Kreb Daily Briefing 20 November 2015

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


Hostage Crisis in Mali: What We Know

Gunmen in Mali have killed at least three people and taken 170 guests and staff members hostage at a luxury hotel in the capital city of Bamako, according to multiple reports. “The attackers, carrying AK-47s, arrived around 7 a.m. in a vehicle or vehicles with diplomatic plates,” one United Nations spokesman told CNN. Details remain sketchy so far. Estimates of the number of attackers involved have ranged from a few as two to as many as 13. There have also been no claims of responsibility yet, however, some guests who were able to prove their Muslim faith were reportedly released. A rescue operation involving special security forces is currently underway and, according to state radio, 80 of the hostages have been freed. “Two members of the Malian security forces were wounded by shots fired from the seventh floor of the hotel and were taken away by ambulance,” one local reporter on the scene told The New York Times. Malian army commander Modibo Nama Traore told the AP that hostages were being freed “floor by floor.” Twelve members of an AirFrance crew that were staying at the hotel are among those reported safe. As a precaution, the airline has reportedly canceled all flights to the former French colony. According to Reuters, several Chinese tourists and a few members of a Turkish Airlines crew remain trapped inside the hotel. American special operations forces are also said to be assisting at the scene. Mali has been in a protracted battle against terrorism since 2012 when the northern part of the country was taken over by Islamist insurgents aligned with al Qaeda. French troops intervened and eventually won back the territory. Malian President Ibrahim Boubacar Keita, who was attending a regional summit in Chad, is on his way back to Bamako. French President Francois Hollande has pledged France’s support, saying “we will use all the means available to us on the ground to free the hostages.”

Hostages Seized in Attack on Radisson Hotel in Mali

BAMAKO, Mali — At least two gunmen stormed a Radisson Blu hotel in Bamako, the capital of Mali, on Friday morning and seized 140 guests and 30 staff members as hostages, according to the company that runs the hotel, though some were quickly released. The number of people killed was unclear, but the manager of hotel said perhaps three people were dead, and there were indications that the hostage takers were releasing Muslims and continuing to hold non-Muslims. Gary Ellis, the manager, said that 90 percent of the staff had been able to leave, and that it was unclear how many people were still in the hotel. Soldiers could be seen roaming inside the hotel and on the roof, according to Pantap Barry, a street bike racer, who was standing outside the hotel. Northern Mali fell under the control of Islamist militants in 2012, but a French-led offensive ousted them in 2013, though remnants of the group have staged a number of attacks on United Nations peacekeepers and Malian forces. The hotel is a popular place for foreigners to stay in Bamako, a city with a population approaching two million, and French and American citizens were among those taken hostage. Xinhua, China’s state-run news agency, reported that “numerous” Chinese tourists were staying at the hotel. Kassim Traoré, a Malian journalist who was in a building about 50 meters from the Radisson, said the attackers asked hostages to recite a declaration of Muslim faith as a way separating Muslims from non-Muslims. Those who could recite the declaration, the Shahada, were allowed to leave the hotel. The Shabab, a Qaeda affiliate in East Africa, used a similar approach in the attack at the Westgate Mall in Nairobi in 2013. Some of those who left, which included people from Mali and foreigners, were not wearing any clothes as they were taken to a police station. More:

FBI: No link between Paris attackers and U.S.

WASHINGTON — FBI Director James Comey said Thursday there are “no connections at all” between the Paris attackers and the United States. In a briefing with Attorney General Loretta Lynch, Comey also said there are no specific or credible threats targeting the United States on any scale. Nevertheless, the FBI director said federal investigators have intensified surveillance on “dozens” of potential suspects who might be at risk of attempting to mount a copy of the coordinated Paris assaults that left 129 dead and hundreds wounded. There are an estimated 900 active investigations involving the Islamic State recruits or other homegrown violent extremists across the country, and Comey said Thursday that number has remained relatively unchanged since the Paris attacks. In the unusual joint briefing, which came shortly after the House voted to halt the admission of Syrian refugees into the U.S., pending a a heavily layered vetting process, Lynch said the bill offered an “impractical and impossible” standard for law enforcement and national security authorities to satisfy. The bill requires, among other things, that the Homeland Security secretary, FBI director and national intelligence director to certify that each refugee fleeing Syria or Iraq does not pose a threat before they can be admitted into the U.S. The legislation, passed by a vote of 289-137, was rushed through less than a week after the stunning attack on Paris where one of the terrorists is suspected to have traveled through Greece as part of a mass exodus of refugees from war-torn Syria. The effect of the bill, Lynch said, would be to “grind the (refugee) program to a halt.” The White House has threatened to veto such legislation. Lynch and Comey also sought to allay fears in the U.S., where the Islamic State, also known as ISIL and ISIS, has released videos in recent days indicating that Washington and New York also are among the group’s targets. Even before the videos emerged, however, local law enforcement agencies across the country announced heightened security measures at sports arenas, transportation centers and entertainment districts, similar to the so-called “soft-targets” hit in Paris. Police departments in New York, Philadelphia, Boston, Chicago and Los Angeles, among others, have taken added security measures in the past week. “We will not let our actions be overtaken by fear,” Lynch said, referring to ISIL operatives as “merchants of violence.” “They want us to live in fear, and we refuse,” the attorney general said.

