Krebs Daily Briefing 19 Feburary 2016

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

International

Pope Francis joins a chorus of world leaders in condemning Donald Trump

KIAWAH ISLAND, S.C. — First was the British prime minister, who called Donald Trump “divisive, stupid and wrong.” Then came Britain’s Parliament, which denounced him with colorful language. The French prime minister, the Turkish president and a Saudi prince also weighed in: The Republican presidential front-runner, they agreed, was a demagogue disgracing the United States. On Thursday, Pope Francis added the strongest voice yet to a growing chorus of world leaders taking a stand against the celebrity candidate — condemning Trump’s hard-line immigration agenda and suggesting he was not a Christian because of it. In taking the rare step of injecting his views into the U.S. campaign, the pontiff’s remarks underscored the anxiety coursing through world capitals about a possible Trump presidency. Francis noted Trump’s promise to deport an estimated 11 million undocumented immigrants living in the United States illegally and make Mexico pay for a wall along the border to keep them out. “A person who thinks only about building walls — wherever they may be — and not building bridges, is not Christian,” Francis told reporters Thursday aboard the papal plane as he returned to Rome from a visit to Mexico, according to a translation from the Associated Press. “This is not in the Gospel,” he added.

https://www.washingtonpost.com/politics/pope-francis-joins-a-chorus-of-world-leaders-in-condemning-donald-trump/2016/02/18/560063b4-d665-11e5-9823-02b905009f99_story.html

U.S. Strikes ISIS Camp in Libya, Killing More Than 30

WASHINGTON — American warplanes struck an Islamic State camp inLibya early Friday, targeting a senior Tunisian operative linked to two major terrorist attacks in Tunisia last year. The operative, Noureddine Chouchane, was most likely killed in the strike, according to the Pentagon. The airstrikes, on a camp outside Sabratha, about 50 miles west of Tripoli, killed at least 30 Islamic State recruits at the site, many of whom were believed to be from Tunisia, according to a Western official, who spoke on the condition of anonymity to discuss military operations. The mayor of Sabratha, Hussain al-Dawadi, put the death toll at 41, and he said that six others had been wounded. He said the airstrikes occurred around 3:30 a.m. The airstrikes come as the Obama administration and its allies areconsidering increased military action against a growing threat in Libya by the Islamic State, also known as ISIS or ISIL. In November, the Americans killed Abu Nabil, also known as Wissam Najm Abd Zayd al Zubaydi, an Iraqi who led the Islamic State’s arm in Libya, in an airstrike on the town of Darnah, in eastern Libya. Mr. Chouchane was suspected of being a major Islamic State operative who helped organize an attack on the National Bardo Museum in Tunis that killed 22 people in March and another in June that killed 38 people at a beach in the coastal resort in Sousse. Mr. Chouchane was one of five fugitives for whom the Tunisian Interior Ministry issued arrest warrants after the museum attack. The Western official said that the airstrikes on Friday morning were focused on Mr. Chouchane and did not represent the start of major new American war in a Muslim country. They were carried out by Air Force F-15E jets that took off from a base in Lakenheath, England.

http://www.nytimes.com/2016/02/20/world/middleeast/us-airstrike-isis-libya.html?emc=edit_na_20160219&nlid=53476364&ref=cta&_r=0

White House sees Cuba visit as chance to consolidate gains. Critics see caving.

In the months since President Obama announced his historic deal to normalize relations with Cuba, the communist government of Raúl Castro has taken only the most modest steps toward less authoritarian rule. Nonetheless, the White House announced Thursday that the president will visit Cuba in March in an attempt to bolster the controversial diplomatic deal — and to spur the sort of political change that the Cuban government has not yet embraced. Speaking to reporters Thursday, White House deputy national security adviser Ben Rhodes said the administration’s “objective here is to do as much as we can with the time we have remaining to make this an irreversible policy.” Obama has made clear that his outreach is focused more on the Cuban people and less on the government. Cuban officials, while eager for American investment, are hoping to reap the economic benefits of a normalization policy while giving up as little political control as possible. The Cuban government continues to crack down on political dissent, and administration officials acknowledge that Havana has not done enough to allow for freedom of expression. Rhodes said Thursday that the president would meet with dissidents during next month’s visit. More:

https://www.washingtonpost.com/politics/white-house-sees-cuba-visit-as-chance-to-consolidate-gains-critics-see-caving/2016/02/18/a544e12e-d666-11e5-b195-2e29a4e13425_story.html

National

CFTC’s Division of Market Oversight Provides Time-Limited No-Action Relief for End Users from the Form TO Filing Requirement

Washington, DC — The U.S. Commodity Futures Trading Commission’s (CFTC) Division of Market Oversight (DMO) today issued a no-action letter providing time-limited relief for end users from the Form TO filing requirement under CFTC regulations. Under CFTC Regulation 32.3(b)(2), counterparties to trade options that are not required to be reported to a swap data repository (SDR) must submit a Form TO filing by March 1 following the end of any calendar year during which they entered into one or more unreported trade options. While the CFTC is considering the finalization of the proposed Trade Options Rule, DMO will not recommend that the CFTC take enforcement action against a market participant that is neither a swap dealer nor a major swap participant (a Non-SD/MSP) for failing to report its otherwise unreported trade options entered into during 2015 on Form TO by April 1, 2016.

