opposed all attempts to ban lawfully-owned firearms and magazine, and [has] stood strong against President Obama and former New York Mayor Michael Bloomberg’s gun control agenda.”  “Your leadership in the U.S. Senate in protecting the rights of law-abiding gun owners in unparalleled and is needed now more than ever,” Cox added. In October, the Alabama Farmers Federation rolled out its endorsement of Alabama candidates in 2016 and endorsed all incumbents, according to a spokeswoman for the group. In a statement sent to AL.com, ALFA President Jimmy Parnell said Shelby “shares the same conservative values that farmers and rural Alabamians hold so dear.” “Our country is at a critical juncture and Sen. Shelby’s tenure will put him in the best position yet to stand strong during these troubling times,” Parnell continued. “Sen. Shelby has proven time and again he can be trusted to do what is right for Alabama and our nation.”

 

http://www.al.com/news/index.ssf/2015/12/alabama_patriots_nra_alfa_endo.html#incart_river_index

 

Blogs/Opinions

 

How Martin Shkreli, the Teen Wolf of Wall Street, Thrived

PONDER for a moment the strange case of Martin Shkreli, the 32-year-old former hedge fund manager who was arrested by the Federal Bureau of Investigation at his Manhattan apartment before dawn on Dec. 17 and charged with securities and wire fraud. Even by the standards of the ego-driven, attention-grabbing, hedge fund industry, Mr. Shkreli’s alleged depravity stands out for its audacity and for his ability to keep the con going long after it should have been stopped dead in its tracks. Mr. Shkreli is best known, of course, as the pharmaceutical entrepreneur who bought orphaned, lifesaving drugs and then jacked up their prices to astronomical levels. But that’s not the behavior that got him arrested. Instead, if the F.B.I., federal prosecutors in Brooklyn and the Securities and Exchange Commission are to be believed, Mr. Shkreli had long been pulling off one scheme after another since his first hedge fund, Elea Capital, collapsed after a bad bet in 2007. In some corners of the business press, however, Mr. Shkreli was seen as something else altogether. In December 2012, Forbes named him to its list of “30 under 30 in Finance,” lionizing him as an activist investor best known for “battling billionaires and entrenched drug industry executives” through his various written screeds on social media. (Forbes provided a more critical take earlier this year.) Alan Geller, a former oil trader who invested with Mr. Shkreli, called him “a genius,” adding, “I’m betting he’s going to make a billion dollars rather than blow up.” Earlier this month, Business Insider praised him for “exposing the critical need for balance between the interests of shareholders and patients.” According to the indictment, the only group that Mr. Shkreli held in greater contempt than patients was shareholders. After his first hedge fund collapsed, he started a second, MSMB Capital, which also lost millions, although he assured investors that it was making them lots of money. Trying to obtain more capital, Mr. Shkreli told one investor in 2010 that MSMB Capital had assets of $35 million. In fact, it had $700. More:

http://www.nytimes.com/2015/12/19/opinion/how-martin-shkreli-the-teen-wolf-of-wall-street-thrived.html?smid=fb-nytimes&smtyp=cur&_r=0

 

Alabama hired Obamacare website developer to ‘fix’ accounting system

Ken Rollins, the vice president of the Alabama Council of the Vietnam Veterans of America, has good instincts. This week he told AL.com reporter Mike Cason that the state’s transition to a new accounting system seemed a lot like the Obamacare rollout of Healthcare.gov. Like a lot of organizations, Rollins’ group has a specialty car tag, and when the state sells one of those specialty tags, Rollins’ group gets $3. Or that’s what typically happens. Since September, they’ve gotten nothing. The Alabama Finance Department is in the middle of updating its accounting software, and the upgrade has been anything but smooth. Throughout the state, government vendors and contractors have been paid late, if at all. Tom Layfield, director of the Alabama Road Builders Association, told the Montgomery Advertiser this week that the late payments have been hurting some of their members. “One of my members said, ‘I’ve begged, borrowed and stolen everything I can. I really have to get paid now,'” Layfield told the Advertiser. The finance department has brought on extra staff to try to unstick the backlog of accounts payable. But that’s work the IT contractor should be doing. Two years ago, the state hired CGI Technologies and Solutions to upgrade the state’s systems. Under the four-year contract, the state will pay CGI $47 million. If CGI seems familiar to you, you might have a nose as good as Rollins’. You see, CGI has bungled another government project before — a little thing called HealthCare.gov, the online home of Obamacare. Even the president had to admit that the website’s rollout was a failure. The irony here is so thick we might have to wait until spring for it to thaw. Alabama Gov. Robert Bentley has been no fan or friend of Obamacare. Two years ago, the governor refused to expand Medicaid in Alabama, turning away as much as $3 billion of federal money. That funding could have provided as many as 300,000 working Alabamians caught in the healthcare gap — too rich for Medicaid, too poor for insurance — with coverage. But Bentley refused, calling Medicaid a broken system that creates dependency on government by giving folks something for nothing. He said that Obamacare and its namesake couldn’t be trusted. But at the same time Bentley was bashing on Obama at the expense of so many Alabamians, his administration hired the same contractor that bungled Healthcare.gov to upgrade the state’s accounting software. Now the state has a whole other broken system. And after the state handed out that no-bid contract, Bentley’s campaign got a little something from CGI’s PAC. According to campaign finance reports, CGI Technologies and Solutions Inc. PAC gave the governor’s campaign $2,500. That’s not crazy money by Montgomery standards, but what does a contractor from Virginia and a subsidiary of a Canadian conglomerate care about Alabama politics so much that it would write a check in the first place? And Bentley wasn’t the only one to get a campaign contribution. Other beneficiaries included Lt. Gov. Kay Ivey, State Senate Pro Tem Del Marsh, Sen. Vivian Davis Figures, Sen. Arthur Orr, Sen. Jimmy Holley, Sen. Phil Williams, Rep. Craig Ford, Rep. Napoleon Bracy and Rep. Alan Boothe. They don’t have a problem with a flawed, broken system. Not so long as the money coming back to Alabama goes into their campaign accounts.

http://www.al.com/opinion/index.ssf/2015/12/alabama_hired_obamacare_websit.html

 

How Jefferson County lawmakers’ incompetence and greed put hundreds of Alabama laws in jeopardy

 

The key to being an Alabama lawmaker is to never let your incompetence get in the way of your greed, and vice versa. It’s the political equivalent of crossing the streams or wearing a belt with suspenders. You can live with people assuming you’re a crook, just as you can make it with everyone taking you for an idiot.  But being a dumb crook? That’s embarrassing and potentially disastrous. Case in point, the Jefferson County legislative delegation, which might again have put hundreds of laws affecting counties and cities throughout the state at risk, all because of its own greed and incompetence. The Jefferson County’s legislative delegation isn’t like some others. It’s the play within a play, or rather, the circus within a circus. When Jefferson County speaks, the rest of the state’s lawmakers roll their eyes, and the gears of Montgomery grind to a halt. If it wasn’t a joke already, House Speaker Mike Hubbard made it into one. When that bunch of lawmakers fusses and fights, Hubbard tells the school children in the gallery that they’ve witnessed something special — a disagreement in the Jefferson County local delegation. It always leaves me worried that those kids don’t really get it, and leave thinking they’ve seen some endangered species. But this is no bald eagle they’ve seen. Jefferson County bickering is as common as crows on a power line. Which is why it was so remarkable last year, when the delegation agreed on something — to effectively extend a one-cent sales tax in Jefferson County, maybe forever. If you live in Jefferson County, you’ve been paying that tax already for the last 10 years. Former County Commission President, now federal inmate, Larry Langford used it to finance $1 billion of school construction, and unlike some of the other disastrous bond schemes Langford put together, this one actually worked. School systems throughout Jefferson County built new buildings, whether they needed them or not, but more importantly, the county’s sales tax has been enough to pay off the debt on time, maybe even ahead of schedule, at which point the tax was supposed to go away. But taxes never really go away, do they? (Unless you live in Baldwin County.) County officials, community leaders and lawmakers couldn’t stand the idea of money staying in the pockets of Galleria and Summit Christmas shoppers. So they came to an agreement: Jefferson County would refinance that debt to lower its payments but stretch them out over a longer time, and this would leave millions each year that could be spent on all sorts of things — the county general fund, the museum, the transit system. Now you could argue that these are all worthy causes, but goodwill and the public’s interest aren’t what brought the county delegation together. Pork did — $3.6 million a year to be divided up and divvied out by the local delegation. This is the sort of thing reelections are bought with. The problem was that the lawmakers didn’t follow their own rules. Under the Alabama Constitution, the Legislature must pass the state budgets first. It can get around this requirement by first passing what’s called a Budget Isolation Resolution, which allows a bill to jump ahead of the budgets. Each year, there are hundreds of budget isolation resolutions, and the budgets inevitably pass last. But here’s where they screwed up: A BIR, as it’s called, needs three-fifths of a quorum (half) of all lawmakers to pass. When you do the math, that comes out to be 32 votes. The Jefferson County bill’s BIR had 13. A couple of conscientious citizens sued, and this week a Jefferson County Circuit Court judge ruled that the Legislature had violated its own rules and that the bill was passed illegally.  The county has said it will appeal the decision to the Alabama Supreme Court. In a statement, this week the county attorney, Carol Sue Nelson, said, “The county respectfully disagrees, and notes that hundreds of other local acts affecting cities and counties throughout the State have been adopted using the same procedure.” And here’s the thing: She’s right. The Alabama Legislature — not just Jefferson County’s delegation — in its laziness and incompetence has passed lots and lots of bills this way, even though you or I could read the plain language of the law and tell what they were doing was illegal. If Jefferson County’s pork bill passed illegally then all those others did, too, but nobody noticed or nobody cared. But that little potentially disastrous problem can’t be ignored anymore because Jefferson County wasn’t content to be merely incompetent. It had to be greedy, too.

http://www.al.com/opinion/index.ssf/2015/12/how_jefferson_county_lawmakers.html

Morning Money

FIRST LOOK: CFTC CHAIR SLAMS BUDGET DEAL — So maybe the anti-regulatory crowd did score a big win the omnibus after all. Per statement to M.M. from CFTC Chair Timothy Massad on the budget deal: “The failure to provide the CFTC even a modest increase … sends a clear message that meaningful oversight of the derivatives markets, and the very types of products that exacerbated the global financial crisis, is not a priority. The CFTC’s appropriation simply doesn’t match our vast responsibilities, especially as the markets we oversee have grown enormously in size, importance and technological complexity. …

“The CFTC’s hardworking staff has diligently implemented the directives of Congress to reign in excessive risk in the swaps market. … But sensible regulation requires resources, and strong rules are meaningless unless they can be enforced properly. While passing the federal budget was an important step forward, and it’s appropriate that the SEC received an increase, I am deeply disappointed that Congress and the Administration couldn’t find even a small increase for the agency’s critical work in a budget of $1.1 trillion.”

BIGGEST WEEKEND WINNER: STAR WARS — M.M. saw it with the family. Enough nostalgia for us older folk, great new characters and story for the kids. M.M. has a few quibbles but not enough to take away from a great experience. No spoilers, don’t worry. And the money, my God the money. We saw it at a 9:00 a.m. showing on Sunday and hordes were gathered well before the gates opened.

LATimes: “The Force, from a galaxy far, far away, rose from its slumber this weekend to assist Disney’s ‘Star Wars: The Force Awakens’ at the box office. Grossing an estimated $238 million in the U.S. and Canada, the seventh installment of the George Lucas-created franchise now holds the record for the largest opening weekend of a film ever.

“The box office has not seen a performance like this since Universal’s ‘Jurassic World’ opened in June ($208.8 million) and, prior to that, 2012’s premiere of ‘Marvel’s The Avengers’ from Disney ($207.4 million). .. Ahead of the weekend, those familiar with audience tracking surveys predicted an opening weekend of $180 million to $220 million. But by Friday afternoon, those projections began to look increasingly conservative.” http://lat.ms/1Pjm1Vi

RUNNER UP: HILLARY CLINTON — She was far from flawless in the (little watched) Democratic debate but she easily outclassed Bernie Sanders and Martin O’Malley. She committed two significant flubs, saying we are “finally where we need to be” fighting ISIS (really??) and suggesting there is an actual ISIS recruiting video featuring Donald Trump’s anti-Muslim comments and policies.

There apparently is no such video. Clinton could easily have just stuck with arguing that ISIS could make recruiting videos out of Trump (because sure they could) without coming across as making it up. Still, Clinton continues to roll to the Democratic nomination regardless of what Sanders is doing in his neighboring New Hampshire.

SECOND RUNNER UP: VLADIMIR PUTIN — Apparently Donald Trump just can’t get enough of the guy. The billionaire has basked in Putin’s praise and defended the Russian president on ABC’s “This Week” when pressed over allegations that Putin has had journalists murdered (never mind the support for Assad, the murders of other innocents and all the rest). “In all fairness to Putin, you’re saying he killed people. I haven’t seen that. I don’t know that he has. Have you been able to prove that?,” Trump said. Apparently George Stephanopoulos has not personally been able to prove it.

BIGGEST LOSER: STEVE HARVEY — M.M. does not watch beauty pageants. But apparently Steve Harvey (who is awesome on Family Feud) crowned the wrong person last night in the Miss Universe contest. http://usat.ly/1JndvhJ

SPAIN IN CHAOS — FT’s Tobias Buck and Ian Mount in Madrid: “Spain was heading for political uncertainty on Sunday night, after a general election that produced a deeply fragmented parliament with little chance of a stable government majority over the next four years. Mariano Rajoy, the prime minister and leader of the centre-right Popular party, will once again command the biggest bloc in parliament. With more than 99 per cent of the vote counted, the PP had won 29 per cent and 123 out of 350 seats in the legislature. But the result also made clear that neither Mr Rajoy nor any of the other party leader would have an easy path towards an overall parliamentary majority. ..

“The opposition Socialists were on course to win 90 seats, followed by the anti-austerity Podemos party with 69 seats. The centrist Ciudadanos party — the most likely of partners for Mr Rajoy — was on track to obtain a worse than expected 40 seats. With his supporters chanting “champions” outside the PP’s Madrid headquarters, Mr Rajoy pronounced himself the election winner, pointing out that his party had won 1.6m more votes and 33 more seats than the Socialists”

THE YEAR IN MONEY — New interactive Bloomberg graphic this morning: “2015: The Year in Money”: “Huge Mega-mergers. Anemic hedge fund returns. Billion-dollar venture capital deals. 2015 was a year of record highs and lows: Blackstone bought up more companies than anyone else; Netflix was the best performer in the S&P 500; The value of U.S. IPOs was the lowest since 2009; VC firms made a record six billion-dollar deals; and more job cuts were announced than in any year 2009” http://bloom.bg/1Yv1Jc8

GOOD MONDAY MORNING — Welcome to a shortened Christmas week. We are with you through Thursday and then go dark until Monday, Jan. 4th. Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben. Earlier risers can catch M.M. on CNBC’s Squawk Box at 6:40 a.m.

OIL KEEPS TANKING — Reuters: “Asian share markets advanced on Monday after a lackluster start, defying a dive on Wall Street, and the price of Brent crude threatened to plumb lows last seen in 2004 on renewed worries over a global oil glut. Brent crude prices LCOc1, which touched a seven-year low of $36.32 overnight, were trading at $36.47 at 0245 GMT as production around the world remained at or near record highs, and a strong dollar following last week’s U.S. rate increases weighed on demand. A break of $36.20 would take it to ground last trod in 2004. U.S. crude CLc1 lost 25 cents to $34.48 a barrel, close to Friday’s 2015 lows.” http://reut.rs/1YqvuzX

DEM DEBATE REWIND — POLITICO’s Gabriel Debenedetti: “Hillary Clinton on Saturday night looked past the debate stage upon which she stood, turning the evening into a Democrat vs. Republican battle rather than focusing on the two remaining contenders badly trailing her in national polls. … The night also brought a de-escalation in the blowup involving Bernie Sanders’ campaign’s viewing and downloading her voter data information, with Sanders apologizing, despite indications that his campaign wanted to keep up the fight over the issue. …

“But the more lasting theme of the evening was Clinton’s attempt to position herself as the inevitable Democratic pick, despite the fact that Sanders is still edging her in New Hampshire, the setting of Saturday night’s showdown.” http://politi.co/1ODrO3f

WRONG-O-METER — POLITICO’s Danny Vinik investigates … Clinton’s claim – and finds no evidence, as yet, of Donald Trump being used to recruit ISIL forces” http://politi.co/1me78bf

SNOOZE FEST — POLITICO’s Glenn Thrush: “The press filing center at St. Anshelm’s College in Manchester resembled the parking lot of a baseball stadium whose team had been eliminated from the playoffs. By the reality-TV standards of the Trump-headlined Republican mud-fights, the substance-heavy, we-all-agree-on-the-basics discourse of the third Democratic debate was a narcoleptic’s dream”

BEZOS TAKES STRONG HAND AT THE WASH POST — WSJ’s Lukas I. Alpert and Jack Marshall: “When Washington Post owner Jeff Bezos received an email from a reader complaining about the time it took for the mobile app to load, he immediately fired off a note to the newspaper’s chief information officer. The message was simple: fix it. … Mr. Bezos helped solve the problem by suggesting loading low-resolution images onto the app first, allowing the page to load on readers’ screens more quickly. In the more than two years since Mr. Bezos bought the Post from the Graham family for $250 million, the billionaire Amazon.com Inc. founder has increasingly made his mark on how the paper is run.

“His focus on customer experience has become a near mandate within the news operation. Executives say Mr. Bezos has encouraged experimentation and building scale ahead of short-term financial gains — an approach that seems to mirror how he relentlessly built Amazon into an online retail giant. ‘Jeff has told us repeatedly that we have a long runway, but we are trying to make prudent business decisions,’ Publisher Fred Ryan said. ‘We are looking at the long term and not just for quick and temporary gains.’ Mr. Bezos has been willing to invest in the paper’s transformation, although executives say they aren’t working with a blank check.”

LOBBYISTS SCORE BIG OMNIBUS WIN — NYT’s Eric Lipton and Liz Moyer: “In the span of a mere 11 days this month, $1 billion in future federal tax payments vanished. … As congressional leaders were hastily braiding together a tax and spending bill of more than 2,000 pages, lobbyists swooped in to add 54 words that temporarily preserved a loophole sought by the hotel, restaurant and gambling industries, along with billionaire Wall Street investors, that allowed them to put real estate in trusts and avoid taxes. … They won support from the top Senate Democrat, Harry Reid of Nevada, who responded to appeals from executives of casino companies, politically powerful players and huge employers in his state.

“And the lobbyists even helped draft the crucial language. The small changes, and the enormous windfall they generated, show the power of connected corporate lobbyists to alter a huge bill that is being put together with little time for lawmakers to consider. Throughout the legislation, there were thousands of other add-ons and hard to decipher tax changes. Some executives at companies with the most at stake are also big campaign donors” http://nyti.ms/1NxfSCz

COOK: FALSE CHOICE ON ENCRYPTION VS. SECURITY — BI’s Biz Carson: “Apple CEO Tim Cook remains a strong supporter of encryption, even as governments continue to question the method of securely gathering data in wake of terrorist attacks. To Cook, it doesn’t have to be one or the other. ‘I don’t believe that the tradeoff here is privacy versus national security,’ Cook said during an interview on “60 Minutes”. ‘We’re America. We should have both.’ … People are using their iPhones to store private sensitive information, like their health and finances. Even conversations with friends or confidential business secrets should be able to be stored securely on an iPhone, Cook believes. …

“The National Security Agency and government officials have been arguing that encryption was a matter of natural security — a trade-off Cook clearly doesn’t buy. … Right now, if a government agency gives Apple a proper warrant, they will hand over what they have. But if the information is encrypted, like private messages, Apple simply may not have the information to give them. Apple is happy to comply with the government’s warrants, but it stops short of welcoming them into its users private, encrypted messages. ‘The reality is that if you put a backdoor in, then it becomes a backdoor for everybody, good or bad,’ Cook said.” http://read.bi/1PflkdG

THE RETURN OF FRANK QUATTRONE — WSJ’s Maureen Farrell: “When Aruba Networks Inc. was considering a sale of the wireless-networking company to Hewlett-Packard Co. last year, the board of directors turned to an investment banker who made his name during the last technology boom. Frank Quattrone worked for 4½ months trying to nail down a deal. But then there was a problem. H-P Chief Executive Meg Whitman refused to negotiate with Mr. Quattrone because he had been so difficult to deal with in previous deals, says someone close to Ms. Whitman.

“Aruba brought in another investment bank to finish the $3 billion takeover agreement. That firm was paid $7.7 million for its work. Mr. Quattrone’s firm got $30 million. In this new era of rising tech stars, the 60-year-old Mr. Quattrone is again one of the biggest deal makers, often beating competing bankers at much larger firms who are a generation younger than he is. Mr. Quattrone is still controversial and still does business much as he did in the dot-com era. A relentless networker who isn’t shy about telling potential clients about the high prices he got in earlier deals, he also ruffles the feathers of adversaries by pushing beyond the usual rough and tumble of deal-making” http://on.wsj.com/1PfqBlx

POTUS Events

President Obama is vacationing in Hawaii.

Floor Action

Congress is in recess for the holidays.

Krebs Daily Briefing 18 December 2015

Thomas L. Krebs, Securities Litigation, Regulation and Compliance Attorney Lawyer (c)2014 Brandon L. Blankenship
Thomas L. Krebs
(205)401-2383

International

Navy SEALs, a Beating Death and Claims of a Cover-Up

The three Navy SEALs stomped on the bound Afghan detainees and dropped heavy stones on their chests, the witnesses recalled. They stood on the prisoners’ heads and poured bottles of water on some of their faces in what, to a pair of Army soldiers, appeared to be an improvised form of waterboarding. A few hours earlier, shortly after dawn on May 31, 2012, a bomb had exploded at a checkpoint manned by an Afghan Local Police unit that the SEALs were training. Angered by the death of one of their comrades in the blast, the police militiamen had rounded up half a dozen or more suspects from a market in the village of Kalach and forced them to a nearby American outpost. Along the way, they beat them with rifle butts and car antennas. A United States Army medic standing guard at the base, Specialist David Walker, had expected the men from SEAL Team 2 to put a stop to the abuse. Instead, he said, one of them “jump-kicked this guy kneeling on the ground.” Two others joined in, Specialist Walker and several other soldiers recounted, and along with the Afghan militiamen, they beat the detainees so badly that by dusk, one would die. The four American soldiers working with the SEALs reported the episode, which has not previously been disclosed. In a Navy criminal investigation, two Navy support personnel said they had witnessed some abuse by the SEALs, as did a local police officer. Separately, an Afghan detained with the man who died provided a detailed account of mistreatment by American troops and Afghan militiamen in an interview with The New York Times. The SEAL command, though, cleared the Team 2 members of wrongdoing in a closed disciplinary process that is typically used only for minor infractions, disregarding a Navy lawyer’s recommendation that the troops face assault charges and choosing not to seek a court-martial. Two of the SEALs and their lieutenant have since been promoted, even though their commander in Afghanistan recommended that they be forced out of the elite SEAL teams. “It just comes down to what’s wrong and what’s right,” Specialist Walker said in a recent interview. “You can’t squint hard enough to make this gray.” More:

http://www.nytimes.com/2015/12/17/world/asia/navy-seal-team-2-afghanistan-beating-death.html?emc=edit_na_20151217&nlid=53476364&ref=headline

Pope Francis just recognized Mother Teresa’s second miracle. Now she will become a saint.