The Man Who Went From Harvard to Goldman to Colombian Jail

As a baby-faced entrepreneur, Kaleil Isaza Tuzman once symbolized the tech industry’s meteoric meltdown. Just years out of Harvard College and a stint at Goldman Sachs, he launched an Internet company only to see it collapse three years later. Today, he finds himself in a South American maximum-security prison, begging to return to the U.S to face securities fraud charges that could send him to an American jail cell for as long as 20 years. For now, he shares a 90-square-foot cell with an accused murderer and a drug trafficker in Patio 16, a wing of the Colombian prison reserved for often-violent defendants. Just how Isaza Tuzman, a 44-year-old U.S. citizen, ended up there is now the subject of a legal fight in New York. He was arrested in September in Colombia at the request of U.S. prosecutors after he was indicted for allegedly cheating investors in mobile-video company KIT Digital Inc. They said he was a risk to flee and now needs to go through Colombia’s extradition proceedings. His lawyers, Reed Brodsky and Avi Weitzman, say in court filings that he’s in “life-threatening conditions” at La Picota prison, a lockup in Bogota decried by the nation’s inspector general for its harsh conditions. And they argue that the arrest of a non-violent, white-collar defendant on foreign soil marked an unprecedented departure for U.S. authorities. More:

China Cracks $64 Billion `Underground Bank’ Moving Money Abroad

China said it cracked the nation’s biggest “underground bank,” which handled 410 billion yuan ($64 billion) of illegal foreign-exchange transactions, as the authorities try to combat corruption and rein in capital outflows that have hit records this year. More than 370 people have been arrested or face lawsuits or other punishment in the case centered in eastern Zhejiang province, the official People’s Daily reported on Friday, citing police officials. The case brought the total for underground banking and money-laundering activities to 800 billion yuan since April, the newspaper said. The probe began in September last year and the police took almost a year to sort through more than 1.3 million suspicious transactions, the state-run Xinhua News Agency reported separately. The authorities froze more than 3,000 bank accounts, Xinhua said. More:



Treasury and I.R.S. Propose Rules to Curb Corporate Relocations for Tax Reasons

 The Treasury Department and the Internal Revenue Service on Thursday issued new rules aimed at discouraging American companies from moving their headquarters abroad in search of lower tax rates. Increasingly, American companies have been trying to reduce their tax liabilities through a tactic known as a corporate inversion — buying smaller foreign competitors and using those purchases to move their headquarters to countries with more favorable tax rates than the United States’. The new measures will make that more difficult by curtailing companies’ ability to avoid United States tax rates if they move to locations where they lack substantial business activity. Yet one of the potential targets of the Treasury Department’s actions, the giant pharmaceutical company Pfizer, is already weighing ways to bypass the rules governing inversions as it seeks to buy a fellow drug maker, Allergan, which is based in Ireland, for about $150 billion. Among the strategies it is discussing is structuring the potential transaction so that Allergan would technically be the buyer, according to a person briefed on the matter who spoke on the condition of anonymity. Because Allergan’s headquarters are already in Ireland — even though much of its operation is based in New Jersey — the arrangement could allow the deal to avoid being deemed an inversion. Yet in reality, Pfizer, with a market value of about $205 billion, would still effectively be buying its counterpart, which has a capitalization of about $124 billion. Its shareholders would own more than 55 percent of the combined company, and Allergan’s shareholders would receive a premium for their holdings, the person added. A deal could be reached in a little over a week, the person said, cautioning that talks are continuing and may still fall apart. Representatives for Pfizer and Allergan declined to comment. More:


The Populist Appeal of Trump’s Narcissism

To describe Donald Trump as a narcissist has become cliché, so widely accepted that the use of the label barely raises an eyebrow. When pundits or politicians like Carly Fiorina remark that Trump has tapped into an underlying rage within the Republican base, they often want to distinguish his appeal to disaffected voters from his narcissistic personality, to separate the man from his message. Trump talks “truth to power,” we often hear, which supposedly explains why so many voters disillusioned with their party leaders admire him. The fact that he often comes across as an egomaniac is irrelevant to the message, almost beside the point. But Trump’s narcissism actually constitutes a large part of his appeal to certain voters. I’m not referring to his over-the-top braggadocio, his unrelenting drive to trumpet his superiority. Narcissism means much more than having an inflated sense of self. Extreme Narcissists (as I refer to them in my forthcoming book (link is external)) like Donald Trump rely on a characteristic set of defenses to evade painful truths about themselves and to shore up that inflated sense of self:  righteous indignation, blame, and contempt. For voters who may feel small and helpless in the face of rapid change, who are worried about their economic future and social standing, or frightened by a complex world beset by seemingly intractable problems, Trump models a simplistic way to vanquish self-doubt and defend oneself against existential anxiety. The rise of Donald Trump thus marks the fusion of populism and narcissism. In times of enormous demographic shift and economic uncertainty, populism exerts a strong appeal for the anxious voter. Populist messages rely on simplistic answers to complex problems and promote an us-versus-them warfare mentality. Like Mr. Trump, populists engaged in battle have traditionally ridiculed their opposition; but in the narcissistic endeavor to prove himself a winner at the expense of all those “losers,” Trump relies on righteous indignation, blame, and contempt as weapons of war. Many disaffected voters are drawn to him precisely because of those traits and not in spite of them.

