Krebs Daily Briefing 22 March 2016

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


Explosions rock Brussels airport, subway; 26 reported dead

BRUSSELS (AP) — Explosions, at least one likely caused by a suicide bomber, rocked the Brussels airport and subway system Tuesday, prompting a lockdown of the Belgian capital and heightened security across Europe. At least 26 people were reported dead and dozens of others injured. A spokesman for the Brussels Metro said 15 people were killed and 55 injured, 10 very seriously, in an explosion on a train. Belgian media initially reported at least 13 dead in two explosions in the airport’s departures area, but later decreased that to 11, citing information from Belgian Health Minister Maggie de Block, who also said 81 people were injured. “What we feared has happened,” Belgian Prime Minister Charles Michel told reporters. “In this time of tragedy, this black moment for our country, I appeal to everyone to remain calm but also to show solidarity.” Belgium raised its terror alert to the highest level, diverting planes and trains and ordering people to stay where they were. Airports across Europe immediately tightened security. European security officials have been bracing for a major attack for weeks, and warned that the Islamic State group was actively preparing to strike. The arrest Friday of a key suspect in the November attacks in Paris heightened those fears, as investigators said many more people were involved than originally thought, and that some are still on the loose. There was no immediate claim of responsibility for Tuesday’s attacks, and Michel said there was no immediate evidence linking key Paris suspect Salah Abdeslam to them. After his arrest Friday, Abdeslam told authorities he had created a new network and was planning new attacks. “We are at war,” French Prime Minister Manuel Valls said after a crisis meeting called by the French president. “We have been subjected for the last few months in Europe to acts of war.” Belgian media reported that 11 people were killed at the airport, where two explosions splattered blood across the departure lounge and collapsed the ceiling. The explosions hit during the busy morning rush. Smoke was seen billowing out of the terminal. Anthony Deloos, an airport worker for Swissport, which handles check-in and baggage services, said the first explosion took place near the Swissport counters where customers pay for overweight baggage. He and a colleague said the second blast hit near the Starbucks cafe. “We heard a big explosion. It’s like when you’re in a party and suddenly your hearing goes out, from like a big noise,” Deloos said, adding that shredded paper floated through the air as a colleague told him to run. More:

Obama briefed on attacks in Brussels

President Barack Obama was briefed on Tuesday morning about the series of explosions throughout Brussels that caused multiple fatalities. “U.S. officials have been and will continue to be in close contact with their Belgian counterparts, and we will provide additional information and updates as we are able to do so,” a White House official said. Obama is currently in Cuba for a historic visit designed to further re-establish ties with the island nation. He is giving a speech later on Tuesday morning at the Grand Teatro in Havana and may address the attacks then. The Justice Department said Attorney General Loretta Lynch has also been briefed about the activity in Brussels. “The Justice Department and the FBI are coordinating with other U.S. Government agencies, as well as our Belgian counterparts,” the Justice Department’s statement said. Details are still emerging about the attacks and the human toll. Brussels was locked down after two explosions occurred at the airport on Tuesday morning, and a series of blasts went off at a subway station several blocks from major European Union institutions.

Delta, United reroute flights from Brussels after blasts

Delta Air Lines and United Airlines rerouted flights following the deadly blasts at Brussels’ Zavemtem airport on Tuesday, while Ireland’s Ryanair canceled all flights due to land there. A suicide bomber blew himself up at the airport on Tuesday morning, killing at least 11 people, according to public broadcaster VRT. Another 15 were killed when a blast tore through a rush-hour metro train in the capital shortly afterwards, the city’s transport operator said. Delta said its flight DL42 from New York to Brussels was diverted to Amsterdam. Another flight, DL80 from Atlanta, had landed safely at the airport and was parked remotely while the airline’s local staff worked to safely deplane passengers. United Airlines, which had two flights due in Brussels on Tuesday morning, said one from Washington Dulles arrived at 7:01 a.m. local time and customers deplaned normally. The other – flight 999 from Newark Liberty – was rerouted to another location that the airline did not identify. United said all remaining flights to and from Brussels International had been suspended until further notice. Ryanair said its flights to and from Brussels’ Charleroi Airport were running, although with some delays. Starwood Hotels & Resorts Inc said all Starwood hotels in Brussels were safe but on lockdown, along with the rest of the city. Facebook Inc said it activated its “safety check” feature for users after the blasts. Delta’s shares were down about 3 percent in premarket trading, while United and Starwood’s shares were down less than 1 percent. Ryanair’s shares were down 3 percent.