Mother Teresa, the Catholic nun famous for her work among the poor in Calcutta, India, is going to be made a saint, the Vatican has announced. The Vatican must recognize two miracles in order to canonize a saint, and Mother Teresa was put on a fast track toward sainthood after her death in 1997. Pope John Paul II recognized the first miracle, required for beatification, in 2003; Pope Francis has now recognized a second. The miracle, according to the church, is that a Brazilian man whose family prayed to Mother Teresa was miraculously cured of brain tumors in 2008, while he was in a coma and about to enter surgery. The first miracle attributed to Mother Teresa also dealt with the disappearance of a tumor, this one of a woman in India. Mother Teresa will probably be canonized in September as part of the pope’s Jubilee Year of Mercy. Sainthood for Mother Teresa is hardly a surprise — even in her lifetime, she was called a “living saint” for devoting her life to the poor and to people living in slums. She won the Nobel Peace Prize in 1979. But after her death, the narrative about her life has become more complicated. Her letters, published in 2003, revealed that she suffered a crisis of faith for decades, which James Martin described in the New York Times as “almost unparalleled in the lives of the saints.” Other critics, most prominently Christopher Hitchens, have questioned her alliances with the rich and unethical, such as Haitian dictator Jean-Claude Duvalier, from whom she raised funds; the conditions in her home for the dying; and her opposition to birth control. Mother Teresa viewed suffering as ennobling, and critics argue she did not do enough to relieve patients’ pain. “She had most of the attributes of sainthood: a dauntingly selfless life, devotion to a higher cause, rude single-mindedness, a thick skin, and a capacity to wring the withers of the rich and powerful,” the Economist wrote when she died in 1997.

http://www.vox.com/2015/12/18/10567314/mother-teresa-pope-francis-saint

National

House approves massive government spending bill

WASHINGTON — The House approved a massive government spending bill Friday morning, setting up Senate votes later in the day that are expected to send that measure and a package of tax breaks toPresident Obama for signing. Friday’s House vote to pass the $1.1 trillion catch-all spending bill was 316-113House lawmakers passed the $622 billion package of tax breaks on Thursday. Both measures will now be combined into one bill and sent to the Senate for final approval, ending legislative business for the year. The White House said Obama would sign the legislation. The tax and spending package contains a mix of conservative and liberal priorities that was generally viewed as an acceptable compromise. The tax package, which includes new and renewed tax cuts for individuals and businesses that are especially popular with Republicans, passed the House 318-109 with 77 Democrats voting in favor. It permanently extends the enhanced child tax credit and earned income tax credit that were boosted by the 2009 economic stimulus, and extends through 2019 a popular corporate tax break that allows companies to more quickly depreciate the value of new equipment. “This legislation prevents tax increases, creates more job opportunities, and makes it easier for Americans to do their taxes,” said House Ways and Means Chairman Kevin Brady, R-Texas. “That’s a great gift, an overdue gift, for American taxpayers.” Republicans are less enthusiastic about the 2,000-page government funding measure, which combines separate fiscal 2016 spending bills for every federal agency into one massive bill. GOP lawmakers wanted to add provisions blocking Obama’s policies on immigration, wetlands rules, armor-piercing bullets and other issues, but those didn’t make the final cut. The measure does, however, give Republicans a major win by lifting the 40-year ban on crude oil exports. It also removes the threat of a government shutdown for the rest of the fiscal year. House Democratic Leader Nancy Pelosi, D-Calif., described the spending bill as a major victory for Democrats but said she “didn’t want to advertise it too much” before Friday’s votes for fear Republicans would try to change it She urged her colleagues late Thursday to support the measure. Pelosi called the end of the oil export ban “atrocious policy” but applauded the extension of tax credits for solar and wind energy projects. She said that in exchange for lifting the ban on oil exports, Republicans dropped their demands for defunding Planned Parenthood — a key GOP goal for much of the fall —  and for blocking Syrian refugees, rolling back gun rules and other issues. “I feel almost jubilant about what is in this appropriations bill,” she said. Sen. John Cornyn, R-Texas, offered fainter praise for the deal, calling it “the antithesis of perfect.” “But In the end, nothing passes Congress and gets signed into law by the president without some level of bipartisan cooperation and both chambers of Congress working together with the executive branch,” Cornyn said.. “And this legislation does include several wins for the American people.” Lawmakers seemed motivated to avoid a political meltdown over the fiscal 2016 budget that would further sour the public’s view of Congress. The tax breaks and spending provisions cover everything government does — and limit how federal money can be spent. For example, the legislation bars Obama from closing the Guantanamo Bay detention facility or spending money on a new facility to house terrorists. It also bars the U.S. from implementing the United Nations Arms Trade Treaty. But it does not include provisions barring implementation of Obama’s plan to defer deportations for children brought to the U.S. illegally and some of their family members. The combined bill bars the government from listing the sage grouse as an endangered species, but it does not include Republican-backed provisions to prohibit theEnvironmental Protection Agency from regulating air emissions related to global climate change. It does not prohibit the administration from resettling Syrian refugees in the U.S., as many Republicans and some Democrats had hoped, but it does include new anti-terrorism limits on visitors from 38 countries who can travel to the U.S. without a visa. There was plenty to irk opponents of the legislation, especially the decision not to allow amendments. “This is a recipe for corruption,” said Sen. John McCain, R-Ariz. “A handful of people behind closed doors worked and then 48 hours or whatever before the vote, presented it to us as take it or leave it.” McCain complained that the legislation includes money for ships that the Navy said it didn’t need, and a huge increase in medical research paid for out of Pentagon funds. “I’m not proud of this. In fact, I’m a bit ashamed,” he said. Democratic leaders labeled the tax package a gift to powerful special interests that isn’t paid for, meaning it will add to the federal debt. But they largely embraced the idea of a government funding bill that lasts more than a few weeks or months. “No one — as it never happens — is going to get everything they want or prevent everything they oppose from being included,” said House Minority Whip Steny Hoyer, D-Md. “Businesses and workers across our country deserve the certainty that comes from ensuring that our government remains open and serving the American people.”

http://www.usatoday.com/story/news/politics/2015/12/18/congress-poised-pass-spending-tax-measures/77495592/?csp=breakingnews

 

Senate panel wants Defense chief’s email

The Senate Armed Services Committee has asked for copies of Defense Secretary Ash Carter’s personal emails after Carter acknowledged he had used a personal email account earlier this year. “With all the public attention surrounding the improper use of personal email by other Administration officials, it is hard to believe that Secretary Carter would exercise the same error in judgment,” Sen. John McCain, an Arizona Republican and committee chairman, said in a statement.. “The Senate Armed Services Committee has requested copies of the emails and will be conducting a review to ensure that sensitive information was not compromised.” Carter told CBS News in Baghdad Thursday that using the personal email was a mistake. “It’s a mistake, and it’s entirely my own,” Carter said, adding that “I stopped” when it was clear the practice was against policy. Carter acknowledged using the account to conduct official business during his first few months as Pentagon chief, the Defense Department said in a statement released Wednesday. The statement followed a New York Times article saying it had obtained 72 of Carter’s work-related emails that he sent or received from a personal email account. The Timessaid it was given the emails in response to a Freedom of Information Act request. “After reviewing his email practices earlier this year, the secretary believes that his previous, occasional use of personal email for work-related business, even for routine administrative issues and backed up to his official account, was a mistake,” the statement from spokesman Peter Cook said. “As a result, he stopped such use of his personal email and further limited his use of email altogether.” More:

http://www.usatoday.com/story/news/politics/2015/12/17/ashton-carter-presonal-email/77468396/?csp=dailybriefing

 

Funding deal hits backlash over increase in foreign worker visas

The $1.1 trillion omnibus funding bill includes language that would dramatically increase the number of visas available for foreign workers, setting off alarm bells among conservatives and labor unions. Congressional leaders quietly slipped the provision into the 2,009-page funding bill, with rank-and-file lawmakers only discovering it Wednesday morning. The move immediately sparked protests from across the political spectrum. The provision could more than triple the number of H-2B visas for foreign workers seeking jobs at hotels, theme parks, ski resorts, golf courses, landscaping businesses, restaurants and bars. The move is intended to boost the supply of non-agricultural seasonal workers. “These foreign workers are brought in exclusively to fill blue collar non-farm jobs in hotels, restaurants, construction, truck driving, and many other occupations sought by millions of Americans,” said Sen. Jeff Sessions (R-Ala.), an outspoken critic of President Obama’s immigration policies, in a statement. “The GOP-led Congress is about to deliver Obama a four-fold increase to one of the most controversial foreign worker programs. The result? Higher unemployment and lower wages for Americans,” he said. Sessions estimates the number of H-2B visas will soar from 66,000 to 250,000 because of the language in the omnibus. He took to the Senate floor Wednesday afternoon to protest the maneuver. Chris Chmielenski, a spokesman for NumbersUSA, a group that advocates for less immigration, criticized Speaker Paul Ryan (R-Wis.) for allowing the provision into the omnibus after pledging to look out for American workers in his first speech to the House after taking the gavel. Ryan called on Congress to look after working-class families after he won election to the Speaker’s office in October. More:

http://thehill.com/homenews/senate/263529-funding-deal-hits-backlash-over-increase-in-worker-visas

 

Neighbor of San Bernardino Attackers Faces Terrorism Charges

 RIVERSIDE, Calif. — Enrique Marquez, who supplied the assault rifles used to kill 14 people in a massacre in San Bernardino, Calif., this month, was arrested Thursday and charged with crimes including conspiring to support terrorists. Court papers show that he and one of the attackers had steeped themselves for years in radical and violent Islamist propaganda, including the teachings of the extremist cleric Anwar al-Awlaki and bomb-making techniques from an Al Qaeda magazine. Mr. Marquez, 24, has told investigators that he and an attacker, his longtime friend and neighbor, Syed Rizwan Farook, had been discussing radical Islam since 2007. They made plans in 2011 and 2012 to launch deadly attacks on the college they had attended and on a busy California freeway. Mr. Marquez bought not only the guns used in the San Bernardino shooting but also the smokeless powder that Mr. Farook used to build pipe bombs, according to documents filed in Federal District Court here on Thursday. In addition to the terrorism charge, he faces a count of lying on gun purchase forms to conceal that he was really buying them for Mr. Farook, and one of defrauding the immigration system by entering into a sham marriage with a Russian immigrant. The court papers filed on Thursday offered the first picture of how Mr. Farook, an American-born Muslim whose parents are from Pakistan, became radicalized — long before the rise of the Islamic State — and who his influences were. The documents offer previously unreported details about his actions and attitudes, including his disdain for American Muslims who went into the military and killed other Muslims, along with the specifics of the attacks he and Mr. Marquez had plotted and the weaponry they amassed. They paint a vivid picture of Mr. Farook’s efforts to radicalize Mr. Marquez, urging him to listen to speeches by a Qaeda leader and read a magazine published by a Qaeda affiliate that provided bomb-building instructions.

http://www.nytimes.com/2015/12/18/us/san-bernardino-enrique-marquez-charges-justice-department.html?emc=edit_na_20151217&nlid=53476364&ref=cta&_r=0

Shkreli, CEO slammed over drug prices, $5M bond

The reviled poster boy of drug price hikes perpetuated a Ponzi scheme on investors in hedge funds and a pharmaceutical company he founded and previously led, federal prosecutors and regulators alleged Thursday. Martin Shkreli, a pharmaceutical industry entrepreneur previously criticized for raising the price of life-saving drugs such as those used to fight HIV and cancer, was arrested early Thursday in New York City and charged on criminal and civil charges of securities fraud. Shkreli’s arrest was not related to drug prices, but instead stems from allegations by federal prosecutors that he illegally took stock from Retrophin — a biotechnology company he started in 2011 and was ousted from in 2014 — to pay off unrelated business debts. More:

http://www.usatoday.com/story/money/2015/12/17/martin-shkreli-arrested/77469752/?csp=breakingnews

Shelby to oppose spending bill he loaded with goodies

Sen. Richard Shelby loaded up the $1.1 trillion spending bill with pet provisions, including one measure worth hundreds of millions to a rocket manufacturer with operations in his home state. The cagey lawmaker also fought hard for language protecting red snapper fisheries on Alabama’s Gulf Coast, even issuing a news release bragging about his efforts. “That is why I fought tirelessly for several provisions to be included in the omnibus appropriations bill that I believe will help respond to the serious challenges facing anyone who wants to fish for red snapper in the Gulf,” Shelby said in the release. But in an only-in-Congress twist, Shelby, a very senior member on the Appropriations Committee, still plans to vote against the sprawling omnibus package. He’s citing the lack of language to restrict Syrian refugees as the reason. The move, however, could make the Republican senator the unofficial chairman of the “hope yes, vote no” caucus on Capitol Hill. It also demonstrates the potency of immigration as an electoral issue in Alabama and the power of Shelby’s fellow home-state senator, Republican Jeff Sessions, over the controversial topic in the Southern state. GOP insiders note that Alabama’s Republican primary is on March 1, and Shelby is loath to do anything that would create distance between him and Sessions on immigration before that date. Sessions, the hardest of hard-liners on immigration issues, has warned that passage of the omnibus is part of a plan by President Barack Obama — with the tacit acceptance of Speaker Paul Ryan (R-Wis.) and Senate Majority Leader Mitch McConnell (R-Ky.) — to resettle tens of thousands of potentially dangerous Syrian refugees in the United States. Sessions says the White House is using the threat of a government shutdown to force Republicans to back down on any effort to block refugees from entering the country, or increase vetting for those who do. “If you don’t vote for it [the spending bill], you shut the government down and you’re a bad guy,” Sessions told Breitbart last week. “And that’s the way it’s been year after year after year.” So Shelby is voting against the omnibus package, despite his extensive and successful work to shape its contents. “While I support the inclusion of several conservative priorities and key provisions critical to Alabama in this year’s omnibus bill, I oppose the overall bill because it gives a blank check to President Obama to continue his dangerous Syrian refugee resettlement plan,” Shelby said in a statement Wednesday. “During this increasingly uncertain time in our nation, we simply cannot allow the president — who is more focused on gun control and climate change than national security — to unilaterally determine who can enter our country.” The Alabama Republican has already angered Sen. John McCain (R-Ariz.) and Georgia Republicans over what he included in the bill. McCain was infuriated at Shelby for inserting a provision into the 2,000-page bill allowing defense contractor United Launch Alliance — a joint venture of Boeing and Lockheed Martin that builds rockets in Alabama — to continue purchasing Russian rocket engines. The measure would reverse language that McCain included in the annual defense authorization bill that limited ULA to purchasing nine engines from Russia. McCain complained that Shelby never spoke to him first about the provision. “Of course not, of course not, of course not. That’s not the way Sen. Shelby does business,” McCain told POLITICO on Wednesday. Shelby also included nonbinding language in the omnibus that affects a long-running water dispute between Alabama and Georgia officials, a matter that’s already in federal court.  More:

http://www.politico.com/story/2015/12/richard-shelby-oppose-sepnding-bill-216904#ixzz3ueFk40Ju

U.S. Chief Justice Roberts Overlooked Stock Conflict in Case

Chief Justice John Roberts overlooked a conflict of interest when the U.S. Supreme Court rejected two appeals in an environmental-cleanup case earlier this year. Roberts took part in the court’s Oct. 5 disposition of the case even though he or a close family member owned stock in Texas Instruments Inc., one of the companies that sought review. The oversight represents the second time in the court’s current term that a justice has participated in a case while having a stake in a company involved in the litigation. Roberts is one of three justices who have stock interests in at least a dozen companies, according to their annual financial disclosure reports. “There was a conflict that should have been caught but was not,” Kathy Arberg, the Supreme Court’s spokeswoman, said in an e-mail. She attributed the mistake to “human error.” Justice Stephen Breyer’s holdings created an issue Oct. 14 when he heard arguments in an energy regulation case that involved a Johnson Controls Inc. unit. At the time, Breyer’s wife held $33,000 worth of that company’s stock, but the justice hadn’t made the connection. She sold her shares the following day, after a reporter inquired. By all indications, neither conflict affected the outcome of the case. Still, the oversights are giving ammunition to those who say the justices should shed their individual stock holdings or put them in blind trusts. “The institution is in dire need of policy changes on recusals and stock ownership,” said Gabe Roth, executive director of Fix the Court, which first noticed the Roberts conflict. He suggested blind trusts as a way to “ensure these oversights do not continue to happen and that our most antiquated government body starts to comport with modern expectations of transparency.” Under the court’s rules, litigants are required to list all the parties to the case, and businesses must disclose any publicly traded parent company. Each of the nine justices’ chambers has its own system for checking for conflicts. Roberts or a family member owns from $100,001 to $250,000 in Texas Instruments, according to his 2014 disclosure report. By law, the justices can’t participate in a case when they own stock in a company that is a party to a case.

http://www.bloomberg.com/politics/articles/2015-12-18/u-s-chief-justice-roberts-overlooked-stock-conflict-in-case

Police Probe Threats to Judge Who Took Oath on Quran

The backlash against a New York City judge who was administered the oath of office using a Quran has become a police matter. The New York Police Department hate-crimes unit is investigating threats made to newly elected Brooklyn Civil Court Judge Carolyn Walker-Diallo. According to the New York Post: Judge Carolyn Walker-Diallo got two calls at 11:30 a.m. Tuesday at the courthouse on Schermerhorn Street, law enforcement sources said on Wednesday. “You are not an American because you got sworn in on a Koran,” a male caller said. “You’re a terrorist; we are going to get you,” a woman said in the second call…The phone threats followed a backlash on Facebook and Twitter after the judge posted a video of her swearing-in ceremony last Thursday on Facebook. “Hate Crimes Task Force is investigating threats made to a Brooklyn Civil Court judge. There are no new updates at this time,” an NYPD spokesperson told Law Blog Thursday. Ms. Walker-Diallo is believed to be Brooklyn’s first Muslim judge. The former compliance officer for a Brooklyn non-profit was elected to the bench last month as a Democrat. A spokesman for the state court system, David Bookstaver, told the Post that incoming judges aren’t required to use religious texts when they take an oath to uphold the law. Most, he said, don’t use a religious text in the ceremony, and he couldn’t recall another instance of a judge using the Quran. Those who swear in on a religious text generally put a hand on a copy of the Bible or the Talmud, the compilation of oral Jewish law. Mr. Bookstaver declined to comment on the threats or the police investigation.

http://blogs.wsj.com/law/2015/12/17/police-probe-threats-to-judge-who-took-oath-on-quran/

House Approves Bill to End Tax-Free Real Estate Spinoffs

Wall Street may have to come up with a new strategy to replace a type of deal that has been popular among activist investors and companies. On Thursday, the House of Representatives approved legislation including provisions that would remove the tax advantages of spinning off corporate real estate into a separate, publicly traded real estate investment trust. The end of such tax-free spinoffs will generate $1.9 billion in additional tax revenue in the coming years, the Joint Committee on Taxation has estimated. Hilton Worldwide may end up being the last big company to reap the benefits of this type of deal. The company, which the Blackstone Group took public about two years ago, is working on a plan to spin off its hotels into a REIT, according to a person briefed on the matter. The hotel operator has requested that the Internal Revenue Service deem the transaction tax-free. These spinoffs have been a popular tactic of activist investors who have pushed companies to unlock cash by separating themselves from their real estate holdings. Publicly traded REITs own property or mortgages and are not taxed so long as they pass most of their income on to shareholders. Companies that own a lot of real estate — mall operators, restaurant chains and even casinos — have looked at a spinoff to a real estate investment trust as a way of getting a higher value for those properties and using the cash to pay off debt. There have been 15 tax-free REIT spinoffs since 2010, including five last year and three this year, for a total of $21.6 billion, according to FactSet. This summer, Darden Restaurants completed the $747 million spinoff of Four Corners Property Trust. Even before Thursday’s vote, regulators and lawmakers signaled their intention to shut off the spigot. The I.R.S. said in September that it would not give any more private approvals on these kinds of spinoffs while it studied the matter more closely.

http://www.nytimes.com/2015/12/18/business/dealbook/house-approves-bill-to-end-tax-free-real-estate-spinoffs.html?ref=dealbook

Congress Gives Americans a Tax Gift for Christmas

Congress’s Christmas-tree tax bill contains surprising presents: permanent extensions of tax benefits for individuals that have long been temporary. The Protecting Americans from Tax Hikes Act of 2015, or PATH, is expected to pass in current form by the middle of next week. The bill’s passage will end a frustrating cycle for millions of taxpayers. In the past, lawmakers have enacted popular temporary provisions, such as deductions for schoolteachers’ supplies or state sales taxes, and then left taxpayers hanging until the last minute as to whether the provisions would be renewed. For example, the provision allowing IRA charitable transfers—a highly popular measure that helps charities and lowers taxes for many older Americans—has been renewed five times since 2006, with four of them coming after Thanksgiving. The nadir was 2012, when the break wasn’t re-enacted until early in 2013, and many donors were confused by rules for making retroactive 2012 gifts. The current bill doesn’t permanently extend all popular breaks. Tax relief for mortgage-debt forgiveness, “bonus” depreciation, and a credit for alternative-fuel vehicles expire in 2016.  Here are notable benefits slated to become permanent:

http://www.wsj.com/articles/congress-gives-americans-a-tax-gift-for-christmas-1450434600/?mod=e2fb

Virginia Schools Shut Down After Islam Is Included in World Religion Lesson

Be careful what you write — or what you ask high school children to write — in parts of Virginia. Apparently, having a go at the centuries-old skill of Arabic calligraphy by copying out the Islamic statement of faith could do funny things to your brain. Parents of pupils at Riverheads High School in Augusta County managed to get themselves so worked up when their children were taught something about Arabic culture — during a World Geography class when they learn about different cultures — that schools across the district had to be closed down. During a section where students learn about different world religions, teacher Cheryl LaPorte decided to demonstrate the intricacies of Arabic calligraphy, the earliest form of which dates back to the end of the 7th century, by asking the students to try to copy the shahada — the Islamic statement of faith, a basic proclamation that is one of the five Pillars of Islam. The students were “not asked to translate the statement or to recite it,” said Augusta County Superintendent Eric Bond in a statement. Rather, the teacher aimed to give students an “idea of the artistic complexity of calligraphy.” The exercise was taken from a teacher workbook called World Religions. However some of the students objected, refused to do the calligraphy, and alerted their parents who claimed LaPorte had tried to “indoctrinate” their children. And if you’re going to indoctrinate students into a religious faith, then it had better be the right one. “She gave up the Lord’s time. She gave it up and gave it to Muhammad,” said Kimberly Herndon, a mother who organized a protest at a school meeting. The meeting was held on Tuesday at Good News Ministries church in Greenville near Riverheads High School, reported News Leader, with police officers present and everyone searched on entry.

https://news.vice.com/article/virginia-schools-shut-down-after-islam-is-included-in-world-religion-class?utm_source=vicenewsfb

State/Local

Don Siegelman released from solitary, says son

Joseph Siegelman said Thursday his father, governor of Alabama from 1999 to 2003, returned to the general population at a federal prison in Oakdale, La. on Dec. 11, about a day after his family said the governor was in solitary. But Don Siegelman’s communication privileges will remain limited until Dec. 30. “He still cannot call or have any visitors, where my mom and sister are concerned, and friends and family will not have the opportunity to speak with him over the holidays,” Joseph Siegelman said. Gov. Siegelman went to the facility’s Special Housing Unit following a phone interview on the Thom Hartmann Program, a liberal talk show, on Oct. 15. Officials limited Siegelman’s communications to written correspondence. The family said they had not been able to speak with him or received an explanation for his confinement. Joseph Siegelman said Thursday they were still uncertain on the reasons. Officials appeared to impose the limits on his telephone and visitation privileges on Oct. 29. Corrections officers use solitary confinement for anything from protection of an inmate to punishment for breaking prison rules. Prison administrators make those determinations. Oakdale declined to comment on Siegelman’s status last week. Joseph Siegelman, who serves as one of Gov. Siegelman’s defense attorneys, spoke to his father on the phone Wednesday. He said the governor was glad to be out of solitary. “He’s going to start to eat better,” he said. “He had to eat whatever they put through the door or window they have. Hopefully things will get back to normal as far as life in prison is concerned.”

http://www.montgomeryadvertiser.com/story/news/politics/southunionstreet/2015/12/17/don-siegelman-released-solitary-says-son/77478244/

 

Pension committee member says RSA recommendations coming

 MONTGOMERY — One of the leaders on a panel of lawmakers that has been studying the Retirement Systems of Alabama said Thursday he thinks the committee is looking at some potentially major changes to the system.

“To be honest with you, I don’t think we can continue on without some changes,” said Rep. Lynn Greer, R-Rogersville. He’s co-chairman of the Legislature’s committee on public pensions, which was created this spring.

Greer wasn’t ready to discuss details of possible changes, but said he thinks legislation will be ready by the start of the 2016 legislative session in February. The committee has vowed not to change the benefits of current retirees or employees and teachers. The committee is expected to meet again in mid-January. Sen. Arthur Orr, R-Decatur, on Thursday said the group possibly could recommend changes on a few issues, including RSA governance and retiree health insurance. Orr is the other co-chair of the study committee. The group has been looking at what other states do in their pension systems. Orr said he wants to know more about whether any changes “would move the needle” in terms of reducing the state’s risk in the system. Some states have gone from a defined benefit plan such as RSA’s, where retirees have a fixed monthly income benefit based on their age at retirement, years of service and salary, to a hybrid plan. Hybrids include a reduced defined benefit plan, along with a 401(k)-type plan. RSA’s December newsletter shows in 2015, both the teachers’ and public employees’ retirement systems earned about 1 percent in returns. The three-year average is about 9 percent. RSA is requesting $961 million from the state for the 2016-17 budget year. The growing annual contribution from the state has been a concern for lawmakers. Meanwhile, the system’s funded rate is about 67 percent. RSA chief David Bronner blamed the 1 percent return on the stock market.

“Most of the loss that was recognized on Sept. 30 has already been made up,” he said Thursday. He and other RSA officials at an Employees’ Retirement System meeting Thursday said they didn’t know what sort of proposals may be coming. Greer said the committee is looking at what’s been done in a handful of states, including California and Kentucky. Kentucky a few years ago moved to a hybrid cash-balance pension system. That state was advised by the Pew Charitable Trusts, which also is advising lawmakers in Alabama. Bronner on Thursday said those hybrids don’t always save money and can mean lesser benefits for retirees. Bronner also said he thinks most lawmakers will leave the system alone if they hear from state employees and teachers. Asked if he was going to rally members to contact their legislators, he said he may write in the next monthly newsletter that, “I’ve done my job, now I need some help from you guys to make sure that you have teachers in the future and that you have state employees.” Greer said many in the state don’t fully understand how the pension system works or the state’s liability. “I think the time has come. We have to get our heads out of the sand and address the problem,” Greer said.

http://www.decaturdaily.com/news/local/pension-committee-member-says-rsa-recommendations-coming/article_db06fd26-e198-5bb5-bd80-d1193acaf44b.html

 

$18,000 in taxpayer cash goes to one council member’s cell phone bill

Birmingham City Council President Johnathan Austin – already known for roaming the nation and the world on the city dime — ran up thousands of dollars in international roaming fees on his city cell phones and other devices in the first 10 months of the year, according to city records. Fees for his city issued cell phone, iPad and mobile hotspot pushed his bills so far this year to $18,255, or more than seven times anyone else’s in the offices of the mayor or council. His usage bill alone was three times higher than the week-long taxpayer-paid trip he took to Germany in December for the Hamburg Aviation Forum. The bills – which city workers say could have been minimized if Austin had contacted the information management department in advance, allowing them to negotiate a better temporary rate with the service provider– dwarf all others in the officers of the council and mayor. Second in charges was mayoral spokeswoman April Odom, with $2,600 in charges. Next was Austin’s assistant Courtney Hunter, with $2,200. The mayor’s bill – like almost all members of council and the staffs, was less than $1,000. Only Austin, Odom, Hunter, Austin staffer Kamilah Gray, Councilman Jay Roberson, Councilman Marcus Lundy and Council Administrator Cheryl Kidd had bills over $1,000. Austin said he was surprised by the amount of the bills, saying he had never been notified of the amounts. He said he was unaware of any policy requiring employees to notify the city of their international travel. He said he will not stop using his devices because “I am an elected official 24-7 whether I am in the city or not. Elected officials have to stay in constant contact.” More:

http://www.al.com/opinion/index.ssf/2015/12/18000_in_taxpayer_cash_goes_to.html#incart_river_home

University of Alabama quietly testing fraternity brothers for drugs

Every week, several members of the University of Alabama’s Sigma Nu fraternity chapter are randomly chosen to report to a cluster of dingy offices on the bottom floor of the school’s Russell Hall and urinate in a cup. Though the compulsory exercise sounds like a rush-season hazing ritual, it is in fact a central component of a strict new anti-drug effort launched at the start of the fall semester. Beginning this academic year, UA has been quietly drug-testing active members of multiple Greek organizations, including the Alabama chapters of the prominent Sigma Nu and Sigma Alpha Epsilon (SAE) fraternities, in the first run of a mandatory screening regime that some experts say is the boldest and most extensive in the nation. Six current and former members of the impacted chapters told AL.com over the past month that they now require their members to submit to periodic urinalysis at a UA facility in order to maintain good standing with the organizations and the school. The university confirmed that it is drug-testing members of some Greek organizations, though it declined to say how many or which ones. In addition to testing urine, the university has played a role in testing samples of some fraternity members’ hair for evidence of drug use over a period of months. The mandatory drug testing has generated controversy among fraternity members who say that it invades their privacy, unfairly targets Greek organizations and drives abuse of risky, hard-to-detect drugs like Xanax.

http://www.al.com/news/index.ssf/2015/12/university_of_alabama_quietly.html#incart_river_home

Trial Judge Quashes Hubbard Motion

MONTGOMERY—On Wednesday, Judge Jacob Walker, III ruled that Speaker Mike Hubbard had improperly handled a subpoena and ordered the information sealed. He also added that the information was not relevant to the case. Court filings state the defense improperly used subpoenas by disregarding Rule 17.3, to gather documents, records and interviews. According to the State’s latest motion, “On October 14, 2015, Hubbard had the Clerk issue a subpoena to Administrative Office of Courts AOC seeking the production of records identifying the AlaCourt users that accessed the publicly filed documents in this case. AOC filed a motion to quash the subpoena on October 21, 2015. At the hearing on October 28, 2015 and again on November 9th the State objected to these documents. AOC and the defense later reached an agreement about the production of some of the subpoenaed records.” The State said, this was another example of Hubbard’s legal team mounting a fishing expedition to gather information, confusing the issue, and delaying the legal process. The hearing showed that Hubbard’s lawyers not only used the Court’s subpoena power to obtain documents for themselves, which prevented the Court from determining whether or not the parties should receive the documents, they also contacted at least one individual named in the AlaCourt records and questioned that person about accessing the Hubbard court file. Court Watcher said Judge Walker was swift and decisive during the hearing, so much so, that Hubbard’s criminal lawyer, J. Mark White was stutteringly, saying, “Yes, Sir, Yes, your Honor,” rather than employing his usual whining tone. Several who attended the hearing commented on Hubbard’s demeanor and appearance, saying he looked sullen and greatly overweight. Reportedly, Hubbard has incurred over $1.5 million in legal fees, is in arrears on payments to his defense attorneys, and is having difficulty raising money. Hubbard has primarily financed his criminal defense by using campaign contributions. According to those with knowledge of Hubbard’s fundraising scheme, third parties are calling around the State to prop-up his legal defense fund. The latest orders coming from the trial judge are not falling in Hubbard’s favor. He is set to stand trial on March 28, 2016, almost two years after his indictment.

http://www.alreporter.com/trial-judge-quashes-hubbard-motion/

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Morning Money

THE LAMENT OF THE BANK LOBBYISTS — Financial firm lobbyists are getting an earful from industry executives all over the country for failing to get much of anything into the omnibus (more on which from Zach Warmbrodt below). No big CFPB changes, no SIFI threshold changes, no DOL fiduciary rule slow-down. No nothing really. “We are hearing from some very disappointed and PO’d bankers,” one lobbying group official emailed. Another in his DC office earlier this week: “We don’t know what’s in this thing but it doesn’t look like good.” The anger among bankers is understandable but the political reality is that slipping Wall Street (or even Main Street) banking riders into must-pass bills is a good way to kill those bills these days. The omnibus needs a hundred or so Democrats to get through the House and that just would not happen with any significant Dodd-Frank rollbacks.