When criticized or challenged, the Extreme Narcissist will experience it as a personal attack and retaliate in kind. So during the recent Republican presidential debate, when Megyn Kelly drew attention to Trump’s history of misogynistic remarks and raised a valid question – whether he could be a suitable leader for 53% of the electorate – he felt it as a personal assault. He launched into a self-righteous critique of political correctness in America. With blatant condescension, he then blamed Megan Kelly for treating him unkindly. Then he insinuated that he might have to take off the gloves in response to her attack. More:


Study finds more Mexicans leaving the US than coming

SAN DIEGO (AP) – More Mexicans are leaving than moving into the United States, reversing the flow of a half-century of mass migration, according to a study published Thursday. The Pew Research Center found that slightly more than 1 million Mexicans and their families, including American-born children, left the U.S. for Mexico from 2009 to 2014. During the same five years, 870,000 Mexicans came to the U.S., resulting in a net flow to Mexico of 140,000. The desire to reunite families is the main reason more Mexicans are moving south than north, Pew found. The sluggish U.S. economic recovery and tougher border enforcement are other key factors. The era of mass migration from Mexico is “at an end,” declared Mark Hugo Lopez, Pew’s director of Hispanic research. The finding follows a Pew study in 2012 that found net migration between the two countries was near zero, so this represents a turning point in one of the largest mass migrations in U.S. history. More than 16 million Mexicans moved to the United States from 1965 to 2015, more than from any other country. “This is something that we’ve seen coming,” Lopez said. “It’s been almost 10 years that migration from Mexico has really slowed down.” The findings counter the narrative of an out-of-control border that has figured prominently in U.S. presidential campaigns, with Republican Donald Trump calling for Mexico pay for a fence to run the entire length of the 1,954-mile frontier. Pew said there were 11.7 million Mexicans living in the U.S. last year, down from a peak of 12.8 million in 2007. That includes 5.6 million living in the U.S. illegally, down from 6.9 million in 2007. In another first, the Border Patrol arrested more non-Mexicans than Mexicans in the 2014 fiscal year, as more Central Americans came to the U.S., mostly through South Texas, and many of them turned themselves in to authorities. The authors analyzed U.S. and Mexican census data and a 2014 survey by Mexico’s National Institute of Statistics and Geography. The Mexican questionnaire asked about residential history, and found that 61 percent of those who reported living in the U.S. in 2009 but were back in Mexico last year had returned to join or start a family. An additional 14 percent had been deported, and 6 percent said they returned for jobs in Mexico. Dowell Myers, a public policy professor at the University of Southern California, said it’s lack of jobs in the U.S. – not family ties – that is mostly motivating Mexicans to leave. Construction is a huge draw for young immigrants, but has yet to approach the levels of last decade’s housing boom, he said. “It’s not like all of a sudden they decided they missed their mothers,” Myers said. “The fact is, our recovery from the Great Recession has been miserable. It’s been miserable for everyone.” Also, Mexico’s population is aging, meaning there’s less competition for young people looking for work. That’s a big change from the 1990s, when many people entering the workforce felt they had no choice but to migrate north of the border, Myers said. More:


House Approves Tougher Refugee Screening, Defying Veto Threat

WASHINGTON — The House voted overwhelmingly Thursday to drastically tighten screening procedures on refugees from Syria, seizing on the creeping fear stemming from the Paris attacks and threatening to undermine President Obama’s Middle East policy. The bill, which passed, 289 to 137, with nearly 50 Democrats supporting it, would require that the director of the F.B.I., the secretary of the Department of Homeland Security and the director of national intelligence confirm that each applicant from Syria and Iraq poses no threat. The bill’s fate is uncertain in the Senate. The White House called the demands “untenable” and said that the president would veto the bill if it reached his desk. The sweeping majority of the House vote was a rejection of Mr. Obama’s moral appeal on the issue and the most vivid manifestation of the rapidly shifting politics within the United States, where Americans are at once war weary yet also frightened by the threats made by the Islamic State. More than two dozen governors, including one Democrat, have said they would try to block Syrian refugees from entering their state, and a recent Bloomberg poll shows that more than half of the nation agrees with them. The House action also served as another blow to Mr. Obama on an area that has repeatedly bedeviled him over the last two years of his presidency — how to articulate and put in place a policy in Syria, where there are no clear paths or partners to end the conflict. The fact that lawmakers in both parties have refused Mr. Obama’s request for an explicit authorization of force against the Islamic State, even as they vote to curb refugees, further highlights the vexing politics in the era of terror. “People are very nervous, very worried about this,” said Speaker Paul D. Ryan in an interview Thursday, referring to a town hall forum he conducted in a Wisconsin county that is fairly split politically. “I think that people want to see that their leaders are taking this situation seriously.” Mr. Ryan, who said he talked to Mr. Obama about the bill earlier in the week, said he worked to persuade Democrats to support the legislation. “This should not be Congress against the president, Republican against Democrat, this should be about ‘What do we need to do to keep our people safe,’ ” he said.