http://www.cftc.gov/PressRoom/PressReleases/pr7328-16

 

Apple, The FBI And iPhone Encryption: A Look At What’s At Stake

Remember the cryptex, the little handheld safe from The Da Vinci Code where entering the correct combination will reveal the secret message and entering the wrong one will destroy it? Now replace the little safe with an iPhone, and instead of a secret message, it’s holding evidence in a terrorism case. The critical combination? It’s a passcode — one the FBI doesn’t know, and one that Apple is reluctant to help the agency figure out. Of course, it’s more complicated than that. Here are a few key questions and answers about the dispute between the tech giant and federal investigators:

 

http://www.npr.org/sections/thetwo-way/2016/02/17/467096705/apple-the-fbi-and-iphone-encryption-a-look-at-whats-at-stake?sc=tw

 

Big banks see the need to shrink – but face a path full of obstacles

When the U.S. Federal Reserve’s newest policymaker Neel Kashkari dropped a bombshell with a call to break up big banks on Tuesday, it was met with a predictably indignant response from their lobbyists. One described his comments as “blind.” But while no one in the executive suites of major global banks would want authorities to force them to split up or downsize, many top bankers acknowledge that their institutions might be better off smaller and simpler. They just worry that any major restructuring could go all wrong because of the way post-financial crisis regulations are applied. In interviews with Reuters, six senior bankers said they are struggling with the costs and restrictions they face as a result of new regulations, as well as a weak global economy and troubled financial markets. The bankers, who are or recently were in positions ranging from business division head to CEO, spoke on the condition of anonymity so they could be candid without upsetting regulators or investors. Fundamentally, the business has to change,” said one veteran banker who was on the executive committee of a major European bank until recently. Big banks’ shareholder returns have sunk “too low,” he said. These problems are not new, but they have fresh relevance as Deutsche Bank AG (DBKGn.DE) confronts questions about its capital adequacy, Barclays PLC (BARC.L) faces pressure to break up and CEOs of big U.S. banks struggle with a loss of investor confidence in their stocks. (For a graphic of U.S. banks’ price-to-book ratios, see reut.rs/1SG0NDL) Management teams in the U.S. and Europe are now taking a hard look at dramatic business model changes, but none of the options are particularly attractive, the bankers said. Merging to cut costs and improve margins is out of the question, given the hurdles banks would likely face from regulators who do not want “too-big-to-fail” institutions getting any bigger. Splitting apart is complicated by capital requirements that would make standalone trading businesses economically unfeasible — and by the fact that there are few, if any, buyers for the assets banks want least. Some top bankers say they are left with little choice but to muddle through what they fear will be a long, dark period of weak earnings, angry shareholders and gradual shrinkage. The problem has gotten so bad that Deutsche Bank CEO John Cryan recently said on a public conference call that he’d much rather be CEO of a simpler, retail-focused bank like Wells Fargo & Co (WFC.N), which has only a modest investment banking operation.

“Unfortunately,” he said, “there are lots of things I wish for that are not going to come true.”

http://www.reuters.com/article/us-banks-soulsearching-insight-idUSKCN0VS0FE?feedType=nl&feedName=businessNews

What Makes Nevada’s Caucuses Distinctive?

Iowa has cornfields and must-get evangelicals. New Hampshire has erratic independents and teeny towns casting midnight ballots. South Carolina has infamously down-in-the-dirt politicking. Nevada has … Vegas? The reputations of some early primary states are firmly established. But Nevada, whose Democratic caucuses will be held on Saturday, hasn’t yet developed a full identity. Nevada isn’t a make-or-break contest for Bernie Sanders or Hillary Clinton, but the state’s distinctive composition could provide clues as to how other states’ voters will lean. Nevada became an early voting state when both Democrats and Republicans decided to bump up their contests ahead of the 2008 election. This year, the caucuses in Nevada are the third contest for the Democrats and the fourth for Republicans, who are competing in South Carolina on Saturday. Proponents of the schedule shift argued that Nevada is more representative of the country than Iowa and New Hampshire, the states that always vote first. Jon Ralston, a veteran Nevada journalist and political observer, told PBS NewsHour’s Judy Woodruff in 2007 that the state’s voters aren’t as used to politics as those in Iowa and New Hampshire, and candidates can’t use identical approaches. “Las Vegas is not like Concord or Des Moines. It’s a very diverse, different urban environment,” he said. “You can’t go and have a cup of coffee with people here at the little coffee shop. You have to do it in a much different way.” More:

http://www.theatlantic.com/politics/archive/2016/02/nevada-caucus-clinton-sanders/468654/

 

