Krebs Daily Briefing 18 February 2016

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

International

Exclusive: Radioactive material stolen in Iraq raises security fears

Iraq is searching for “highly dangerous” radioactive material stolen last year, according to an environment ministry document and seven security, environmental and provincial officials who fear it could be used as a weapon if acquired by Islamic State. The material, stored in a protective case the size of a laptop computer, went missing in November from a storage facility near the southern city of Basra belonging to U.S. oilfield services company Weatherford (WFT.N), the document obtained by Reuters showed and officials confirmed. A spokesman for Iraq’s environment ministry said he could not discuss the issue, citing national security concerns. A Weatherford spokesman in Iraq declined to comment, and the company’s Houston headquarters did not respond to repeated requests for comment. The material, which uses gamma rays to test flaws in materials used for oil and gas pipelines in a process called industrial gamma radiography, is owned by Istanbul-based SGS Turkey, according to the document and officials. An SGS official in Iraq declined to comment and referred Reuters to its Turkish headquarters, which did not respond to phone calls. The document, dated Nov. 30 and addressed to the ministry’s Centre for Prevention of Radiation, describes “the theft of a highly dangerous radioactive source of Ir-192 with highly radioactive activity belonging to SGS from a depot belonging to Weatherford in the Rafidhia area of Basra province”. A senior environment ministry official based in Basra, who declined to be named as he is not authorized to speak publicly, told Reuters the device contained up to 10 grams (0.35 ounces) of Ir-192 “capsules”, a radioactive isotope of iridium also used to treat cancer. More:

http://www.reuters.com/article/us-mideast-crisis-iraq-radiation-idUSKCN0VQ22F

China’s Subprime Crisis Is Here

Sorry, Kyle Bass, you’re a bit late to the game. The debt problem in China has already reached the proportions of the U.S. subprime mortgage debacle. Don’t worry, though: Chinese authorities are on the case — discussing reducing the required coverage for bad loans so that banks can keep booking profits and lending. Including “special-mention” loans, which are those showing signs of future repayment risk, the industry’s total troubled advances swelled to 4.2 trillion yuan ($645 billion) as of December, representing 5.46 percent of total lending. That number is already higher than the $600 billion total subprime mortgages in the U.S. as of 2006, just before that asset class toppled the world into the worst financial crisis since 1929.

http://www.bloomberg.com/gadfly/articles/2016-02-17/china-s-600-billion-subprime-crisis-is-already-here?cmpid=yhoo.headline

Spanish Unit of China’s ICBC Raided in Money Laundering Case

The Spanish police raided the Madrid subsidiary of one of China’s largest banks on Wednesday and arrested five of its directors as part of a broad investigation into money laundering. The Madrid branch of the Industrial and Commercial Bank of China is accused of helping several Chinese and Spanish criminal syndicates commit financial fraud, according to Europol, the police agency of the European Union, which helped the Spanish police in its investigation. The investigation, code-named Operation Shadow, builds off a case last year by the Spanish police that claimed that a group had laundered 40 million euros of earnings from discount stores operated by Chinese businessmen across Spain. The group was also accused of importing goods from China without declaring them to Spanish customs authorities, avoiding the payment of import and tax duties. Thirty people were arrested in that case. After last year’s operation, the Spanish police said they followed “the money trail” and found that the syndicate had deposited its earnings at the Spanish subsidiary of ICBC. The bank then sent it to China “without checking their origin as required by law,” according to Europol. More:

http://www.nytimes.com/2016/02/18/business/dealbook/spanish-unit-of-chinas-icbc-raided-in-money-laundering-case.html?ref=dealbook&_r=0

Pope targets Trump in visit to U.S.-Mexico border

Pope Francis, in his own gentle way, is taunting Donald Trump. In an unofficial, but epic, rebuttal to Trump and other Republican immigration hardliners running for president, the 79-year-old Roman Catholic leader is visiting the U.S.-Mexico border on Wednesday evening to show solidarity with migrants. The stop comes at the end of a six-day papal visit to Mexico and as immigration policy remains a flash point in the GOP presidential primary race. Francis is to hold a Mass in the border city of Juarez and visit the Rio Grande, offering prayers throughout for the safety of migrants, many of whom die on the journey to the United States. Trump — who once described Mexican migrants as “rapists” and insisted that he will get Mexico to pay for a “beautiful” wall along the border — has criticized the pope for his planned visit, calling him a “very political person.” “I think that he doesn’t understand the problems our country has. I don’t think he understands the danger of the open border that we have with Mexico,” the real estate mogul said on Thursday. Trump also alleged that Mexico pushed the pope to visit “because Mexico wants to keep the border just the way it is because they’re making a fortune, and we’re losing.” Trump made his own trip to the U.S.-Mexico border in July, causing a great spectacle as he doubled down on his warnings about the misdeeds of undocumented immigrants. The Vatican reportedly has called Trump’s comments “very strange” and pointed out that the welfare of migrants has long been a passion for Francis. The Argentine-born pontiff is the first pope from Latin America and he has unflinchingly confronted a range of hot-button issues, including same-sex marriage and climate change. In Europe, which is struggling to cope with a huge wave of migrants from Syria, Iraq, Afghanistan and other troubled countries, the pope has called on Catholic parishes to take in refugee families. During a visit to the United States last September, the pope repeatedly raised the topic, including in a historic speech to Congress. Francis urged lawmakers to show kindness to migrants and asylum seekers, reminding them that they themselves were descended from immigrants who helped build America. His admonitions had limited effect.

http://www.politico.com/story/2016/02/pope-francis-trump-border-219377#ixzz40SbYuvNw

 

Iraq war supporters think they were just vindicated on Saddam’s WMDs. They’re wrong.

blockbuster story in Sunday’s New York Times reports that, during the height of the Iraq War in 2005 and 2006, the CIA secretly purchased decades-old Iraqi chemical weapons from an undisclosed seller, in an effort to prevent those weapons from falling into the hands of terrorists. This follows up on an October New York Times investigation that found that American troops in Iraq “repeatedly encountered, and on at least six occasions were wounded by, chemical weapons remaining from years earlier in Saddam Hussein’s rule.” The American invasion of Iraq was premised on Saddam’s alleged weapons of mass destruction, and chemical weapons are WMDs. So these stories finally vindicate President George W. Bush and his decision to invade Iraq, right? Wrong. The stories, while important, are being widely misrepresented by Iraq war advocates — including Karl Rove himself — seeking to exonerate Bush. Just as they did in October when the initial investigation came out (and when an earlier version of this post ran), those Iraq war advocates are also attempting to re-write history, misrepresenting the Bush administration’s widely-publicized rationale for invading. The world has always known that Saddam had a chemical weapons program in the late 1970s and 1980s — American companies helped him build it — but that he shut it down in 1991. In 2002, Bush argued that the US had to invade because Saddam was actively developing new chemical, biological and nuclear WMDs, in a secret and ongoing program, with an explicitly aggressive purpose: “to threaten America and the world with horrible poisons, and diseases, and gases, and atomic weapons.” Bush was explicit in claiming that Saddam had an active weapons program: “Saddam Hussein still has chemical and biological weapons, and is increasing his capabilities to make more. And he is moving ever closer to developing a nuclear weapon.” (Bizarrely, a number of conservatives now insist that Bush never made any such claim.) The Bush administration hit this argument repeatedly. Then-National Security Advisor Condoleeza Rice claimed that Saddam was running a clandestine nuclear program that was only “six months from a crude nuclear device.” She argued that this program was so imminent, and so clearly designed to target the United States, that a US invasion was the only option: “We don’t want the smoking gun to be a mushroom cloud.” Those claims have never been proven, including by these New York Times reports (the October Times article is very clear about this). Rather, these stories reveal only that Iraq was sprinkled with aging, forgotten, and long-discarded warheads from Saddam’s shuttered 1980s chemical weapons program — and that the Bush and Obama administrations have systematically covered up discoveries of those warheads, including the wounds they’ve caused American soldiers. More:

http://www.vox.com/2014/10/15/6981493/iraq-wmd-saddam-chemical-weapons-new-york-times

National

U.S. jobless claims fall as labor market tightens

Feb 18 – The number of Americans filing for unemployment benefits unexpectedly fell last week, pointing to labor market strength that could keep Federal Reserve interest rate hikes on the table this year. Initial claims for state unemployment benefits decreased 7,000 to a seasonally adjusted 262,000 for the week ended Feb. 13, the lowest reading since November, the Labor Department said on Thursday. The prior week’s claims were unrevised. Economists polled by Reuters had forecast claims rising to 275,000 in the latest week. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 8,000 to 273,250 last week. The health of the jobs market could determine whether the U.S. central bank raises rates this year. Bets for a March rate hike have largely been eliminated against the backdrop of tightening financial market conditions and worries about the U.S. and global economies. A Labor Department analyst said there were no special factors influencing last week’s claims data and that claims were estimated for Pennsylvania, Virginia and Puerto Rico. Pennsylvania experienced a computer glitch and Virginia was unable to provide data on time, though the issues were considered minor. Claims are being closely monitored for signs of a pickup in layoffs in the wake of the recent massive stock market sell-off. There is no indication so far that companies have responded to the tightening in financial market conditions by reducing headcount. More:

http://www.reuters.com/article/us-usa-economy-idUSKCN0VR1PB

 

Scalia died at a remote resort. Who pays for these trips and what do justices have to disclose?

 Justice Antonin Scalia’s sudden death over the weekend at a remote West Texas ranch spawned a host of questions about how authorities in the area responded. It also raised questions about the nature of his travel, who paid for a Supreme Court justice to visit a remote resort and whether they are subject to the same disclosure guidelines as other judges or federal officials. Here is a guide to these questions. Where did Justice Scalia die? Scalia was at the Cibolo Creek Ranch, a resort tucked away in the Big Bend region of Texas about 30 miles from the border with Mexico. The ranch is 30,000-acre getaway that is home to John B. Poindexter, according to the website of J.B. Poindexter & Co. It is a remote location that has reportedly attracted the likes of Mick Jagger, Jerry Hall and Bruce Willis. When Tommy Lee Jones directed a movie more than a decade ago, he filmed several scenes at the ranch, according to the Houston Chronicle. Who paid for his trip? All of which raises the question: Who pays for a Supreme Court justice to make this kind of trip? Not Scalia, it turns out. Poindexter told The Washington Post that Scalia was not charged for his stay, something he described as a policy for all guests at the ranch. “I did not pay for the Justice’s trip to Cibolo Creek Ranch,” Poindexter wrote in a brief email Tuesday. “He was an invited guest, along with a friend, just like 35 others.” Poindexter added: “The Justice was treated no differently by me, as no one was charged for activities, room and board, beverages, etc. That is a 22-year policy.’’ However, Poindexter said he did not pay for Scalia’s charter flight to Texas. A person familiar with the ranch’s operations said that Poindexter hosts such events two or three times a year. Poindexter, who would not identify Scalia’s friend, is a Texas native and decorated Vietnam veteran who owns Houston-based J.B. Poindexter & Co., a manufacturing firm. The company has seven subsidiaries, with combined annual revenue of nearly $1 billion, according to information on its website. Among the items it manufacturers are delivery vans for UPS and FedEx and machine components for limousines and hearses. The company has 5,000 employees, the site said. One of Poindexter’s companies was involved in a case that made it to the high court. Last year, the Supreme Court declined to hear a case involving an age discrimination lawsuit filed against one of these companies, court records show. More:

https://www.washingtonpost.com/news/post-nation/wp/2016/02/17/justice-scalias-death-and-questions-about-who-pays-for-supreme-court-justices-to-visit-remote-resorts/?tid=sm_fb

 

Before Supreme Court nod, an intrusive interrogation

WASHINGTON (AP) – Did you ever buy porn, sniff glue, have sex in junior high? Exactly how many times? White House lawyers are scouring a life’s worth of information about President Barack Obama’s potential picks for the Supreme Court, from the mundane to the intensely personal. In trying to replace the late Justice Antonin Scalia, the president could alter the balance of the court for decades – but only if he can get his nominee through Republicans in the Senate. Prospective justices are put through the nation’s most thorough background check, an invasive process where nothing is off-limits. After all, a surprise dredged up later could scuttle confirmation. So candidates’ taxes, writings, childhoods, business dealings, medical histories and, yes, love lives, are all scrutinized for potential red flags. “The idea that you miss something that later torpedoed the nomination – that’s a nightmare,” said Jack Quinn, former White House counsel to President Bill Clinton. Just ask Judge Douglas Ginsburg. Nine days after President Ronald Reagan nominated him for the high court, it was revealed he had smoked marijuana as a law professor at Harvard and he was forced to bow out. For Obama, who has successfully nominated two justices, the vetting process is even more critical this time as he works to push a nominee through in his final year in office. Already, Republicans are threatening to not even hold a vote. If hearings get mired in a squabble over some late revelation, Republicans could find a fresh rationale for dragging the process out until Obama’s term ends in January 2017. “I am going to present somebody who indisputably is qualified for the seat,” Obama said Tuesday. Traditionally, vetting takes weeks if not months, depending on how many candidates are being checked. But Obama is expected to move as quickly as possible to announce his pick. The White House was jolted into action after learning of Scalia’s death, officials said, summoning administration lawyers over Presidents Day weekend to begin searching for a suitable replacement. Obama, traveling in California, has been working with top advisers on his list while aides feel out senators about their willingness to hold a vote.

http://www.wsfa.com/story/31240184/before-supreme-court-nod-an-intrusive-interrogation?sf21067970=1

Senate Republicans Grow Uneasy Over Supreme Court Delay Strategy

Senate Majority Leader Mitch McConnell (R-KY) drew a line in the sand on Saturday by saying that his chamber of Congress won’t even consider President Obama’s nominee to replace Supreme Court Justice Antonin Scalia. Now, some of McConnell’s fellow Republicans are backing away from that line. The Kentucky lawmaker’s snap decision seems to have given some of his colleagues whiplash, and they have begun to openly question whether flat-out refusing to even consider the president’s eventual choice is the best course of action. Senate Judiciary Committee Chair Chuck Grassley (R-IA), who agreed with McConnell over the weekend, now says he hasn’t decided whether his panel will hold a confirmation hearing for an Obama nominee. “I would wait until the nominee is made before I would make any decisions,” Grassley told reporters, according to Radio Iowa. “In other words, take it a step at a time.”