How to Waste a Billion Dollars

The political world is discovering an unsettling truth: Money isn’t everything. The latest evidence comes from the just-expired presidential campaign of Louisiana Gov. Bobby Jindal, a Republican who dropped out on Tuesday, saying, “This is not my time.” Jindal had wallowed in the low single digits in polls and was relegated to the undercard debates even though groups allied with his campaign consistently ranked among the top sponsors of TV ads in Iowa. Or consider the staggering confession made by conservative billionaire Charles Koch last month. The man who along with his brother David has spent or steered hundreds of millions of dollars into reshaping U.S. politics in recent years said, in effect, that he believes he has been wasting his money. “We looked like we won. [But] as you can see by the performance, we didn’t win much of anything,” Charles Koch told MSNBC’s Joe Scarborough and Mika Brzezinski in October. “So far we’re largely failures.” Koch was only conceding what has become, more and more, an obvious fact. With the advent of Republican Paul Ryan as speaker of the House and a budget deal that will prevent more government shutdowns, the Koch-funded Freedom Caucus has been, for the moment, declawed. One of Ryan’s first acts as speaker? Passing a highway funding bill that also revived the U.S. Export-Import Bank, whose charter had expired June 30. Conservatives have targeted the bank, arguing it aids big businesses that shouldn’t need government assistance. Yes, it is true that of the eight U.S. Senate races where Americans for Prosperity—the Koch brothers’ flagship politically active nonprofit—was expressly advocating for the election or defeat of candidates during the 2014 midterm elections, the Kochs’ preferred politicians prevailed in seven. But what has that gotten them in terms of changing policy? The Kochs are unlikely the only ones who are suffering from some buyers’ remorse in a political era in which money was supposed to be king—especially after the U.S. Supreme Court’s Citizens United v. Federal Election Commission decision helped open the door to super PACs. In fact, you could call this the season of disappointed big-money political donors. From the halls of Congress to the 2016 presidential campaign trail, the political system is awash with cash, but many are discovering that money alone can’t always buy you love. “Money gives you the opportunity to get a message out,” said Meredith McGehee, the policy director at the nonpartisan Campaign Legal Center. But, she added, “No amount of money can overcome a bad candidate.” More:


Inside the Money Laundering Scheme That Citi Overlooked for Years

 When Antonio Peña Arguelles opened an account in 2005 at Citigroup’s Banamex USA, the know-your-customer documents said he had a small business breeding cattle and white-tailed deer, ranch-raised for their stately antlers. About $50 a month would come into the account, according to the documents.

A week later, Peña Arguelles wired in $7.09 million from an account in Mexico, allegedly drug money from Los Zetas, a violent cartel founded by former Mexican soldiers, documents in his money-laundering case in Texas say. In all, Peña Arguelles shuttled $59.4 million through the account, according to a confidential report by banking regulators that berated Banamex USA in 2013 for its failure to comply with anti-money-laundering rules. Banamex USA didn’t file a suspicious activity report about the account, according to regulators, even after Peña Arguelles’s brother Alfonso was killed in late 2011, his body dumped at the Christopher Columbus monument in Nuevo Laredo, Mexico, with a banner draped above it accusing Antonio of being a money launderer and stealing from the Zetas. The bank didn’t produce an activity report after U.S. prosecutors asked for the account documents at the end of that year or when Peña Arguelles was indicted in early 2012 for conspiracy to launder monetary instruments. And it didn’t file one until May 2013, months after the Federal Deposit Insurance Corp. and the California Department of Business Oversight issued a written order in August 2012 demanding the bank check old accounts. More:


5 Things to Know About UnitedHealth’s Obamacare Warning

UnitedHealth Group Inc.’s announcement that it expects to take a big hit from its insurance sales under the Affordable Care Act and could pull out in future years is another worrying sign for the health law’s stability, though by no means a fatal blow, in the ACA’s critical third sign-up period. Here’s why:


Aetna says individual Obamacare business performing as expected


U.S. health insurer Aetna Inc (AET.N) on Friday said its business that includes individual Obamacare health plans had performed as expected, following on earlier news that UnitedHealth Group Inc (UNH.N) might exit the unprofitable market. Aetna said in a regulatory filing that its individual business had continued to perform in line with its projections through October. It backed its full-year 2015 operating earnings forecast of $7.45 to $7.55 per share. The news came the day after UnitedHealth cut its earnings forecast, saying it was losing money on the Obamacare business because of low enrollment and high costs. The company said it might pull out of these plans in 2017. That statement from the fourth-largest insurer on the exchange raised questions about the long-term sustainability of the key Obamacare program and drove down shares of insurers, including Aetna, and hospital companies. Leerink Partners analyst Ana Gupte said Aetna’s statement showed the company had already factored in challenges in the individual business to its 2015 outlook and commentary about 2016. Aetna had referred back to earlier comments when asked on Thursday about UnitedHealth’s commentary. In October, Aetna had said it was not making money from the business, which sells government-subsidized plans on exchanges created under the U.S. Affordable Care Act but that profitability could improve next year. It had about 815,000 members in plans on the exchanges and 275,000 in plans sold off the exchanges. Enrollment for 2016 exchange plans opened earlier this month. In October, the U.S. Department of Health and Human Services forecast about 10 million people would have plans in 2016, significantly below industry expectations of 20 million. On Thursday, Aetna shares fell 7 percent, UnitedHealth lost 6 percent and Anthem Inc (ANTM.N), the second-largest player on the exchanges, fell 9 percent. Aetna’s earnings affirmation echoes that of Centene Corp (CNC.N). The small health insurer, which focuses on Medicaid, also said its exchange business was performing in line with its expectations. Kaiser Permanente, a hospital and insurer system that sells Obamacare plans in eight states and the District of Columbia, said in an emailed statement on Thursday that it was “strongly committed” to participating in the exchanges.


The awfulness of daylight saving time, mapped

One of the biggest problems with daylight saving is that for many of us with 9-to-5 jobs, our sunrises and sunsets often occur at odd times. Some people hate waking up at 7 am for a 9-to-5 and finding it’s still dark out. Others find it sad to leave work at 5 pm amid total darkness. There are also major inequalities within individual time zones. New York City and Detroit are both in Eastern time. The sun will rise in Detroit at 7:28 am Friday. In New York City, it will rise at 6:48 am. So how might this change if we abolished or extended daylight saving? Cartographer Andy Woodruff decided to visualize this with an excellent series of maps. First, he looked at how many days per year people around the United States receive “reasonable” sunrise and sunset times, defined as the sun rising at 7 am or earlier or setting after 5 pm (so one could, conceivably, spend some time in the sun before or after work). Right now a lot of people have unreasonable sunrises (the dark spots) for much of the year:


The Page Who Took Down the GOP

In the middle of October I was sitting on my couch in Washington and heard a familiar name come up on CNN: Dennis Hastert. “Prosecutors have charged Hastert with lying to the FBI about $3.5 million he agreed to pay to… a former student to keep quiet about allegations of sexual abuse dating back to Hastert’s time as a high school teacher.” On October 28, after striking a deal with prosecutors, the former speaker of the House pleaded guilty. This was nine years after the FBI had barged into my parents’ house, more than a decade after the unsettling things I’d seen on Capitol Hill. It was the final thud of a decline that had reshaped Congress—and in which I’d played a pivotal role that almost nobody except those FBI agents knew. Hastert’s speakership had ended in both defeat and scandal. He resigned the office in November 2006, after Democrats retook the House. He didn’t have much choice in the matter. That fall, a story exploded that likely cost Republicans their House and Senate majority: Florida Republican Rep. Mark Foley, it was revealed, had repeatedly made sexual advances to several congressional pages. Hastert, the speaker at the time, had allegedly been told by House colleagues about Foley’s history of messaging teens, and did nothing. I was a congressional page in 2001 and 2002. During that year, Foley sent sexual instant messages to at least three of my classmates. The messages weren’t flirtatious—though some started that way—but out and out lewd. Two of those recipients continued to receive them well after their time in the page program had elapsed, extending into our college years. Many of us who were pages at the time knew that the conversations had taken place. Some of us even shared copies of the message logs among ourselves. But how the conversations went public, and who gave them to reporters and started the avalanche that ended Foley’s career and dealt a blow to the Republican congressional majority, has never come out. It was me. I didn’t do it to sink the Republicans, though as an aspiring Democratic politico, I wasn’t sorry to see it happen. I did it because I realized just how easily Rep. Foley had been evading accountability for repeat offenses, and that the House leadership was either unwilling or unable to solve the problem. I had no idea what I’d eventually learn about the speaker in whose hands the problem was placed. More:



Repairs, AG’s office could delay VictoryLand re-opening

As he strolled through the cavernous West Gaming room inside VictoryLand, owner Milton McGregor pointed to one of the dozens of tangles of wires protruding from under the colorful casino carpet and shook his head. “When they took the machines out of here, they caused a lot more damage than we realized,” McGregor said. The “they” in this case would be investigators and state troopers working on behalf of Alabama Attorney General Luther Strange, who sent officers to raid VictoryLand in February 2013 and remove electronic bingo machines the AG’s office believed were illegal. In August, after Montgomery County Circuit Court Judge William Shashy ruled against the AG’s office and ordered VictoryLand’s machines returned, McGregor had workers on site the next morning to begin renovations and assess the damage caused. “In some cases, they cut the wires, and in others they just reached down and jerked it out of the ground,” McGregor said. “Hell, had they asked, we would’ve unplugged the things for them. They just didn’t care.” The damage has so far cost McGregor into the hundreds of thousands of dollars as he readies his Shorter casino for opening. In an interview earlier this month, McGregor said he hoped to be open by Christmas. That appears unlikely. Two issues are causing delays — one far more serious than the other. The damages and restoration of the facilities was underestimated slightly. But far more problematic is an existing agreement between Strange’s office and three of the top electronic bingo machine vendors. Created back in 2011, that agreement allowed vendors to retrieve machines worth thousands of dollars from shuttered casinos around the state and move them to other locations — many went to one of the state’s three Poarch Creek casino locations, which were exempted from the deal. In exchange, the companies agreed not to return to the state or face some form of liability. That agreement has left some of the top vendors hesitant to return, and it has seemingly caused a behind-the-scenes disagreement between the governor’s office and Strange. Earlier this month, Gov. Robert Bentley issued an executive repealing his first executive order — issued in 2011 — that gave Strange the authority to chase down gambling operations in the state. Instead, Bentley, in the new executive order, turned that power over to the local sheriffs and other local law enforcement agencies. Strange, who had sent a letter to local district attorneys in January saying as much, stated that he agreed with Bentley’s decision. However, Strange’s office continued to pursue an appeal of Shashy’s ruling with the Alabama Supreme Court, and on Tuesday, a spokesperson for his office said it still maintains that the agreement signed with the three gaming vendors is valid. Asked if that meant Strange believes his office has the authority to enforce that agreement, the spokesperson said yes. More:


Gov. Robert Bentley’s task force recommends Medicaid expansion

A task force appointed by Gov. Robert Bentley today recommended that the governor and the Legislature find a way to provide health insurance for Alabamians without coverage. The Alabama Health Care Improvement Task Force approved a recommendation that said the biggest obstacle in improving health is the “coverage gap that makes health insurance inaccessible to hundreds of thousands of Alabamians.” The majority of that group are working people who earn too much to qualify for Medicaid but don’t have private insurance, according to the Task Force statement. It said expansion could provide coverage to about 290,000 Alabamians, including 185,000 who are working. The recommendation does not specifically call for Medicaid expansion under the Affordable Care Act. But a two-page statement attached to the recommendation describes benefits that would come with expansion. The Task Force recommended that the governor and the Legislature “move forward at the earliest opportunity to close Alabama’s health coverage gap with an Alabama-driven solution.” The task force, which has more than 30 members, approved the recommendation on a voice vote with no opposition. For several years, Bentley has been an opponent of expanding Medicaid under the Affordable Care Act. In the last year, the governor has said his administration might pursue a way to cover more people through an Alabama-specific plan. He has sounded increasingly more open to the idea in recent weeks. Jennifer Ardis, spokeswoman for the governor, indicated the governor has not taken a position on today’s recommendation by the task force. “The governor appreciates the hard work of the task force, which is made up of health care experts across Alabama,” Ardis said. “He looks forward to working with the Legislature to review the recommendations.” Sen. Gerald Dial, R-Lineville, a task force member, said Medicaid expansion is critical for rural areas like his east Alabama district. But Dial told his fellow task force members that expansion will come with a price tag. States will have to begin paying 5 percent of the cost of expanded coverage in 2018 and 10 percent in 2020. Dial said it’s realistic to expect Alabama to need an additional $400 million to $700 million over several years. “Somebody is going to have to pay some more taxes,” Dial said.


AG Luther Strange files VictoryLand appeal to Alabama Supreme Court

Attorney General Luther Strange has filed an appeal to the state Supreme Court of a circuit court ruling ordering the state to return electronic bingo machines and cash seized from VictoryLand casino in 2013.

Circuit Judge William Shashy ruled against the state in October, finding that the machines were legal under a constitutional amendment approved by Macon County voters in 2003. Shashy also ruled that the state was enforcing the law unequally because the same machines were being used at bingo operations in Lowndes and Greene counties. The judge ordered the state to return the machines and cash unless it took legal action in the other counties within 45 days. The Supreme Court last week issued a stay, putting Shashy’s ruling to return the machines on hold while the state’s appeal is pending. The state filed the 74-page appeal brief today. The state maintains the machines are illegal slot machines. Authorities seized 1,615 machines and $263,000 from VictoryLand. VictoryLand has announced plans to try to reopen by Christmas. VictoryLand attorney Joe Espy said last week the Supreme Court stay would not affect those plans. Espy said the casino was working to obtain new machines rather than wait on the return of the seized machines, which he said were damaged in the raid. A press release from the casino last week said that about 3,500 people have applied for jobs.


What’s wrong with working for JeffCo? One-third of offered applicants declined jobs in last 5 months