Obama: ‘This Is A New Day — Es Un Nuevo Dia — Between Our Two Countries’

“This is a new day — es un nuevo dia — between our two countries,” President Obama said after meeting with Cuban President Raúl Castro in Havana. The two leaders agreed that there are still deep fissures between the two countries and that a healthy relationship between them will take work. That uneasiness was apparent as soon as journalists began asking questions. Obama and Castro were not supposed to take questions, but a last minute change made that possible and Obama called first on CNN’s Jim Acosta, who is Cuban-American. In Spanish, Acosta asked Castro why his country kept political prisoners. Clearly miffed, Castro asked Acosta to hand over a list of political prisoners. “Give me a list after this press conference. If there are political prisoners, they will be released by nightfall. That’s it,” Castro said. Almost immediately, The Center for a Free Cuba, which advocates for human rights on the island, sent over a list documenting more than 1,000 cases of persons who they say were “arbitrarily detained” for political reasons. “The list is never complete,” Frank Calzon, the nonprofit’s executive director, said in a statement. “When President Obama announced back in December 17, 2014 that 50 some prisoners were to be released, we later discovered that some were re-imprisoned later.” The Cuban American National Foundation released its own list of 47 people the organization says are political prisoners. Obama was diplomatic when he addressed Cuba’s human rights record. He said the U.S. would continue to press the issue of freedom of speech and expression, much like it does around the world. The United States, however, cannot force change on the island, he said. “Cuba’s destiny will not be decided by the United States or any other nation,” Obama said. “Cuba is sovereign and the future of Cuba will be decided by Cubans and not by anybody else.” Castro said it was unfair to focus solely on the issue of freedom expression. Cuba, he said, views many things as human rights, including the right to free healthcare and education. “Here in Cuba, all children are born in a hospital, no matter what mountain they live on,” Castro said. “In Cuba, men and women who do the same job earn the same.” All countries, he said, have failings on human rights but all countries also excel in other areas. Obama’s official visit to Cuba began on Monday with a wreath-laying ceremony at the foot of a memorial to Cuban independence hero and poet José Martí. It’s worth pausing on that for a minute. The statue of Martí is also at the center of La Plaza de la Revolución, a square as important and revered in Cuba as Moscow’s Red Square or Beijing’s Tiananmen Square. On the other side, in the distance, the buildings for the ministries of defense and interior are framed with outline portraits of Ernesto “Che” Guevara and Camilo Cienfuegos, two of the country’s bearded revolutionary heroes.

What Does Obama’s Picture in Front of a Che Mural Mean?

If many American conservatives were already agitated and colicky about President Obama’s trip to Cuba, a photo op in Havana Monday pushed them into full-on apoplexy. Obama went to visit a memorial to national hero Jose Martí, and was then photographed standing in front of a huge mural of Che Guevara, the leftist guerrilla who along with Fidel Castro was a leader of Cuba’s Communist revolution. The reaction was harsh. (The liberal site Talking Points Memo gathers a good sampling.) The Drudge Report went with subtle innuendo and a funny callback to the Bush administration: “MISSION ACCOMPLISHED.” One writer tweeted, “Finally, our POTUS is able to honor the mural of a racist, terrorist, mass murderer who oversaw concentration camps.” Jay Nordlinger fumed, “In Cuba, the Castros’ island prison, the American president has been photographed with looks of delight on his face in front of a Dear Leader-ish image of Guevara.” (He doesn’t look all that happy to me, but your mileage may vary.) Was it bad advance work by presidential staff? Perhaps, though this being Cuba, it might be difficult to avoid being photographed with icons of Marxist repression—starting with President Raul Castro, with whom Obama gave a brief shared press conference on Monday. As Peter Ubertaccio wryly noted on Twitter, Republican Presidents Ronald Reagan and George H.W. Bush were also photographed with portraits of iconic brutal Communists: see photo’s at link below. In other words, getting your photo taken with monsters of the 20th century is an occupational hazard of diplomacy. More:

9 questions about Cuba you were too embarrassed to ask

A little over a year after the US and Cuba revealed their historic deal to take major steps toward ending their 50-plus years of hostility, which they had negotiated in secret, President Obama is in Cuba — the first president to visit since 1928. This is a huge moment for Cuba, for President Obama, and for the US-Cuba relationship. But you might reasonably be wondering why this is happening now. How did things get so bad between the US and Cuba in the first place, and why has that lasted for such a long time? What is actually changing now, and what does it mean for the two countries? What follows is a guide to your most basic questions about the US and Cuba. (Note: this article, which initially published in December 2014, and has been updated to reflect Obama’s trip.)

Mark Zuckerberg Met with China’s Propaganda Chief

Facebook C.E.O. Mark Zuckerberg has had a busy week in China. Aftertaking a brisk jog through Beijing’s smog-filled streets, he courted China’s top propaganda official in what Chinese media called a “rare meeting”with Communist Party propaganda chief Liu Yunshan in Beijing on Saturday. Zuck was in town to attend the China Development Forum, but met with Liu to discuss the development of the Internet in China and how Facebook could potentially be integrated. Despite China stepping up its Internet censorship—Liu recently warned Chinese Internet users against crossing the “baseline” when discussing politics online, and the country has called for a global “governance system” for the Internet, which activists warn could smother free speech—it appears Zuckerberg’s efforts are paying off and relations between Facebook and China are warming ever so slightly. In their meeting, Liucommended Zuckerberg for his “cooperative” attitude with Chinese regulations and “hopes [Facebook] can strengthen exchanges, share experiences and improve mutual understanding with China’s Internet companies,” Chinese news agency Xinhua quoted Liu as telling Zuckerberg. Zuckerberg has been currying favor with China for a while now, and with good reason. Since 2009, Facebook’s services have been blocked in the country, which harbors a large number of Internet users—720 million people, to be exact. The Chinese government has restricted Internet access across social-media platforms over its concerns about commentary critical of the government, especially on political anniversaries. China’s Internet is heavily censored by what is known as the “Great Firewall,” but Zuckerberg has been making strides to appeal to the country. He’slearning Mandarin Chinese and, along with his Chinese-American wife,Priscilla Chan, recently gave his baby daughter a Chinese name—Chen Mingyu. He’s also hosted Chinese Internet chief Lu Wei at Facebook’s headquarters, and sits on the advisory board at Tsinghua University’s School of Economics and Management. Given China’s regulatory restrictions on the Internet, Facebook would probably have to submit itself to some form of censorship if it goes live in the country. Facebook says it hasn’t received any takedown notices from the Chinese government, likely because of the difficulty in accessing the social network within China in the first place. The country stands to gain from working with Facebook, however; Chinese businesses use Facebook to reach markets outside of the country, which would ultimately benefit China’s own slowing economy.

Cruise giant Carnival Corp. wins approval for Cuba sailings

It’s official: Cruise giant Carnival Corp. (CCL) will launch its first voyages from the USA to Cuba in May. The parent company of Carnival, Princess and eight other cruise brands on Monday said the Cuban government had approved its previously announced plans to begin sailings to the island nation out of Miami. The cruises, which already are on sale, will be operated bi-weekly by the company’s new social impact-focused Fathom brand, which will debut in April with volunteer vacations to the Dominican Republic. The trips will take place on Fathom’s 704-passenger Adonia, a former P&O Cruises vessel. The announcement came during President Barack Obama’s historic trip to Cuba. Obama has normalized relations with the Communist country and is loosening restrictions for U.S. travelers to Cuba that are tied to the decades-long U.S. trade embargo. While the embargo still exists, the Fathom cruises to Cuba now fall under an exception to the embargo for “people-to-people” travel. Carnival first announced plans for Cuba cruises in July, when it received U.S. government approval for the trips, but noted at the time that they would be contingent on approval by the Cuban government. That approval came late Monday in the form of signed agreements between Carnival and Cuban authorities from Havanatur Celimar and various other agencies that enable the voyages, the company said. “We are excited about Cuban approval and are ready to take travelers there through an extraordinary guest experience on the beautiful MV Adonia,” Carnival Corp. CEO Arnold Donald said in a statement accompanying the announcement. When Fathom kicks off its first sailing from Miami to Cuba on May 1, it’ll mark the first time that a cruise ship has sailed from the USA to Cuba in more than 50 years, Carnival said it had been told.