Sen. Thom Tillis (R-NC), a member of the Judiciary panel, went one step further, warning that if lawmakers don’t act, the entire GOP will be painted as obstructionists come Election Day. “I think we fall into the trap if we just simply say sight unseen — we fall into the trap of being obstructionist,” he said during an interview on “The Tyler Cralle Show,” as first reported by ThinkProgress. “If he puts forth someone that we think is in the mold of President Obama’s vision for America, then we will use every device available to block that nomination, wait for the American people to voice their vote in November and then move forward with the nomination after the election,” he added. Republicans have come under withering criticism over their announced strategy, with Democrats casting it as a bald political calculation designed to fire up the GOP base before an election in which the party is doing everything it can to hold onto its slim majority in the Senate. More:

https://finance.yahoo.com/news/senate-republicans-grow-uneasy-over-231000588.html

 

Obama Slams Trump: “It’s Not Hosting a Talk Show”

With Donald Trump still firmly at the wheel of the G.O.P. clown car as he hurtles toward the Republican nomination, President Barack Obama, looking nervously toward his last days in office, is sounding a dire warning to the rest of America: please do not let this happen. During a press conference Tuesday after a summit meeting with Southeast Asian nations in Rancho Mirage, California, Obama reiteratedhis belief that Trump would not be the Republican nominee, expressing faith that the American people would reject the reality star. But he spent plenty of time slamming the other candidates, though not by name. “I think foreign observers are troubled by some of the rhetoric that’s been taking place in these Republican primaries and Republican debates,” he began. “I don’t think it’s restricted, by the way, to Mr. Trump. I find it interesting that everybody is focused on Trump, primarily just because he says in more interesting ways what the other candidates are saying, as well.” Condemning the virulent anti-Muslim and anti-immigrant rhetoric underpinning much of the G.O.P.’s messaging, Obama noted that while Trump was a bit more creative with his language, “you’ve got a candidate who sponsored a bill—that I supported—to finally solve the immigration problem, and he’s running away from it as fast as he can.” (That candidate, Senator Marco Rubio, was once viewed as a moderate with the most crossover appeal—that is, until this election cycle.) But he saved his harshest language for Trump. “I have a lot of faith in the American people, and I think they recognize that being president is a serious job,” he said. “It’s not hosting a talk show or a reality show. It’s not promotion. It’s not marketing.” Accusing Trump of “pandering” at the expense of “trying to solve problems,” Obama reminded the crowd that a president “has the nuclear codes with them, and can order 21-year-olds into a firefight, and have to make sure that the banking system doesn’t collapse”—all things, he suggested, that Trump was not capable of doing. Earlier, when asked about the Democratic race between Bernie Sanders and his former secretary of state, Hillary Clinton, Obama noted that ultimately, the two “agree on a lot of stuff and disagree pretty much across the board with everything the Republicans stand for.” Although he has avoided making any sort of endorsement for which candidate should succeed him, Clinton has been running explicitly on a promise to continue and build on Obama’s successes, casting Sanders as an electoral risk that could deliver the presidency to Republicans. Obama, according to White House insiders, appears to agree. It’s a possibility that is surely weighing on his mind as he considers his last 300 or so days in office and looks to safeguard his legacy from the repudiation Trump and the rest of the G.O.P. field represent.

http://www.vanityfair.com/news/2016/02/obama-trump-election-2016?mbid=nl_021716_Daily&CNDID=11508510&spMailingID=8557490&spUserID=MTA5MzMxMjM0MzYxS0&spJobID=861748801&spReportId=ODYxNzQ4ODAxS0

 

Firm with Saudi ties works on Air Force One, other VIP jets

WASHINGTON — A company owned by a Saudi investor works on Air Force One and other VIP aircraft that fly Cabinet secretaries and other dignitaries around the world, USA TODAY has learned. GDC Technics has been servicing President Obama’s jet as a contractor for Boeing, according to the Air Force. This is the first time the Pentagon has acknowledged that a contractor from a business with foreign ties has worked on Air Force One. The company was bought in 2013 by MAZ Aviation, which is owned by Saudi businessman Mohammed Alzeer. It also has operations in Fort Worth, Texas, and in Germany. The Air Force considers the security of Air Force One a top priority, said Lt. Col. Chris Karns, a spokesman. The White House declined to comment. “While we can’t go into specific details about security measures, there are stringent security protocols in place,” Karns said. “The security processes related to Air Force One are proven and effective.  GDC, a subcontractor to Boeing, does not have unsupervised access to the aircraft nor do they have access to sensitive information about the plane.  This particular subcontract is for cabinets, desks, and other furnishings and all work is conducted offsite.” No foreign nationals have access to Air Force One at any time, Karns said. Generally, GDC employees complete work on furnishings in San Antonio, and Boeing employees re-install items on the plane. But GDC employees who are U.S. citizens with proper background checks are escorted on to Air Force One to conduct repairs, he said. Along with Air Force One, GDC Technics services the E-4B, which serves as an aerial national command post “in case of national emergency or destruction of ground command and control centers,” according to the Air Force. The E-4B is also known as the Doomsday Machine. The Pentagon’s reliance on contractors for military work has grown dramatically during the last few decades. Contractors often outnumber U.S. military personnel on the ground in Iraq and Afghanistan since 2001, according to the Congressional Research Service. In June 2015, for example, there were about 9,000 U.S. troops in Afghanistan compared with 29,000 Pentagon contractors, according to the service. The foreign ownership of facilities the U.S. relies on has been an issue. In 2006, Congress killed the sale of U.S. port facilities to Dubai Ports World of the United Arab Emirates because of concerns about foreign ownership of key infrastructure. GDC Technics, based in San Antonio, boasts that it is renowned for “interior upgrade work on VIP and head-of-state airliners,” according to its website. The company also notes that its facilities are secured 24 hours a day by guards who have passed FBI background checks and have security clearances. They also use “advanced surveillance systems” to ensure the safety of aircraft. A spokesman for the company, Charley Celli, declined to comment on the company’s clients.

http://www.usatoday.com/story/news/nation/2016/02/17/air-force-one-obama-boeing-white-house-contractors-pentagon/80511854/?csp=breakingnews