 What’s wrong with working for Jefferson County? That’s the questionLorren Oliver, the man appointed by the federal judge to oversee Jefferson County’s human resources department, intends to find the answer to after 101 people recently declined job offers with the county. That number represents one-third of the 301 job offers made in a five-month period this year. Oliver said Thursday that number appeared to be a “substantial” rate of job refusals. Oliver said he doesn’t know the reasons why the people may have declined the jobs, such as pay, job security, or having gotten another job while waiting on the county to make a decision. But he said he will be meeting with some people next week about setting up a way to track the reasons in the future. “When one in three say ‘no’, I think we owe it to ourselves to find out why,” Oliver said. Oliver had noted the job refusals in his monthly status report filed Nov. 16 in federal court. Oliver is required to file monthly reports on the progress of  getting the county’s personnel system in compliance with a 1982 consent decree mandating the county not discriminate against blacks or women in hiring, firings, and promotions. Oliver, who has been the interim federal receiver over the county’s human resources department since the last receiver was fired, is being appointed by U.S. District Court Judge Lynwood Smith to permanently fill that position beginning Nov. 30. The judge announced the appointment at a Thursday status conference. In this month’s status report Oliver stated that since June 11 the county had made approximately 200 hires. In making thee hires, 305 job offers were extended. Four conditional offers of employment were withdrawn because candidates were subsequently rejected based on background issues and then 101 of the candidates extended offers declined the employment offer, according to the report. “On its face, this level of declines seems high to the Interim Receiver,” Oliver wrote. “There is currently no mechanism in place to gather systematic data on the reasons candidates reject employment offers with the County,” Oliver wrote. “This is important information to understand the reasons (drivers) of individual decisions to decline employment offers and to inform a strategy to over time position Jefferson County as an employer of choice.” Oliver said the system also should be used to track and gather data on what drives workers to voluntarily and involuntarily leave the county.




Josh Moon: Leaders’ fears are just plain irrational

When did we become such cowards? As governor after governor – and all of the Republican presidential hopefuls – began railing against the idea of this country accepting a number of poor, desperate people running from war and hunger and certain death, all I could wonder is how we ended up with so many cowards. Even worse: when did we end up with so many cowards in charge? In all, as of Tuesday morning, 26 governors – 25 of them Republicans (surprise!) – had proclaimed their states closed to Syrian refugees. Why? Because a terrorist might be in the group. And after the deadly Paris terrorist attacks, we should be very concerned about our own safety. Forget that there’s a nearly three-year vetting process. Forget that the majority of the people who would be relocated to the U.S. would be younger children. Forget that every single one of the Paris attackers were European nationals and not refugees. Forget it all, because these Republicans are scared. They’re scared like children of the monster under the bed. And any action can be justified if enough fear is injected. We know that well here in Alabama, where fear has been used by state leaders to turn the masses against anyone who looks or acts a bit different from our brand of “normal.” Blacks, gays, Hispanics – we’ve treated them all like dirt. And we’ve justified those actions with a solid foundation of fear. The blacks were raping our white women.

The Hispanics were spreading diseases and taking our jobs. The gays were ruining marriage and morals.

Get the pitch forks, light the torches and get those crosses to burning. And now, we’ve used more irrational fear in a sad, disgusting attempt to turn away refugees, mostly children and women in desperate need of shelter and safety. Alabama, with a Christian church on every other corner, is refusing Syrian refugees seeking shelter. If only there was some guidance on this situation from the Bible – some specific reference to Middle Eastern people seeking refuge, maybe a man and a woman, an inn keeper with a full house, something like that. There wasn’t Gov. Robert Bentley on national TV Tuesday morning saying his heart wants to help, but his head says no. First, it’s nice to know he has a heart. Second, is that the same head that told you to sign that utterly illegal immigration bill a few years ago – the one the state is still trying to pay for? That Bentley was at the forefront of the movement against the refugees should likely come as no surprise. Xenophobia is Alabama’s top export, after all. And Bentley used CNN Tuesday morning to deliver an Alabama-sized helping to the country. Telling people that he had been told by “law enforcement” that “all major threats” of terrorist activity had come from the refugee program.

I’m pretty sure the law enforcement person who told Bentley this also saw Ferris pass out at 31 Flavors last night. Because in all the years of refugees coming to America, there hasn’t been a single terrorist act committed by any of them. (The Tsarnaev brothers were not refugees, they were the children of asylees, and as such were not subjected to the refugee screening process.) Honestly, Republicans, how much fear is enough? Is it not enough that your irrational fears and poor understanding of the world led to a misguided war that lasted more than a decade, caused the deaths of thousands of Americans and gave rise to ISIS? Is it not enough that fear has turned you against the very American and Christian values you pretend to care so much about? On the gateway to this country – the Statue of Liberty – we asked for the huddled masses, the wretched refuse, the poor, the tired, the homeless, those yearning to breathe free.

In the Bible, Jesus states plainly that when you refuse to feed the hungry, provide water to the thirsty or provide clothing, shelter and aid to the needy and sick, you can’t enter the Kingdom of Heaven. Irrational fear doesn’t excuse your responsibilities in either case.

It just makes you a coward.


Morning Money

HERE’S WHAT’S AHEAD FOR THE GOVERNMENT SPENDING SHOWDOWN, which needs to be resolved by Dec. 11: As lawmakers leave town ahead of next week’s holiday, appropriators are taking stock as they try to craft an agreement to keep the government open and move a number of riders, including tweaks to financial regulation. A spokeswoman for the House Appropriations Committee said negotiations are ongoing and that “all items are open until final.” An aide for the Senate Appropriations Committee said Senate appropriators are updating each other on the status and progress of outstanding issues and that nothing’s off the table.

MEANWHILE: COONS OPPOSES ANY FINANCIAL REGULATION RIDERS ATTACHED TO OMNIBUS. Colin Wilhelm reports: Sen. Chris Coons, the ranking member on the Financial Services Appropriations Subcommittee, said today that he opposes any financial regulatory language attached to legislation needed to fund the government.