Citigroup says being investigated in Germany over dividend trades

Citigroup (C.N) is being investigated by German tax authorities over an equity trading strategy known as “cum-ex” or “dividend stripping,” the U.S. bank said on Tuesday. Dividend stripping involves buying a stock just before its dividend rights expire, then selling it, taking advantage of a now-closed legal loophole that allowed both buyer and seller to claim tax credits. “Citi’s Germany unit has never been trader, broker or structurer of cum ex trades,” a Citi spokesman in Frankfurt said. He said the bank did act as a settlement agent for clients’ trades, but only supplied its infrastructure had no knowledge of the actual trades being carried out. German daily Handelsblatt reported on Tuesday that the Frankfurt tax office had asked for 706 million euros ($791.07 million) in back taxes from Citi. The Citi spokesman said the financial authorities had not asked the bank for the back taxes. A number of large banks have already paid hundreds of millions of euros in back taxes and tens of millions to settle disputes with German authorities. Citigroup and several of its subsidiaries are on a list of about 130 banks which have allegedly been involved in cum-ex trades. German financial watchdog Bafin is surveying the country’s 1,800 lenders to see if they are at risk from potential demands for back taxes from “cum-ex” trades. Bafin last month closed the German operations of Canada’s Maple Financial on impending financial over-indebtedness related to tax evasion investigations.


Roberts Criticized Supreme Court Confirmation Process, Before There Was a Vacancy

WASHINGTON — Last month, Chief Justice John G. Roberts Jr. delivered some blunt remarks about the Supreme Court confirmation process. The Senate should ensure that nominees are qualified, he said, and leave politics out of it. The chief justice spoke 10 days before Justice Antonin Scalia died, and he could not have known how timely and telling his comments would turn out to be. They now amount to a stern, if abstract, rebuke to the Republican senators who refuse to hold hearings on President Obama’s nomination of Judge Merrick B. Garland. Some people are hoping that the chief justice will speak out again, and more directly, addressing the actual nomination of an actual nominee. It was not long ago that qualified nominees coasted onto the court, Chief Justice Roberts said last month. In 1986, Justice Scalia was confirmed by a vote of 98 to 0. In 1993, Justice Ruth Bader Ginsburg was confirmed by a vote of 96 to 3. These days, Chief Justice Roberts said, “the process is not functioning very well.” The last three justices should have sailed through, too, he said. He was referring to Justice Samuel A. Alito Jr., appointed by President George W. Bush, and Justices Sonia Sotomayor and Elena Kagan, appointed by Mr. Obama. Forty-two senators voted against Justice Alito, 31 against Justice Sotomayor and 37 against Justice Kagan. “Look at my more recent colleagues, all extremely well qualified for the court,” Chief Justice Roberts said, “and the votes were, I think, strictly on party lines for the last three of them, or close to it, and that doesn’t make any sense. That suggests to me that the process is being used for something other than ensuring the qualifications of the nominees.” If Justices Sotomayor and Kagan were “extremely well qualified for the court,” it is a safe bet that Chief Justice Roberts has a similarly high regard for Judge Garland, with whom he served on the United States Court of Appeals for the District of Columbia Circuit.