Three Days Behind the Counter at a Vegas Gun Shop

On a recent Monday, the Smith & Wesson 9mm Model SD9VE handgun was selling briskly at the Westside Armory, 1,900 square feet of guns and ammo in a tidy shopping mall anchored by a Vons grocery and also featuring a nail salon, Starbucks, and Buffalo Wild Wings. The mall is 15 minutes southwest of the Las Vegas Strip but feels worlds away from the garish casinos. The store’s owner, Cameron Hopkins, bundles the SD9VE with a Streamlight TLR-3 flashlight, which attaches beneath the barrel, as well as two 16-round magazines. The package goes for $399.99, down from $526.70. “It’s a nightstand pistol,” Hopkins says to one potential customer, a tall man in a blue sweatsuit. “Perfect for home defense, and you can’t beat the price.” The guy ponders for 20 minutes, musing about the danger of nighttime intruders entering his house from an adjacent golf course, and then buys one. Handguns at Westside Armory—Glock, Smith & Wesson, Colt, and Sig Sauer—are displayed in waist-high glass cases. Rifles and shotguns hang from the walls. To get to the firearms, customers first pass racks of holsters, goggles, ear protection, magazines, speed loaders, range bags, cleaning solutions, and paper targets—zombies, grimacing thugs, Osama bin Laden. Boxes of ammunition line one wall, interspersed with such novelties as red-white-and-blue colored ceramic lawn gnomes bearing miniature guns and hand grenades. The main business of Westside Armory, though, is handguns, mostly semiautomatic pistols, which carry ammunition in rectangular magazines that snap into the grip. Handgun sales outnumber rifle and shotgun sales by about 20 to 1, although some of the most expensive items the store sells are custom-made rifles that retail for $2,500 or more. Westside Armory took in $190,000 in December, its highest mark since opening in the summer of 2014. That’s consistent with a nationwide boom. In December, the Federal Bureau of Investigation did a record 3.3 million background checks, half a million more than the previous monthly high in the wake of the Newtown, Conn., elementary school massacre in 2012. “It’s been this way for the last seven years,” since President Obama got into office, says Mike Moore, Westside’s account manager at RSR Group, a large national gun-and-ammunition wholesaler based in Winter Park, Fla. Moore and others in the industry marvel at the staying power of what they call “the Obama surge”—elevated sales driven by the (unfulfilled) fear of tougher federal gun control. “There’s four things selling guns at the moment,” says Rocky Fortino, one of Hopkins’s employees. “One: ‘I’m afraid they’re going to make it harder to buy a gun, so I better get one now.’ Two: ‘I’m afraid of home invasions and other violent crime.’ Three: ‘I’m afraid of mass shootings.’ And four: ‘I’m afraid of terrorism.’” On the last concern, Fortino and I agree that Westside Armory doesn’t really offer much in the way of antiterrorism weaponry. Reality rarely enters into the equation of fear. Crime is actually down in Las Vegas, as it is nationwide. And President Obama’s most recent executive actions on guns—announcing in January that his administration would more strictly enforce existing rules governing dealer licensing—“won’t have much practical effect at all,” Hopkins says. Yet any time the president opens his mouth about guns, anxiety jumps. “What if Obama does something that makes me have to give my new gun back?” one customer asks. “I don’t think that’s likely,” salesman Jeff Giese says, reassuringly, as he rings up the man’s transaction for another Smith & Wesson 9mm. More:

http://www.bloomberg.com/features/2016-three-days-in-a-las-vegas-gun-store/

Fed Officials, at Meeting, Found Economic Outlook Cloudy

WASHINGTON — Federal Reserve officials threw up their hands in January, deciding that they could not decide whether market turmoil would impede domestic economic growth. The Fed in recent years has issued an assessment of economic conditions after each meeting of its policy-making committee, but that assessment was missing from its statement after the most recent meeting in January. An official account of the meeting, published Wednesday after a standard three-week delay, makes clear that Fed officials simply did not know what to say. “Most policy makers thought that the extent to which tighter conditions would persist and what that might imply for the outlook were unclear, and they therefore judged it was premature to alter appreciably their assessment of the medium-term economic outlook,” the meeting account said. The Fed is unlikely to raise its benchmark interest rate while this confusion persists, suggesting that investors are right to discount the chances of a rate increase at the Fed’s next meeting, in March. But according to the account, many officials remain optimistic that the market turmoil will not leave a lasting mark on the economy, suggesting rate increases could resume later this year. “It might prove prudent to wait until the inflation data are stronger before we undertake a second rate hike,” Patrick T. Harker, the Federal Reserve Bank of Philadelphia president, said on Tuesday at the University of Delaware. But, “I believe as we move into the second half of the year with economic activity growing at trend or slightly above trend, the unemployment rate below its natural rate, and price pressures starting to assert themselves, policy can truly normalize.” More:

http://www.nytimes.com/2016/02/18/business/economy/fed-minutes-interest-rates.html?ref=dealbook

Curbing big U.S. banks is not political: Fed’s Kashkari

The newest Federal Reserve policymaker dismissed concerns that his call for radical action to rein in “too big to fail” banks was a partisan move, and instead said it highlighted the U.S. central bank’s independence from politics. Minneapolis Fed President Neel Kashkari touched a nerve on Wall Street and on the U.S. presidential election campaign when on Tuesday he said existing rules to protect taxpayers and the economy from a bank failure were not enough, and urged Congress to consider breaking up massive banks. “I don’t see this as a partisan issue,” he said in an interview on Wednesday. “I do think there are people on both sides of the aisle who care about this issue and think we should take stronger action,” Kashkari, a former Republican candidate for California governor who took the Minneapolis job last month, told Reuters. “It wasn’t a political statement. It was a statement about economic risks.”

http://www.reuters.com/article/us-usa-fed-kashkari-idUSKCN0VQ2R8

Renting Giant Cruise Ships Is the New Wave in Private Yachting

Floating amid mega-yachts in Monte Carlo’s crowded harbor during the May 2015 Monaco Grand Prix was a startling sight: Windstar’s 212-passenger Star Breeze cruise liner. Lodged in one of the prime berths, the passenger ship was placed as a private yacht would be—because for the week, it was one.

“The ship is within inches of not being able to come into the harbor, but it fits exactly, down by the hairpin turn,” explained Windstar’s Amy Conover via phone from her office in Seattle. The 440-foot long Star Breeze wasn’t crammed with day-trippers midway through a jaunt around the Mediterranean, for which it was designed. The ship was serving  as a private playground, rented by a wealthy client for use as a convenient perch for 200 friends while the ship’s crew catered to their needs. Guests could sleep and party aboard it during the week of Monaco’s famed car races, enjoying the comforts of the waitstaff and kitchen crew amid watertight security. The mogul renter even provided the most luxurious of day trips: Each of his lucky friends was offered a vintage automobile from the likes of Mercedes and Ferrari, including some retired Grand Prix race cars. Guests drove the race course on Saturday evening during the moments before it was shuttered to make way for Sunday’s grand finale. Such ships have long been rented out for corporate charters, perhaps as end-of-year incentives for top-performing sales execs or as vehicles for political fundraising. Today they are increasingly taken out of public use for private hire, enabling billionaires such as that Grand Prix super-fan to upgrade to a personal cruise ship.