Everything you need to know about who pays when Supreme Court justices travel

When Supreme Court Justice Antonin Scalia died at a Texas resort last weekend, he was staying in a 1,100-square-foot, $700-a-night room overlooking a lake. He wasn’t paying, though. And while Scalia is subject to the same financial disclosure laws that govern scores of federal employees, it is unclear if he would have needed to disclose the trip due to a loophole in what all such employees must report. This trip was one of hundreds taken by the Supreme Court justices in recent years, but its exclusive and private nature — with Scalia and three dozen other unidentified people gathered at a remote resort — has drawn new attention to how much is known about the high court and how its members travel. When justices do venture outside of Washington, the tabs are frequently picked up by outside organizations. A review of annual financial disclosure forms filled out by the justices show that in recent years, Scalia and the eight current justices took at least 365 trips where an outside group picked up some or all of the tab. “We live in a world now where all the Supreme Court justices are rock stars,” said Ronald D. Rotunda, a law professor at Chapman University. “They’re invited all over the place. They publish their books, they go on book tours…People just like to have them around.” Scalia was the group’s most prolific traveler since the first full year during which he and the eight sitting justices served together. He was reimbursed for travel-related expenses by outside groups 23 times in 2014, the last year for which data is available, and nearly 100 times since 2011. At the other end of the spectrum was Chief Justice John G. Roberts Jr., who reported five such reimbursements since 2011. The other seven justices fell somewhere in between. However, these disclosure forms provide scant details about the activities of the country’s Supreme Court justices, men and women who have lifetime appointments to the court. More:

https://www.washingtonpost.com/news/post-nation/wp/2016/02/19/what-supreme-court-justices-do-and-dont-disclose/?hpid=hp_hp-more-top-stories_wonkblog-free-9am%3Ahomepage%2Fstory

 

Yahoo Takes a Step Toward a Possible Sale

Yahoo wants to show investors that it is serious about fielding takeover offers. The Internet company said on Friday that its board had formed a strategic-review committee of independent directors to consider the best path for its core business, according to a statement. The committee, along with its advisers, is creating a protocol for communicating with other parties that may be interested in a transaction with Yahoo. Yahoo has tapped financial advisers, including Goldman Sachs, JPMorgan and Paul J. Taubman’s firm, PJT Partners, as well as the law firm Cravath, Swaine & Moore, to help with the process. The committee would then be responsible for recommending what it determines to be the best transaction to the board — if one exists. Yahoo’s shares gained in early-market trading on the news that the company was organizing itself to potentially get sold. Yahoo first acknowledged that it was exploring “strategic alternatives” in early February, as activist investors like Starboard Value pushed for a sale of the core business, which includes search, mail, sports and finance. Marissa Mayer, Yahoo’s chief executive, had been focused instead on a reverse spinoff, in which Yahoo’s core and its Japanese affiliate would be separated from the company’s huge stake in the Chinese e-commerce giant Alibaba Group into its own publicly traded company. “Separating our Alibaba stake from Yahoo’s operating business is essential to maximizing value for our shareholders,” Ms. Mayer said in Friday’s statement. “In addition to the reverse spin, there are strategic alternatives that could help us achieve the separation, while strengthening our business.” The company declined to make any other additional disclosures about the sales process.

http://www.nytimes.com/2016/02/20/business/dealbook/yahoo-takes-a-step-toward-a-possible-sale.html?ref=dealbook&_r=0

 