The days of these measures slipping through unnoticed are simply over. One comment from Sen. Elizabeth Warren and it’s off to the races. So while banking executives think many of the changes they are pushing are common sense relief that would benefit more than just their own bottom lines, most Democrats (and even many Republicans) simply don’t see it that way. It’s not so much a failure of the lobbyists (though they still get the incoming fire) as it is a complete shift in both the way the sausage gets made and the politics surrounding the banking industry. And Obama’s final year in office — with Hillary Clinton on the campaign trail — is not going to be the time for bankers to win big Dodd-Frank changes.

OMNIBUS OFF-TRACK? — POLITICO’s Jake Sherman, John Bresnahan and Lauren French: “The House overwhelmingly approved a $680 billion package of tax cuts even as the White House and House leaders in both parties scrambled to round up support for a $1.1 trillion spending bill scheduled for a vote Friday morning. … The tax package passed 318-109, with 241 Republicans — virtually the entire GOP Conference — voting yes. But the dynamics on the spending bill are far different, and at this time, passage is far from assured.

“The Capitol isn’t in full panic yet, but there does appear to be a rising level of concern on the Democratic side of the aisle that they will be short the votes needed to pass the omnibus spending bill. Liberals are angry that the bill includes language to lift the longstanding ban to export U.S. oil, and is silent on the debt crisis in Puerto Rico and other Democratic priorities … Should the measure fail — which many doubt it will — Congress would likely stay in session over the weekend. Government funding runs out on Dec. 22” http://politi.co/1Icr0pA

LEW LOOKS TO REASSURE DEMS ON PUERTO RICO — In a statement last night, Treasury Secretary Jack Lew: “The Administration has been clear that the fiscal situation in Puerto Rico is urgent. Congressional Democrats have worked to find a solution, and Speaker Ryan’s direction to the relevant Committees of the House of Representatives to work on a legislative solution reflects the need for Congress to act quickly.

“Any solution must include both independent oversight and an orderly process to restructure the Commonwealth’s debt. Providing restructuring authority to the people of Puerto Rico will require Congress to confront difficult interests and tough issues, but it is essential to protect the 3.5 million Americans who live in the Commonwealth. The Administration remains committed to working with Congress to address this crisis.”

SHELBY LARDS UP BILL … ONLY TO OPPOSE IT — POLITICO’s John Bresnahan: “Sen. Richard Shelby loaded up the $1.1 trillion spending bill with pet provisions, including one measure worth hundreds of millions to a rocket manufacturer with operations in his home state. … But in an only-in-Congress twist, Shelby, a very senior member on the appropriations committee, still plans to vote against the sprawling omnibus package. He’s citing the lack of language to restrict Syrian refugees as the reason.

“The move, however, could make the Republican senator the unofficial chairman of the ‘hope yes, vote no’ caucus on Capitol Hill. It also demonstrates the potency of immigration as an electoral issue in Alabama and the power of Shelby’s fellow home-state senator, Republican Jeff Sessions, over the controversial topic in the Southern state. GOP insiders note that Alabama’s Republican primary is on March 1, and Shelby is loath to do anything that would create distance between him and Sessions on immigration before that date” http://politi.co/1Pa4vB4

CRUZ: OBAMA WINS THE STIMULUS — Sen. Ted Cruz (R-Tex.) in POLITICO: “It’s Christmastime in Washington, D.C., and that can mean only one thing: Congress is once again playing Santa Claus. The names at the top of its list are the Washington Cartel: The big businesses and lobbyists who get in bed with career politicians to do nothing but grow government. And left off the list: the American taxpayer. … Before long, Republican leaders in the Senate and House intend to join hands with a majority of Congressional Democrats to pass a bill that funds President Barack Obama’s disastrous agenda well into 2016” http://politi.co/1YltUiK

GOOD FRIDAY MORNING — Congrats on completing another week that lasted 19 days. Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben

DRIVING THE DAY — Chances are good that Congress will clear the omnibus and skip town for two weeks but it’s not a lock … President Obama holds a news conference at 1:50 p.m., presumably to celebrate the omnibus but possibly to chide Congress for not getting it done … . After the news conference, Obama flies to San Bernadino, Calif., to meet with families of the victims of the terrorist attack. Following the meeting, Obama flies to Honolulu for vacation … Lew will conduct meetings in New York City

OBAMA PREPS FOR FINAL YEAR — POLITICO’s Edward-Isaac Dovere: “Hillary Clinton, Donald Trump and a loudly ticking clock aren’t explicitly mentioned in an internal White House memo mapping out President Barack Obama’s plan for 2016. But they’re defining it. The very calendar-conscious memo, according to White House aides, leans heavily on using the ‘conversations’ that have defined Obama’s recent media approach to push his own agenda. But he’ll also use them to subtly, then not-so-subtly, make the case for the Democratic nominee, whom Obama and everyone else in the White House assume (but won’t yet say out loud) will be Clinton.

“On Friday, Obama will use his annual year-end press conference to take a victory lap after what he and his aides gloat was an expectation-defying 2015, but also lay the groundwork for an eighth year that they insist will be different from any other. … Acknowledging privately that he flubbed his initial response to the Paris attacks, Obama’s aides are hoping to add more theater to his counterterrorism response. The actual strategy isn’t changing much. But with White House aides saying they feel like Americans are more worried about the immediate threat of terrorism in the wake of Paris and San Bernadino than at any point since 9/11” http://politi.co/1OaNL9x

FED HIKES … SOME RATES DROP — WSJ’s Katy Burne: “On the day the Federal Reserve implemented its plan to raise interest rates, driving up overnight borrowing costs, broader market forces conspired instead to drive other U.S. interest rates down. The Fed increased its overnight target rate for lending between banks early Thursday, hitting 0.35 percent. But yields on Treasurys — from one-month bills to 10-year notes — fell as demand from investors drove prices higher. … It is a conundrum that Fed officials have grappled with for months leading up to the decision to end seven years of near-zero rates.

“While the Fed can orchestrate a rise in its overnight target rate, buying and selling by investors worldwide largely dictate the movement of yields in the $12.8 trillion Treasury market, a forum that effectively sets the borrowing rates for everything from mortgages to corporate loans. Strong global demand for U.S. Treasurys, which tends to push down yields, is potentially creating a conflict with the central bank’s plans to raise U.S. interest rates. Treasurys are being sought out by numerous sources now, thanks to soft global growth, regulatory changes that increase interest from banks and money-market funds, among other institutions, and investors and banks boosting cash holdings” http://on.wsj.com/1JfwTx7

CORPORATE BONDS TAKE A HIT — FT’s Eric Platt: “Investment grade bond funds in the US have been hit with a record wave of redemptions, a week after two high-yield funds announced they would shutter and another barred withdrawals as the credit market showed further cracks … Investors withdrew $5.1bn from US mutual funds and exchange traded funds purchasing investment grade bonds — those rated triple B minus or higher by one of the major rating agencies — in the latest week, according to fund flows tracked by Lipper. The figures, the largest since Lipper began tracking flows in 1992, accompanied another week of $3bn-plus withdrawals from junk bond funds.

“Lipper put the total investor withdrawals from taxable bond funds in the week to December 16 at $15.4bn. The ructions in credit markets have been exacerbated by the closure of funds managed by Third Avenue and Lucidus, as well as the decision to bar redemptions from a Stone Lion credit fund. The figures underscore the skittishness in the US corporate bond market headed into the final days of the year. Analysts and portfolio managers have warned that defaults are likely to climb in 2016, as the slide in oil and other commodity prices weighs on the energy and materials industries”
http://on.ft.com/1Qwim7W

YELLEN DRAWS PRAISE — Larry Fink on Bloomberg TV: “I think she nailed it. It was not too hot, not too cold, right down the center. I think it was a very well scripted conference … And the most important thing, what she gave the market is clarity. I think the opportunity they missed in September, why the markets were so unsettled because we had no clarity on their actions. And in this case they really expressed exactly what they’re looking for.” http://bloom.bg/1Oyl1YQ

MORGAN STANLEY TO TRIP STOCK-TRADING — WSJ’s Justin Baer and Jenny Strasburg: “Morgan Stanley plans to trim as many as 5 percent of its stock-trading employees early in 2016, part of an annual exercise to cull some of its less critical staff … The cuts will affect about 100 people globally and are based solely on performance … They aren’t related to the Wall Street firm’s recent decision to slash about 25 percent of its debt traders and salespeople. Morgan Stanley’s executives expect to end 2016 with roughly the same number of equities employees the firm will have at the start of the year …

“Morgan Stanley isn’t alone in pruning its workforce annually, in both good and slower years, with rival Goldman Sachs … expected to shed some 5 percent of its employees in early 2016 as well. Across big banks, executives are looking for ways to cut costs, reducing headcount and travel budgets. Earlier this month, Morgan Stanley said it would take a $150 million charge related to cuts of 1,200 people firm wide, about 2 percent of the company’s overall workforce. That move included the elimination of about 470 fixed-income and commodities jobs for salespeople and traders. Those cuts reflect a slump in debt-trading revenue that set in during the summer months, and that now threatens to extend into 2016”

PHARMA BRO SHACKLED — NYT’s Julie Creswell, Stephanie Clifford and Andrew Pollack: “It has been a busy week for Martin Shkreli, the flamboyant businessman at the center of the drug industry’s price-gouging scandals. He said he would sharply increase the cost of a drug used to treat a potentially deadly parasitic infection. He called himself ‘the world’s most eligible bachelor’ on Twitter and railed against critics in a live-streaming YouTube video. After reportedly paying $2 million for a rare Wu-Tang Clan album, he goaded a member of the hip-hop group to ‘show me some respect.’

“Then, at 6 a.m. Thursday morning, federal authorities arrested Mr. Shkreli, 32, at his Murray Hill apartment. He was arraigned in Federal District Court in Brooklyn on securities fraud and wire fraud charges. In a statement, a spokesman for Mr. Shkreli said he was confident that he would be cleared of all charges. … Federal officials described his crimes as a quasi-Ponzi scheme in which he used money from his company to pay off money-losing investors in his hedge funds. An F.B.I. official called his business schemes a ‘securities fraud trifecta of lies, deceit and greed.’”http://nyti.ms/1mqRE43

NYSE/NASDAQ TEAM UP ON MARKET STRUCTURE — Bloomberg’s Robert Schmidt: “Two of the largest U.S. exchanges are forming a trade group to weigh in on market structure issues in Washington, moving to present a united front as regulators review complex and controversial issues that could have wide impact on how stocks are traded. The New York Stock Exchange and Nasdaq Inc. have brought on two veteran lobbyists to run the Equity Markets Association: Mike Ferguson, who served in the House as a New Jersey Republican, and Michael Williams, a Democrat who worked in the White House during the Clinton administration. …

“The organization will begin by focusing more on educating the public, agencies and lawmakers on policy issues but will lobby as well, Williams said in an interview. The association also plans to reach out to other exchanges to see if they want to join, he said. … Securities and Exchange Commission Chair Mary Jo White has said she wants to undertake a ‘holistic review’ of U.S. market structure. That is likely to include issues ranging from the regulatory responsibilities of exchanges to whether there is too much trading taking place in dark pools”

POTUS Events

1:50 pm EST || Holds a press conference; Briefing Room
5:15 pm EST || Departs for Hawaii vacation
7:55 pm PST || Arrives in San Bernardino, California
7:55 pm PST || Obama and First Lady Michelle Obama visit privately with families of victims of the terrorist attack; San Bernardino
9:35 pm PST || Departs San Bernardino
1:05 am HST || Arrives in Honolulu, Hawaii

Live stream of Obama press conference at 1:50 pm

Floor Action

The House is scheduled to gavel in at 9 a.m. with a vote – on the government spending bill – set for around 9:15 a.m. The Senate’s scheduled depends on when the House passes the omnibus.

Krebs Daily Briefing 17 December 2015

Thomas L. Krebs, Securities Litigation, Regulation and Compliance Attorney Lawyer (c)2014 Brandon L. Blankenship
Thomas L. Krebs
(205)401-2383

International
How the DEA Took Down the Most Vicious Drug Cartel in the World
For 14 months, the first thing Dave Herrod, a special agent with the Drug Enforcement Administration, did every morning was boot up his laptop and begin tracking a 43-foot yacht with Dock Holiday painted on the stern. In the summer of 2005, the DEA had intercepted a conversation in which members of a Mexican drug cartel known as the Arellano Félix Organization discussed buying a yacht in California. Herrod and his colleagues studied the classified ads in yacht magazines and determined that the Dock Holiday was the boat the AFO members wanted. DEA agents then managed to get on board and install tracking devices before the sale went through. That’s when Herrod started watching the boat on his laptop. Since the early 1990s, the Arellano brothers—the inspiration for the Obregón brothers in the movie Traffic—had controlled the flow of drugs through what was perhaps the single most important point for illicit commerce in the world: the border crossing from Tijuana to San Diego. Much of the AFO’s success derived from its predilection for innovative violence. The cartel employed a crew of “baseballistas” who would hang victims from rafters, like piñatas, and beat them to death with bats. Pozole, the Spanish word for a traditional Mexican stew, was the AFO’s euphemism for a method of hiding high-profile victims: Stuff them headfirst into a barrel of hot lye or acid and stir for 24 hours until only their teeth were left, then pour them down the drain.
http://www.theatlantic.com/magazine/archive/2016/01/how-the-dea-took-down-the-most-vicious-drug-cartel-in-the-world/419100/
Qatari Safari Members, Including Royalty, Are Abducted in Iraq
BAGHDAD — Militants in the southern Iraq desert ambushed and abducted at least 26 hunters from a Qatari safari early Wednesday, officials of both countries reported. The kidnapping victims were said to include some members of senior Qatari royalty. Dozens of kidnappers, dressed in military uniforms and riding in at least 50 sport utility vehicles with machine-gun mounts, overwhelmed Iraqi sentries guarding the Qataris’ tent encampment in the Samawa desert near the border with Saudi Arabia, said Falih Hasan, the governor of Muthanna Province. The governor said the kidnappers, whose identities, affiliations and motives were unclear, “attacked the tents where the hunters stayed and insulted and beat the security forces accompanying them” as they seized at least 26 members of the expedition and spirited them away before dawn. He also said that “senior Qatari emirs” were among the hunters. Iraqi police officials said that the kidnappers also took four of the safari’s vehicles and that two kidnapping victims were from Qatar’s governing family. The precise identities of the hostages were not disclosed. Iraq’s Interior Ministry said in a statement that the kidnapping victims were seized in a desert area near the Saudi border by “unknown militants riding a number of vehicles.” Qatar’s Ministry of Foreign Affairs said in a statement that it was working with Iraq’s government “at the highest security and political levels” to determine who had abducted the hunters and to secure their release. Despite many years of war, mayhem and instability that continue to convulse Iraq, its southern desert is regarded as a paradise for hunters among the wealthy classes of affluent Arab states in the Persian Gulf like Qatar. Safaris have been organized annually for hunting migratory birds and other game, despite the security risks. The Qataris are known for their penchant for hunting the Asian houbara bustard, which resembles a small turkey. The site of the abduction, more than 200 miles south of Baghdad, is far from the areas of northern and western Iraq controlled by the Islamic State, the extremist group that has been targeted in an aerial bombing campaign by Western and Arab governments.
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National

Fed Raises Key Interest Rate for First Time in Almost a Decade
WASHINGTON — The Federal Reserve said on Wednesday that it would raise short-term interest rates for the first time since the financial crisis struck, a vote of confidence in the strength of the American economy at a time when much of the rest of the global economy is struggling. The widely anticipated decision, a milestone in the Fed’s postcrisis stimulus campaign, ends a seven-year period in which the Fed held short-term rates near zero. Even as it raises its benchmark interest rate by 0.25 percentage points, however, the Fed emphasized subsequent increases would come slowly. Interest rates on mortgages and other kinds of loans, and on savings accounts and other kinds of investments, are likely to remain low by historical standards for years to come. The Fed’s announcement cited the strength of job growth, and the broader backdrop of a moderate-but-steady economic expansion, as evidence that the economy no longer needs quite as much help from ultralow borrowing costs. “The committee judges that there has been considerable improvement in labor market conditions this year, and it is reasonably confident that inflation will rise over the medium term to its 2 percent objective,” the Fed’s policy-making committee, the Federal Open Market Committee, said in a statement released Wednesday afternoon after the end of a two-day meeting. More:

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Lawmakers Don’t Bar New Rule on Financial Advisers
A proposed rule to impose tougher regulations on financial advisers is poised to move forward after opponents failed to persuade lawmakers to derail it. Financial companies and lobbyists had mounted a last-minute battle to attach a provision to Congress’s giant spending bill that would effectively kill the landmark rule. But the $1.15 trillion spending plan unveiled by congressional leaders late Tuesday didn’t include such a step as Democrats staved off most of the measures pushed by Republicans to ease financial-industry regulations. While Republicans scored a significant policy win with a provision that would lift a 40-year-old ban on oil exports, some other controversial provisions such as antiabortion measures were left out of the spending bill for fiscal year 2016. The spending bill is expected to clear Congress this week. After dodging a congressional blow, the proposed Labor Department rule is widely expected to be adopted before President Barack Obama’s second term ends in January 2017. Mr. Obama has made updating regulations governing retirement savings a priority. Analysts expect the Labor Department to file a draft of its final rule early in January with the Office of Management and Budget, which typically takes 90 days to review proposed rules. That will be followed by the public announcement of the rule, before it is implemented eight months later. Labor Department officials have said they expect the rollout during the first half of next year. Once the rule is unveiled, it will likely face court challenges from opponents. At the core of the fight is a new “fiduciary rule” that would require brokers and financial advisers to act in the “best interest” of retirement savers—a higher standard than current regulations, which only require advice be “suitable.” The new rule aims to lower the cost of retirement savings by eliminating potential conflicts of interest between people who offer investment advice and companies that sell financial products. The rules aim to help individual investors who are increasingly responsible for building their own retirement nest eggs through programs like IRAs and 401(k)s that have largely replaced traditional pension funds. The financial industry has opposed the proposal, saying it would raise compliance costs and drive many financial advisers out of business while pushing investment advice out of reach of middle-class savers.
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Shkreli, CEO Reviled for Drug Price Gouging, Arrested on Securities Fraud Charges
A boyish drug company entrepreneur, who rocketed to infamy by jacking up the price of a life-saving pill from $13.50 to $750, was arrested by federal agents at his Manhattan home early Thursday morning on securities fraud related to a firm he founded. Martin Shkreli, 32, ignited a firestorm over drug prices in September and became a symbol of defiant greed. The federal case against him has nothing to do with pharmaceutical costs, however. Prosecutors in Brooklyn charged him with illegally taking stock from Retrophin Inc., a biotechnology firm he started in 2011, and using it to pay off debts from unrelated business dealings. He was later ousted from the company, where he’d been chief executive officer, and sued by its board. In the case that closely tracks that suit, federal prosecutors accused Shkreli of engaging in a complicated shell game after his defunct hedge fund, MSMB Capital Management, lost millions. He is alleged to have made secret payoffs and set up sham consulting arrangements. A New York lawyer, Evan Greebel, was also arrested early Thursday. He’s accused of conspiring with Shkreli in part of the scheme. Shkreli’s lawyer and a spokesman for Retrophin didn’t immediately respond to requests for comment. Greebel and his firm weren’t immediately available to comment either. A spokeswoman for Brooklyn U.S. Attorney Robert Capers did not immediately respond to a call and e-mail seeking comment. Shkreli’s extraordinary history—and current hold on the public imagination—makes the case more noteworthy than most involving securities fraud. The son of immigrants from Albania and Croatia who worked as janitors and raised him deep in working-class Brooklyn, Shkreli both epitomizes the American dream and sullies it. As a youth, he showed exceptional promise and independence and, after dropping out of an elite Manhattan high school, began his conquest of Wall Street before he was 20. More:
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New York State Agrees to Overhaul Solitary Confinement in Prisons

New York has agreed to a major overhaul in the way solitary confinement is administered in the state’s prisons, with the goal of significantly reducing the number of inmates held in isolation, cutting the maximum length of stay and improving their living conditions. The five-year, $62 million agreement, announced on Wednesday, is the result of a lawsuit brought by the New York Civil Liberties Union over the abusive treatment of inmates in solitary in the state’s prisons. For 23 hours a day, 4,000 inmates are currently locked away in concrete 6-by-10-foot cells, sometimes for years, with little if any human contact, no access to rehabilitative programs and a diet that can be restricted to a foul-tasting brick of bread and potatoes known at the prisons as “the loaf.” The changes are expected to reduce the number of inmates in solitary confinement by at least a quarter and usher in a range of reforms, including limiting the time served to three months in most cases and providing the prisoners with certain privileges, like monthly phone calls and group recreation. “This is the end hopefully of an era where people are just thrown into the box for an unlimited amount of time on the whim of a corrections officer,” said Taylor Pendergrass, the civil liberties union’s lead counsel on the case. “This will not be the end of the road for solitary confinement reform, but we really think it’s a watershed moment.” The legal settlement caps three years of negotiations between the civil liberties union and the administration of Gov. Andrew M. Cuomo, and comes at a time of intense scrutiny of the state prison system. In June,two murderers escaped from the Clinton Correctional Facility in Dannemora, N.Y., setting off a nationwide manhunt that cost millions of dollars. But it also exposed serious dysfunction within the State Department of Corrections and Community Supervision that has been documented in aseries of articles by The New York Times and The Marshall Project, a nonprofit news organization. While states like Washington and Coloradohave gone further in curbing the use of solitary confinement, both the civil liberties union and the governor’s office say the New York settlement is historic, given the size of the corrections system — it encompasses 54 prisons that hold nearly 60,000 inmates — and how much there was to do after decades of neglect.

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Did Ted Cruz Reveal Classified Information at the GOP Debate?

The Senate Intelligence Committee is looking into whether Sen Ted Cruz (R-TX) may have revealed classified information when discussing the government’s ability to monitor phone records during Tuesday night’s Republican debate, Committee Chairman Richard Burr (R-NC) told reporters this morning. “I’m having my staff look at the transcripts of the debate right now,” Burr told reporters this morning. The committee is looking into whether Cruz’s comments regarding recent changes in the metadata collection program, which was the subject of a testy exchange between Cruz and Sen Marco Rubio (R-FL). “The old program covered 20 percent to 30 percent of phone numbers to search for terrorists, the new program covers nearly 100 percent,” Cruz said, “That gives us greater ability to stop acts of terrorism, and he knows that that’s the case.” Rubio began his response to Cruz by saying, “Let me be very careful when answering this, because I don’t think national television in front of 15 million people is the place to discuss classified information.” Rebecca Glover Watkins, who acts as the Communications Director for Chairman Burr, tweeted this just after the exchange: Cruz shouldn’t have said that. Senator Burr says the Intelligence Committee, of which Rubio is a member but Cruz is not, is looking into whether the numbers Cruz mentioned were classified. “The question had been raised therefor I asked them to look at it and see if there was any validity to it,” Burr told reporters, “Anytime you deal with numbers, and I think it dealt with numbers, the question is: Is that classified or not or is there an open source reference to it. So it’s not as clear as just reading what he said. We’ve got to search all sorts of media outlets to see if anybody had reported the number independently.” Burr clarified that he did not see the exchange itself during last night’s debate. “I didn’t watch it. ‘The Voice’ was on,” he said, adding “It was the final episode.”
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Trump says we need to ban Syrian refugees because they have ISIS photos on their phones
Early in Tuesday night’s GOP debate, Wolf Blitzer asked Donald Trump to defend his proposal to ban all non-American Muslims from entering the United States. Trump’s answer was, even for Donald Trump, pretty strange: We are not talking about isolation. We’re talking about security. We’re not talking about religion. We’re talking about security. Our country is out of control. People are pouring across the southern border. I will build a wall. It will be a great wall. People will not come in unless they come in legally. Drugs will not come through that wall. As far as other people into migration where they’re going, tens of thousands of people having cell phones with ISIS flags on them. I don’t think so, Wolf. They’re not coming to this country. And if I’m president and if Obama has brought some to this country, they are leaving. They’re going. They’re gone. ISIS phones! So to be clear, Trump’s argument for keeping out Muslims was:
• “We are not talking about religion” — even though the proposal specifically calls for banning entry by people of a specific religion.
• We should build a wall — nay, a “great wall” — on the Mexican border.
• Syrian refugees are a terrorist threat because “thousands” of them have “cellphones with ISIS flags on them.” This appears to be a reference to a report floated on the conspiracy site Infowars and the British tabloid the Daily Mail that several refugees in Norway were found with photos of ISIS flags on their phones — which 1) is not “thousands of people,” and 2) seems like documentation of ISIS’s presence rather than a statement of support per se.
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Obama to visit San Bernardino Friday, White House says
WASHINGTON — President Obama will visit San Bernardino Friday to visit privately with the families of victims of a terrorist shooting spree that killed 14 people and injured 22 more, the White House said. Obama will stop in San Bernardino on the way to his annual Christmas vacation with his family in Hawaii. “While he is en route to Honolulu, the president wil stop in San Bernardino, California to visit privately with the families of the victrims of the terror attack in San Bernardino earlier this month,” White House Press Secretary Josh Earnest said Wednesday. Obama has attended memorial services for victims of mass shootings in Fort Hood, Texas, Tuscon, Ariz., the Washington Navy Yard, Newtown, Conn., and Charleston, S.C. But he’s also met with victims privately, as he did in October after a shooter killed 10 people at Umpqua Community College in Roseburg, Ore. Earnest said Obama’s visit would be patterned after Roseburg and that no public events are expected.
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An Unbelievable Story of Rape
No one came to court with her that day, except her public defender. She was 18 years old, charged with a gross misdemeanor, punishable by up to a year in jail. Rarely do misdemeanors draw notice. Her case was one of 4,859 filed in 2008 in Lynnwood Municipal Court, a place where the judge says the goal is “to correct behavior — to make Lynnwood a better, safer, healthier place to live, work, shop and visit.” But her misdemeanor had made the news, and made her an object of curiosity or, worse, scorn. It had cost her the newfound independence she was savoring after a life in foster homes. It had cost her sense of worth. Each ring of the phone seemed to announce another friendship, lost. A friend from 10th grade called to ask: How could you lie about something like that? Marie — that’s her middle name, Marie — didn’t say anything. She just listened, then hung up. Even her foster parents now doubted her. She doubted herself, wondering if there was something in her that needed to be fixed. She had reported being raped in her apartment by a man who had bound and gagged her. Then, confronted by police with inconsistencies in her story, she had conceded it might have been a dream. Then she admitted making the story up. One TV newscast announced, “A Western Washington woman has confessed that she cried wolf when it came to her rape she reported earlier this week.” She had been charged with filing a false report, which is why she was here today, to accept or turn down a plea deal. Her lawyer was surprised she had been charged. Her story hadn’t hurt anyone — no suspects arrested, or even questioned. His guess was, the police felt used. They don’t appreciate having their time wasted. The prosecution’s offer was this: If she met certain conditions for the next year, the charge would be dropped. She would need to get mental health counseling for her lying. She would need to go on supervised probation. She would need to keep straight, breaking no more laws. And she would have to pay $500 to cover the court’s costs. Marie wanted this behind her. She took the deal. More:
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State/Local

Why did the Koch brothers give Troy University $298,500?