“It’s like owning a mega-yacht for a week or two,” explained Carolyn Spencer-Brown, editor of industry bible Cruise Critic, via phone as she was about to board a ship in Miami. “It’s much like if your first-ever flight was on a private plane. You’re starting at the top.” More:

http://www.bloomberg.com/news/articles/2016-02-17/renting-giant-cruise-ships-is-the-new-wave-in-private-yachting

 

State/Local

Hubbard prosecutor pressured state’s top cop for affidavit clearing prosecutor of misconduct

The prosecutor in the public corruption case against House Speaker Mike Hubbard sought from state law enforcement officials a sworn statement clearing him of allegations he may have shared secret grand jury information in the Hubbard case, according to sources familiar with the attempt. Gov. Robert J. Bentley, in an interview Wednesday morning, confirmed that Assistant Attorney General Matt Hart had sought a sworn statement or affidavit from Alabama Secretary of Law Enforcement Spencer Collier. Hart’s pursuit of a sworn statement by state police that they had found no evidence to support allegations is another twist in what has been a raging battle between Hart and the lawyers for Hubbard, a battle that started almost three years ago when news surfaced that Hart was investigating the powerful lawmaker. Collier did provide an affidavit to Hart against the governor’s order, Bentley said. Bentley, who is expected to be a witness in the case against Hubbard, said he ordered Bentley’s legal adviser David Byrne and Collier in a face-to-face meeting to follow Alabama Law Enforcement Agency procedure and not submit any affidavit. “I met with my legal adviser and Secretary Collier … and we discussed the fact I believe Matt Hart had brought an affidavit and wanted them to sign that,” said Bentley. “I told them that since they were not investigating anything, they could not give an affidavit of any type. I left the meeting feeling there would be no affidavit given. Later I found out one was given.”  Bentley said, “I was clear.” Sources say Hart was anxious for a sworn statement from law enforcement clearing him of the allegation he had shared information illegally from the Hubbard grand jury. When Collier refused Hart’s request, Hart then told Collier he would seek subpoenas ordering Collier to appear before a grand jury to undergo questioning the next morning, sources say. More:

http://www.al.com/news/index.ssf/2016/02/hubbard_prosecutor.html

State’s top cop placed on leave following failure to follow governor’s order

Gov. Robert J. Bentley has placed Secretary of Law Enforcement Spencer Collier on a medical leave of absence from his job as the state’s top cop. Bentley notified Collier today he had made the decision to place him on leave. Collier told his staff and employees of the Alabama Law Enforcement Agency this afternoon. The leave of absence, which is for three months, comes as Collier is dealing with back problems and pain and is scheduled to soon undergo surgery. But Bentley’s decision also comes after news that Collier had failed to follow Bentley’s orders not to submit a sworn statement in a court filing in the on-going battle between state prosecutors and lawyers for indicted House Speaker Mike Hubbard.

Assistant Attorney General Matt Hart, who is leading the state’s prosecution of Hubbard on charges he used his office for financial gain, recently sought from Collier a sworn statement clearing him of allegations he may have shared secret grand jury information in the Hubbard case, according to sources familiar with the attempt.

http://www.al.com/news/index.ssf/2016/02/states_top_cop_placed_on_leave.html#incart_river_home

 

Guns in cars bill gets heated public hearing

 Sen. Gerald Allen, R-Tuscaloosa, the sponsor of a bill to allow loaded pistols in cars without a concealed carry permit, quickly set the tone of a public hearing on the legislation Wednesday. “If you are for this bill, you are for the Second Amendment,” Allen told the Senate Judiciary Committee. “If you are against it, you are for gun control.” That statement – and the subsequent booing by dozens of law enforcement members in attendance – set the contours of the debate over the senator’s bill: Whether it was a natural progression in gun rights, or a threat to public safety. Current law in Alabama allows drivers to carry pistols in cars if they are unloaded and out of arm’s reach. A concealed carry permit is needed to carry a loaded gun. Allen’s measure would do away with that restriction. Allen and other supporters of the legislation couched it in gun rights terms. Eddie Fulmer of BamaCarry Inc., a gun rights group told committee members that any one voting against the bill “can never say you stand for Second Amendment rights again.” Fulmer also accused law enforcement opposed to the measure of “standing against law abiding citizens given our rights by our creator and guaranteed by our Constitution.” Law enforcement officers who spoke against the legislation said it was a question of public safety. “The only thing we’re saying is ‘Who is that fellow behind the wheel?’” said Bobby Timmons, director of the Alabama Sheriffs Association. “Has he had a background check? What is a life worth?” Timmons also criticized Allen using the bill as a litmus test for gun rights. “When I walked in this building, my Second Amendment rights were taken away,” Timmons said. :I couldn’t bring my weapon in here.” Lee County Sheriff Jay Jones said existing permit laws led to the arrests of people who were planning home invasions or assaults.

Passing the law, Jones said, would mean “a reduction in the safety of citizens in Alabama, and for our peace officers and communities as well. Please don’t take this law off the books.” Demopolis Police Chief Tommie Reese, who told the committee a mentally ill person shot him from a car, said the sheriffs’ offices played a critical role in screening gun availability. “They’re able to check people out,” he said. “They’re able to turn down people who don’t necessarily need a gun. We’re not against the Second Amendment by any means. But not everybody needs a gun.” Allen submitted his bill in all three sessions of the Legislature in 2015. The Senate approved the legislation in the first special session last year. The House did not take it up. The Senate Judiciary Committee did not vote on the bill Wednesday.

 http://www.montgomeryadvertiser.com/story/news/politics/southunionstreet/2016/02/17/guns-cars-bill-gets-heated-public-hearing/80478478/

Law Enforcement Comes Out In Force to Oppose SB14

On Wednesday, February 18 hundreds of sheriff’s deputies and police officers from all over the state joined Alabama Governor Bentley (R) at the state capital to lay a wreath at the memorial for officers who have laid down their lives protecting and serving the people of Alabama. It was bad timing for permit-less carry in vehicles supporters because over a hundred of those officers stayed in Montgomery later that afternoon to support the Alabama Sheriff’s Association and Alabama Police Chiefs Association in their efforts to defeat Senate Bill 14 at a public hearing before the Alabama Senate Judiciary Committee. Law enforcement officers, including some Sheriffs and police chiefs filled the committee meeting room, an adjoining committee room, and overflowed out into the halls. SB 14 is sponsored by Alabama Senator Gerald Allen (R from Tuscaloosa). Sen. Allen told the committee that the Senate passed this same bill in the 2015 legislative session 24 to 4. The bill removes the requirement of a concealed carry permit to carry a loaded weapon in your vehicle and changes the law so that carrying handguns could not lead to a disturbing the peace charge. Sen. Allen said, “Alabama is the only state in the deep south where you have to have a concealed carry permit to keep a loaded firearm in your vehicle. If you are for this bill then you are for the second amendment. If you oppose this bill you are for gun control.” The Alabama Sheriff’s Association said that they are not opposed to the Second Amendment. They are for background checks in order to be able to carry weapons. This is the fourth time we have been here to oppose this. We appreciate you not giving it a favorable report. More:

http://www.alreporter.com/law-enforcement-comes-out-in-force-to-oppose-sb-14/

Company introduces dating site for Alabama sports fans

You’ve heard of Christian Mingle. Well, this is for those that practice that other religion called sports. On Wednesday, Sports Dating Inc. introduced an online dating site for Alabama sports fans called BAMAmeetup.com. According to the company, the site offers “profile creation, matching, and searching – along with messaging through an email network with the goal of helping Alabama sports fans find love with other Alabama sports fans.” According to Sports Dating Inc.’s founder, Shane Munson, his company released a similar dating site for Kentucky fans in July 2015, and it garnered a big response. “When looking at other fan bases to offer this service, Alabama has a great following and was an obvious choice,” Munson said. Munson added that the site won’t have millions of other users like eHarmony or Match.com, which are designed to reach a much broader base.