State/Local

The Mike Hubbard prosecution controversy, explained

Almost from day one, Alabama House Speaker Mike Hubbard and his rotating cast of defense lawyers have claimed that the felony ethics charges against him were politically motivated. Rather than refuting the charges themselves, the defense has impugned the motives of the prosecution. Even though Alabama Attorney General Luther Strange removed himself from the case early on, Hubbard’s team has insinuated that Strange wants to politically cripple the Alabama House Speaker who might later be a rival for a higher office such as governor or the United States Senate. Most defense claims of prosecutorial misconduct have centered around one prosecutor. Although the defense’s political conspiracy theory puts Strange at the top of its pyramid, in court filings and evidentiary hearings, the defense team has directed most of its attack at Deputy Attorney General Matt Hart. Hart is a former assistant United States Attorney who has directed grand jury investigations in numerous public corruption cases. Hart has been a contentious figure within the AG’s office, but he’s not the only one.  Last October, former Deputy Attorney General Sonny Reagan testified that Hart frequently made inflammatory statements about Hubbard and that he thought Hart was out to get the Alabama House speaker. Gene Sisson, an investigator with the AG’s office, also filed a complaint with the Alabama Ethics Commission accusing Hart of unprofessional conduct. Prosecutors in the Hubbard case argued in court that Reagan and Sisson had been exposed helping the Hubbard defense and undermining the Lee County grand jury. Strange fired Sisson for helping Reagan surreptitiously record Acting Attorney General Van Davis, and Reagan resigned before he could be fired. Until two weeks ago, it seemed that the defense team’s strategy to derail the prosecution had run its course and the case could soon go to trial. An affidavit from an enigmatic political operative breathed new life into the defense’s strategy. Baron Coleman, a political consultant, lawyer and radio talk show host, gave the Hubbard defense an affidavit saying that he had between 50 and 100 conversations with Hart over the last several years and that Hart had given him information that might have come from the grand jury. As a campaign consultant for Hubbard’s 2014 opponent, Coleman said he used that information for a “whisper campaign” against Hubbard. Coleman did not explicitly accuse Hart of violating the grand jury secrecy law — a felony in Alabama — however he did record at least some conversations with Hart, portions of which he has played for defense lawyers. The defense says the portions they heard were damning, and in court this week, they accused Hart of breaking the grand jury secrecy law. Prosecutors say Coleman was a confidential informant. For at least three years, Coleman was providing the state with information, prosecutors said, and they have submitted some of that information underseal to the court as proof. The prosecution has also given the court multiple affidavits from law enforcement and associates of Coleman. Those affidavits seem to support the prosecution’s argument that Coleman was acting as a confidential informant and that no law was broken. Last year the Hubbard defense team subpoenaed Coleman to testify about apparent grand jury leaks, but Coleman fought successfully to quash the subpoena. In court, Coleman said then that he knew nothing about the grand jury’s work and that he didn’t know what, if anything, he knew that could help the defense. Those statements seem to directly contradict the affidavit he later gave to the defense. Lee County Circuit Judge Jacob Walker has scheduled a hearing on March 3 in which Coleman is expected to testify under oath. Even if Coleman is telling the truth this time, it might not matter for Hubbard. A 1988 case, the Bank of Nova Scotia vs. the United States, set the legal standard for dismissing charges over prosecutorial misconduct. To have the charges dismissed, the defense would have to prove that any misconduct unduly influence the grand jury to indict Hubbard. Nothing the defense has argued so far closes that loop. At best for Hubbard, if Coleman proves to be telling the truth this time, then Hart might be forced from the case and could face charges himself or violating grand jury secrecy. Even then, though, the case Hart helped build could continue. A squabble between Gov. Robert Bentley and Alabama’s top cop has added a new dimension of controversy.  Just when it seemed this story couldn’t get any crazier or more complicated, Gov. Robert Bentley put the state’s top law enforcement officer, Spencer Collier, on leave after Collier signed an affidavit for Hart. That affidavit said that Coleman had approached law enforcement about his allegations of misconduct, not the other way around, as Coleman claimed in the affidavit he gave the defense. According to the governor, he instructed Collier not to sign an affidavit for Hart but Collier signed it anyway, and the governor told AL.com’s Chuck Dean that there would be repercussions for Collier. Later that day, Bentley put Collier on leave, ostensibly for medical reasons.

http://www.al.com/opinion/index.ssf/2016/02/the_mike_hubbard_prosecution_c.html

 

Ford Says that Bentley May Have Obstructed Justice

“In the Criminal Justice System the people are represented by two separate, yet equally important groups. The police who investigate crime and the District Attorneys who prosecute the offenders.” Anyone who has watched the long running crime drama, “Law and Order,” understands how this works. Police respond to and investigate crimes and the prosecutors work with them to build and prove those cases in the court of law. The two separate but equally important groups of professionals work together in service to the people they protect. In the state of Alabama our police are the Alabama Law Enforcement Agency (ALEA) and our prosecutors are the Alabama Attorney General’s Office. Anyone familiar with the TV show (or the real life operations of the American justice system) knows that if a prosecutor asks a law enforcement officer for a sworn affidavit about something in a criminal case the state is working on the officer complies with that request routinely. When the state’s top cop, ALEA Director Spencer Collier, was asked to provide a sworn affidavit by the Chief of the Alabama Attorney General’s Office’s Special Prosecutions Division Matt Hart, he like any other sworn officer of the law would likely have done, did as requested and provided the requested information. According to original reporting by the Alabama Media Group’s Chuck Dean this blind pursuit of justice so angered Alabama Governor Robert Bentley (R) that Bentley has placed Secretary of Law Enforcement Spencer Collier on a medical leave of absence from his job for the next three months. Bentley has appointed Stan Stabler as acting secretary of law enforcement. Stabler is a body guard, currently the chief of the Dignitary Protection Unit at ALEA and formerly the head of Bentley’s protection detail. The Governor’s actions in interfering with a criminal investigation are…unusual. The Governor is already a witness in the case against the sitting Speaker of the House, Mike Hubbard (R from Auburn) and likely to be called to testify if and when the case is ever brought to trial.

http://www.alreporter.com/ford-says-that-bentley-may-have-obstructed-justice/

 

Rainy Day Patriots Kicked Out of Hoover Tactical Over Negative Comments about Shelby