Troy University in 2014 was one of the biggest beneficiaries of a foundation run by billionaire brothers known for their commitment to conservative causes and candidates. The Charles Koch Foundation last year gave Troy $298,500, making the Alabama college the group’s fifth largest university beneficiary for 2014 and one of 14 nationwide to receive more than $100,000 from the brothers. That information comes from a report released Tuesday by the Center for Public Integrity, which won the 2014 Pulitzer Prize for investigative reporting. Troy spokesman Matt Clower told AL.com on Wednesday the funds went to the Manuel H. Johnson Center for Political Economy in the Sorrell College of Business. “The Koch Foundation was among the donors whose support helped establish the Johnson Center for Political Economy in September 2010. The Koch Foundation has continued its support of the center since that time,” Clower wrote in an email. The Johnson Center is one of but a few to benefit from the foundation’s funds. “A pair of private foundations led by the billionaire industrialists poured more than $23.4 million into U.S. colleges and universities during 2014, according to a Center for Public Integrity analysis of tax documents recently filed with the Internal Revenue Service,” the report stated. “That’s several million dollars more than the $19.3 million the Charles Koch Foundation and Fred C. and Mary R. Koch Foundation together spread among schools during 2013 — and nearly double the $12.7 million they spent in 2012.” In 2013, Troy’s Johnson center received $50,000 from foundations run by the brothers, the center reported in November. “In 2014, (Troy) spokesman Andy Ellis said a previous contribution “provided gifts to establish the Manuel H. Johnson Center for Political Economy within the Sorrell College of Business.” The center is led by Stephen C. Miller, who earned his doctorate at George Mason University and “received a five-year grant to support free enterprise educational activities by the Charles Koch Foundation,” the November report stated. George Mason University in 2014 was the biggest university recipient of Koch brothers’ donations, receiving more than $16.7 million that year, the center reported. The other top five recipients were: Florida State University, The Catholic University of America and Creighton University. “Almost all of the higher education programs the Koch foundations fund cleave to the brothers’ philosophy of promoting free markets and laissez-faire capitalism in the United States,” the center reported Tuesday. “In some cases, the Koch foundations have attempted, or succeeded, in attaching certain strings to their contributions, such as control over curriculum, and more recently, obtaining personal information about students. Dozens of college officials interviewed this year by the Center for Public Integrity assert that their professors retain full academic freedom and may teach as they see fit, regardless of who is funding their programs.” Clower said the Koch Foundation contributions do not influence how classes are taught at Troy. More:

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Alabama’s K-12 cuts since recession among nation’s worst, report finds
Alabama ranks second worst in the country in state K-12 education funding cuts, with state formula support down 17.3 percent since the start of the Great Recession, according to a report released Thursday by the Center on Budget and Policy Priorities (CBPP), a nonpartisan policy research organization based in Washington, D.C. Only Oklahoma has seen deeper per-student state funding cuts since 2008 than Alabama has. Overall, Alabama cut its total state and local investment in K-12 schools by 11.3 percent per student between 2008 and 2014, the seventh worst cut in the nation. This erosion in education support could make it harder for workers to compete for highly skilled jobs in the global economy, said Kimble Forrister, executive director of Arise Citizens’ Policy Project (ACPP). Cutting education also could make it more difficult for communities to attract well-paying jobs and could deprive local businesses of a strong customer base, Forrister said. “If we want a strong future for our state, we need to invest in it now,” Forrister said. “Alabama must invest in our schools so our children and grandchildren can receive the education they need to succeed in life and help their families get ahead.”
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Lawsuit says Blue Cross to Blame for Closure of Mental Healthcare Provider
When Alabama Psychiatric Services closed in February, it sent shockwaves through the state’s mental health community. The company provided mental healthcare to about 28,000 people in locations throughout Alabama and employed more than 250 medical professionals. APS blamed the sudden closure on Blue Cross Blue Shield of Alabama, but a lawsuit filed in Jefferson County Circuit Court in May, and amended last month, offers more details on the specific allegations. The Players: The case includes two plaintiffs, APS and Managed Health Care Administration. According to the lawsuit, both had a long-term relationship with BCBSAL. The health insurer did not manage its own mental healthcare coverage, instead contracting management out to MHCA. This relationship was based on what’s called a capitated model. Under the arrangement, BCBSAL paid a set amount per person for care. This gave providers a steady stream of revenue. In APS’s case, that revenue helped the company to maintain clinics in smaller cities with fewer patients. The suit says, because APS operated as a network, it was dependent on this capitated model. APS and MHCA were also dependent on BCBSAL. The insurer provided at least 95 percent of those companies revenue. The Change: In 2013 Blue Cross Blue Shield of Alabama decided to change who managed its mental health services and contracted with New Directions Behavioral Health. BCBSAL is a part owner of New Directions. The suit says because of Managed Health Care Administration and Alabama Psychiatric Services’ long history of providing mental healthcare in the state, New Directions wanted to continue to work with those companies for four years. But the new agreement also changed that capitation model of funding. Executives at MHCA and APS feared they’d lose providers or have to close offices. The suit says BCBSAL agreed to make up any revenue shortfall for at least the initial part of the agreement. As financial pressures mounted on MHCA and APS in 2014, the suit says BCBSAL and New Directions refused to provide the additional funding. APS closed in February 2015. The Allegations: One of the lawsuit’s several claims is that executives with BCBSAL committed fraud because they misrepresented facts and withheld information throughout the negotiation process. It also alleges the insurer misrepresented the need for proprietary information from MHCA and APS and that BCBSAL instead used the information to undermine those companies’ funding models. The suit alleges BCBSAL executives said they had no stake in New Directions. It also says BCBSAL is in breech of contract when the company failed to compensate APS and MHCA for lower revenue. Essentially, APS and MHCA say the companies would never have agreed to work with BCBSAL and New Directions if all the information had been presented fairly. Instead they say Alabama has lost a major mental healthcare provider and BCBSAL customers are receiving poorer care. The companies are seeking punitive and compensatory damages. In a response filed by BCBSAL, the company denies the allegations. A company spokeswoman says they do not comment on pending litigation.
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Wadsworth Says that Jefferson County Ruling Likely to be Decided by Alabama Supreme Court
On Monday, December 14, Jefferson County Circuit Judge Michel Graffeo ruled in favor of a lawsuit brought by State Representatives John Rogers (D) and Mary Moore (D) and taxpayer advocate Keith Shannon striking down the state law which would have allowed Jefferson County to refinance $600 million in outstanding school construction bond debt. The law allowed the County to divert $60 million of the savings to non-education related spending. State Representative Tim Wadsworth (R) said that the ruling would affect hundreds of local bills around the state. Rep. Wadsworth said in a statement, “The decision by Jefferson County Circuit Judge Michael Graffeo voiding Act 2015-226 which allowed Jefferson County to refinance $600 million in school construction debt has far reaching consequences. The court ruled that the procedure set up in the legislature to pass local bills prior to the passage of a budget was improper. There has been over 500 local bills passed under this procedure since its inception 10 years ago. The decision to reverse this ruling with all likelihood will be decided by the Alabama Supreme Court. As a consequence of this ruling, certain proposed local school projects will be delayed. In addition, local bills passed over the last several years using that budget isolation procedure could potentially be in jeopardy. The legislature’s job is to solve state problems. So we need to roll up our sleeve and work together to solve this problem along with all the state’s other problems.” Judge Graffeo ruled that the common practice of allowing local the issue to be voted on just by legislators representing the affected county violates the state Constitution. Only 13 legislators voted on the Budget Isolation Resolution (BIR) for the bill, which Graffeo wrote is insufficient to meet the requirement to allow the bill to move forward. Jefferson County has announced that it will appeal the ruling. More:
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Alabama health panel rejects new abortion clinic rules
The State Committee of Public Health today rejected new rules to allow abortion clinics to operate without a doctor with hospital admitting privileges. The proposed rules resulted from a judge’s ruling in a federal lawsuit filed by an abortion clinic in Tuscaloosa. Current rules require abortion doctors to have admitting privileges at a local hospital or, as an alternative, that clinics have a contract with an outside doctor who has hospital privileges. Proponents of the requirements say they are important so that the clinic’s doctors can treat patients who develop complications and need hospital care. The new rules would have allowed an exception if a clinic was not able to hire or contract with a doctor with hospital privileges. The new rules would have required those clinics that are granted an exception to have doctors available for consultation in the event a clinic patient is hospitalized. Clinic employees would be trained on the standards of care and protocol for abortion complications. The committee rejected the new rules 8-5. State Committee member Dr. Michael Flanagan, a Dothan anesthesiologist, spoke in opposition to the new rules at today’s committee meeting. Flanagan said he wanted to see uniformity in standards of care for all procedures to protect patients. “I don’t think we should make exceptions,” Flanagan said. Committee member Dr. Eli Brown, an obstetrician/gynecologist from Birmingham, spoke in support of the rules, saying they would protect access to a legal medical procedure. Brown said denying women access won’t stop abortions, but will drive some to dangerous measures. “She’ll have a kitchen top abortion with a clothes hanger and will still show up at the ER,” Brown said. It does not appear the committee’s decision to reject the new rules will have any immediate impact on clinic operations in Alabama. The Tuscaloosa clinic that doesn’t meet the requirements of the current rules on hospital privileges is operating under a waiver of those rules that will stay in place for most of next year. The state’s other clinics — in Birmingham, Huntsville, Mobile and Montgomery — meet the current requirements on admitting privileges. The dispute over the rules came about after the longtime doctor at the West Alabama Women’s Center in Tuscaloosa, who had admitting privileges, retired last year. His replacement was unable to obtain admitting privileges for reasons unrelated to his qualifications, according to the clinic. And the clinic said it could not find another doctor with privileges who would agree to be the covering hospital physician. The clinic sought a waiver from the state rules but was denied by former State Health Officer Don Williamson. The clinic then filed the lawsuit. In August, U.S. District Judge Myron Thompson granted the clinic’s request to block the state from enforcing the regulation. Thompson ruled that the clinic was likely to prevail on its claim that the admitting privileges requirements were unconstitutional. The clinic then reopened under a waiver, granted by Williamson, that will remain in effect for one year.
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Shelby to vote against omnibus despite fighting for provisions helping Decatur, Alabama coast
U.S. Sen. Richard Shelby, R-Ala., is planning on voting against the omnibus spending bill agreed to by legislative leaders on Wednesday, despite language he got into the legislation that would protect some 850 jobs in Decatur and to increase fishermen’s access to red snapper on the Alabama coast. Shelby said while there are some aspects to the bill that he likes, such as continued reliance on a Russian-made rocket engine used by a Decatur joint venture that sends the country’s national security satellites into orbit and the red snapper provisions, he intends to vote against the omnibus because it doesn’t include measures like blocking the president’s Syrian refugee resettlement plan or defunding Planned Parenthood. “While I support the inclusion of several conservative priorities and key provisions critical to Alabama in this year’s omnibus bill, I oppose the overall bill because it gives a blank check to President Obama to continue his dangerous Syrian refugee resettlement plan. During this increasingly uncertain time in our nation, we simply cannot allow the President – who is more focused on gun control and climate change than national security – to unilaterally determine who can enter our country,” Shelby said in a statement. “This omnibus bill puts the United States on a path towards admitting an unknown number of potentially dangerous migrants who we cannot properly vet. President Obama’s lack of strategy on how to combat ISIS coupled with his failure to secure our borders underscores the critical need for Congress to stop him in his tracks. Unfortunately, this bill fails to halt the President’s reckless proposals and prioritize the safety of the American people.” Shelby, who is running for re-election in 2016, faced criticism by one of his Republican primary opponents, retired Marine Capt. Jonathan McConnell, who accused Alabama’s senior senator of having it both ways.
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Judge recalls warrant for Birmingham councilor’s arrest at mayor’s request
BIRMINGHAM, AL (WBRC) – The warrant for Birmingham City Councilor Marcus Lundy’s arrest has been withdrawn at the request of Mayor William Bell, according to the city council and an order from the Municipal Court of Birmingham. “Having been informed by the complainant that he desires the warrant to be withdrawn, it is hereby removed from active status immediately,” the order states. A municipal judge signed the order on Dec. 16. The mayor decided to do this for the “good of the city,” April Odom with the mayor’s office said. “We are concerned about the overall good of the city and keeping up the positive momentum that we have seen over the past several years. With that in mind, I have withdrawn my complaint,” Bell said in a statement Odom emailed.
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Morning Money
MARKETS CHEER YELLEN MOVE — POLITICO’s Ben White and Jon Prior: “The stock market jumped on Wednesday as Wall Street took the Federal Reserve’s first rate increase in nearly a decade in stride, a reaction that should ease concern among Democrats about the immediate economic impact of the historic move. … The Dow Jones Industrial average jumped 224 points following the announcement by Fed Chair Janet Yellen that the central bank would raise its target rate by a quarter point, a move that many Democrats feared would inject a fresh dose of economic uncertainty into the 2016 presidential campaign.
“Market analysts said Yellen, at least initially, had pulled off a remarkably smooth shift in policy in a way that should not create much turbulence in the short-term, boosting Democrats’ hopes for running on a strong economy next year. ‘What the Fed has done is started hiking rates for the first time in a decade without causing any major turbulence and that is a significant achievement,’ said Mohamed A. El-Erian, chief economic adviser at Allianz. ‘They did that by first signaling the move very effectively and second by wrapping the first hike in very dovish language. The reference to a ‘gradual’ approach highlights that this will be loosest tightening in the modern history of the Fed.’”

FED CHAIR SAYS KEEP CALM — “Yellen, who took over last year following a big push for her nomination by progressive Democrats, said the central bank would act to aid the economy if troubling signs emerge. ‘I think it’s important not to overblow the significance of this first move,’ she said at a news conference following the announcement. ‘It’s only 25 basis points.’ … At the news conference Wednesday, Yellen expressed confidence that the U.S. economy would continue to do well in 2016 and not return to recession in the near future.
“‘I feel confident about the fundamentals of the U.S. economy, the health of U.S. households and domestic spending,’ she said. ‘The underlying health of the U.S. economy I consider to be quite sound. I think it’s a myth that expansions die of old age so the fact that this has been quite a long expansion does not lead me to believe it is one whose days are numbered.’ In its statement on Wednesday, the Fed pledged to go slowly and pause its interest rate hiking campaign at any signs of significant economic trouble” http://politi.co/1P81ykt
SO WHAT’S NEXT? — Morgan Stanley: “The Fed delivered a lower/slower path in its ‘dots’, though not as much as we had expected. The median path was little changed in 2016, but the mean path fell by 21bps in 2016 (to1.26 percent from 1.47 percent) … The Fed inserted the word “gradual” in the statement to stress a slow pace of hikes, but in doing so risks having markets assign a definition to gradual as being 4 hikes/year. …
“We continue to expect the next hike to come in June, informed by our expectation that incoming data on core PCE prices will not satisfy the ‘actual progress’ toward the 2 percent inflation goal the Fed is looking for.”

BANKS MOSTLY LOSE IN THE OMNI — POLITICO’s Bernie Becker: “Banks got a few odds and ends in the omnibus, including a provision that keeps the Securities and Exchange Commission from mandating that companies disclose political donations. But banks and Republicans fell short in efforts to pare back Dodd-Frank regulations and in replacing capital lost in the recent transportation bill. On top of that, there was no serious effort to block the Labor Department from implementing a new fiduciary standard rule for retirement brokers, and efforts to impede Consumer Financial Protection Bureau rules were also brushed aside.” http://politi.co/1NydGsn

FIRST LOOK: LEW AT THE SECURITY COUNCIL — From Treasury Secretary Jack Lew’s remarks to be delivered today at the UN Security Council meeting on ISIL financing — the first ever meeting of Finance Ministers at the Security Council: “As we have all learned — with our work to counter Al-Qaida, ISIL, and other groups to date — successful use of these counter-terror financing tools requires robust domestic implementation, intense multilateral coordination, deep collaboration with private partners, and a relentless desire to adapt and change our tools as these groups adapt to us.”

GOOD THURSDAY MORNING — Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben

DRIVING THE DAY — Lew and other finance ministers have a press availability after the UN Security Council meeting on ISIL financing … Philly Fed at 8:30 a.m. expected to rise to 1.0 from -5 … Index of leading indicators at 10:00 a.m. expected to rise 0.1 percent … Congress heads toward votes on tax extenders on Thursday and the omnibus Friday …

ALSO TODAY: “Wells Fargo hosts its final Real Economy event with U.S. Senator Amy Klobuchar and local Minnesota leaders on Thursday, Dec. 17th in Minneapolis at 1:30pm ET. Joining Senator Klobuchar to discuss economic trends and conditions in the state will be Michael Swanson, agriculture economist for Wells Fargo, and a panel of experts” Web cast: http://usat.ly/1QtypDk

OMNIBUS FLY AROUND —
CFPB SUNSHINE? — CEI’s John Berlau: “Section 704 (on page 1970) adopts legislation from Rep. Sean Duff (R-Wis.) that applies the Federal Advisory Committee Act — mandating open meetings for advisory committees to agencies, departments and bureaus — to the CFPB. The CFPB had maintained it was exempt from the law because it was part of the Fed, and closed most of its advisory meetings to the public” http://bit.ly/1Ox5UPf

LEFT CELEBRATES — Americans for Financial Reform: “The omnibus government spending bill … did not include the dangerous financial deregulatory riders that Wall Street and its allies had been promoting. That is very good news. Financial industry lobbyists and their friends in Congress pushed hard to use this ‘must pass’ legislation to achieve a number of unrelated, unpopular, and destructive policy goals.

“Among other things, they sought to block the [CFPB] from regulating the use of forced arbitration in the banking and lending markets; to derail the Department of Labor’s efforts to combat the problem of conflicted retirement investment advice; and to significantly weaken regulatory oversight of large banks and giant non-bank financial institutions. They failed.”

THE TIMING — POLITICO’s Jake Sherman, Lauren French, Burgess Everett and Anna Palmer reports: “House Republican leadership has pushed back the vote on the spending bill from Thursday to Friday, keeping a promise to give lawmakers three days to read the bill. The tax bill will come to a vote Thursday in the House. Senate Republican leaders hope to wrap up the entire process by Friday, with the Senate voting on a combined bill. … Republicans succeeded in lifting the four-decade ban on exporting U.S. oil. Democrats beat back nearly every other Republican attempt to insert various policies into the bill” http://politi.co/1Zc4ml6

FULL OMNIBUS TEXT — http://1.usa.gov/1m6knun

EXTENDERS TEXT — http://1.usa.gov/1OwGiC0

ICBA’s Cam Fine: “Regulatory relief for the nation’s Main Street community banks is essential for economic prosperity in communities across our great nation. While the omnibus legislation introduced today includes welcomed tax extenders and cybersecurity information-sharing legislation, it very regretfully missed a real opportunity to bring more robust relief to community banks and the customers they serve.”
Property Casualty Insurers Association of America: “PCI was successful in securing multiple provisions for the property casualty industry in the legislation [including] the Policyholder Protection Act; which clarifies and corrects several ambiguities and loopholes in the Dodd-Frank Act, preserving the authority of state insurance regulators to protect insurance policyholders and prevent federal banking regulators from abusing funds set aside to pay policyholder claims to rescue a failing affiliated bank.”
ABA’s Rob Nichols: “We’re profoundly disappointed that lawmakers were unable to enact common-sense reforms in this session of Congress that would help America’s hometown banks better serve their clients, customers and communities and make the loans that drive our economy forward”

FREEDOM CAUCUS GIVES RYAN A PASS — POLITICO’s Anna Palmer and Lauren French: “The House Freedom Caucus hates the massive government-funding bill: Spending levels are billions of dollars higher than what conservatives wanted and at least two top policy priorities — language addressing Syrian refugees and so-called sanctity of life — got cut. … But unlike in past fiscal battles, when lawmakers took shots at GOP leaders and tried to tank bills, this time conservatives are largely holding their fire. Even as they vow to oppose the package, many are still praising Speaker Paul Ryan’s (R-Wisc.) handling of the $1.1 trillion spending bill and $680 billion in tax breaks.” http://politi.co/1UBKvt3

FED FLY-AROUND —
THE PATH FORWARD — WSJ’s Jon Hilsenrath and Ben Leubsdorf: “Fed officials said they would move up the federal funds rate by a quarter percentage point on Thursday, to between 0.25 percent and 0.5 percent … New projections show officials expect their benchmark rate to creep up to 1.375 percent by the end of 2016, according to the median projection of 17 officials, to 2.375 percent by the end of 2017 and 3.25 percent in three years. That implies four quarter-percentage-point interest rate increases next year, four the next and three or four the following. …
“That is a slower pace than projected by officials in September and much slower compared to earlier series of Fed rate increases. In the 2004-06 period, for example, the Fed raised rates 17 times in succession, an approach Fed officials don’t intend to repeat. In September seven Fed officials believed the fed funds rate could rise to 3 percent or higher by 2017; now just four do. Ms. Yellen said the benchmark rate ‘remains accommodative.’ which is Fed jargon for a level low enough to stimulate economic growth.” http://on.wsj.com/1QtBdAs

LOW RATES FOR YEARS — NYT’s Binyamin Appelbaum: “Interest rates on mortgages and other kinds of loans, and on savings accounts and other kinds of investments, are likely to remain low by historical standards for years to come. Moving to raise rates is the most important and riskiest decision the Fed has made under the leadership of Ms. Yellen, the Fed’s chairwoman since early 2014. …
“Every other developed nation that has raised rates since the end of the financial crisis has been forced to backtrack as economic conditions proved unable to handle higher rates. There are also signs of strain in some financial markets as investors dump high-yield junk bonds and pull money from developing markets.” http://nyti.ms/1P88qhK

INVESTORS: “WHATEVER” — FT’s Sam Fleming: “Investors largely shrugged off the widely expected decision to tighten monetary policy, and many welcomed the clarity that it finally brought. ‘At last,’ said Kathy Jones, a strategist at Schwab. ‘I am so glad this is out of the way. We can obsess about something else.’ … The two-year Treasury yield rose to more than 1 per cent for the first time since 2010 and the dollar slipped slightly versus the euro after the decision.
“The S&P 500 stock market index extended its gain to 1.5 per cent for the day, bringing it back into positive territory for the year. … The increase comes amid signs of a steady US recovery, with consumer spending growth holding firm and unemployment standing at just 5 per cent, lower than the 5.3 per cent rate that was prevailing when the Fed last kick-started an interest rate raising cycle in 2004” http://on.ft.com/1TR247v

QUICK REVERSE? — WP By Ylan Q. Mui: “[T]he Fed gave no precise timeline for its next move and pledged to withdraw its support for the recovery gradually. Some analysts believe the central bank will instead be forced to reverse course. The country’s economic expansion has been dogged by volatile oil prices, a slowdown in China and weak global growth, and the Fed’s cautious approach is an acknowledgement that it is operating in uncharted territory and further progress is not guaranteed ‘It’s been a long time since the Federal Reserve has raised interest rates,’ Yellen said. ‘I think it’s prudent to be able to watch what the impact is on financial conditions and spending in the economy.’ http://wapo.st/1TR2c76

ALSO FOR YOUR RADAR —
ICBA HITS BACK AT FASB — Per the ICBA: “ICBA sent a letter from its leadership bankers to FASB. The letter hits back hard on FASB Chairman Russell Golden’s remarks, which as the letter states, slander community banks” Release: http://bit.ly/1O7t4vc; Letter: http://bit.ly/1TR0pPr

IN-DEPTH REPORTING: Pro recently added in-depth policy reporting for alternative energy, transportation security and water-related topics. Dedicated reporters include: Esther Whieldon (alternative energy), Jennifer Scholtes (transportation security) and Annie Snider (water). To learn more,contact your account manager.

HILLARY AND BLACKSTONE — IBT’s David Sirota and Andrew Perez: “Hillary Clinton is traveling the country, promising to get tough on corporate wrongdoers and ‘shadow banks.; But as she promises to crack down on investment firms that offer banking services outside the purview of traditional financial regulations, her presidential campaign is vacuuming in cash from executives at a Wall Street firm known as one of the country’s biggest shadow banks — one recently fined by federal regulators for allegedly ripping off its clients.
“Last week, the president of Blackstone Group, Tony James, hosted a fundraiser for Clinton. The cash flowed to the Clinton campaign just two months after the private-equity giant settled with the Securities and Exchange Commission over charges that it used so-called monitoring fees to enrich the firm at the expense of investors. Clinton accepted the money from executives at the sanctioned firm even as she has criticized the Obama administration for not punishing the perpetrators of financial crime more strenuously.” http://bit.ly/1P9k9P3

PUERTO RICO WARNS OF DEFAULT — NYT’s Michael Corkery and Mary Williams Walsh: “The governor of Puerto Rico redoubled threats on Wednesday of a major bond default, as an effort to help the struggling commonwealth use bankruptcy to shed debt headed for defeat in Congress. Gov. Alejandro García Padilla warned in a speech at the National Press Club in Washington that Puerto Rico would probably miss debt payments in January or May because its government had run out of cash. ‘There is no money,’ he said. ‘I don’t have a printing machine.’
“The governor’s comments came as Congress omitted from a federal spending bill any measures to allow Puerto Rico to restructure its roughly $72 billion of debt in Federal Bankruptcy Court. Mr. García Padilla and his Democratic Party allies in Washington have been pushing for months to allow the island to take shelter from its creditors through bankruptcy. Chapter 9 bankruptcy, which is available to cities, counties and other local governments on the mainland, specifically excludes Puerto Rico as well as states” http://nyti.ms/1moXAKL

POTUS Events
10:00 AM The President and the Vice President receive the Presidential Daily Briefing
Oval Office Closed Press
11:20 AM The President receives a briefing with his national security team; the Vice President also attends
National Counterterrorism Center, McLean, Virginia Closed Press In-Town Travel Pool Gather 10:20AM – North Doors of the Palm Room
12:15 PM The President delivers a statement
National Counterterrorism Center, McLean, Virginia Travel Pool Coverage
1:00 PM Press Briefing by Press Secretary Josh Earnest

Floor Action
The Senate will convene at 10 a.m. with no votes scheduled. In the House, first votes expected between 10:15 and 11:15 a.m. and last votes expected between 12 and 1 p.m.