http://www.saturdaydownsouth.com/alabama-football/dating-site-for-alabama-sports-fans/

Brewbaker Sponsor’s Historic Innocence Commission

MONTGOMERY—State Sen. Dick Brewbaker (R-Montgomery) has introduced a bipartisan-sponsored bill that would create an Innocence Inquiry Commission. In 2002, North Carolina was the first state to establish an Innocence Commission to rehear cases where the accused and their advocates claim wrongful conviction.  “The reason I filed this bill is that Alabama is one of several states that have active death penalty statutes. Other states like North Carolina and Texas that have active death penalty statutes, have found it useful to establish these innocence commissions,” said Brewbaker. According to Brewbaker, the purpose of the Innocence Commission is to grant a defendant a new trial or receive outright exoneration, if there, “is physical evidence that can prove actual innocence, not just reasonable doubt, but actual innocence.” Brewbaker said the commission, “would add a lot of integrity to the death penalty process for Alabama.” And hopes lawmakers will see the wisdom in “following the lead of states like Texas and establish an innocence commission.” The North Carolina commission, “is charged with providing an independent and balanced truth-seeking forum for credible post-conviction claims of innocence in North Carolina.  The Commission is separate from the appeals process.  A person exonerated by the Commission process is declared innocent and cannot be retried for the same crime.” While Brewbaker says he is “absolutely for the death penalty …society has the obligation if it is going to impose such penalties to make sure, absolutely sure, that it is being imposed on people are in fact guilty.” He says, an innocence commission is a way to have cases reviewed, expediently, and at very low cost. This review needs to be handled in a “manner where you are not simply enriching a bunch of lawyers or stringing out the process for another four or five years.” Alabama’s Commission would operate within the Administrative Office of Courts and would consist of eight members. Members would include:

http://www.alreporter.com/brewbaker-sponsors-historic-innocence-commission/

Blogs/Opinions

 

Evangelical Christians should not vote for Donald Trump – Ed Rogers

Since the start of the 2016 campaign, I have said that I will tell readers when it is time to panic. Well, it’s time to panic. That chilling reality came to me once I realized Donald Trump won a plurality of evangelical voters, 27 percent, in the New Hampshire primary. And according to today’s Monmouth University poll, Trump is poised to win 33 percent of the evangelical vote in South Carolina on Saturday. How can that be? I wonder if this is the end of the evangelical movement within the Republican Party. Trump’s strength in South Carolina, of all places, is alarming. Many evangelical leaders, who can be so quick to point out the moral failings of others, are strangely silent concerning Trump’s shortcomings. How can they reconcile fidelity to their faith with a vote for Trump? How do they overlook Trump’s personal qualities and behavior? What about the morality of entrusting the presidency to someone with the temperament and questionable judgment we have all witnessed from Trump? I would like some answers. I find it hard to believe evangelicals are supporting Trump because of his policy positions, since he doesn’t have many. They can’t be supporting Trump because of his faith or godliness, and they certainly shouldn’t hide behind Trump’s goofy comments, such as how he “love[s] the Bible” or reads “Two Corinthians.” Come on. In The Post’s Chris Cillizza’s assessment of South Carolina Gov. Nikki Haley’s decision to endorse Sen. Marco Rubio (R-Fla.) today, he notes some remarkable data on her phenomenal popularity in the state. Cillizza cites a Winthrop University poll showing Haley “with an 81 percent approval rating among likely Republican primary voters.” How can Haley, who is poised, knowledgeable and graceful, have that kind of approval rating — likely anchored by evangelical voters — yet the voters in her state appear ready to hand a victory to the likes of Trump? I realize Trump is getting only a plurality among evangelicals, but there is no hiding the fact that his support appears to be growing. I can’t wrap my brain around how Haley and Trump can co-exist as leaders in the same party. So what is driving evangelical voters to Trump? His “evolution” on issues such as partial-birth abortion, his personal attacks on his fellow candidates and his lack of credible policies should be enough to make Republican primary voters — and especially evangelicals — pick another candidate. As a Southerner, it pains me to even ask if Trump is attractive to many evangelicals because of a so-called dog whistle. In Trump’s case, it’s more like a blaring dinner bell. If you feel like your problems are someone else’s fault, Trump is giving you a full buffet of those who might have cost you or held you back. I, along with others, thought Trump’s campaign would implode, but now that I see where he is with evangelical voters, I have my doubts about Trump’s implosion and about those evangelical voters as well.

https://www.washingtonpost.com/blogs/post-partisan/wp/2016/02/17/evangelical-christians-should-not-vote-for-donald-trump/

Josh Moon: Hubbard case brings more embarrassment to state

“When voters went to the polls in November and dramatically changed the make-up of the Alabama Legislature, they signaled a demand to change the way Montgomery does business and a desire to end the political scandals and embarrassing headlines that have plagued our state for the past several years.”