Thursday, February 18 the Rainy Day Patriots met for a U.S. Senate candidate’s forum at Hoover Tactical Firearms when they were told by Hoover Tactical Firearms owner Gene Smith that this meeting was outside of the bounds of their agreement and could not be held. The Senate debate had to be cancelled. Present at the event were Jonathan McConnell, former State Senator Shadrack McGill, Marcus Bowman, and John Martin. The incumbent, U.S. Senator Richard Shelby (R) was not there, neither were the two Democrats; Ron Crumpton and Charles Nana. Jonathan McConnell said in a statement, “You’ll never believe what just happened. Just as we were ready to start tonight’s debate, Richard Shelby sent in one of his cronies to shut it down. It’s bad enough that he didn’t have the courage to face me in the first place, but it’s an insult to democracy that he and his cronies decided to suppress free speech that I, and many others, fought to defend as a Marine. Every Alabamian should be as furious as I am that Senator Shelby believes this election can be stolen and he will continue to get rich off of the taxpayers’ dime. He exemplifies everything that is wrong with politicians — we must put an end to it.” The ‘Alabama Political Reporter’ talked with Senator Shelby’s spokesperson Katy Britt. Mrs. Britt said that the Shelby campaign was not involved in shutting down the event and did not put pressure on or ask Hoover Tactical Firearms to do anything. Mrs. Britt said that they received no invitation to any debate by the Rainy Day Patriots and only found out about the event days earlier incidentally online. Senator Shelby she said was already scheduled for another event in a different region of the state so could not have attended. The ‘Alabama Political Reporter’ talked with Marcus Bowman on Thursday night. He said that the debate was, “My idea from the get go.” He said that he emailed all of the campaigns on Friday, February 5. Martin, McConnell, and McGill all agreed to hold it on Monday, February 15. They had no venue, no moderator, and no rules. Bowman said that he then met Ann Eubank who is co-director of the Rainy Day Patriots. Eubank said that the Rainy Day Patriots could host the event at their already scheduled Thursday, February 18th meeting. She would find a moderator and the other details. Former talk radio host Lee Davis was named the moderator; but Bowman said that he had no rules and no format when he arrived at Hoover Tactical on Thursday. In the parking lot he met McConnell spokeswoman Elizabeth “Liz” BeShears. Mrs. BeShears said that they wouldn’t be able to hold the event after all because of objections from Mr. Gene Smith who supports Senator Shelby’s re-election. Bowman said that he, Eubank, Smith, and the other candidates including McConnell then held an impromptu conference and Smith agreed to allow the forum to proceed if nothing negative was said about Senator Shelby. “We all agreed under those rules.” The candidates would just discuss the issues. Bowman said that once the forum began though, McConnell stood up and interjected ‘what about his negative ads against me.’ Smith threatened to call the police. More:

http://www.alreporter.com/rainy-day-patriots-kicked-out-of-hoover-tactical-over-negative-comments-about-shelby/

 

House members request federal probe into Mike Hubbard ethics trial

 More than 35 Alabama legislators, both Republican and Democrat, have signed on to a letter urging U.S. Attorney General Loretta Lynch and U.S. Attorney for the Middle District of Alabama George Beck to open a U.S. Department of Justice investigation into aspects of House Speaker Mike Hubbard‘s ethics trial. According to the letter, Miles M. “Matt” Hart, an attorney in the office of Alabama Attorney General Luther Strange, has been allowed to “improperly use a grand jury” in efforts against Hubbard. Further, the letter claims that Hart has provided “selective information” commandeered through the grand jury to a political opponent of Hubbard. The letter lays out a twisted tale of corruption based on testimony from attorney Baron Coleman. Coleman was an organizer and consultant with the campaign of Sandy Toomer, who ran against Hubbard in 2014. According to Coleman, Hart provided him with “confidential grand jury information” to be used against Hubbard during that campaign. Coleman claims that he had between 50 and 100 conversations with Hart and used the information discussed therein to create a “whisper campaign” in Hubbard’s home district, Lee County. Coleman specifies that he was provided with the identities of persons appearing before the grand jury, assurances that the jury would indict Hubbard and that the Attorney General’s office had sufficient information to “counter any perceived prejudice or trouble inside the office.” The “assurances” occurred before the grand jury finished hearing testimony and Coleman claims that “each piece of information came from Matt Hart and was provided to the citizens of Lee County” by Coleman and others who believed the information to be factual. The letter goes on to say that Hart threatened to bring Coleman before a grand jury if he ever revealed that he had “a pipeline of information out of the Attorney General’s office.” Further, Coleman claims that when he was subpoenaed by Hubbard’s defense team Hart offered to work with him on answers to “potential questions regarding Speaker Hubbard, the grand jury proceedings” and more. The letter goes on to call into question the timing of Hubbard’s indictments, which occurred only two weeks before his re-election. “The timing of the indictments, coupled with Mr. Coleman’s sworn testimony and the statements if others … gives our members grave concerns that the Alabama Attorney General’s Office has used the power of its office in a coordinated effort to defeat Speaker Hubbard in his election,” the letter says. Though Strange has officially recused himself from “the matter regarding Speaker Hubbard,” and may not believe he has the power to “overrule, discipline, or investigate” Hart, the letter calls for an “unbiased investigation” to be made into the statements made by Coleman. “For the sake of all involved – including Speaker Hubbard, Mr. Hart, General Strange, and the citizens of Alabama – this matter and these claims should be thoroughly investigated by an unbiased body with the resources and experience to do so,” the letter states. More:

 

http://altoday.com/archives/8754-alabama-house-members-request-doj-investigation-into-mike-hubbard-ethics-trial

 