Krebs Daily Briefing 16 December 2015

Thomas L. Krebs, Securities Litigation, Regulation and Compliance Attorney Lawyer (c)2014 Brandon L. Blankenship
Thomas L. Krebs
(205)401-2383

International

The Curious Case of the Jihadist Who Started Out as a Hacktivist

Once upon a couple of years ago, Junaid Hussain was a teenager of Pakistani descent living in Birmingham, England. By day, he was an aspiring rapper. By night, he was Trick, an outspoken and respected member of Team Poison, a pro-Palestinian hacker-crew ally to, and sometime partner of, the well-known hacktivist collective Anonymous. To his thousands of followers, many of them British Muslims who dealt with marginalization and deprivation on a daily basis, Trick’s Palestinian-flag-decorated child’s-face avatar on Twitter was the very face of hacktivism itself. His tone was bold, his pronouncements aggressive, even explicitly revolutionary. He was the friend of the underdog, the oppressed. He had hacker cred. He had swagger. He had fangirls. He’d started hacking at the age of 11, according to an interview published by the software database and tech news site Softpedia in 2012. A quest for revenge drove him to it. He said his online gaming account had been hacked, and he wanted payback. Soon he graduated to hanging out in hacker forums. By 15, he said he and a friend had founded Team Poison. “I became political—it started from watching videos of children getting killed in countries like Kashmir & Palestine,” he told the Softpedia interviewer in 2012. “I wanted to know why this was happening and who was doing it, there was loads of questions in my head. It made me angry, it changed the way I lived my life and the way I saw the world. I then started using hacking as my form of medium by defacing sites to raise awareness of issues around the world and to ‘bully’ corrupt organizations and embarrass them via leaks etc., which is how I got into hacktivism.” Operation Free Palestine, which targeted Israeli credit cards in 2012, was typical of the operations in which he was involved. In a four-year span, Team Poison also claimed to have hacked Mark Zuckerberg’s Facebook page, named and shamed members of the far-right English Defense League, and leaked the address book of Tony Blair’s personal assistant. It hacked NATO, the British Ministry of Defense, and other government targets. Most famously, Team Poison claimed to have flooded the British spy agency MI6’s terrorism hotline with prank calls, releasing a recording of an agent telling them she’d report them to the F.B.I.—the spy agency equivalent of “wait till your father gets home”—that would have mortified 007.

http://www.vanityfair.com/news/2015/12/isis-hacker-junaid-hussain?mbid=nl_121515_Daily&CNDID=11508510&spMailingID=8351698&spUserID=MTA5MzMxMjM0MzYxS0&spJobID=821679169&spReportId=ODIxNjc5MTY5S0

Russian Spring Break 2016: Syria’s Front Lines

While much of the world desperately searches for a solution to the nearly five-year civil war in Syria, Russian travel agency Megapolis has a different idea in mind: Send Russian tourists to the front lines to make a profit off of the deadly conflict. Starting in 2016, Megapolis plans to sell what they’ve coined as “Assad Tours” — prepaid vacations to bring Russians to Syria for four- or five-day trips, all for the low cost of just $1,500. The name of the expedition is neither surprising nor original — a Russian airstrike campaign has for months bombarded rebel strongholds in an attempt to bolster Syrian President Bashar al-Assad. But according to Anatoly Aronov, president of First Patent Company, which reportedly helped file Megapolis’s licensing application with Moscow, there are a number of “advantages” for Russians to travel to Syria right now. (According to a report in Interfax, a Russian news agency, a spokesman for the federal tourism agency said he had not yet received the company’s application.) But Aronov told Russian newspaper Novaya Gazeta that Russians would likely enjoy their experience because Syrians are used to the presence of Russian troops, some of whom proclaimed in October that they have “been there since the beginning and will stay to the end.” And the large number of Syrians who have studied in Russian universities, and therefore speak Russian, means tourists won’t have to worry too much about interpreters. Plus, Syrians are so cash strapped they may even want to house the tourists for a small payment. Never mind that the conflict has forced millions of refugees to flee to neighboring countries — including hundreds of thousands who have braved the dangerous trip to Europe — or that the U.N. estimates more than an additional 7 million people who have been forced from their homes remain in Syria. Or, even, that Assad’s regime, Russia, France, the U.S., and others are regularly dropping bombs on the besieged country. Megapolis is reportedly already in negotiations with hotels and transportation services in Syria, and Aronov said it is currently awaiting approval from the appropriate government officials in both Moscow and Damascus. And if any company knows how to organize such an insane endeavor, it’s likely a Russian one. Last year, a Russian company by the name Megapolis Kurort announced a similar trip to war-torn Eastern Ukraine. According to pro-Kremlin newspaper Izvestiya, the trips were advertised as lasting around four days and costing upwards of $3,000 — about double the price of the Syria trip. It wasn’t immediately clear Tuesday whether the two were the same company. Even Aronov questions the mentality of those who are willing to pay to visit some of the most dangerous places in the world. “You’re asking how many crazies will show up? All tourists are crazy — they pay money to see things they could watch for free on television,” he said.

http://foreignpolicy.com/2015/12/15/russian-spring-break-2016-syrias-front-lines/?utm_source=Sailthru&utm_medium=email&utm_campaign=New%20Campaign&utm_term=%2AEditors%20Picks

The Billion-Dollar Caliphate

Last month, U.S. fighter jets unleashed airstrikes against oil fields, refineries, and hundreds of tanker trucks near the Syrian city of Deir Ezzor. Dubbed Operation Tidal Wave II, the attacks were the latest phase in a campaign to bomb the Islamic State into bankruptcy, striking at the heart of the black-market economy and extortionist tax system that have underwritten the salaries of tens of thousands of extremist fighters. But the Islamic State has proved resilient, developing a diversified economy to bankroll the costs of its burgeoning caliphate. According to a 2014 Thomson Reuters study, the terrorist group has more than $2 trillion in assets under its control, with an annual income of $2.9 billion. Much of this money is raised through the “taxes” the group imposes on those who live within its territory. This includes an $800-per-truck levy on vehicles entering Iraq from Jordan and Syria, a 5 percent tax collected for social welfare and salaries, a $200 road tax on drivers in northern Iraq, a 50 percent tax for the ability to loot Raqqa’s archaeological sites, and a 20 percent tax at similar sites in Aleppo, according to the Thomson Reuters study. Additionally, non-Muslims must pay a religious protection fee known as jizya. “They call it taxes, but we call it extortion,” Hans-Jakob Schindler, the acting coordinator of a U.N. Security Council group that monitors al Qaeda, the Islamic State, the Taliban, and other terrorist groups, told Foreign Policy. “There have been some strains on some of the financing streams caused by a multitude of factors — maybe some sanctions, maybe some of the military actions,” Schindler said. But he added, using an acronym for the Islamic State: “The overall situation of ISIL, as far as financing is concerned, has not significantly diminished. It’s just the relative importance of various financial streams is changing. We have a balloon effect: You put pressure on one side; it gets high on the other side.” Fawaz Gerges, a professor of international relations at the London School of Economics and Political Science, said everyday services are also heavily taxed. This includes garbage pickup, heating oil, and electricity generators. Even residential property rentals and sending kids to school are taxed, he said. These kind of levies are “a growth industry” for the Islamic State, Gerges told FP. These payments could generate up to $30 million each month, according to Thomson Reuters. A 2015 report by the New York Times, supported with data from Rand Corp., put annual tax and extortion revenue higher, at $600 million in 2014. That same study estimated that oil generated only $100 million that year, though many other civilian and military experts estimated oil-related revenues to be much higher.

http://foreignpolicy.com/2015/12/15/the-billion-dollar-caliphate/?utm_content=buffer411e4&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer

National

GOP leaders release spending bill

Republican leadership early Wednesday morning released a 2,009-page end-of-the-year spending bill, likely setting up a vote in the House for Friday.  The $1.149 trillion legislation links myriad policy fights, including tightening the visa program in the wake of terrorist attacks, reauthorizing healthcare benefits for 9/11 first responders through 2090 and a ban on transferring Guantanamo Bay detainees into the United States. The legislation, which comes after weeks-long negotiations, would fund the government through Sept. 2016, when the 2016 fiscal year ends. House leadership had hoped to post the legislation Tuesday, which would have allowed for a vote on Thursday under House rules. However, because the legislation was posted at about 1:30 a.m. on Wednesday, it likely sets up a vote in the House on Friday in order to follow the so-called “three-day rule.” In a veiled swipe at former Secretary of State Hillary Clinton, the legislation would block funding for the State Department and the Agency for International Development (USAID) for private email servers, and require that officials turn over all federal records before stepping down. Senate Appropriations Committee Chairman Thad Cochran (R-Miss.) praised the legislation, calling it “our best option to responsibly meet national security requirements, improve our country’s infrastructure and address other public needs.”

http://thehill.com/blogs/floor-action/house/263397-gop-leaders-release-spending-bill

What’s in the massive deals Congress made overnight?

While much of the nation slept, Congressional leaders unveiled two deals that are stuffed with major issues, from what the nation does with its oil and how it supports renewable fuel to a significant change at U.S. borders and a controversial proposal to increase the National Security Agency’s abilities online. The larger of the two plans would fund government for the rest of the fiscal year and comes as spending for most of government is set to expire Wednesday at midnight. Leaders plan to keep government running with another short-term fix, funding agencies through Dec. 22. That will give Congress time to debate and vote on the long-term bill. The other proposal is a bill extending and creating dozens of tax breaks. Whenever Congress rolls out legislation in the middle of the night, we pay close attention. Here is what we found in our first look at these twin deals. 1$ Trillion Spending bill:  Known by the appropriately impressive, and painful-sounding, term “Omnibus Spending Bill,” this bill would fund most of the federal government through the end of September 2016. Key highlights: $1.1 Trillion in spending. Biggest increase: New $1.1 billion in funding for research on traumatic brain injury and suicide in the military. Funding froze: For the IRS. Republicans are highly critical of the agency. More:

http://www.pbs.org/newshour/rundown/what-are-in-the-massive-deals-congress-made-overnight/

Why Tickets to College Games Come Easy on Capitol Hill

 When a top congressional aide wanted tickets to a Virginia Tech football game in 2012, he did what many people in Congress do: He asked the university’s lobbyist. “I know the box will be jammed on this, but is there a way we can accommodate him?” the Virginia Tech lobbyist wrote to another school official, according to documents reviewed by The Wall Street Journal. “Definitely,” the official replied, “since we need the Congressman for a lot of reasons and they are very helpful to us.” The aide, chief of staff to then-Rep. James Moran (D., Va.), was offered two free tickets for the presidential suite, although he later decided not to go. A 2007 ethics law bans lobbyists from providing anything of value to congressional officials, but public universities are exempted. That means university lobbyists alone among Washington’s power players can provide lawmakers and aides tickets to collegiate sporting events. The rules stipulate that lawmakers shouldn’t ask for tickets unless they are invited, and should avoid accepting them “repeatedly.” A review of thousands of documents from more than a dozen public universities, received from open-records requests by the Journal, shows that lawmakers and staffers routinely receive free tickets to big football and basketball games, sometimes sitting in luxury suites with the university president. The Journal looked at a geographically diverse assortment of schools with major football and basketball programs. “Universities have an advantage in the lobbying game because of these tickets,” said Bryson Morgan, a former congressional ethics investigator. “A president’s box is a pretty effective place to make a pitch. Getting one-on-one time with a member of Congress is pretty hard. Yet if you give a member of Congress a ticket to a suite, you can get three to four hours of incredibly valuable time.” That means that this year’s college bowl games are not only a showcase of the year’s best football teams—but also huge opportunities for university presidents to lobby members of Congress and key congressional aides. More:

http://www.wsj.com/articles/why-tickets-to-college-games-come-easy-on-capitol-hill-1450134320

Court refuses to overturn air pollution rule despite Supreme Court defeat

An appeals court has upheld the Obama administration’s sweeping mercury pollution rule for power plants, despite a Supreme Court decision against the regulation. The Court of Appeals for the District of Columbia Circuit ruled Tuesday that the Environmental Protection Agency (EPA) is allowed to enforce the air pollution regulation while it works to fix the flaw identified by the high court. The Supreme Court ruled in June that in developing the mercury and air toxics standards, the EPA violated the Clean Air Act by not considering the compliance costs to electric utilities. The agency did consider costs in writing the rule, but the justices decided that a unique provision in the law requires a cost-benefit analysis before even starting to write it. The Supreme Court did not overturn the rule and left it to the Circuit Court to decide its fate. The EPA plans to fix the problem by April by simply reasserting the cost-benefit analysis that it already completed. The Circuit Court judges did not say why they reached their decision in the brief order, although they noted that the EPA has promised a fix by April 16. EPA spokeswoman Melissa Harrison said the agency is “very pleased” with the Circuit Court’s decision. “These practical and achievable standards are already cutting pollution from power plants that will save thousands of lives each year and prevent heart and asthma attacks,” she said. “The standards also slash emissions of the neurotoxin mercury, which can impair children’s ability to learn.” Harrison noted that the majority of power plants affected by the rule are already operating the necessary controls to comply. A group of states and energy companies had asked the Circuit Court to vacate the rule, arguing that the Supreme Court’s decision identified a fatal issue that prevents the rule’s enforcement. But the EPA said that argument ignores the court’s “tradition of remanding deficient rules without vacatur when vacatur would have significant adverse consequences for public health and the environment, or offers evidence of any significant disruptive consequences for industry of maintaining the status quo under the Rule through remand without vacatur.” In oral arguments earlier this month, the Circuit Court judges repeatedly questioned whether the states and energy companies would experience any harm if the rule were allowed to stand, according to Bloomberg BNA. The mercury standard is one of the most expensive regulations put forth by the Obama administration. Enforcement only started earlier this year, but utilities blamed it for the closure of scores of coal-fired power plants in recent years.Republicans held up the Supreme Court ruling as a vindication of their criticisms of the EPA and evidence that the Obama administration does not care about the costs of its regulatory initiatives.

http://thehill.com/policy/energy-environment/263234-court-upholds-epa-air-pollution-rule

Private Clinton Emails Included Two ‘Top Secret’ Messages: Investigators

Two of the four classified messages discovered in emails turned over to the State Department by Democratic presidential candidate Hillary Clinton were labeled “top secret,” the chairman of the Senate Judiciary Committee said Tuesday. Clinton’s emails have been under scrutiny since it was revealed that she used a private server in her home to send and receive messages when she was secretary of state. The FBI has been looking into the security of the private server — which the Clinton campaign said Tuesday was being turned over to the Justice Department — and investigators have been trying to determine whether Clinton sent or received classified information on an unsecured system. Sen. Chuck Grassley, R-Iowa, chairman of the Judiciary Committee, said Tuesday night that Charles McCullough, the inspector general for U.S. intelligence agencies, had reported that two of the emails not only were classified but were in fact categorized as “Top Secret, Sensitive Compartmented Information” — one of the strictest security classifications. Grassley has been pushing for details of the classified emails found on Clinton’s private server and a thumb drive in the possession of her attorney. Clinton’s turning over of the server is “a welcome development,” he said, but he declared: “That’s a long time for top secret classified information to be held by an unauthorized person outside of an approved, secure government facility.” Clinton aides have maintained that nothing on her server was classified at the time she saw it, suggesting that classified messages were given the label after the fact. John Kirby, a spokesman for the State Department, said that was the case with two emails, adding that it remained unclear “whether, in fact, this material is actually classified.” “Department employees circulated these emails on unclassified systems in 2009 and 2011, and ultimately some were forwarded to Secretary Clinton,” Kirby said Tuesday. “They were not marked as classified.” Nick Merrill, the Clinton campaign’s press secretary, said Clinton had “pledged to cooperate with the government’s security inquiry, and if there are more questions, we will continue to address them.” Merrill said that since Clinton asked the State Department to publish the emails in the spring, she had also turned the server itself over to the Justice Department. House Speaker John Boehner, R-Ohio, said “it’s about time” Clinton handed over the server. “Secretary Clinton’s previous statements that she possessed no classified information were patently untrue,” Boehner said. “Her mishandling of classified information must be fully investigated.” Rep. Trey Gowdy, chairman of the House committee investigating the Sept. 11, 2012, attack on the U.S. consulate in Benghazi, Libya, said the information represented a “serious national security issue.” “The revelation that Secretary Clinton exclusively used private email for official public business, and the multitude of issues that emanated from her decision, including this most recent one, demonstrates what can happen when Congress and those equally committed to exposing the truth, doggedly pursue facts and follow them,” he said.

http://www.nbcnews.com/news/us-news/private-clinton-emails-included-two-top-secret-messages-investigators-n408186

Battered, Apologetic and Still Pitching Their Hedge Funds

It has been a bruising year for hedge funds. Not even billionaire managers with sterling records were able to escape heavy losses, and several among them have made the industry’s list of worst performers. Some lost so much of their investors’ money this year that they have written apology letters. Yet even in this most humbling of years, some of these same hedge funds are soliciting investors for more money and marketing new funds that promise bigger and better opportunities. Take John A. Paulson, who made billions of dollars betting against the housing bubble in 2008 but is nursing losses in three funds this year. He is now raising money for two new funds: a private equity fund and a one focused on health care stocks. This fall, Larry Robbins, the founder of Glenview Capital Management, apologized to his investors in a letter after losing 20 percent through October. In the same letter, he offered them the opportunity to invest in a new fund. To sweeten the offer, Mr. Robbins promised that the new limited-time portfolio would not charge any fees. To go to battered investors with a new moneymaking spiel takes a certain self-confidence that seems second nature to billionaires. Some might even call it chutzpah. Mr. Robbins appeared to acknowledge as much in his letter to investors. “Unfortunately, opportunity often feels like a punch in the face,” he wrote. The recent fund-raising, however, underscores a bigger trend in the industry: Pension funds still want to invest in hedge funds, even as they complain about high fees and years of disappointing performance. And that has been the case even as some prominent funds shut down and talk grows about the diminishing luster of hedge funds as an asset class. Investors are, and will continue to be, eager for higher returns in a world of near-zero interest rates even as the Federal Reserve prepares to raise rates for the first time in nearly a decade. The number of new hedge fund start-ups is outpacing fund closures this year, despite mounting fear in recent days about the viability of firms that are heavily invested in junk bonds. More:

http://www.nytimes.com/2015/12/16/business/dealbook/battered-apologetic-and-still-pitching-their-hedge-funds.html?ref=dealbook

The First Person to Hack the iPhone Built a Self-Driving Car. In His Garage

A few days before Thanksgiving, George Hotz, a 26-year-old hacker, invites me to his house in San Francisco to check out a project he’s been working on. He says it’s a self-driving car that he had built in about a month. The claim seems absurd. But when I turn up that morning, in his garage there’s a white 2016 Acura ILX outfitted with a laser-based radar (lidar) system on the roof and a camera mounted near the rearview mirror. A tangle of electronics is attached to a wooden board where the glove compartment used to be, a joystick protrudes where you’d usually find a gearshift, and a 21.5-inch screen is attached to the center of the dash. “Tesla only has a 17-inch screen,” Hotz says. He’s been keeping the project to himself and is dying to show it off. We pace around the car going over the technology. Hotz fires up the vehicle’s computer, which runs a version of the Linux operating system, and strings of numbers fill the screen. When he turns the wheel or puts the blinker on, a few numbers change, demonstrating that he’s tapped into the Acura’s internal controls. After about 20 minutes of this, and sensing my skepticism, Hotz decides there’s really only one way to show what his creation can do. “Screw it,” he says, turning on the engine. “Let’s go.” As a scrawny 17-year-old known online as “geohot,” Hotz was the first person to hack Apple’s iPhone, allowing anyone—well, anyone with a soldering iron and some software smarts—to use the phone on networks other than AT&T’s. He later became the first person to run through a gantlet of hard-core defense systems in the Sony PlayStation 3 and crack that open, too. Over the past couple years, Hotz had been on a walkabout, trying to decide what he wanted to do next, before hitting on the self-driving car idea as perhaps his most audacious hack yet. “Hold this,” he says, dumping a wireless keyboard in my lap before backing out of the garage. “But don’t touch any buttons, or we’ll die.” Hotz explains that his self-driving setup, like the autopilot feature on a Tesla, is meant for highways, not chaotic city streets. He drives through San Francisco’s Potrero Hill neighborhood and then onto Interstate 280. More:

http://www.bloomberg.com/features/2015-george-hotz-self-driving-car/

Can Kentucky’s New Governor Undo Obamacare?

Matt Bevin campaigned on a health-care pledge that would undo the work of his predecessor: to dismantle Kentucky’s popular insurance exchange and change up the even more popular Medicaid expansion. But as the Republican governor’s campaigning morphs into actual governing, he could find that pledge hard to stick to: not only because hundreds of thousands of Kentuckians now have insurance but also because his plans could be costly—and no one seems to know who would pay for all of it. “I don’t understand how this would save us money,” said health-care advocate Emily Beauregard, pushing back on Bevin’s claim that his plans would help taxpayers. “I think all evidence points to it costing Kentucky more money.” Throughout his self-funded, outsider campaign, Bevin—who just began his second week in office—had pledged to kill the state exchange, Kynect, and to alter Medicaid expansion. But he has already walked back some of his earlier, hard-line rhetoric: Where he once promised on the trail to entirely roll back the expansion, more recently he has said he would modify it. This leaves health officials and other stakeholders in Kentucky still unsure of what happens next, or whether Bevin will further shift his stance as he plots his agenda for the state. “I’m waiting with bated breath,” said former cabinet secretary Audrey Tayse Haynes, who spearheaded Kentucky’s health-care changes under the previous governor, “like others are as well.” More:

http://www.theatlantic.com/politics/archive/2015/12/kentucky-bevin-obamacare-kynect-medicaid/420690/

Would Emerging Tax Bill Help a Code Overhaul Later? Maybe

Would the giant tax bill being unveiled Tuesday make it easier for Congress to later overhaul the tax code? Maybe. Republicans say the plan “reduces the baseline for getting to comprehensive tax reform,” as Senate Majority Leader Mitch McConnell said ahead of the bill’s release. Here’s what he means: Congressional scorekeepers assume tax cuts with expiration dates will expire as scheduled, even breaks such as the research and development tax credit that are popular, bipartisan — and virtually always get extended without offsetting tax increases or spending cuts. Under that assumption, the estimates for how much revenue the government will collect over the next decade are artificially high by several hundred billion dollars. As a result, a revamp of the tax code that could be considered for budgeting purposes as being “revenue-neutral” today would require either eliminating those breaks or paying for their extension in the future. Former House Ways and Means Chairman Dave Camp (R., Mich.) proposed doing this last year and that is what the Republican budget calls for. But it isn’t what Congress is about to do. The tax bill up for votes this week would make the research credit and several others permanent without making up the revenue loss. In one sense, that is a recognition of reality, biting off the deficit impact in one chunk instead of two-year increments. It also would make it even harder to balance the budget, because even bigger spending cuts would be required to do so. If this bill passes, when Congress later attempts a revamp the tax code it will have a lower revenue target, by essentially having cut taxes now. That means less pain to get to a revenue-neutral bill in the future, though it certainly doesn’t make a once-in-a-generation tax overhaul easy or likely. Still, the coming bill has deficit hawks worried.

http://blogs.wsj.com/law/2015/12/15/would-emerging-tax-bill-help-a-code-overhaul-later-maybe/

Ashley Madison Data Breach Lawsuits Pose Privacy Test

The class-action litigation over the Ashley Madison data breach is testing how much privacy courts are willing to grant plaintiffs who sue companies for failing to protect their personal information. In August hackers released nearly 10 gigabytes of data stolen from Avid Life Inc., the parent company of Ashley Madison, a dating website for those looking for extramarital affairs. The data included sensitive information, including customers’ names, email addresses and credit-card details, and exposed millions of accounts. More than a dozen civil lawsuits have been filed in federal courts against Avid Life, which is accused of failing to safeguard customer information. Most of the plaintiffs have shielded their names, suing as John and Jane Does. The company, which seeks to arbitrate the breach claims, has asked judges in at least two courts to order the plaintiffs to use their real names. And at least one judge has agreed that plaintiffs shouldn’t be allowed to use pseudonyms. This week a federal judge in Arkansas ordered a “John Doe” plaintiff suing Avid Life to refile his complaint with his actual name. A constitutional right to open courts normally requires plaintiffs to publicly identity themselves in court. Judges have some discretion to grant anonymity, and they sometimes do to protect privacy among other reasons. U.S. District Judge James M. Moody Jr., in a decision Monday, said the privacy interests of the plaintiff weren’t significant enough to warrant confidentiality. Wrote the judge:

http://blogs.wsj.com/law/2015/12/15/ashley-madison-data-breach-lawsuits-pose-privacy-test/

Fed readies first hike in almost a decade amid calm markets

Eight years after a devastating recession opened an era of loose U.S. monetary policy, the Federal Reserve was set on Wednesday to raise rates for the first time since 2006, in a sign the world’s largest economy had overcome most of the wounds of the global financial crisis. A decision will be released at 2 p.m. (1900 GMT), with markets prepared for an initial 25 basis point “liftoff” that would move the Fed’s target rate from the zero lower bound to a range of between 0.25 and 0.50 percentage points. It is to be followed by a news conference by Fed Chair Janet Yellen to elaborate on the central bank’s latest policy statement. A Dec. 9 Reuters poll showed the likelihood of a hike on Wednesday was 90 percent with economists forecasting the federal funds rate to be 1.0-1.25 percent by end-2016 and 2.25 percent by end-2017. Markets set a positive stage for the Fed’s potentially historic turn as U.S. stock futures rose ahead of the market open on Wednesday and bond markets and the dollar were steady. Analysts said that after weeks of preparation a surprise decision not to hike would be the more disruptive choice. “It is a foregone conclusion that the Fed is going to raise rates,” said Kully Samra, a managing director at U.S. focused investment manager Charles Schwab in London. The rate hike will separate the Fed from major central banks in Tokyo, Frankfurt, Beijing and elsewhere that are all battling to stimulate their economies and generate growth. There were signs that the underlying strength of the U.S. consumer-led economy would continue even after a rate rise. A hike on Wednesday would still leave U.S. policy extremely loose, and Fed officials have signaled they will act cautiously from that point forward to nurture a tepid recovery. Markets and analysts will focus on the exact language the Fed uses in its statement to justify the hike and describe how it will evaluate the timing of subsequent steps.