House Speaker Mike Hubbard, Opelika-Auburn News, Dec. 20, 2010

At the Lee County Courthouse on Tuesday, the hopes of 2010 voters died a little more. That is where the latest hearing in the ongoing prosecution of Mike Hubbard took place. The Speaker, once so proud of the new Republican control and the promises of ethics reform, now on trial facing 23 felony counts. Most of those counts stem from violations of laws Hubbard championed and then later complained about in private emails. It is safe to say that if there were actually voters out there dreaming of a more ethical, better operating state legislature when they went to the polls in 2010, they have certainly given up the dream by now. The years since the Alabama GOP “stormed the state house” have been plagued with pandering, worthless bills that mostly ensure you can marry your gun but not someone of the same sex. And the scandals have been uglier and far more embarrassing. In this case alone, in addition to Hubbard’s charges, another legislator has already pleaded guilty to ethics charges and another was able to beat charges in a high-profile case. And then there are the headlines. Hubbard has accused the sitting attorney general in the state, Luther Strange, of concocting the entire investigation simply to get a leg up in the 2018 race for the governor’s mansion – a race in which both men were expected to participate. The AG has denied that, of course. Since almost the day Hubbard was first charged, back in October of 1814 or thereabouts, his defense team – which is now minus its lead defense attorney after he quit for conflict issues – has alleged the AG’s office has misbehaved. The AG’s office has denied that, of course. Specifically, it has accused lead white-collar crimes prosecutor Matt Hart of spreading grand jury information around improperly, strong-arming people and generally acting like how prosecutors act when normal people are being prosecuted. All of this has been laid bare in mostly-public court documents, along with sappy emails in which Hubbard tells former Gov. Bob Riley how much he loves and respects him and the two discuss the hardships of trying to live on a measly $300,000 per year. In the midst of it all, two AG office staffers – an attorney and an investigator – have been forced out, accused of conspiring with Hubbard’s defense team. And the whole charade has been the political news equivalent of 200 clown cars crashing. Last week, it got worse. An affidavit filed by Baron Coleman, a Montgomery radio host and political consultant, alleges Hart possibly shared secret grand jury information with him. But Coleman’s co-host, Jack Campbell, in an affidavit filed on behalf of the state, said those claims weren’t true and that Coleman had personally told him that Hart hadn’t shared the info. In Coleman’s affidavit, specific instances were cited, some of which fell after the judge in the case (and really, bless his heart) issued a gag order. In answering those allegations, the state’s filing said the conversations were all part of an elaborate ruse designed to flush out a confidential information (Coleman) who had been turned by the other side. Seriously. I’m not making that up. In an actual court filing in this case, it says Hart’s conversations post-gag order were an effort to determine “if Coleman, as a confidential informant, had been compromised.” It’s like an episode of “The Americans,” only with a disappointing number of zero Keri Russells. There are also allegations in the affidavits that the State Bureau of Investigations was investigating Hart for misconduct, because why not? And there are rumors of more embarrassing news to come. All of it is simply additional evidence of just how disastrous GOP control in Alabama has been. The pandering bills, the austerity mindset that has stunted the state’s economic recovery and cut vital services, the refusal to expand Medicaid, the absurd attacks on public education, the refusal to address the state’s backwards tax code – all of it has been the opposite of changing things for the better. The 2010 election wasn’t a grand change for Alabama. It was the start of a long-running disaster.

http://www.montgomeryadvertiser.com/story/news/local/blogs/moonblog/2016/02/16/hubbard-case-brings-more-embarrassment-state/80415966/

 

Morning Money

TRUMP TRAILS CRUZ IN NEW POLL — Pretty big shocker in the latest NBC News/WSJ poll showing Ted Cruz narrowly leading Donald Trump nationally, 28 percent to 26 percent. The lead is within the poll’s margin of error. And it could be something of an outlier. But the really interesting stuff in the poll is below the top line. When combining first and second choices, Trump comes in third at 38 percent behind Cruz with 45 percent and Marco Rubio with 40 percent.

And both Cruz and Rubio crush Trump in head-to-head matchups. Cruz leads Trump 56 percent to 40 percent and Rubio leads Trump 57 percent to 41 percent. Trump also had a big drop among “traditional values” voters for whom abortion and gay marriage are top issues. Trump’s support among this group dropped to 20 percent from 31 percent. Cruz received support from 33 percent of traditional values voters who are critical in GOP primaries.

All of this suggests that if and when the field narrows down, Trump will have a very difficult time consolidating support and emerging as the eventual GOP nominee. In fact, if the race ends up coming down to Trump, Rubio and Cruz (which seems fairly likely given where all the polls are now), Trump could finish third behind the two sitting senators. Of course it’s just one poll and we have a long way to go, but for the Wall Street crowd terrified of Trump, the NBC/WSJ survey is a sliver of good news. Full results: http://bit.ly/1R8NrfQ

MEANWHILE IN SOUTH CAROLINA … Trump maintains a big lead according to the latest Bloomberg survey. Trump clocks in at 36 percent percent of likely voters, Cruz at 17 percent, Rubio at 15 percent and Jeb Bush at 13 percent. The numbers came before Rubio received the endorsement from SC Gov. Nikki Haley.” http://bloom.bg/219iv3x

TOWN HALL WRAP UP — Not a lot of huge headlines out of the GOP town halls last night. Donald Trump continues to have a hard time proving that he was strongly against the Iraq war before it began. He also defended his absurd lawsuit threat against Ted Cruz over a Cruz ad that uses footage of Donald Trump himself saying he was “strongly” pro-choice.

Rubio had a generally strong performance, particularly a detailed answer on race relations. But he stumbled when he asserted that the Fed does not have a “mandate” to stimulate the economy. Of course it does, in fact, have a dual mandate to both keep inflation in check and promote full employment. That answer probably won’t hurt him among Republicans but it’s disconcerting nonetheless.

THE BIG IDEA: SCALIA SHUTDOWN? — Guggenheim’s Chris Krueger: “The unexpected death of Justice Antonin Scalia over the weekend has completely altered the Washington agenda and could create a perfect storm around the only ‘must pass’ bill before the Congress this year: the October 1 stopgap spending measure to prevent a government shutdown.

“We file this in the low-probability/high-impact category for DC-created tail risk … September could present the Senate Democrats and White House with a dangerous piece of leverage versus Senate Republicans: we will vote against cloture on a CR (and trigger a shutdown) unless we get a vote on Obama’s SCOTUS nominee”

DEM ECONOMISTS RIP SANDERS — Via a letter from former CEA Chairs Alan Krueger, Austan Goolsbee, Christina Romer and Laura D’Andrea Tyson: “We are concerned to see the Sanders campaign citing extreme claims by Gerald Friedman about the effect of Senator Sanders’s economic plan — claims that cannot be supported by the economic evidence. …

“As much as we wish it were so, no credible economic research supports economic impacts of these magnitudes. Making such promises runs against our party’s best traditions of evidence-based policy making and undermines our reputation as the party of responsible arithmetic” http://bit.ly/1PRmZVx

KASICH HITS NYC — POLITICO’s Zachary Warmbrodt: “Ohio Gov. John Kasich [was in] New York [Wednesday] to raise money for his presidential campaign. Ohio Republican Sen. Rob Portman and former New Hampshire Sen. John Sununu [were] hosting the event with a number of Kasich’s private sector backers, Kasich steering committee co-chair Bob Rusbuldt said. “He had an event in Cleveland last night,” said Rusbuldt, president of the Independent Insurance Agents and Brokers of America. “We have a fundraiser coming up in Dallas as well.” http://politico.pro/1U8QY08

FED STAYS POSITIVE — Via PNC economists: “Central bank officials remained positive about the near-term outlook for the economy, despite the turmoil in financial markets, according to the minutes … Participants noted that GDP growth had slowed at the end of 2015, but also that the labor market continued to strengthen, which some viewed as a ‘more reliable early reading on the economy’s underlying strength.’

“Positives for growth included consumer spending and housing, and to a lesser extent business investment, while trade and inventories were drags. The general view was that falling energy prices were a positive for the U.S. economy.”