Judge will not block Alabama voter ID law

 A federal judge Wednesday deciding against effectively suspending Alabama’s law requiring voters to show photo identification at the polls. U.S. District Judge L. Scott Coogler refused a preliminary injunction request to allow alternate means of identification for voters in the upcoming 2016 elections Currently, a person without photo identification can vote if two poll workers sign affidavits saying they recognize and “positively identify” the voter. Greater Birmingham Ministries and the NAACP asked Coogler to expand that provision so people can vote if they provide certain identification documents without photos or information to identify themselves to poll workers. Coogler criticized the request as a backdoor method to do away with the photo identification requirement that took effect in 2014. “They are asking the court to rewrite the positively identify provision in a way that circumvents the photo identification requirement altogether — without actually providing proof that the photo ID requirement is unduly burdensome on Alabama voters,” Coogler wrote. The groups argued that it was potentially discriminatory to give local election officials, “unfettered discretion to determine whether or not to vouch for a registered voter’s identity.” “This is precisely the type of device that Alabama and other states used for decades to discriminate against voters of color by subjecting their right to vote to the passing whim or impulse of individual election officials,” lawyers for the plaintiffs wrote in the injunction request. Alabama in 2014 began requiring voters, with few exceptions, to show government-issued photo identification at the polls.

Greater Birmingham Ministries and the NAACP filed the lawsuit in December challenging the law as an infringement on voting rights. The lawsuit contends Alabama politicians knew that black and Latino voters “disproportionately lack the required photo ID.” The judge did not rule on the merits of the overall lawsuit but hinted that it might not prevail. Coogler wrote that courts, “already answered the question as to whether photo ID laws like Alabama’s violate the U.S. Constitution and/or the Voting Rights Act.”

 http://www.al.com/news/index.ssf/2016/02/judge_will_not_block_alabama_v.html#incart_river_index

 

Morning Money

BUSH DONORS EYE THE END — Jeb Bush donors on Thursday pushed back on rumors that the former Florida governor would drop out if he finishes out of the top three in South Carolina. But they didn’t push back all that hard. One donor told M.M. that if Bush does finish out of the top three there would be a series of “come to Jesus” meetings about the prospects for continuing on to Nevada and Super Tuesday. This donor also said if Bush fades to fifth or sixth in South Carolina it could be the end of the campaign. The donor added that Bush losing the endorsement of South Carolina Governor Nikki Haley was a “crushing blow to the solar plexus” that was “devastating” to Bush.

This donor said it would be strange for Bush to get out if there are multiple candidates finishing close to third in South Carolina. “He’s been aggressive in Nevada and this is such a crazy year who knows what could happen, it could go all the way to the convention,” the donor said. But a second donor close to Bush said there would be “tremendous pressure” on Bush to leave the race if he does poorly in South Carolina. “Everybody is now very concerned about Trump and Cruz,” the donor said, adding that if Bush does badly in South Carolina donors will want to coalesce around Rubio as quickly as possible. “I was disappointed by Marco’s flub in New Hampshire because frankly this shake out should have happened sooner.”

SANDERS CUTS INTO HRC LEAD — NBC’s Mark Murray: “Bernie Sanders has cut Hillary Clinton’s national polling lead in half after the results of the first two Democratic nominating contests … Still, Clinton holds a double-digit advantage over Sanders, with the next race taking place in Nevada on Saturday …

Fifty-three percent of Democratic primary voters say they back the former secretary of state, while 42 percent of them support the Vermont senator. But Clinton’s 11-point lead over Sanders is down from her 25-point edge a month ago — before Sanders’ blowout victory in New Hampshire and narrow loss in Iowa” http://nbcnews.to/1PUzrUc

SANDERS ACTUALLY LEADS in the latest Fox News poll: http://fxn.ws/1SVv3L5

CLINTON: STILL NOT RELEASING TRANSCRIPTS — POLITICO’s Eliza Collins: “Hillary Clinton will release transcripts to her paid speeches — just as long as everyone else does too. ‘I am happy to release anything I have when everybody else does the same,’ Clinton said during Thursday’s Democratic town hall in Nevada, before adding that all other candidates had made paid speeches — including her Democratic rival, Vermont Sen. Bernie Sanders. According to The New York Times, Sanders made just under $2,000 for three speeches in 2014, a fraction of what Clinton has made.

“The former secretary of state made $675,000 for three speeches for Goldman Sachs. When asked during a previous televised town hall event why she accepted so much money, she responded, ‘Well, that’s what they offered.’ Clinton’s aides and allies have sought to downplay the need to release her speech transcripts.” http://politi.co/1KtxWzH

MM SIDE NOTE — One person who attended Clinton’s Goldman speech in Arizona told M.M. on Thursday: “I can’t believe they will ever release the transcript based on what she said. I can’t see it happening. Certainly not while she’s still fighting Sanders.”

GET SMART FAST — If you want to understand what is going on in the GOP primary, read this from the NYT’s Ross Douthat: http://nyti.ms/1RSJL41

NEGATIVE RATES, THE COMIC BOOK — Via Bloomberg Businessweek: “Once Upon a Time, There Came a Negative Rate … by Peter Coy and Dorothy Gambrell … An illustrated look at how to get banks to put their money to work, starring Janet Yellen. The comic-strip format story explains why Yellen and other central bankers are considering” negative interest rates and how that will affect banks and consumers.”http://bloom.bg/24du3FD

THE BIG IDEA: WARREN FOR SCOTUS? — American Banker’s Ian McKendry on something that is not going to happen but is interesting nonetheless: “It’s an idea sure to give big banks nightmares — Sen. Elizabeth Warren, D-Mass., the scourge of Wall Street, as the next justice of the Supreme Court. First floated by a Democratic congressman on Monday, the idea has gained steam within progressive ranks as President Obama vowed Wednesday to nominate a successor to the late Justice Antonin Scalia in the next few weeks.