http://www.reuters.com/article/us-usa-fed-idUSKBN0TY2EX20151216

State/Local

UN bashes Alabama on women’s rights, immigration, abortion; Zeigler says agency ‘has no business’ going to Alabama

Alabama State Auditor Jim Zeigler railed against a United Nations report that slammed the state’s voter ID law, “history of severe violence against abortion providers,” and treatment toward immigrants, saying the U.N. has “no business in Alabama.” The report, released Friday, was compiled by a group of U.N. investigators who were in Alabama and two other states last month and found that in the U.S., “women fall behind international standards as regards their public and political representation, their economic and social rights and their health and safety protections.” Reached on Monday by AL.com, Zeigler said the report is “not going to sit well with the people of Alabama and they have no business doing this. They should be going to Syria or many, many other places besides Alabama.” Zeigler said he was particularly concerned by a section of the report referring to the Convention on the Elimination of All Forms of Discrimination Against Women, or CEDAW, which notes that the U.S. is one of seven countries that haven’t ratified the convention. Still, the U.N. said the convention’s ideals are contained in another U.N. provision that is “binding” to America. The state auditor said Alabama is capable of handling discrimination outlined by the convention. He added that although the report found that the state’s voter ID laws made it difficult for women whose names changed due to marriage or divorce to cast ballots, he never heard of such complaints. “The Alabama secretary of state’s office and the state Legislature are perfectly competent to look into any complaints about that,” he said. The report also criticized the state’s “history of violence against abortion providers,” referring to the 1993 killing of Dr. David Gunn, who was killed at his Pensacola, Florida, abortion clinic and operated another clinic in Alabama. The report didn’t invoke the bombing of a Birmingham abortion clinic by Eric Rudolph in 1998. Zeigler accused the U.N. investigators of mischaracterizing Alabama and said the body should butt out of the state’s business. “We all are against violence against anyone, but the court systems and law enforcement are perfectly capable of handling that,” he said, adding that the Gunn murder was “ancient history” and “in another millennium.” “We don’t need the help of the U.N.,” Zeigler continued. The body also called out Alabama’s treatment of immigrants, bashing the state for not allowing immigrants who lawfully reside in the state to get access to Medicaid even after they wait the federally mandated five-year timeframe to apply. “We heard appalling testimonies of migrant women who were diagnosed with breast cancer but could not afford the appropriate treatment,” the reporters wrote. Our Group also regretted to learn about the serious inadequacies of health care facilities to treat women with disabilities and calls for improvement.” Zeigler questioned the credibility of the report because investigators didn’t contact church leaders, adoption advocates or abortion alternative counselors. “The U.N. is preparing to try to dictate to Alabama what we must do on abortion, contraceptives given to youth, sex education in schools, tolerance of alternative sexual orientation and other ‘progressive’ issues,” he said in a statement. “I will monitor this developing situation and report back. I will also coordinate a strategy for how we can resist this U.N. intrusion.”

http://www.al.com/news/index.ssf/2015/12/un_bashes_alabama_on_womens_ri.html#incart_river_index

Gov. Robert Bentley: I didn’t know my wife was filing for divorce

On the morning of Aug. 28, Gov. Robert Bentley and Dianne, his wife of 50 years, posed for the cameras at a Montgomery event celebrating the state’s colleges. What attendees didn’t know at the time was at virtually the same moment the pictures were being made, the First Lady’s attorneys in Tuscaloosa were filing papers to end her marriage to the governor. Now, Gov. Bentley has confirmed he was also unaware that his wife sought to end their marriage until after the paperwork was filed. In a wide-ranging interview with the AP, Bentley said he was not aware his wife had signed divorce papers two days before the Aug. 28 event and signed them about 30 minutes before going to Montgomery. He did not know she was seeking a divorce until later that day, he said. “Yeah, I did not know that it was going to take place,” Bentley said. According to the divorce papers, the Bentleys had been separated since January, with the governor residing in Montgomery and Mrs. Bentley living in Tuscaloosa. The relationship was so strained the First Lady almost didn’t attend the Jan. 19 inauguration in Montgomery. The Governor and Mrs. Bentley settled their divorce in September. The divorce details the property settlement but does not disclose a reason behind the split. In keeping with his past practice of not discussing the divorce in detail, Bentley did not address the status of his marriage prior to Mrs. Bentley’s filing in the year-end story. Small changes have taken place since the divorce. The First Lady’s page has been removed from the state’s website; the governor’s biography now only references the couple’s four sons and eight grandchildren. In September, Bentley denied reports he had left the Governor’s mansion in favor of the nearby Blount House. Dianne Bentley is residing in the couple’s Tuscaloosa home per the divorce agreement. Bentley, 72, said his Christmas plans include spending time with his 90-year-old brother and attending church. “One of the things I also believe is as the Bible says, God takes all of our issues and all of our problems and if we have faith, he helps work through those difficulties and he makes good things out of bad things. I believe that. One of the things this difficult time has meant for me is I am stronger in my faith right now than I have ever been because I believe God is going to take care of me,” he said.

http://www.al.com/news/index.ssf/2015/12/gov_robert_bentley_i_didnt_kno.html

RSA in discussions with Shoals leaders to invest attraction money into conference center

FLORENCE, Ala. (WHNT) – More than ten years ago, the Retirement Systems of Alabama (RSA) invested millions of dollars into the Shoals with a Marriott hotel and Robert Trent Jones golf course. But one project which has yet to break ground is a community sponsored attraction at Veterans Park in Florence to complete the deal. Tennis courts and a few older ball fields make up the majority of land use in the park. RSA agreed to build the hotel, golf course, and take over a struggling conference center if the Shoals would build an attraction in the park. As part of the initial investment, a two-cent gasoline tax was approved by the voters and $2 million was set aside for the park. “Over the years, there have been many things talked about. A water theme park. A botanical garden was one of them I remember talking about. Bass Pro Shop has been one,” Florence Mayor Mickey Haddock explained. But the problem has always come back to the owner of the land. TVA leases the property to Florence for recreational use only, which has put a damper on commercial development. Mayor Haddock said they have been approached by RSA to consider investing the $2 million into the conference center and foregoing the attraction. “We need to at least listen if Dr. Bronner is asking for money to upgrade his sound systems, projection systems, adding some new things that would attract visitors,” Haddock stated. The mayor has not given up hope in finding a project for Veterans Park, but it has been more than 10 years since the money was set aside. Haddock said the two-cent gasoline tax for the RSA project is expected to be paid off by 2020 and will roll off the pumps. Local government leaders say they are open to hearing more about the new proposal of investing the money.

http://whnt.com/2015/12/15/rsa-in-discussions-with-shoals-leaders-to-invest-attraction-money-into-conference-center/

Police report documents fight between Birmingham mayor, councilor

BIRMINGHAM, AL (WBRC) – Birmingham Mayor William Bell’s office has released the police report filed after Bell and Councilman Marcus Lundy got into a fight on Tuesday morning at City Hall that sent them both to the hospital. Bell and Lundy got into a physical altercation in council chambers and outside of public view, according to one of Lundy’s assistants. They both intend to press charges against each other. The fight left Mayor Bell, 66, with a sprained knee, a crushed vocal cord and a contusion. He will have to have rehab for his knee injury. Lundy, 48, was treated for injuries to his thigh and leg, according to City Council President Johnathan Austin who shared photos of Lundy’s injuries with media. Both men have since been released from the hospital and Bell has sworn a warrant seeking Lundy’s arrest.  The police report lists Bell as the victim and Lundy as the offender. It says Lundy will be charged with third degree assault.  [PDF: Police report on fight between Mayor Bell and Councilor Lundy] According to the police report, Mayor Bell asked to speak with Councilor Lundy about a city matter. Bell said Lundy started to change the subject and tried talking to him about a personal issue. “Mayor Bell stated Councilman Lundy started cursing him and getting loud. Mayor Bell stated at this point he let Councilman Lundy know he was no longer going to stay and listen to him,” the report says. The police report says Mayor Bell turned to leave and grabbed the door but Lundy pushed it closed. “Mayor Bell stated he attempted to leave by opening the door two more times and each time Councilman Lundy pushed the door closed. Mayor Bell stated all of a sudden Councilman Lundy grabbed him from behind and put him in a choke hold,” the report states. Mayor Bell told police he kept telling Lundy “No” and to stop. The mayor said two of Lundy’s assistants opened the door  and got Lundy off of him. Both of the assistants refused to give police a statement until they spoke with an attorney. “Mayor Bell had bruising on the right side of his neck and swelling to his left knee,” the police report states. Police were dispatched to City Hall at 9:58 a.m. The police report says Birmingham officers tried to speak with Lundy, but a city council attorney told them Lundy would not give a statement at this time. The police officer who filed the report stated that he was unable to observe Lundy’s injuries at the time. Lundy was treated by Birmingham Fire and Rescue at the scene and taken to UAB Highland by a private vehicle. Mayor Bell was also treated at the scene by Birmingham Fire Rescue and taken to Brookwood hospital by his security detail, according to the report.  The Birmingham City Council released video that captures sounds and commotion from the fight that could be heard during their Tuesday meeting. Councilors briefly adjourned the meeting after hearing noises and a yell from the council chamber.

http://www.wbrc.com/story/30756302/police-report-documents-fight-between-birmingham-mayor-councilor

Warrant issued for Councilman Marcus Lundy on assault charge after fight with Mayor William Bell

An arrest warrant has been issued for Birmingham City Councilman Marcus Lundy after he and Mayor William Bell were involved in an altercation Tuesday morning. A complaint was signed Tuesday night and a warrant was issued on a third-degree assault, according to police. The charge is a class A misdemeanor. “Councilman Lundy, like any other citizen, will be given the courtesy to turn himself in at the city jail so the court proceedings can begin,” police spokesman Lt. Sean Edwards said. A police report released Tuesday afternoon outlined the account Bell gave to officers after the incident: He said he asked Lundy to discuss a “city matter,” and Lundy “started cursing him and getting loud.” When Bell said he would not stay and listen, Lundy twice pushed the door closed and “grabbed him from behind and put him in a chokehold,” Bell said. According to the report, Bell told Lundy to stop until two of Lundy’s assistants — Jose Perry and Chris Moseley — opened the door and pulled the councilman off Bell. Neither Lundy nor his assistants gave a statement to police, saying they needed to consult an attorney first. The report said Bell had bruising on his neck and a swollen left knee. He was treated and released from the hospital. Lundy has not yet spoken out about the incident, but he will issue an official statement Wednesday, according to a city council news release. “Councilor Lundy stands by his statement that he was physically attacked today by Mayor Bell, which resulted in him receiving treatment at a local hospital for a deep three-inch abrasion to his left thigh,” the release states. “Councilor Lundy sincerely appreciates the many prayers and well wishes that he and his family have received from the public during this time.” Council President Johnathan Austin would not comment on who initiated the conflict, but said Lundy would press charges. The incident is indicative of Bell’s lack of respect and willingness to cooperate with the council, Austin said.

http://www.al.com/news/birmingham/index.ssf/2015/12/warrant_issued_for_councilman.html#incart_river_index

Hubbard, Criminal Lawyers Caught Cheating

MONTGOMERY—New court documents in Speaker Mike Hubbard’s criminal case reveal, that he and his attorney have been improperly using subpoenas, by disregarding Rule 17.3, to gather documents, records and interviews. (SEE MOTION.) Rule 17.3. Subpoena duces tecum, reads as follows:  (a) PRODUCTION OF BOOKS, PAPERS, ETC. A subpoena may command the person to whom it is directed to produce the books, papers, documents, or other objects which may be designated therein. (b) PRODUCTION PRIOR TO TRIAL AND FOR INSPECTION. The court may direct that books, papers, documents, or other objects designated in the subpoena be produced before the court at a time prior to the trial or prior to the time when they are to be offered in evidence. Upon their production, the court may permit the parties and their attorneys to inspect them, or portions thereof. (c) DISMISSAL OR MODIFICATION. The court, on motion made promptly, may dismiss or modify a subpoena duces tecum if compliance therewith would be unreasonable, oppressive, or unlawful. According to the State’s latest motion , “On October 14, 2015, Hubbard had the Clerk issue a subpoena to Administrative Office of Courts AOC seeking the production of records identifying the AlaCourt users that accessed the publicly filed documents in this case. AOC filed a motion to quash the subpoena on October 21, 2015. At the hearing on October 28, 2015 and again on November 9th the State objected to these documents. AOC and the defense later reached an agreement about the production of some of the subpoenaed records.” However, Hubbard’s legal team appears to have asked that the documents be sent directly J. Mark White’s office, and not to the Court, which is in direct violation of Rule 17.3. According to the record, “A third party in response to a Rule 17.3 subpoena must first be produced to the Court. Only then may the records be provided to both parties – a decision which rests entirely in the sound discretion of the Court.” On December 9, Trial Judge Jacob Walker III ordered, that the information sent to White be placed under an immediate protective order, stating, “The production is not to be disseminated, copied, or used for any purpose until further Court Order. (SEE ORDER.) However, Hubbard’s criminal lawyers had procession of the documents and would have had ample time to examine them thoroughly. A prominent defense attorney and former prosecutor speaking on background described this tactic respectively as “not so artfully breaking the rules,” and “high-handed cheating.”

http://www.alreporter.com/hubbard-criminal-lawyers-caught-cheating/

Five public meetings planned on Alabama gasoline tax

A legislative committee plans to hold five regional meetings in January about a possible proposal to increase the state gasoline tax to support road construction and maintenance. Rep. Mac McCutcheon, chairman of the Permanent Joint Transportation Committee, said the committee will meet in Birmingham, Huntsville, Mobile, Montgomery and Tuscaloosa as it considers whether to propose raising the state gasoline tax for the first time in 24 years. McCutcheon, a Republican from Huntsville, said there’s not yet a final draft of a bill. He said the purpose of the meetings is to collect facts and figures about road projects and determine the level of need. “I want to make sure we’re sensitive to needs and we’re not just trying to use low fuel prices to get more revenue,” McCutcheon said. The legislative session begins Feb. 2. Gov. Robert Bentley last week told the Alabama Asphalt Pavement Association that he would support an increase in the gasoline tax. The state gasoline tax hasn’t changed since 1992, when the Legislature raised it by a nickel, to 16 cents a gallon. “We’re operating and trying to build and repair roads on 1992 revenue,” McCutcheon said. Also, improved vehicle fuel efficiency means that drivers pay less per mile than they did two decades ago because the tax is based on volume, not price. Sen. Gerald Dial, R-Lineville, vice chairman of the Joint Transportation Committee, said that trend is bound to continue.

The Obama administration has issued standards requiring cars and light duty trucks to get the equivalent of 54.5 miles per gallon by model year 2025. “We eventually have got to do something,” Dial said. There is some support in the business community for raising the gas tax. Business Council of Alabama President William Canary said the BCA “believes that it is past time for Alabama to address this growing problem with a reasonable long-term solution that puts Alabama’s transportation infrastructure back in working order and allows us to invest in our future.” “Specifically, we support a solution to fix our roads and bridges and invest in Alabama’s future that includes reforms and is dedicated to road and bridge construction and maintenance,” Canary said in a statement. Tom Layfield, executive director of the Alabama Road Builders Association, said if the gasoline tax had been indexed for inflation in 1992, it would be 11 cents higher today. “It’s coming up on 24 years since the last time we addressed transportation infrastructure funding,” Layfield said. “We have so much less purchasing power today than we did in 1992.” A system of well-maintained roads with adequate capacity promotes safety and saves valuable time for drivers, Layfield said. It’s also an important factor in attracting employers, he said. The Association of County Commissions of Alabama is providing information about what it believes is the need for more money to fix county roads and bridges through a website, Drive Alabama. Most of the gasoline tax goes to the state Road and Bridge Fund and is used to match federal dollars for road construction and maintenance. Counties and cities also receive a share earmarked for roads. In addition to the 16-cent tax, the state collects an inspection fee of 2 cents per gallon that goes to the Department of Agriculture and Industries, which inspects gasoline pumps. Also, about 310 cities and 27 counties levy their own gasoline taxes. Counties can levy a gasoline tax if the Legislature approves a local bill. Most of the county gasoline taxes are 1 cents to 3 cents a gallon. Baldwin County is the highest at 5 cents, according to a Department of Revenue report on city and county gas taxes. County gas tax revenues support roads, and several counties also use them to support education. More:

http://www.al.com/news/index.ssf/2015/12/sen_gerald_dial_says_public_wi.html#incart_river_index

Blogs/Opinions

Josh Moon: End the embarrassment and pardon Don Siegelman

It doesn’t matter why Don Siegelman is in solitary confinement at a Louisiana federal prison. It doesn’t matter because Don Siegelman shouldn’t be in prison at all. Why this absolute travesty has been allowed to continue – and make no mistake, it is both Democrats and Republicans who have allowed it – is a mystery to me and to a number of attorneys and legal scholars from across the country. It is an embarrassment to the justice system. It is an embarrassment to the state. And it should be an embarrassment to every citizen. Since we’re about a decade past the case, let me recap the shenanigans. So, deep breath, ready, go … Siegelman, a Democrat, was narrowly defeated in 2002 by Bob Riley, after a late-night recount in Baldwin County gave Riley an unexpected 3,000-vote edge. It was unexpected because Siegelman had already been declared the winner by the Associated Press. Regardless, Siegelman lost, but remained a popular figure in the state and would make a formidable opponent if he decided to run for governor again in 2006. But before that could happen, he was indicted on federal bribery charges in 2004. The case went before federal judge U.W. Clemon, who tossed most of it, and after opening statements, the prosecution dropped the rest. Clemon later called it “the most unfounded case” that he had ever presided over in his legal career. But a year later, the feds were back with a new indictment for basically the same charges, but this time in Montgomery and in front of federal judge Mark Fuller. That name might ring a bell, since Fuller was forced to resign his position on the bench this year after being arrested for assaulting his wife in an Atlanta hotel room. But in 2004, Fuller was on the bench and he refused to recuse himself from the case despite a clear conflict of interest arising from a pension dispute three years earlier. There also was the matter of Fuller owning a controlling share in Doss Aviation, which miraculously received $300 million in government contracts after the Siegelman trial. But what’s a few hundred million among friends? The case itself was handled during the first few months primarily by U.S. Attorney Leura Canary, whose husband, Bill, was managing Riley’s re-election campaign at the same time. Canary eventually recused herself, but well ….Siegelman was accused and eventually convicted (sort of) of accepting a bribe from former HealthSouth CEO Richard Scrushy. The “bribe” came in the form of two $250,000 in donations to Siegelman’s education lottery in exchange for a spot on a health care licensing board. And that, in the wake of the Citizens United decision from the U.S. Supreme Court – a decision that labeled campaign contributions a form of free speech – would seem to be the biggest hole in this case. Because there is no question that what Scrushy provided was a donation to the lottery fund. And there is no disputing that none of it went to Siegelman personally. So, Siegelman is serving 77 months for reappointing a guy to a non-paying board after that guy exercised his right to free speech. After the case, and after Fuller ordered Siegelman and Scrushy shackled and escorted to prison from the courtroom (a rare sight in a white collar case), even more awful conduct was revealed. A Republican attorney said she had overheard Bush administration officials, including Karl Rove, discussing using the Justice Department to target Siegelman. There was evidence the prosecution improperly interviewed two jurors, thus tainting the jury. Then there’s the matter of Fuller’s poor jury instructions, which failed to instruct jurors that an explicit quid pro quo must exist to rise to the level of bribery. And one last thing: The prosecution’s star witness, Nick Bailey, who was Siegelman’s aide, basically made it all up. Bailey told a fantastic story of Siegelman exiting a meeting with Scrushy, waving a $250,000 check around and telling Bailey that Scrushy wanted a seat on the hospital board. Siegelman’s attorneys later learned that the check was cut days after the meeting. See? This thing is a stinking pile of disgrace. It has prompted more than 100 former state attorneys general to sign a letter asking the Supreme Court to review the case. But there’s no need for that. Because I think we all know what’s right here. It’s past time for President Obama to pardon Don Siegelman.

http://www.montgomeryadvertiser.com/story/news/local/blogs/moonblog/2015/12/16/end-embarrassment-and-pardon-don-siegelman/77311378/

 

Stoking refugee fears, Bentley sent staff scrambling

Rationalization and justification are not the same thing. At one point in college, I had screwed up. I screwed up lots of times in college and I don’t remember what I had done in this particular instance, but I recall pleading my case to my professor. Really, though, I was making excuses. “I’m trying to justify …” I said, before being cut off. “No, you’re not justifying anything,” she said. “You’re trying to rationalize what you did, and you cannot rationalize what is not already justified.” It put me in my place. A justified decision doesn’t require a lot of explanation. It doesn’t have to be retconned, recalibrated or reconfigured. It speaks for itself. It certainly doesn’t need to be painted over with bull … obfuscation. I’ve carried that little rock in my pocket ever since. I run my fingers over it to remind myself never to obfuscate, to use the polite term. But other times, I want to put it in my slingshot pop one public official or another right between the eyes. Like Gov. Robert Bentley. Again. After the terrorist attacks in Paris last month, Bentley used the tragedy to score political points when he announced that Alabama would not welcome any Syrian refugees trying to flee from ISIS. For the governor, it was yet another instance of “Ready, Shoot, Aim!” Behind the scenes, his staff scrambled to rationalize the governor’s pronouncement, Anniston Star reporter Tim Lockette revealed this week. The governor doesn’t use email, but his staff does. Lockette requested those documents through Alabama public information laws. Those emails show that the staff was caught unprepared. They quickly assembled talking points, and cribbed from an executive order issued by Louisiana Gov. Bobby Jindal when drafting a similar order for Alabama. And those emails again show that, at the center of the governor’s circle of advisers is Rebekah Mason, Bentley’s senior political adviser. Mason ostensibly works for the governor, but her paycheck comes from a dark money group, the Alabama Council for Excellent Government. As a 501c4 non-profit, that organization doesn’t have to disclose who’s really paying the bills. But anyway … What’s apparent from the emails is that the governor’s staff wasn’t prepared for the governor’s position on Syrian refugees. Instead, they had to shoehorn a rationalization onto the governor’s proclamation.  What communication they had from the governor seems to have come first through Mason. But mostly, there was a lot of staffers trying to rationalize what was not already justified. What we can tell is that the governor’s office had little or no reason to believe that Syrian refugees were coming to Alabama. All they had to do was check with the agency responsible for resettlement of refugees in Alabama, and they would have known that much. Also, two days before the governor shot first and aimed later, he had been told there were no credible threats in Alabama. But safety was never what this was about. This was politics. The governor saw an opportunity to exploit the public’s fear to score political points and to distract attention from a state government that can’t meet the needs of its citizens. There’s no way to rationalize that, and it certainly wasn’t justified.

http://www.al.com/opinion/index.ssf/2015/12/stoking_refugee_fears_bentley.html

 

Who started City Hall fight? Who won?

 It’s full-on crazy in Alabama, a you-can’t-make-this-up throw down of a day in Birmingham City Hall.

Let’s get this perfectly straight. Right there in the middle of the city council meeting Mayor William Bell taps Councilman Marcus Lundy on the shoulder and the two go into a back room. And then Bam! And then Wham! And they have to recess the whole council meeting because a fight breaks out in the back. It’s the Brawl in City Hall, the Attack Right Out Back. And all of a sudden the 66-year-old mayor is going to the hospital with injuries to his throat and his knee. And all of a sudden the 48-year-old Lundy is going to the hospital with injuries to his calf. And the mayor is demanding that Lundy be arrested and charged with assault. And Lundy’s two assistants – Chris Mosley and Jose Perry – refuse to give statements to police without their lawyers even though they were in the hall closest to the action. And the council president is pointing his finger at the mayor, proclaiming that Lundy will file charges against him. And the mayor’s staff is pointing fingers at the council, saying the world has gone crazy. And … Come on man! Because the whole of the world is watching Birmingham come apart at the seams. Because the whole world is again looking at Alabama expecting to see a bunch of boorish rubes going at it old school in some backroom, and the whole world sees exactly what it expects. Losers. Who won that fight? Nobody. Who lost that fight? We all did. Because this isn’t just a disagreement between two guys who happen to be elected officials. This is a sign and a symptom of a city government gone terribly wrong. It’s a clear warning that Birmingham has two parts of government with no respect for one another. We have leaders who see each other as the enemy. So the people suffer. Whose fault is it? Council President Johnathan Austin and other council members who support him and Lundy say the mayor is a dictatorial force with a history of bullying who has no intention of working with the council. Austin said the Mayor went so far as to interfere in Lundy’s personal job with Regions Bank, threatening to Lundy’s bosses to take all the city’s money out of that bank “if they didn’t do something about Lundy.” The mayor’s office says that is patently false, that BBVA won the bulk of the city’s banking in a request for proposals several years ago anyway. But in truth it all just becomes petty and pitiful and pathetic. Because – whoever started it – Birmingham is the Big Loser. Whatever good has been done here — all those cranes over downtown and the World Games and stadiums and music –means nothing. All the claims that we’ve changed are bunk. All that work to call ourselves a human rights city are washed away in our own all-too-human wrongs. We are still that place that settles its disputes with violence, and lawyers, and anger, and absurdity. I don’t know who started it. I don’t know who to blame, other than everyone. Including voters. But I know the mayor and council need to go back and take a look at the last time something like this happened: when former Birmingham School Board member Tyrone Belcher took it to a couple of other board members in a back room during an executive session. He gave those guys a beating. And then something happened that almost never happens in this town. Voters, in the next election, tossed out almost the whole lot of them. Seems like a plan.

http://www.al.com/opinion/index.ssf/2015/12/who_started_city_hall_fight_wh.html

Why I’ve Got Money on Cruz (and Not on Trump)

Of the many superlatives history will bestow on America’s 2016 presidential race, here’s one you might not have heard: It will be the biggest political gambling event of all time. And as a British professional gambler, without any ideological axe to grind, I have one simple agenda: to make as much money as humanly possible, right up until November 8, 2016, betting on your elections. Political betting is virtually unknown to most Americans, mainly because betting on politics is illegal in the U.S., apart from small-stakes prediction sites. But in Britain, where I live, our ultra-liberal gambling laws let us bet on pretty much anything taking place anywhere in the world, for whatever stakes we can afford. And when it comes to the profit scale, opportunities and pure entertainment, no gambling market quite compares to this one. The attention and research lavished on your presidential race by overseas betters would astonish American observers. During the last presidential election in 2012, Betfair, the world’s biggest peer-to-peer betting exchange (for which I write as a freelance political analyst), saw a record $200 million traded on the main “Next President” market. That’s just one market with one firm. There are other peer-to-peer exchanges; and traditional oddsmakers like Paddy Power, Ladbrokes, William Hill and Skybet are all in the business. Taken across all markets throughout the whole race, with odds offered on every single step of the race, that figure easily runs into billions. As a gambler, I’ve noticed that Americans might also be obsessed with predicting their presidential races, but they often rely on pundits whose name recognition far outstrips their accuracy. Gamblers can’t afford to be wrong that often: Political prediction is a genuine game of skill, with serious research going into the effort—and serious rewards for the gambler who gets it right. I’ll cut to the chase: my current prediction is for Hillary Clinton to become president, in line with Betfair’s ratings, at about 54 percent. But my main focus—and where the greatest potential profit lies—is predicting the winner of the GOP nomination. In gambling terms, this race is the perfect political market: one that’s wide-open, and in which momentum (and therefore the betting), swings regularly between candidates. Right now I have positions on a raft of outsiders, including Ben Carson, Carly Fiorina—and my biggest bet, on Ted Cruz.

http://www.politico.com/magazine/story/2015/12/presidential-election-2016-gambler-predicts-213430#ixzz3uUW5sJ30
Morning Money

FED DAY IS FINALLY HERE — POLITICO’s Jon Prior and Ben White: “The Federal Reserve’s expected interest-rate hike Wednesday has been well-telegraphed to minimize economic volatility. The soft landing may also have another upshot: minimal political turbulence. Federal Reserve Chair Janet Yellen, tapped last year by President Barack Obama to lead the Fed and strongly supported by the progressive wing of the Democratic Party, is expected to promise a very slow and cautious approach even as the central bank increases borrowing costs for the first time in almost a decade.