“We had a meeting earlier today of the [leadership of the House and Senate financial services appropriations committees] and I did not accept a single policy rider that would have changed anything that relates to Dodd-Frank, ” Coons told POLITICO.

However, Coons said that he might support riders “if all” Democratic members of the banking committee were comfortable with negotiated language being included in the end of year omnibus spending package.

IS CONGRESS DRIVING OVER THE FEDERAL RESERVE? Fed pushes back as Congress eyes its billions. By Zachary Warmbrodt: Even as members of Congress are slamming the Federal Reserve for being too political with its monetary policy, they are plotting to use the central bank as a government piggy bank.
Congress is aiming to take billions out of the Fed’s accounts to help pay for a new highway and transit bill, but the Fed is balking, registering “strong concerns about using the resources of the Federal Reserve to finance fiscal spending.”

But members of Congress who consider the Fed money to be the only politically feasible way to fund a long-term transportation bill are wondering why the central bank didn’t try to stir up opposition sooner. The Fed has clearly been in Congress’s crosshairs since at least July.

Congress has until Dec. 4 to vote on a bill, whether it be a long-term deal or another temporary patch. The broad outlines of a deal could be announced as soon as Friday.

HENSARLING FIGHTS FOR FED REFORMS: In a Wall Street Journal op-ed, House Financial Services Committee Chairman Jeb Hensarling (R-Texas), celebrated a bill the House passed on Thursday to rewrite rules for the Federal Reserve. The bill drew concerns from Fed Chair Janet Yellen earlier in the week. “The greater the powers ceded to the Fed, the more its activities must be opened up to scrutiny and critical examination,” Hensarling said. “Otherwise, we may soon awake to discover that our central bankers have instead become our central planners.”

GOOD FRIDAY MORNING — Ben is off today, but do send him tips at and follow him on Twitter @morningmoneyben.

DRIVING THE DAY — The Urban Institute and CoreLogic hold a symposium on housing finance at 8:30 a.m. … James Bullard, St. Louis Fed President, speaks on the economy in Ft. Smith, Ark. at 9 a.m … . The Kansas City Fed releases its manufacturing index at 11 a.m. There are no economic indicators on the calendar. Hillary Clinton has fundraisers in Louisville, Kentucky and Tennessee

COINCIDENTALLY … Allergan-Pfizer to talks include Allergan as possible buyer. The Wall Street Journal. “However the deal is technically structured, the much larger Pfizer will effectively be buying the Dublin-based Allergan and assuming a lower offshore tax jurisdiction.”

NY FED FINDS SUBPRIME AUTO LOANS ON THE RISE: via POLITICO’s Jon Prior: Subprime auto loans jumped to $40 billion in the second quarter to a 10-year high, surpassed only by the easy credit days of 2005, per a new study by the New York Federal Reserve. These riskier loans written by specialty auto finance companies have started to climb again and are higher than those offered by banks and credit unions. Federal regulators like the Consumer Financial Protection Bureau and Securities and Exchange Commission have taken notice, with the CFPB pushing to crack down on discrimination among auto lenders despite push back from Congress and the industry lobbyists. The NY Fed researchers warn more of these loans could run into trouble if the economy sinks further, but the higher levels of risk are nowhere near the subprime mortgage bubble that brought down the financial system, which was almost four times larger.


OBAMACARE’S FATE MAY REST ON PATIENCE OF INSURERS AETNA, ANTHEM. Zachary Tracer, Bloomberg News: The fate of Barack Obama’s signature health-care law may depend on how long Anthem Inc. and Aetna Inc. are willing to wait before starting to make money off it.

The two insurers are on the hot seat now that UnitedHealth Group Inc. appears unlikely to linger as a seller on the Affordable Care Act’s government-run markets.

WHAT WE’VE LEARNED ABOUT PAUL RYAN. Jake Sherman and John Bresnahan report: “Ryan will go big in 2016, Ryan is going to empower Kevin McCarthy, Ryan isn’t afraid to stand up to the right wing — inside and outside the Capitol, Ryan is keeping his word about changing how the House works, But, his so-called “firm rules” are actually quite malleable, Ryan likes being on TV — and other Republicans like to see him doing it, But he’s still getting his sea legs.”

SENATE REPUBLICANS WORK ON PUERTO RICO BILL AS DEFAULT LOOMS. Kasia Klimasinska and Kathleen Miller, Bloomberg News: Top Senate Republicans with jurisdiction over Puerto Rico are working on a legislative proposal to help the commonwealth as it struggles with more than $70 billion of debt, countering a plan by the Obama administration.

POTUS Events

From the White House:

In the morning, President Obama will meet with Embassy personnel and families. This meeting is closed press.

In the afternoon, the president will depart the Philippines en route Kuala Lumpur, Malaysia. Later in the afternoon, the President will participate in a Young Southeast Asian Leaders Initiative (YSEALI) town hall.

In the evening, Obama will have a bilateral meeting with Prime Minister Najib Razak of Malaysia. Obama will remain overnight in Malaysia.

Floor Action

Congress is out for the Thanksgiving break.