“While the move would be polarizing, nominating Warren could make sense for Obama. The former Harvard law school professor is reliably liberal on core issues the president cares about — and her nomination would galvanize the Democratic party. A Warren nomination ‘would all be about the political optics and rally Democrats and the base ahead of the election,’ said Brian Gardner, an analyst at Keefe, Bruyette & Woods. http://bit.ly/1Ubn0sD

GOOD FRIDAY MORNING — Happy weekend everyone. Enjoy the South Carolina (R) and Nevada (D) results on Satuday. Email me bwhite@politico.com and follow me on Twitter @morningmoneyben

WATT REACT — Compass Point’s Isaac Boltansky: “At the core of Director Watt’s speech was a detailed warning regarding the risk posed by the steady reduction of GSE capital as required by the Third PSPA. … We believe Director Watt’s commentary regarding the need for a change to the dividend sweep at Fannie Mae and Freddie Mac represents a tonal shift in the GSE conversation as it is an explicit statement that after eight years in conservatorship Fannie Mae and Freddie Mac should be run as a going concerns rather than left in legislative purgatory.”

COULD BETTER MODELS PREVENT FINANCIAL CRISES? — IBT’s Amy Nordrum: “What if ecologists who study food webs and epidemiologists who study disease outbreaks could help central bankers predict the next financial crisis? That idea isn’t so far-fetched to some economists who want to adapt a widely used scientific strategy to monitor the global economy. … A group of financial experts, including the chief economist of the Bank of England, issued a call to action Thursday in a major scientific journal asking scientists for help in building a better economic model.” http://bit.ly/1Vr6kfc

HAPPENING TODAY: STATE SOLUTIONS EVENT — POLITICO at 11:30 a.m. presents its Sixth Annual State Solutions event featuring one-on-one interviews with state governors including Phil Bryant (R-Miss.), John Hickenlooper (D-Colo.), Bill Haslam (R-Tenn.), Asa Hutchinson (R-Ark.), Jack Markell (D-Del.), Matt Mead (R-Wyo.), Jay Nixon (D-Mo.) and Peter Shumlin (D-Vt.) Livestream: politico.com/live; hashtag #POLGovs

POLL BLAST — All the 2016 data you need via POLITICO’s Eliza Collins: http://politi.co/1Vr6tz7

INSIDE APPLE’S BIG SHOWDOWN — WSJ’s Devlin Barrett and Daisuke Wakabayashi: “At a congressional hearing on Feb. 9, Federal Bureau of Investigation Director James Comey discussed obstacles of prying open electronic devices such as smartphones, zeroing in on a case in point: the San Bernardino, Calif., terrorist attack … Although few realized it at the time, Mr. Comey’s comments were a shot across the bow of Apple Inc. The company had been refusing for weeks to help the FBI unlock the phone … Justice Department officials had even considered filing court papers against Apple a month earlier, only to hold off in the hope of gaining more cooperation. …

“It is a legal battle that holds risks for both sides.State and local law-enforcement authorities are already looking to follow the lead of the FBI in its face-off with Apple. On Thursday, Manhattan District Attorney Cyrus Vance said his office is in the process of determining which cases involving encrypted smartphones it should bring before a New York state judge … The legal fight between the Justice Department and Apple over encryption had been building for months. .” http://on.wsj.com/1PV71tk

CHINA FOREX RESERVES DWINDLE — FT’s Keith Bradsher: “As markets around the world have churned, China has long taken comfort in having what in the financial world amounts to a life preserver: its vast holdings of other countries’ money. A year and a half ago, China held as much as $4 trillion in foreign exchange reserves. … Now, as China’s economic growth slows, that sign of national strength is slowly ebbing. China’s foreign exchange reserves are shrinking steadily as money flows out of the country, and Beijing moves to shore up its currency.

“The country’s reserves have shrunk by nearly a fifth since the summer of 2014 — and more than a third of the shrinkage has been in the last three months. By the end of January, reserves stood at $3.23 trillion, a level that has prompted speculation about how much lower Beijing will let them go. With a smaller pot of reserves, Chinese leaders have less room to maneuver, should the economy undergo a sudden shock. The reserves situation also weakens China’s control over the value of its currency, the renminbi.” http://nyti.ms/1QnV2tQ

WALMART SALES DROP — FT’s Lindsay Whipp: “Walmart reported its first annual sales decline since at least 1980, underlining the stiff challenges it faces competing against Amazon in ecommerce while coping with the impact of the strong dollar and a loss of share at its UK Asda stores. The 0.7 per cent decline in revenue to $482.1bn* for the year ended January was due mainly to the strong dollar, without the impact of which sales would have risen 2.8 per cent. … The fall, the worst in at least 35 years according to S&P Capital IQ data, came as the world’s largest retailer said that ecommerce sales growth slowed for the fifth consecutive quarter to 8 per cent in the final three months of the year. The company blamed the deceleration on its UK, Chinese and Brazilian markets. By contrast Amazon’s quarterly growth was 26 per cent despite its much larger base.