“With recent assurances from Yellen that the central bank will exercise extreme care, growing numbers of Wall Street analysts now believe that a gentle hike of just a quarter of a percentage point will not be necessarily bad news for markets, and could even provide a short-term stimulus if businesses are inspired to invest in new equipment now rather than wait for higher rates in the future. For traders, a rate hike is assumed. The Fed failing to move would likely cause a much bigger reaction on Wall Street.

“At the same time, though the Fed fiercely guards its political independence, the knock-on effect could be good news for Democrats including Hillary Clinton who don’t want to see the bank pump the brakes too hard. Senior Democrats say the economy has come a long way from the depths of the crisis in 2009 and should be able to weather slightly higher rates.

“‘You look at where we are today and it is enormously different,’ White House Council of Economic Advisers Chairman Jason Furman told POLITICO on Tuesday. ‘The unemployment rate has come down to 5 percent; you are seeing some signs of wage growth; you are seeing consumer spending strengthening. A huge range of things about the economy just feel enormously different today.’” http://politico.pro/1m6C6BS

RECESSION AHEAD … BUT NOT YET — Pantheon’s Ian Shepherdson: “The Fed will raise rates by 25 basis points today, 11 years and six months since the previous tightening cycle began, in June 2004. This tightening, like that one, will end in recession eventually, but this time around we expect a garden-variety business cycle downturn rather than a massive financial crash and a near-death experience for global capitalism.”

S&P’s Beth Ann Bovino: “We expect 4 more rate hikes next year, with the FOMC skipping a beat in between moves, to gauge how the economy absorbs the shock … However, if the statement indicates an increased concern over global economic and financial developments, their path to normalization may be slower than we currently expect.”

Larry Summers: “Given the strength of the signals that have been sent it would be credibility destroying not to carry through with the rate increase so there is no interesting discussion to be had about what should be done on Thursday. There is an interesting counterfactual discussion to be had. Should a rate increase have been so clearly signaled? If rates are in fact going to be increased the answer is almost certainly yes. … Assuming that the language surrounding the rate increase on Thursday is in line with what the market expects, I would be surprised if there are major market gyrations after the Fed statement” http://bit.ly/1m55ZCI

GOP DEBATE WRAP: RUBIO-CRUZ RUMBLE — POLITICO’s Eli Stokols: “Forget about Donald Trump’s Muslim talk. All eyes were on the simmering feud between Ted Cruz and Marco Rubio that boiled over on Tuesday night’s debate stage, with the two rising senators laying into each other over their national security bona fides and immigration track records. … Trump, topping 40 percent in national polls for the first time this week, found himself punching down at Jeb Bush, and to the surprise of many, held his fire against Cruz.

“Meanwhile, the two other top-tier candidates duked it out, jockeying for position atop the field along with the anti-establishment billionaire in a primary that’s been recalibrated following terror attacks in Paris and California. Rubio and Cruz sparred over the expiration of the NSA phone record surveillance program, past votes on defense spending and their overall approach to combating Islamic State. And for the first time on the debate stage, Rubio endured tough questions and a two-pronged attack from Cruz and Rand Paul over his support for a 2013 comprehensive immigration reform bill, long thought to be his Achilles heel in the Republican primary” http://politi.co/1I8iSq9

FIELD SHRINKS — POLITICO’s Mike Allen: “The field feels narrower all the time, with only Trump, Rubio and Cruz driving the race’s conversation. Chris Christie was at his best in Vegas, capping off a great month. But it wasn’t enough to siphon attention away from his better-polling rivals. And Jeb Bush had a moment, but not a lasting one. … Rubio is the Barack Obama of 2008: He rises to big moments, lives up to the hype, and is a gifted communicator and performer. There’s a reason Hillary Clinton allies fear Rubio, and are suddenly publicly pushing the idea that the GOP nominee will be Cruz, an opponent they would much prefer” http://politi.co/1Jboc6U

BERNANKE THINKS “POPULISM” WILL EASE — POLITICO’s Nolan D. McCaskill: “Ben Bernanke says he is optimistic that the wave of ‘populism’ sweeping the United States will eventually crest, alluding to the rise of Donald Trump on the right and ‘democratic socialist’ Bernie Sanders on the left. ‘There is a lot of anger about economic developments in general, and the Fed is one object of that anger,’ the former Federal Reserve chairman said in an interview with MarketWatch published Tuesday. ‘I hope things will get better over time.’

BUSH: I WON’T BE “DIVIDER IN CHIEF” — Jeb Bush is appearing on Wall Street Week where he discusses the state of his campaign, Trump and where the country can stand to improve. … Cohosts Anthony Scaramucci and Gary Kaminsky question why Bush and his message are not resonating with the American people, that maybe his approach is too low key and not bombastic enough. Bush responds by saying:

“If you’re looking for a Divider-in-Chief, I’m not your guy … If you want someone that will disparage every American, I’m not your guy … If you want someone who can fix the damn things that exist in this country, I am your guy. And I don’t think that’s low energy. I just don’t go out of my way to tear people down to make myself look better.” http://bit.ly/1RnDZaL

GOOD WEDNESDAY MORNING — Welcome to Fed Day! Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben

RYAN ANNOUNCES BUDGET DEAL — POLITICO’s Burgess Everett, Jake Sherman and Seung Min Kim: “After more than 10 painful days of backroom negotiations and horse-trading over how to fund the government and renew hundreds of billions of dollars in tax breaks, House Speaker Paul Ryan announced a budget deal to wrap up the year’s business by the end of the week. … House lawmakers planned to post the $1.1 trillion budget bill … as the Big Four congressional negotiators put the finishing touches on legislative text that was expected to lift the oil export ban for Republicans and deliver clean climate funding to Democrats.

“The spending measure will be paired with a massive package of tax breaks that will last at least two years, though some breaks could be permanent … For days now, Ryan, Minority Leader Nancy Pelosi, Senate Majority Leader Mitch McConnell and Minority Leader Harry Reid have been negotiating the gargantuan package, which builds on John Boehner’s final two-year bipartisan budget deal.” http://politi.co/1NoA2OV

END OF AN ERA AT THE FED — WSJ’s Jon Hilsenrath: “The Federal Reserve’s likely decision Wednesday to raise short-term borrowing costs will mark the end of an era of zero interest rates, a period of extraordinary policy experimentation that has yielded mixed results. … Despite the Fed’s aggressive efforts to spur the economy since the 2008 financial crisis, it’s delivered neither the vigorous expansion it wanted nor the disasters its critics feared. In the process, the central bank emerged less like an all-powerful force and more like so many other institutions that have struggled in recent years to keep up with events beyond their control.

“‘It was in fact a period of great uncertainty and insecurity for the Fed,’ the central bank’s former chairman, Ben Bernanke, said … The Fed pinned short-term interest rates near zero for seven years and added trillions of dollars in mortgage and Treasury bonds through largely untested programs known as quantitative easing to its portfolio to lower long-term rates. Low rates, by encouraging investment and spending, helped spark an economic expansion now 78 months old, longer than all but four expansions ever recorded” http://on.wsj.com/1QLPlna

ROUGH YEAR FOR HEDGE FUNDS — NYT’s Alexandra Stevenson and Matthew Goldstein: “It has been a bruising year for hedge funds. Not even billionaire managers with sterling records were able to escape heavy losses, and several among them have made the industry’s list of worst performers. Some lost so much of their investors’ money this year that they have written apology letters. Yet even in this most humbling of years, some of these same hedge funds are soliciting investors for more money and marketing new funds that promise bigger and better opportunities.

“Take John A. Paulson, who made billions of dollars betting against the housing bubble in 2008 but is nursing losses in three funds this year. He is now raising money for two new funds: a private equity fund and a one focused on health care stocks. This fall, Larry Robbins, the founder of Glenview Capital Management, apologized to his investors in a letter after losing 20 percent through October. In the same letter, he offered them the opportunity to invest in a new fund. To sweeten the offer, Mr. Robbins promised that the new limited-time portfolio would not charge any fees” http://nyti.ms/1ZbroIV

BUDGET DETAILS — FT’s Ed Crooks in New York and Shawn Donnan in Washington” “Tight restrictions on US crude oil exports, in place for 40 years, would be lifted as part of a budget deal agreed in Congress on Tuesday evening … The deal presented to Republicans in a late-night meeting by House Speaker Paul Ryan would also raise spending on defence and a number of domestic programmes. It would also avoid a government shutdown that had been looming as soon as Wednesday. … President Barack Obama’s administration has expressed opposition to relaxing the controls on crude exports, but he is seen as likely to accept a broad spending bill that also includes liberalisation of oil sales.

“The crude export restrictions were introduced in 1975 to support the price controls put in place as a response to the oil crisis of 1973-74. They remained in place even after those controls were scrapped in 1981. Removing the curbs was a policy priority for US oil producers struggling after the plunge in crude prices since the summer of last year. The industry has argued that allowing free trade in oil would boost US production, investment and jobs. Analysts say large volumes of crude are unlikely to flow out of the US as soon as the restrictions are lifted” http://on.ft.com/1Yg2Y47

ASIA RISES AHEAD OF FED — Reuters: “Asian stocks rose briskly on Wednesday, with sentiment lifting as Wall Street rose before a likely hike in U.S. interest rates, while the dollar held to large gains made as Treasury yields picked up. … ‘A lot of capital will be looking for a temporary home outside of the U.S. so as to avoid the likely increase in volatility after the hammer falls.

“And in the context of our current world markets, for many Japan looks like a credible home,’ said Martin King, co-managing director at Tyton … With a hike seen as a mostly done deal after more than a year of anticipation, investor focus is fixed on how the Fed might opt to pace its tightening cycle next year. The central bank has hinted that it intends to hike rates gradually” http://reut.rs/1mnlNRF

EURO-AREA HIRING PICKS UP — Bloomberg: “Euro-area companies are hiring at the fastest pace in more than four years in a sign of confidence that the region’s economy will gather momentum in the coming months, according to Markit Economics. Encouraging order intake pushed the rate of employment growth to the highest since May 2011, the London-based company said on Wednesday. A Purchasing Managers’ Index for manufacturing and services was at 54 in December, close to the

54.2 measured in the previous month. The European Central Bank cut one of its key interest rates this month and extended quantitative easing after updated projections showed that the region’s inflation rate would rise slower than previously anticipated. Economic confidence remained at the highest level in more than four years in November in anticipation of more stimulus” http://bloom.bg/1lONFOQ

POTUS Events

All times ET  
10:00 AM The President receives the Presidential Daily Briefing

Oval Office Closed Press

11:25 AM The President delivers remarks at a naturalization ceremony

The National Archives Building, Washington, DC Pooled TV, Open to Correspondents In-Town Travel Pool Gather Time: 10:40AM – North Doors of the Palm Room

12:30 PM The President and the Vice President meet for lunch

Private Dining Room Closed Press

12:30 PM Press Briefing by Press Secretary Josh Earnest

 

Floor Action

The Senate will convene at 11:00 a.m. with senators being allowed to speak during morning business until 6:00 p.m. No votes are scheduled. First votes expected between 10 and 11 a.m. in the House and last votes are expected between 2 and 3 p.m.

Krebs Daily Briefing 14 December 2015

International

The world just agreed to a major climate deal in Paris. Now comes the hard part.

After two weeks of bleary all-nighters in Paris, diplomats from around the world have hammered out a major global agreement to address climate change. Here’s the full 31-page document, which was approved by 195 countries on Saturday. It’s important to be clear on what this wad of paper actually does. The Paris climate agreement hasn’t saved the planet and it hasn’t solved global warming. Not by itself. Instead, the deal is supposed to add structure and momentum to efforts that are currently underway around the world to reduce greenhouse-gas emissions. That’s a worthwhile task in its own right. Since 2014, nearly every country has submitted a voluntary plan to the United Nations for tackling climate change. The US is reducing carbon dioxide from power plants. China is boosting wind and solar. And so on. But those pledges, in the aggregate, remain weak and inadequate. If you add them all up, global emissions are projected to keep rising through 2030, putting us on pace for 2.7°C (or more) of warming by century’s end. That’s well above the 2°C threshold that many scientists argue is unacceptably risky:

http://www.vox.com/2015/12/12/9981020/paris-climate-deal

Turkey says its patience with Russia ‘has a limit’: newspaper

Turkey’s foreign minister said Ankara’s patience with Russia “has a limit” after Moscow’s “exaggerated” reaction to a weekend naval incident between the two countries, an Italian newspaper reported on Monday. A Russian destroyer fired warning shots at a Turkish vessel in the Aegean on Sunday to avoid a collision and summoned the Turkish military attache over the incident..”Ours was only a fishing boat, it seems to me that the reaction of the Russian naval ship was exaggerated,” Mevlut Cavusoglu told Italian daily Corriere della Sera in an interview. “Russia and Turkey certainly have to re-establish the relations of trust that we have always had, but our patience has a limit,” Cavusoglu said. The incident is likely to heighten tensions between the two nations who are at odds over Syria and Turkey’s downing of a Russian warplane last month. Cavusoglu said Russia had already “put itself in a ridiculous position” with accusations by its President Vladimir Putin that Turkey had shot down the jet to protect oil supplies from Islamic State. “No-one believed it” he said. He also criticized Russia’s military intervention in Syria, saying it was aimed at propping up the regime of President Bashar al-Assad, not combating Islamic State. “Unfortunately Russia is not in Syria to fight terrorists,” he said, adding that only 8 percent of its air strikes had been aimed at Islamic State while 92 percent were against other groups hostile to Assad.

www.reuters.com/article/us-mideast-crisis-russia-turkey-idUSKBN0TX0RM20151214#wwD8BB6aEtPaHCg3.99

In Talks Over Seized U.S. Property, Havana Counters With Own Claim

MIAMI — Some of the thorniest conversations in the long road toward full relations between Cuba and the United States have only just begun in recent days: The two sides are sitting down for the first time to discuss the American properties Cuba confiscated decades ago.The very idea of compensation for property and businesses seized in the wake of the Cuban revolution sent a quiver of excitement down the backs of the thousands of people who lost everything from sugar mills to family homes to oil refineries. People started dusting off yellowing deeds. Lawyers were called. But what if Cuba approaches these historic talks with a rather different unsettled claim in mind? In 1999, a Cuban court found the United States government liable for deaths and damages caused by America’s “aggressive policies” against the island — namely, the Bay of Pigs invasion and the trade embargo prohibiting American citizens and companies from doing business in Cuba. Arguing that the United States had strangled Cuba’s economy and caused irreparable harm, the court ordered the United States to pay $181 billion in damages. So while legal representatives from the State Department flew to Havana last week to make the case for American claims against Cuba, the Cubans made a presentation of their own. “We know that they believe that they have billions of dollars of claims relating to human damage and economic damage resulting from the embargo,” said a State Department official who briefed reporters on the condition that she not be named. “And I think we can expect that we will hear more about that as we proceed with these discussions.” The official would not say whether the Cubans demanded an exact figure in reparations. It is unclear how the Cuban government arrived at any of the many damage estimates bandied about. At the United Nations this year, Cuba said it was owed about $121 billion. The Cuban government-run news media says the amount owed is $833.75 billion. “This is an extremely complicated subject,” Josefina Vidal, head of United States affairs in the Cuban Foreign Ministry, told The Associated Press after the first meeting of the bilateral commission this fall. “I imagine that when the two countries begin to meet, one of the first things we will have to do is to clarify all the accounts.” (She noted that the Cuban court verdict was 15 years old, suggesting there were fresh numbers to crunch.)

http://www.nytimes.com/2015/12/14/world/americas/talks-begin-in-cuba-on-confiscated-us-property-worth-billions.html?emc=edit_th_20151214&nl=todaysheadlines&nlid=53476364&_r=0

National

Regulators to Wall Street Banks: Rescue Yourselves Next Time

After Wall Street has spent years trying to convincing regulators how they could collapse without disrupting the financial system, the largest U.S. banks will soon have to take the additional step of showing how they can keep from failing in the first place. The Office of the Comptroller of the Currency, which is responsible for maintaining the safety and soundness of national banks, is planning to propose a requirement that lenders with more than $50 billion in assets to provide blueprints for how they’ll withstand a crisis and maintain their businesses. It’s a big undertaking for bank compliance staffs and the first time many of the largest regional firms would have to submit formal survival strategies. “Effective planning is critical to the resiliency of banks’ core business lines and critical operations,” OCC Chief Thomas Curry said in a statement. The initiative will lay out enforceable guidelines for recovery planning that lets a bank keep its doors open under severe stress, he said. Living Wills-The Federal Reserve set the stage last year with a similar recovery-planning system for eight of the biggest bank holding companies, but the agency’s staff has been more focused on what happens after a failure. The Fed and Federal Deposit Insurance Corp. have to manage the banks’ so-called living wills, plans required by the Dodd-Frank Act that outline how they could be safely resurrected if recovery efforts fail. The OCC plans would be backed by the teeth of enforcement, so banks could face penalties if they consistently fall short of the new requirements. The agency took a similar approach with recent rules that demanded better risk management and more skeptical boards at banks, specifying that banks that don’t comply could face enforcement action. In last year’s move, the Fed advised banks including JPMorgan Chase & Co. and Citigroup Inc. that they needed a menu of options for surviving a range of problems, as long as a reasonable chance remained that they could return to health. The strategies are supposed to be regularly updated and include plans regarding the possible sale, transfer or disposal of significant assets, portfolios, legal entities or business lines.

 

http://www.bloomberg.com/news/articles/2015-12-14/regulators-to-wall-street-banks-rescue-yourselves-next-time

 

Fannie and Freddie’s Government Rescue Has Come With Claws

On May 9, 2012, the executives of Fannie Mae, the beleaguered mortgage finance company, finally went public with good news: After three and a half years as a ward of the state, it was profitable again. Since being bailed out by the government at the height of the financial crisis, Fannie had drawn $116 billion from the Treasury. But it had been clear for months inside the company that things were looking up. In fact, when Susan McFarland, chief financial officer of Fannie, announced the earnings, she said, “We expect our financial results for 2012 to be significantly better than 2011.” But even as Fannie’s profit report brought hope to shareholders, it also stirred government officials to action. The day after Fannie’s announcement, court documents show, a high-level official at the agency that regulates the lender sent an email to a colleague. In it, the official asked for legal advice regarding a proposed change to the repayment terms of the government’s bailout of Fannie Mae and its brother mortgage backer, Freddie Mac. Three months later, on a quiet Friday in August, that change came: The Treasury Department would take all of the companies’ profits for its general-purpose fund, helping to finance government operations and reduce debt. The shift would better protect taxpayers, the government said. The decision to sweep into the Treasury all of the companies’ profits — which by now have far exceeded the amount of the total bailout and dividends owed — has attracted legal challenges from institutional investors and speculators in Fannie and Freddie. Originally set up by the federal government to make homeownership feasible in good times and bad, Fannie and Freddie were private companies with an implicit government guarantee.

http://www.nytimes.com/2015/12/13/business/fannie-and-freddies-government-rescue-has-come-with-claws.html?ref=dealbook

 

On Pardons, Obama’s the Stingiest President Since John Adams

As the two presidents, one incoming and the other outgoing, shared a limo to the inauguration in January 2009, President George W. Bush had some advice for President-elect Barack Obama: “Announce a pardon policy early on and stick to it.” Bush had been stunned by a final-days flood of appeals for clemency on behalf of friends and former colleagues convicted of federal crimes. “I came to see a massive injustice in the system,” Bush recalled in his memoir, Decision Points. “If you had connections to the president, you could insert your case into the last-minute frenzy. Otherwise, you had to wait for the Justice Department to conduct a review and make a recommendation.” Since then, Obama has embraced criminal justice reform—especially the problem of over-incarceration—as a major cause of his administration. “Over the course of this year, I’ve been talking to people all across the country about reforming our criminal justice system to be fairer, to be smarter, to be more effective,” he said in a speech in November.  And yet as he approaches his own last-minute frenzy of requests for clemency, Obama’s record so far—counting commutations and pardons—lags behind every recent president except George H.W. Bush, who had only a single term. On pardons, which give ex-inmates a better chance to get jobs, find housing, vote and generally live normal lives, Obama is the stingiest president since John Adams—64 granted so far, less than 3 percent of the petitions filed. Executive clemency is one of the few powers clearly reserved for the president in the Constitution. It includes commutations (reducing sentences considered excessive) and pardons (cleansing the criminal record of freed prisoners deemed worthy of a second chance.)

http://www.politico.com/magazine/story/2015/12/barack-obama-criminal-justice-pardons-213435#ixzz3uIhUnKfY

 

Iowa’s radical privatization of Medicaid is already struggling

On Jan. 1, 31 days before Iowa caucus-goers cast the first votes of the 2016 presidential race, the state will gain another national distinction, but of a dubious variety: It plans to launch the most sweeping and radical privatization of Medicaid ever attempted. In an extraordinary social policy experiment, Iowa’s Gov. Terry Branstad (R) is kicking about 560,000 of the state’s poorest residents out of the traditional Medicaid health-care program for the poor and forcing virtually all of them to sign up with private insurers. The trend toward managed care for Medicaid has been underway for decades and some 39 states do it to some extent. But experts inside and outside government say no state has tried to make such a wholesale change so quickly — in Iowa’s case, launching the program fewer than 90 days after signing contracts with private health-care companies. Dana Milbank writes about political theater in the nation’s capital. He joined the Post as a political reporter in 2000. Iowa is conducting an extreme test of a familiar premise of free-market conservatism: that the private sector is more efficient at management and service delivery than government. But the results so far should give pause to those who automatically make such assumptions. The transition of Iowa’s $4.2 billion Medicaid program has made the rollout of HealthCare.gov look orderly. An Iowa administrative law judge late last month recommended that Iowa throw out the contract it awarded to WellCare, one of the four companies hired to manage the new program, noting that the company failed to disclose details of its “integrity agreement” with the federal government after the 2014 convictions of three former executives involving the misuse of Medicaid money. In addition, WellCare had paid $138 million to resolve claims that it overbilled Medicare and Medicaid, and the firm had also hired two former Iowa legislators, who improperly communicated with the Branstad administration during the bidding process. The Des Moines Register has reported that the four companies selected to operate the Iowa program have had more than 1,500 regulatory sanctions combined and have paid $10.2 million in fines over the past five years. These involved canceled appointments, privacy breaches, untimely processing and failure to obtain informed consent. More:

https://www.washingtonpost.com/opinions/iowas-radical-privatization-of-medicaid-is-already-failing/2015/12/11/58b21362-a01b-11e5-bce4-708fe33e3288_story.html?hpid=hp_no-name_opinion-card-alt1-f%3Ahomepage%2Fstory

 

An Inmate Dies, and No One Is Punished

 

DANNEMORA, N.Y. — Inmates who have served time at the Clinton Correctional Facility here tell of being taken aside by a sergeant soon after they arrive and given a warning: Cross the guards, and bad things can happen. And they do. Inmates describe being ambushed by guards and beaten, taunted with racial slurs, and kept out of sight, in solitary confinement, until the injuries inflicted on them have healed enough to avoid arousing suspicion. One story in particular has been passed along over the last few years as a kind of parable of brutality and injustice on the cellblocks. Leonard Strickland was a prisoner with schizophrenia who got into an argument with guards, and ended up dead. In the inmates’ telling, the guards got away with murder, ganging up on Mr. Strickland and beating him so viciously that he could barely move. The guards deny this, saying they acted only in self-defense and did what was necessary to subdue an out-of-control prisoner. But what came next is indisputable. In a security video obtained by The New York Times, Mr. Strickland is seen in handcuffs, barely conscious and being dragged along the floor by officers, while a prison nurse standing close by does nothing. Even as he lies face down on the floor, near death, guards can be heard shouting, “Stop resisting.” By the time an ambulance arrived, medical records described Mr. Strickland’s body as cold to the touch and covered in cuts and bruises, with blood flowing from his ears.

 

http://www.nytimes.com/2015/12/14/nyregion/clinton-correctional-facility-inmate-brutality.html?emc=edit_na_20151213&nlid=53476364&ref=headline

 

Friend of San Bernardino shooter is at center of FBI investigation

 

SAN BERNARDINO, Calif. — When Enrique Marquez didn’t show up on Friday, Dec. 4, for his shift as a doorman at Morgan’s Tavern, a pirate-themed neighborhood bar in nearby Riverside that’s popular with the punk-rock crowd, his co-workers became concerned. Then they saw a strange, garbled note that he had posted on his Facebook page after midnight that Thursday: “I’m. Very sorry guys. It was a pleasure.”

The co-workers feared that he may have become suicidal. In fact, he had checked himself into a mental-health facility sometime in the immediate aftermath of the Dec. 2 shooting rampage here in which a husband and wife killed 14 people using assault rifles that Marquez had purchased several years earlier.

Marquez, who was quickly tracked down by the FBI, has been cooperating with the extensive investigation of the massacre carried out by Marquez’s former neighbor Syed Rizwan Farook and Farook’s Pakistani wife, Tashfeen Malik. According to senior U.S. law enforcement officials, Marquez has told the FBI that he and Farook had discussed mounting some sort of attack in 2012, but then he got spooked after a terrorism investigation based in Riverside resulted in the arrest of four local men in November of that year for plotting to kill Americans in Afghanistan. The men were convicted and sentenced to long prison terms. A sign is seen in the front yard after law enforcement officials raided the Riverside home of Enrique Marquez, who lived next door to an old address of shooter Syed Rizwan Farook. Agents are investigating whether those men or any of their associates — or the FBI’s confidential informant in that case — had contact with Farook or Marquez. Lawyers involved in the case said they were unaware of a direct connection. It is not clear whether Farook and Marquez chose a specific target or time to carry out the attack they had discussed, the officials said. The FBI is investigating whether the rifles that Marquez bought were intended for use in that 2012 attack that was called off, the officials said.