STILL SEES CAUSE FOR PAUSE — WSJ’s Jon Hilsenrath: “Federal Reserve officials appear increasingly reluctant to raise short-term interest rates at their March policy meeting, and possibly beyond, amid market turbulence, China’s dimmed outlook and indications that inflation could stay at low levels longer than expected. Officials struggled with uncertainty about these developments at their January policy meeting, according to minutes …

“Since the meeting, some officials have started speaking out about their desire to wait to raise interest rates again until they’re sure the U.S. economic outlook isn’t deteriorating and inflation isn’t stuck below their 2 percent target. At the January 26-27 gathering, officials ‘agreed that uncertainty had increased, and many saw these developments as increasing the downside risks to the outlook,’ said the minutes, which were released with their regular three-week lag.” http://on.wsj.com/1TnXijQ

ASIA UP AGAIN – Reuters: “Asian stocks rose across the board on Thursday as crude oil extended gains on hopes that big producers will cap production, improving investor sentiment for riskier assets. Crude oil remained the main market driver. U.S. crude was up 1.7 percent at $31.19 a barrel following a 7 percent jump on Wednesday after Iran voiced support for a Russia-Saudi-led move to freeze production to deal with the market glut that had pushed prices to 12-year lows.” http://reut.rs/1WsTSM0

SHOULD APPLE CRACK iPHONE FOR THE FBI? — NYT’s Matt Apuzzo: “As a legal matter, the showdown between the Obama administration and Apple … turns on an 18th century law. More practically, though, it boils down to this question: Should you be able to lock your phone so securely that even the F.B.I. cannot open it? The Obama administration and police officers around the country say no, and their precedent is the past. Homes and cars do not have unbreakable locks. You cannot buy an uncrackable safe. And terrorists and child molesters should not be able to buy a hand-held computer that keeps its secrets forever.

“Apple, backed by technologists and civil libertarians, says yes. People live their lives electronically; their phones are a record of loves and fantasies, illnesses and losses. Apple built its recent iPhones to keep that data private and says nothing less than the future of privacy is at stake in this fight. … Syed Rizwan Farook, one of the two people suspected of killing 14 people, left behind an iPhone 5c — a locked one. The F.B.I. has not been able to get access to any data on it. For the administration, it was perhaps the perfect test case, one that put Apple on the side of keeping secrets for a terrorist”
http://nyti.ms/1ROGX7S

CHINA DEALS NIXED — FT’s Don Weinland, Arash Massoudi and James Fontanella-Khan: “China’s flourishing appetite for acquiring overseas companies has been dealt a sharp setback as regulatory fears hindered two potential takeovers and highlighted the obstacles to striking deals with Chinese companies. In the space of a day, two separate takeovers involving Fosun International, one of China’s most acquisitive private conglomerates, and state-backed China Resources have collapsed — with the latter being spurned despite it offering a higher bid for its US target. …

“These challenges undermine what is expected to be a driving force in dealmaking in 2016, with Chinese companies already on course to shatter a record for outbound mergers and acquisitions. So far this year, the value of Chinese M&A overseas has topped $75bn, more than any other year on record except for 2015, when a total of $112bn in deals were attempted, according to Dealogic. On Wednesday, the rush to acquire overseas assets continued as Zoomlion pushed ahead with its $3.3bn takeover bid for US crane maker Terex.” http://on.ft.com/1TnXzDi

MORE KASHKARI REACT — Via Public Citizen: “Public Citizen welcomes the candid assessment from one of the chief architects of the 2008 Wall Street bailout that too-big-to-fail banks persist. Public Citizen also applauds his call for solutions that include breaking up the largest banks. … It is especially revealing that a Republican Federal Reserve bank president has acknowledged the continued threat of bank failures. When more conservatives say we’re still vulnerable to bank failures, perhaps more members of Congress will recognize that we do, indeed, have a problem, Houston.”

Narayana Kocherlakota: “My successor as Minneapolis Fed President, Neel Kashkari, gave his first speech in his new role today. … He argued passionately in favor of imposing much tighter restrictions on the nation’s largest financial institutions, including possibly requiring them to hold a lot more capital or breaking them up. … My first comment is that adopting President Kashkari’s proposals when interest rates remain near their lower bound would have adverse macroeconomic consequences.

“Almost by design, higher capital standards mean that banks face higher financing costs … At least some of those higher financing costs would be passed along in the form of lower rates of return to savers and higher interest rates to borrowers. … I do think that policymakers have become considerably better at responding to financial crises. Thus, the Federal Reserve’s response to the 2007-09 crisis was, in my estimation, a big improvement on its response to the events of 1929-33” http://bit.ly/1Qn84l1

MAYBE NOT SUCH A BIG WIN FOR THE LEFT? — Sam Bell emails: Trading a strong monetary dove (Kocherlakota) for a strong bank regulator (Kashkari) is a bad deal for progressives at this moment in time. Above all else, we need a Federal Reserve leaning into its full employment mandate. I fear Kashkari will be a disaster in this area: http://bloom.bg/1VpgBZ8.

POTUS Events

10:00 am Receives the Presidential Daily Briefing
11:15 am Honors the 2015 NHL Champion Chicago Blackhawks; East Room
2:05 pm Meets with African American faith and civil rights leaders; The Roosevelt Room
4:40 pm Hosts a reception in recognition of African American History Month; East Room

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

Floor Action

The House will return on February 23rd. The Senate will return February 22nd.

Announcements

Deciding Whether to Itemize or Use the Standard Deduction

Most people claim the standard deduction when they file their federal tax return, but you may be able to lower your tax bill if you itemize. You can find out which way saves you the most by figuring your taxes both ways. The IRS offers these six tips to help you choose:

  1. Use IRS Free File. Most people qualify to use free, brand-name software to prepare and e-file their federal tax returns. IRS Free File is the easiest way to file. Free File software will help you determine if you should itemize and will file the right tax forms based on your answers. It will do the math and e-file your return – all for free.

Check your other e-file options if you can’t use Free File.

  1. Figure Your Itemized Deductions. Add up deductible expenses you paid during the year. These may include expenses such as:
  • Home mortgage interest
  • State and local income taxes or sales taxes (but not both)
  • Real estate and personal property taxes
  • Gifts to charities
  • Casualty or theft losses
  • Unreimbursed medical expenses
  • Unreimbursed employee business expenses

Special rules and limits apply. Visit IRS.gov and refer to Publication 17, Your Federal Income Tax, for more details.

  1. Know Your Standard Deduction. If you don’t itemize, your basic standard deduction for 2015 depends on your filing status:
  • Single $6,300
  • Married Filing Jointly $12,600
  • Head of Household $9,250
  • Married Filing Separately $6,300
  • Qualifying Widow(er) $12,600

If you’re 65 or older or blind, your standard deduction is higher than these amounts. If someone can claim you as a dependent, your deduction may be limited.

  1. Check the Exceptions. There are some situations where the law does not allow a person to claim the standard deduction. This rule applies if you are married filing a separate return and your spouse itemizes. In this case, you can’t claim a standard deduction. You usually will pay less tax if you itemize. See Publication 17 for more on these rules.
  2. Use the IRS ITA Tool. Visit IRS.gov and use the Interactive Tax Assistant tool. It can help determine your standard deduction. It can also help you figure your itemized deductions.
  3. File the Right Forms. To itemize your deductions, use Form 1040 and Schedule A, Itemized Deductions. You can take the standard deduction on Forms 1040, 1040A or 1040EZ.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.