“The company reduced its sales growth outlook for this fiscal year to flat from between 3-4 per cent, reflecting a worse than expected impact from currency fluctuations and loss of revenue from its store closures. Shares slid 3.1 per cent to $64.09 by close of trading in New York. The 54-year-old company, which grew into the world’s largest retailer from a single store in rural Arkansas, is undertaking its biggest transformation since its inception as it tackles intensifying competition amid rapid shifts in the way consumers shop.” http://on.ft.com/1oO9Y8j

ASIA SLIPS — Reuters: “Asian shares slipped from near three-week highs on Friday as a rally in oil prices reversed and investors remained cautious about the outlook for the global economy. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7 percent, but gains in previous sessions left it up 4 percent for the week. … Oil prices reversed earlier gains on Thursday following a rise in U.S. stockpiles but look set to post their first rise in three weeks after the battered market took heart from a tentative deal by major producers to freeze output at January’s highs.” http://reut.rs/1orNvNP

CORRELATION EASING — Bloomberg: “Slowly, as global markets show signs of waking from their New Year’s rout, the lockstep moves that have paralyzed investors from Tokyo to New York are beginning to ease. While four days is a small sample, the equity rally that began Friday is starting to weaken previously ironclad ties between, say, the Standard & Poor’s 500 Index and things like oil and junk bonds. The easing represents a reversal from the year’s first six weeks, when concerns about economic growth and solvency risk wove markets together tightly.

“Loosening the ties matters, particularly to investors who want something other than paranoia and euphoria about the global economy to inform where they put their money. Markets fueled by psychology tied to China or U.S. credit conditions have proven especially difficult to trade in 2016, penalizing hedge funds and spurring outflows from equity mutual funds.” http://bloom.bg/1SDmMuB

ALSO FOR YOUR RADAR

ABA: REGULATE FINTECH — ABA’s Rob Nichols in an American Banker op-ed: “[S]ome issues regarding how banks and fintech firms operate cohesively need to be addressed. Principally, consumers still face potential confusion when dealing with two sectors that have differing regulatory regimes. … As enthusiastic participants in an economy that uniquely and dynamically supports innovation, bankers have always welcomed creative new ways to serve their customers. … For customers, a loan is a loan and a payment is a payment. They don’t care whether a bank provides the service. Because of some regulatory gaps and uncertainty, they should” http://bit.ly/1Vr6HWX

NY FED WARNS ASSET MANAGERS — FT’s Robin Wigglesworth: “The New York Federal Reserve has warned that asset managers are vulnerable to quasi-bank runs that can cause ‘significant negative spillovers’ across financial markets. The combination of deteriorating trading conditions — especially in corporate bonds — combined with the swelling of the US mutual fund industry that promises investors the ability to redeem money at a moment’s notice has become an increasing concern for some policymakers, fund managers and analysts. …

“While the NY Fed’s researchers have argued that bond market ‘liquidity’ is not as bad as many traders and analysts maintain, they have examined the vulnerability of mutual funds to a sudden spurt of investor withdrawals, and concluded that they are indeed susceptible to ‘runs’ despite not using leverage. The analysts simulated a scenario where Treasury bond yields suddenly and permanently rose by 1 percentage point across all maturities, and the investor redemptions that might cause the knock-on impact on markets.” http://on.ft.com/1XAVDI5

POTUS Events

4:15 pm Meets with the Democratic governors; EEOB

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

Change Your Name?  It Can Affect Your Taxes

A name change can have an impact on your taxes. All the names on your tax return must match Social Security Administration records. A name mismatch can delay your refund. Here’s what you should know if you changed your name:

  • Report Name Changes.  Did you get married and are now using your new spouse’s last name or hyphenated your last name? Did you divorce and go back to using your former last name? In either case, you should notify the SSA of your name change. That way, your new name on your IRS records will match up with your SSA records.
  • Make Dependent’s Name Change.  Notify the SSA if your dependent had a name change. For example, this could apply if you adopted a child and the child’s last name changed.

If you adopted a child who does not have a Social Security number, you may use an Adoption Taxpayer Identification Number on your tax return. An ATIN is a temporary number. You can apply for an ATIN by filing Form W-7A, Application for Taxpayer Identification Number for Pending U.S. Adoptions, with the IRS. You can visit IRS.gov to view, download, print or order the form at any time.

  • Get a New Card.  File Form SS-5, Application for a Social Security Card, to notify SSA of your name change. You can get the form on SSA.gov or call 800-772-1213 to order it. Your new card will show your new name with the same SSN you had before.
  • Report Changes in Circumstances when they happen. If you enrolled in health insurance coverage through the Health Insurance Marketplace you may receive the benefit of advance payments of the premium tax credit. These are paid directly to your insurance company to lower your monthly premium. Report changes in circumstances, such as a name change, a new address and a change in your income or family size to your Marketplace when they happen throughout the year. Reporting the changes will help you avoid getting too much or too little advance payment of the premium tax credit.

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.