If they were — or if Marquez knew at the time when he transferred the rifles to Farook that they were going to be used for a violent act — he could be charged with a federal felony, according to law enforcement officials. Authorities do not believe that Marquez had any direct knowledge of the later plot by Farook and Malik.

 

https://www.washingtonpost.com/world/national-security/friend-of-san-bernardino-shooter-is-at-center-of-fbi-investigation/2015/12/13/13c53a1c-a1b6-11e5-b53d-972e2751f433_story.html?hpid=hp_hp-top-table-main_marquez-510pm%3Ahomepage%2Fstory

 

State/Local

 

Alabama ‘Stand Your Ground’ immunity hearings becoming more common

Demetrius Watson believed he faced a split-second life or death decision the night of Dec. 3, 2013 when confronted by a woman he had never met, his attorney said. The Chilton County woman, who was later found to be drunk and under the influence of drugs to treat depression and a bi-polar disorder, had confronted Watson on his family’s Shelby County property threatening to kill him and screaming wild claims that he had killed her baby, court documents show.  Watson, a former Marine, fired one warning shot before shooting 40-year-old Lisa Langston in the arm, a wound that turned fatal. He was indicted for murder. Instead of waiting to see what a jury might do, Watson’s attorney, Richard Jaffe, made a rare but increasingly popular request for a hearing to determine whether Watson should be immune from prosecution under Alabama’s Stand Your Ground self-defense law. Shelby County Circuit Judge Dan Reeves granted the hearing, ruled that Watson was immune, and tossed out the indictment. “It’s very unusual,” Jaffe said of the immunity hearing and judge’s decision. The Shelby County District Attorney’s Office, which argued Watson had no reasonable fear of danger from the unarmed woman, has appealed the ruling. Jaffe declined a request by AL.com to speak to Watson citing the appeal that is still pending.  A Shelby County prosecutor also declined comment while the appeal is pending.

http://www.al.com/news/birmingham/index.ssf/2015/12/alabama_stand_your_ground_immu.html#incart_river_home

 

Letter Exchange Seems to Clear Opening for VictoryLand

MONTGOMERY—A letter exchange between Gov. Robert Bentley, Macon County District Attorney E. Paul Jones, and Sheriff Andre’ Brunson seems to clear a path for the reopening of VictoryLand. It also serves as an assurance to those companies supplying bingo machines, that the State will not confiscate them as in the past. The December 4 letter from Jones and Brunson began, “We appreciate the full faith and confidence you have expressed in  us to enforce the  law in  our county. We assure you that every law will be enforced equally as it applies to each of our citizens and all those doing  business in our county.” The is a direct acknowledgement of the Governor’s Executive Order returning the power to enforce State gaming laws to local law-enforcement. The letter continues: “There are a number of nationally recognized, reputable companies that now  desire to  provide bingo games in Macon County. We have advised them that they  are welcome  to do  business  with us as long as they cooperate with our offices and fully comply with all applicable laws, rules and regulations governing bingo in our county.” Jones and Brunson pledge to Gov. Bentley, that they will have each machine, “examined, tested and certified by a reputable independent testing laboratory,” to ensure that are in compliance with the constitutional amendment making bingo in any form legal in Macon County. Three days later, Bentley wrote Jones and Brunson, stating, “I am satisfied with the terms and conditions you outlined in your letter to me with respect to the inspection and legal compliance for any bingo machine brought to Macon County. I have every confidence that you will enforce the law in your county as it applied to this important issue.” Attorney General Luther Strange has challenged the assertion, as did former Gov. Bob Riley, that VictoryLand should be under the jurisdiction of local law-enforcement. Both men raided VictoryLand, in what was seen by Montgomery Circuit Judge William Shashy as selective prosecution, which violated VictoryLand’s federal equal protection clause.

http://www.alreporter.com/letter-exchange-seems-to-clear-opening-for-victoryland/

 

Financial Software System Still Failing Despite Spin

The State Finance Department’s failed implementation of a $47 million dollar software solution has led to tens of thousands of dollars in unpaid bills, thousands of angry vendors, and frayed nerves, throughout almost every State agency, yet, it is still being dismissed by those responsible for the debacle as a mere glitch. The Finance Department has been telling local TV news outlets the problems should be solved in two weeks. The statewide financial software program known as “STAARS” has been plagued since the beginning, even though Finance Director Bill Newton and his assistant Rex McDowell have tried their best to hide this fact. On December 9, a spokeswoman for Finance claimed, “Payments are being processed and paid daily…and additional State employees have been assigned to assist with the implementation of the upgrade.” However, an email from the State Comptroller, Tom White, sent on December 8, paints a very different picture. The subject line reads: “IMPORTANT INFORMATION: FY 16 Emergency Declarations for Services Normally Paid on PO.” The body says, “Please forward this information to your agency head and all staff as needed. A number of agencies have not been able to set up FY 16  purchase orders (PO’s). This delays processing payment transactions for FY 16 services.” Agencies can declare a Title 41-16-23 emergency for each specific type of service in order to process FY 16 payments, until the purchase orders  are issued. Title 41-16-23 declared emergencies are specific, not general or blanket declarations.  A purchase order is considered a contract purchase order. All emergency declarations must meet minimum requirements specified in Finance Fiscal Policy & Procedures Manual, Chapter 4,  page 4-4.

http://www.alreporter.com/financial-software-system-still-failing-despite-spin/

Blogs/Opinions

Donald Trump is trending on Twitter

 

With thousands gathered around him and a live national TV audience, Donald Trump stepped to the podium. His hands stretched out like Jesus on the cross, and then he began to speak to the Republican National Convention. As you may have noticed, I’m not a politically correct guy. When I said we needed to kill these ISIS jihadis and their families, people got upset, but not you guys. You know we have to kill them. We have to kill their families. We have to kill their pets. And we have to kill their pets’ families. I know that sounds extreme, but if we don’t, one day you’re walking down the sidewalk, you look down and see a hamster, and boom! You’re dead. Promising to kill people is good for my polls. A lot of you don’t think I care about the polls, which is remarkable since whenever in my speeches I’m not saying crazy racist stuff, I’m talking where I am in the polls. But the polls just show you which way the wind is blowing. They don’t make the wind. I make the wind. When a lousy poll came out of Iowa showing that Ted Cruz was gaining on me — the thing was rigged, obviously —  you know what I did? I went out on TV and said that we shouldn’t let any Muslim people into this country. That’s ridiculous by the way. I do a lot of business with Muslims. How am I going to do that if the princes and the sheiks and those other guys in the Middle East who care about money like me can’t come here? I care about money. I’ve said from the beginning that I’m spending my own money on this campaign. I have a lot of money. But I haven’t had to spend much of it. In fact, I have been getting money from other people, but that doesn’t matter because I don’t have to spend a dime. You know why? I’m trending on Twitter. Any dufous can tweet, and many of you do. No, I’m talking about those things on the left side of the screen, where it says what’s ‘trending.’ If you’re running for president today and you’re not trending, you’re losing. I’m always winning. And the media doesn’t know what to do about it. You see all those cameras in the back of the room? Everywhere I go, somebody in the room starts yelling about how black lives matter and those bloodsuckers point the cameras at them. This has made me genuinely upset. Not because I have any beef with the guy yelling. He’s just doing what I do. No, if those cameras aren’t pointed at me, that’s a problem. So I yell about throwing the guy out on his ass, and what do you know? The cameras always come back to me. Ronald Reagan he ain’t. He’s not even W. The media’s biased. It’s a real thing. But the thing is, it’s not liberal bias. No, what those guys love is conflict. They love what’s weird and out of the ordinary. You know why? Because that’s what you love. You love a freak show. You like me because I’m like you. I wasn’t always like you. Obama — I’ve said nice things about the guy. I’ve said he was a great leader and that he saved us from a second Great Depression. It’s true. You can look it up. Google it. I said I liked Hillary Clinton, too. She and Bill are nice people. But then I made some crack about where Obama was born. I thought it was a joke, but you took it seriously. And then that business about a wall? Really? But I was trending on Twitter. You don’t have to be a genius to figure out what the right things are to say. It does help that I’m a genius, but that doesn’t matter. A lot about me hasn’t mattered to you. I’ve said many times that I’m in favor of a single-payer health care system, but then I promised to repeal Obamacare and none of you cared about any of that anymore. It was like magic. If somebody tried to correct me, I just said something else hateful, and you ate it up. Like that woman Megyn Kelly. I made a joke about her being on her bleeding from wherever, and look at all the women here today. Black people, crippled people — excuse me, I mean ‘handicapped’ — war heroes. I’ve insulted them all. I’m running out of people to insult. The only ones left are you. So here’s what I’m going to do. I’m going to accept your nomination here today. Thank you. If you have a plaque or something, I’ll put it on my wall, as long as it’s nice looking. But then, I’m going to vote for Hillary Clinton. What? Didn’t you realize you’d all been punked? I threw myself on this grenade. I drew out America’s dark side from the shadows and I put it on display. I said every nasty thing. I made myself a caricature of the meanest possible fascist, just to see who would take the bait. And you didn’t disappoint. It wasn’t easy. I had to give up my dignity. I’ve probably destroyed whatever financial prospects I had left and I’ll probably go broke. But at least we now know what we’re dealing with. And it was worth it. It was the least I could do for my country.

 

http://www.al.com/opinion/index.ssf/2015/12/donald_trump_is_trending_on_tw.html

 

What I Learned Watching 15 Hours of Cruz Family Videos

 

It’s called Project X, according to the clapperboard seen briefly deep into the footage: roughly 15 hours of raw, unedited video meant for use in making ads for Ted Cruz’s presidential campaign. Vast swaths are just Cruz and his wife and their two young daughters—matching dresses a must—walking, talking, smiling, laughing, fishing, eating, holding hands, riding horses, doing puzzles, reading stories, saying grace. Cruz spends some time toting a shotgun around a field and firing it at unseen targets in the sky.

Filmed the last week of last year—some three months before Cruz made his candidacy official with a speech at Liberty University—it was discovered this past summer on YouTube, labeled online simply as Cruz TX Footage 01 to 16. Clips have been surfacing on TV and the Internet, showing odd glimpses of the life of a highly scripted candidate. Some of the things in the clips we already know: Cruz and his father, for instance, are gifted talkers. What they say on camera is rehearsed and familiar, as in nearly verbatim, to anybody who has seen their stump speeches. But watch all of it, and you learn some things about Ted Cruz that are hard to imagine ever showing up in a campaign ad. Despite the stagecraft, you encounter a family that’s messier than the one you’ll almost certainly see portrayed as the Cruz campaign enters the thick of the primaries. The footage offers an intriguing familial mishmash of single mothers, half-siblings and stepparents, bearing burdens of modern America—depression, drinking, drugs. Cruz’s wife, an executive for Goldman Sachs currently on a leave of absence because of the campaign, describes herself as “a traditional mom,” albeit one who cops to not cooking, and likens her handling of multimillion-dollar investment portfolios to her family’s missionary work in Africa. Cruz’s daughters adore him, you’re told, and yet you learn that they sometimes consider him “a guest” in their Houston home.

It also becomes clear that the death of Cruz’s half sister—and what he then did for her son—is a story he thinks reflects well enough on him that he wants to tell it in all its wince-inducing detail. Cruz’s mother is the least willing participant here—the most interesting, too, in part because she is at times so obviously reluctant to play along. Why is this available, all of it, to anyone? Evidently, shooting video like this and posting it in a public space lets campaigns and their supportive PACs share the content without technically communicating, which would be against the rules.
http://www.politico.com/magazine/story/2015/12/ted-cruz-b-roll-family-videos-213429#ixzz3uIici7qA

 

Morning Money

HUGE WEEK FOR THE FED – POLITICO’s Ben White and Francesco Guerrera in a trans-Atlantic team up: “Breaking up is hard to do, even when it is consensual, but that’s what’s likely to happen to the U.S. and Europe on Wednesday. … The widely expected decision by the Federal Reserve to raise rates for the first time in nearly a decade would put an end to the transatlantic compact of convergent monetary policies that helped the world economy recover from the financial crisis.

“While the Fed starts raising rates to prevent stoking up inflation and financial bubbles, the European Central Bank has vowed to keep stimulating the eurozone’s anemic growth with negative interest rates and large bouts of bond-buying. The parting of the ways is inevitable and accepted by both camps, given the relative strength of the U.S. economy and the struggles of the European one. But what happens in the new era of divergent economic policies is a crucial question for policymakers, politicians, investors and financial firms.

THE POLITICS – “Ever since the crisis thrust central banks center stage as the only players with the resources to fight global recession, their actions have become more controversial and politically sensitive. The Fed’s first rate-hike since 2006 is fraught with political intrigue in the U.S. Conservatives who love to bash the Fed say it is long past time for the central bank to remove itself as the dominant economic policy making machine in Washington

“Many on the right will likely dismiss the rate hike as coming far too late. And if markets react badly and the economy takes a significant hit, it will give conservatives — including presidential hopefuls Rand Paul and Ted Cruz — even more ammunition to criticize the Fed and push efforts in Congress to open the central bank to more political scrutiny while curtailing some of its powers.

“‘The Fed should have raised interest rates in 2010 and 2011 and if they did that they would actually be in a position to cut them today,’ said James Rickards, a central bank critic and chief global strategist at West Shore Funds. ‘The Fed is on the brink of committing a historic blunder that may rank with the mistakes it made in 1927 and 1929. By raising into weakness, they will likely cause a recession.’” http://politi.co/1UnE90m

WHAT WILL THE FED SAY? – The rate hike seems certain. But what will the statement say? And what will the dot plot show? Pantheon’s Ian Shepherdson: “The FOMC likely will point out that the policy stance remains very accommodative, and seek to reinforce the idea that it intends to raise rates slowly. That said, recent FOMC statements have not offered any specific guidance on the pace of tightening, saying instead that the … [O]ur recent conversations with investors suggest that many market participants expect the statement to be accompanied by a clear downshift in the dot plots for the next three years”

CORKER FAILED TO DISCLOSE MILLIONS – WSJ’s Brody Mullins: “Sen. Bob Corker failed to properly disclose millions of dollars in income from real estate, hedge funds and other investments since entering the Senate in 2007, according to new financial reports filed by the Tennessee Republican. Mr. Corker late Friday filed a series of amendments showing that his personal financial reports as originally filed included dozens of errors and omissions. The new filings came after The Wall Street Journal asked the senator’s office about some irregularities in his prior financial reports. The senator is the third-ranking Republican on the Senate Banking Committee, which oversees the real-estate and financial-services sectors.

“The new forms show that Mr. Corker had failed to properly disclose at least $2 million in income from investments in three small hedge funds based in his home state. He also didn’t properly report millions of dollars in income from commercial real-estate investments due to an accounting error. And he didn’t disclose millions of dollars in other assets and income from other financial transactions. … A letter sent to the secretary of the Senate along with the new financial reports acknowledged that the senator’s previous reports didn’t comply with Senate rules” http://on.wsj.com/1QfCj2X

SEE YOU TUESDAY! – Please join me in DC on Tuesday morning for the final Morning Money breakfast of the year with Jason Furman, Chairman of the White House Council of Economic Advisers. Doors at 8 a.m. — The Mayflower Hotel — 1127 Connecticut Ave. NW. RSVP: http://politi.co/1jTIaMT Also Tuesday at the same time: Mike Allen has Paul Ryan and Mitch McConnell: http://bit.ly/1NY66X2.

BIG OBSTACLES FOR PARIS CLIMATE DEAL – FT’s Pilita Clark in Paris: “The obstacles facing this weekend’s historic global climate change accord were thrown into relief on Sunday night when businesses and government officials downplayed the impact of the deal and US Republicans underlined their opposition. … The Paris agreement, which requires all countries to regularly publish plans to deal with global warming, has been hailed by international leaders as a turning point after more than 20 years of effort to make this century the last to be powered by fossil fuels.

“[C]oal and oil industry executives shrugged off any suggestion the new agreement sealed in Paris on Saturday night would have any immediate impact on their businesses. The agreement’s goals include driving down carbon-dioxide emissions from burning fossil fuels as soon as possible in order to limit global warming to ‘well below’ 2C from pre-industrial times and perhaps as little as 1.5C … Benjamin Sporton, head of the World Coal Association, said he did not see the new agreement spurring a “massive change at the moment” for companies that produce coal” http://on.ft.com/1lZzPIJ

GOOD MONDAY MORNING – Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben

DRIVING THE WEEK – All about the Fed at 2:00 p.m. on Wednesday with the central bank likely to raise rates for the first time since 2006 by 25 basis points to a range of 0.25 percent-to- 0.50 percent with a statement likely to be highly dovish about the trajectory and stopping point … GOP candidates debate again Tuesday night with Ted Cruz on the rise …

ASIA DROPS – Reuters: “Asian stocks fell on Monday and China’s yuan hit fresh 4-1/2 year lows as plunging oil prices added to investors’ nervousness about riskier assets ahead of an expected U.S. rate rise by the Fed … The People’s Bank of China (PBOC) on Monday continued guiding the currency lower, setting the yuan/dollar official midpoint at its weakest since July 2011. China decision to loosen its grip on the yuan and allow slow but steady depreciation in recent weeks had added to concerns that the world’s second-biggest economy may be more fragile than expected.

“The PBOC said late Friday it has begun publishing a yuan index rate against a basket of currencies, seen by some as a green-light for more devaluation which could in turn pressure other emerging Asian currencies. … For now, investors looked past better-than-expected Chinese indicators released over the weekend.” http://reut.rs/1NYB1Tk

DOW CHEMICAL FIGHT HEATS UP – WSJ’s David Benoit: “Long-simmering hostility between Dow Chemical Co. and Daniel Loeb reached a boiling point over the weekend, with the shareholder activist calling for the removal of Chief Executive Andrew Liveris in the wake of the company’s agreement to merge with DuPont Co. … On Saturday, a day after Dow unveiled the tie-up, Mr. Loeb sent a private letter to the board raising questions about the deal’s timing. Mr. Loeb supports the merger, which would create an agriculture and chemical giant currently valued at more than $120 billion before breaking it up into three parts.

“Mr. Liveris is to be executive chairman of the combined company, while DuPont CEO Edward Breen is to maintain that title at the new group. Mr. Loeb’s letter, reviewed by The Wall Street Journal, questions whether the deal was rushed to be completed before a so-called standstill agreement barring him from publicly speaking about Dow expired this weekend. According to people familiar with the matter, Mr. Loeb believes unanswered questions about leadership, the board and the breakup signal the deal was rushed. He believes a second deal Dow announced Friday to take complete control of joint-venture Dow Corning raises similar questions” http://on.wsj.com/1TK3hh1

MORE BIG BANK JOB CUTS AHEAD – FT’s Laura Noonan in New York and Martin Arnold in London “Big banks in Europe and the US announced almost 100,000 new job cuts this year, and thousands more are expected from BNP Paribas and Barclays early next year, as the wave of lay-offs that began in 2007 shows no sign of abating. The 2015 cuts — which exclude the impact of major asset sales — amount to more than 10 per cent of the total workforce across the 11 large European and US banks that announced fresh lay-offs … The most recent came last week, as workers at Dutch lender Rabobank learnt of 9,000 cuts across their bank the day after Morgan Stanley announced 1,200 lay-offs …

“Barclays and BNP Paribas, two of Europe’s biggest banks, will unveil job cuts when they announce strategies that are designed to strip out 10 to 20 per cent of the costs at their investment banks … At Barclays, the axe will fall on March 1 when chief executive Jes Staley unveils a fresh strategy with the bank’s annual results. The announcement will include Barclays’ plans to move more quickly to shrink its investment bank, which employs about 20,000 people … BNP Paribas’s new corporate and institutional banking chief Yann Gérardin will announce a new cost cutting plan in February” http://on.ft.com/1Y8u9O6

THIRD AVENUE TAKEAWAYS – Mohamed A. El-Erian on Bloomberg View: “Third Avenue attracted considerable attention last week with the announcement that it would restrict withdrawals from its high-yield Focused Credit Fund. And rightly so: Any investment management company that limits investors’ access to their capital is taking a major decision with consequential implications not just for its clients, but also for its own future.

“The move raises questions about the fund’s investment strategy as well as market liquidity more generally, especially during periods of uncertainty and increasing market dislocations. … The bigger the outflows from an asset class in general, the greater the potential for accidents. High yield is particularly vulnerable to mishaps, having already experienced significant investor withdrawals and related technical damage” http://bv.ms/1P13HA8

THE FED AND THE REAL WORLD – NYT’s Binaymin Appelbaum: “William Harris tapped his retirement savings to open A-Town Pizza, a Neapolitan pizzeria, in this Denver suburb three years ago. He borrowed $200,000 to open a second location this year and now employs 60 people. On a good Friday, his shops sell 1,200 pies. In such stories, the Fed …finds evidence that its seven-year campaign to reboot the American economy is succeeding. So on Wednesday, the Fed, which has held short-term interest rates near zero since December 2008, will most likely announce that it will start nudging rates upward …

“Mr. Harris, for one, is not ready. ‘It’s scary when you hear that the government is planning to slow things down,’ the wiry 39-year-old said as he folded menus. ‘We live on people’s extra money. That’s the money they spend on pizza. And it still feels very fragile.’ Monetary policy is conducted in a language of bloodless abstraction, and most Americans pay little, if any, attention. But the Fed is about to make a big bet, and the decisions it makes in Washington have large consequences, here in Colorado and across the nation” http://nyti.ms/1Y8tQmu

WHAT IF THEY HAVE TO REVERSE COURSE? – WSJ’s Jon Hilsenrath: “Fed … officials are likely to raise their benchmark short-term interest rate from near zero Wednesday, expecting to slowly ratchet it higher to above 3 percent in three years.

But that’s if all goes as planned. Their big worry is they’ll end up right back at zero. Any number of factors could force the Fed to reverse course and cut rates all over again: a shock to the U.S. economy from abroad, persistently low inflation, some new financial bubble bursting and slamming the economy, or lost momentum in a business cycle which, at 78 months, is already longer than 29 of the 33 expansions the U.S. economy has experienced since 1854” http://on.wsj.com/1NYmDu9

CRUZ SURGES PAST TRUMP IN IOWA – POLITICO’s Kristen East: “Ted Cruz has opened up a 10-point lead over Donald Trump in Iowa, according to an influential poll of likely Republican caucus-goers. In the Des Moines Register/Bloomberg Politics poll out Saturday evening, Cruz took 31 percent of Republicans polled, with Trump at 21, Ben Carson at 13, Marco Rubio at 10, and the rest polling at 3 percent or below. Cruz’s support in Iowa has more than tripled over the past two months. His rise comes only days after a Monmouth University also had the Texas senator in first place in Iowa, earning 24 percent among those Republicans polled” http://politi.co/1lZP9oH

POTUS Events

10:40 am || Holds a National Security Council meeting on the campaign against ISIS; The Pentagon
12:35 pm || Delivers a statement; The Pentagon

Live stream of Obama statement at 12:35 pm and White House briefing at 1:00 pm

Floor Action

Capitol Hill denizens are hoping the next several days will be their last legislative workweek of the year as lawmakers move toward passing a major spending deal to avoid a shutdown.

Time is, once again, running short to meet the new Wednesday deadline to keep the government’s lights on. And with Christmas now less than two weeks away, lawmakers face the additional pressure of getting their work done in time to leave Washington for the holidays.

The secretive negotiations between top congressional leaders have been moving slowly, but lawmakers are hoping to release the text of the yearlong spending package by Monday after pushing the original deadline back by five days.

However, House GOP aides warned late last week that glacial negotiations over policy riders could result in the measure not being released until possibly Tuesday.

The House could vote Wednesday at the earliest if the catch-all spending bill, known as an omnibus, is made public on Monday in order to meet a rule that all legislation be made public for three calendar days before a vote.

But the House won’t have its first votes of the week until Tuesday night — an indication that the omnibus might not be released until as late as possible.

The Senate will likely have less than 24 hours to pass either the omnibus bill or yet another stopgap measure to avoid a government shutdown Wednesday night.

While senior Republican senators were sounding confident they will be able to meet the deadline, Sen. John Cornyn (R-Texas) also warned that leadership would need help from all their members.

“If we have to go through the regular procedures it could take up to eight days, so obviously it’s going to take a little cooperation unless people want to spend Christmas here,” he told reporters late last week.

Conservative lawmakers, as well as Senate’s Republican presidential contenders, are remaining tight-lipped about whether they will support a time agreement to speed up votes on the spending bill.

Sen. Jeff Sessions (R-Ala.) previously called on the omnibus to include a provision that would block funding for refugee resettlement until Congress has voted on a plan from the Obama administration.

Asked if he would require the spending bill to go through the Senate’s procedural hoops if the language isn’t included, he said, “I haven’t thought that through.”

The spending bill is also expected to be linked to a major package renewing expiring tax credits, with Senate Finance Committee Chairman Orrin Hatch (R-Utah) saying that negotiations would likely extend through the weekend.

“I could live with the two-year program, but I think … it would really be stupid for the Democrats to not take the full program”, Hatch, who has been involved with the talks, said late last week. “I hope we have a larger package. It’s good for Democrats. It’s good for Republicans.”

House Minority Leader Nancy Pelosi (D-Calif.) indicated last week that Republicans may have to pass the tax extenders package without the help of Democrats. Her party has been trying to extend the child tax credit and index it to inflation so that it increases over time, but Republicans have been resisting the idea.

“We don’t need to be for it,” Pelosi said. “They’ll have enough Republican votes supporting their special interest friends to pass this thing in a second.”

Trade

A long-awaited customs enforcement measure is headed toward the Senate after easily passing the House on Friday.

The legislation — which comes after months of negations between House and Senate lawmakers — includes an overhaul of the U.S. Customs and Border Protection agency, as well as new protections for intellectual property and stronger tools for the government to crackdown on currency manipulation.

House Democrats largely opposed the measure with Pelosi suggesting that negotiators “poisoned” the enforcement legislation.

Sen. Ron Wyden (D-Ore.), however, backed the House-Senate compromise after it was announced last week, saying the lawmakers were “on the verge of passing the strongest package of trade enforcement policies in decades.”

Hatch said separately that he expects it to be passed by the Senate this year, leaving senators with a handful of days to send it to the president, who is expected to sign it.

Nominations

The Senate’s expected to make a last-minute dash on a handful of nominations.

Senate Majority Leader Mitch McConnell (R-Ky.) scheduled votes for Monday evening on Alissa Starzak’s nomination to be general counsel for the Army, John Conger to be principal deputy under secretary of Defense, Stephen Welby to be an assistant secretary of Defense and Franklin Parker to be an assistant secretary of the Navy.

The Senate also confirmed a slate of Obama nominees last week, as well as Gayle Smith to be the head of the U.S. Agency for International Developement (USAID) late last month.

But top Obama appointments are still in limbo with Senate Minority Leader Harry Reid (D-Nev.) saying that “the Republican majority has confirmed fewer nominations of any Congress in decades.”

In addition to the pace of judicial nomination votes, Democrats have also honed in on Adam Szubin to be under secretary for terrorism and financial crimes at the Treasury Department.

Szubin was one of six nominations that Sen. Sherrod Brown (D-Ohio) tried to pass by unanimous consent on the Senate floor, but he was blocked by Sen. Richard Shelby (R-Ala.).