Puerto Rico takes restructuring law to U.S. high court

Puerto Rico will ask the U.S. Supreme Court on Tuesday to validate a law that could let it cut billions of dollars from what it owes in debt at some public agencies, a key test in the island’s efforts to weather a massive fiscal crisis. The U.S. territory, facing what its governor has called an unpayable $70 billion debt and a 45 percent poverty rate, will argue its case against financial creditors, including Franklin Advisers and OppenheimerFunds, who want to keep contentious restructuring talks out of court. As Puerto Rico leaders, creditors and U.S. lawmakers seek a debt solution in the U.S. Congress, the question before the Supreme Court is whether the island should be allowed to restructure debts under a court-supervised regime similar to Chapter 9 bankruptcy laws used by U.S. cities such as Detroit and Stockton, California. “It is very significant that the Supreme Court took this case — we’re seeing efforts to try to determine with some more clarity the status of Puerto Rico,” said bankruptcy expert Melissa Jacoby, a professor at the University of North Carolina School of Law. Puerto Rico, which as a U.S. commonwealth is excluded from Chapter 9, passed the Recovery Act in 2014, a local restructuring law that lets it put public entities, such as power authority PREPA, into bankruptcy. Two U.S. court decisions deemed the Recovery Act invalid after PREPA creditors sued, with the Supreme Court agreeing in December to hear an appeal. Creditors say the act contradicts federal bankruptcy law, which prohibits states from making their own debt restructuring laws. Puerto Rico argues that if it is exempt from Chapter 9, it must also be exempt from the limitation on states passing their own laws. “It makes no sense to read a limitation on Chapter 9 to apply to a jurisdiction … that is categorically excluded from that chapter,” it said in January. The outcome could threaten a hard-fought, consensual restructuring at PREPA, where creditors holding most of the utility’s $8.3 billion in debt agreed to take 15 percent reductions in payouts. More:

Analysts Urge Citigroup Split

Analysts at Keefe Bruyette & Woods on Monday waded into the debate over breaking up the nation’s biggest banks, releasing a report that urges Citigroup to split up. In the report, the analysts argue that Citigroup’s stock price is being held back by regulations that require big banks to hold large amounts of capital. The analysts suggest Citigroup could break up in several ways — by selling part of its Banamex unit in Mexico, splitting its consumer and corporate units in the United States into two companies, or selling its international operations. Together, the moves could increase Citigroup’s market value by 57 percent, to $198 billion, the analysts estimated. K.B.W. believes that the primary motivation for splitting up would be the faster return of excess capital to shareholders,” the report said. In a statement, a Citigroup spokeswoman said, “Citi’s board of directors, as part of its fiduciary obligation to shareholders, annually conducts a formal review of Citi’s strategy and progress. The board remains confident that the current strategy being executed by the existing management team will yield the best long-term results for shareholders.” Calls to break up one of the nation’s largest banks have been common in the Democratic presidential campaign. Analysts at Goldman Sachs have looked at what would happen if JPMorgan Chase broke up. But such calls have been relatively rare on Wall Street, given the financial realities of finding buyers for many of the assets and a firm belief held by many top executives that their banks can still flourish at their current sizes. Citigroup has also sold billions of dollars in assets since the financial crisis to simplify. Most recently, the bank said it planned to sell its operations in Argentina, Brazil and Colombia. More:

Looking Back at Lehman’s Collapse With the Woman Who Fell Farthest

As the financial system was teetering and about to collapse, Erin Callan had a prescient exchange with one of her colleagues at Lehman Brothers. It was Nov. 29, 2007, and news that the co-president of Morgan Stanley, Zoe Cruz, had just been fired after her firm took a $3.7 billion loss on subprime mortgage securities was flashing across TV screens all over Lehman’s trading floor. Joe Gregory, the chief operating officer of Lehman, popped into Callan’s office. “Did you see the Morgan Stanley news?” Gregory asked. “The news about Zoe?” Callan, who was about to take over as Lehman’s chief financial officer, was distressed. Cruz was one of the highest-ranking women on Wall Street. Without her, Callan would be left standing nearly alone as a female atop a male-dominated industry, like a weather vane attached to a roof that may or may not have been sound. The parallels with Cruz’s situation were obvious. More:

Apple May Be Willing to Risk Contempt Charge

Parents are known at times to deliver an ultimatum to a recalcitrant child by saying, “Do this, or else!” The question is what that the frequently undelivered punishment may actually be. When a case is in court, the judge can hold a party in contempt as the “or else” for refusing to comply with an order. But how far can a court go in imposing sanctions for contempt? That question may arise for Carl Ferrer, the chief executive of, an advertising website that has been identified for its connections to possible sex trafficking. Mr. Ferrer is in a fight with the Senate Permanent Subcommittee on Investigations for not complying with a subpoena. It may also become an issue for Apple if a judge orders it to help unlock the iPhone used by one of the shooters in the terrorist attack in San Bernardino last December. The company may be willing to defy the order, and even if it wants to comply, there is a chance that its engineers would refuse to provide that assistance, as The New York Times reported, perhaps making compliance impossible. In Mr. Ferrer’s case, the Senate voted 96-0 to pass a resolution on Thursday authorizing its legal counsel to file an action in the Federal District Court in Washington to hold him in civil contempt for refusing to turn over corporate records about the company’s advertising review procedures and appear before the subcommittee to testify last November. The company’s lawyer issued a statement that it “looks forward to a proper consideration of the important First Amendment constitutional issues by the judiciary – the branch of government charged with protecting the constitutional rights of all Americans.” A judge’s power to punish someone for misconduct that takes place inside the courtroom is broad, as any fan of the movie “My Cousin Vinny” will recall when the protagonist is summarily ordered to jail for his antics. For conduct outside the judge’s presence, the power to impose a penalty is more limited, and depends on whether it is intended to punish the person, which would be a criminal case, or coerce compliance with an order, which is civil. More:

Group urges scrutiny of Sen. Bob Corker for hedge fund ties

A watchdog group has filed complaints against Sen. Bob Corker (Tenn.) with the Securities and Exchange Commission and the Senate Ethics Committee, claiming the Republican may have broken the law by failing to disclose hedge fund investments. The Campaign for Accountability (CfA) on Monday said that Corker, who serves as the chairman of the Senate Foreign Relations Committee and as a senior member of the Senate’s banking panel, “concealed information about his stake in hedge funds that are managed by his campaign donors.” “Sen. Corker hasn’t just made a mockery of Senate disclosure rules, he may have committed a crime,” said the group’s executive director, Anne Weismann, in a statement. “Authorities should investigate why Sen. Corker was so intent on hiding the underlying assets of these funds that he filed inaccurate disclosure forms year after year.” The Tennessee senator rejected the complaints as part of smear campaign by the group. “This is yet another baseless accusation by this political special interest group. These claims are categorically false and nothing more than a smear campaign,” a Corker spokesman told The Hill. “When amending the senator’s financial disclosure report, our office worked directly with the Senate Ethics Committee to ensure items were reported accurately and in line with Senate guidelines.”  In the most recent complaint, the CfA says that in addition to not properly disclosing the underlying assets of each hedge fund, enforcement officials should probe the relationship the senator has with the hedge funds in which he is invested. The group said that, since 2004, Corker has received more than $204,000 in campaign contribution from top employees or family members of the Tennessee-based hedge funds in his portfolio: Gerber/Taylor Management Company, TSWII Management Company and Pointer Management. CfA also said the founder of TSWII, L. H. Caldwell III, was one of the co-chairs to Corker’s campaign committee during the 2006 election cycle. Caldwell and his family have given a total of $93,280 to the Tennessee Republican’s fundraising vehicles, including 13 contributions by Caldwell’s children, who listed their occupations as “students” on federal forms. On those donations, “the address provided was for the Caldwell family home in Lookout Mountain, Tennessee, even when they had jobs and lived elsewhere, raising questions about whether Mr. Caldwell was the real donor,” CfA said. “It’s clear Sen. Corker has made a fortune investing with his top campaign contributors and has broken ethics rules to avoid scrutiny of these relationships,” said Weismann, who formerly served as the chief counsel of Citizens for Responsibility and Ethics in Washington (CREW). “The SEC, the Senate ethics committee and the Department of Justice should all take a long, hard look and see what, exactly, the senator has been working so hard to hide.” The group has made allegations to congressional ethics and federal enforcement officials against the senator before.  Following a Wall Street Journal report last year that examined how Corker purchased and sold stock in a real estate investment company, sometimes in close proximity to announcements by the firm, CfA called for an investigation into the lack of disclosure around those trades. Corker amended forms going back to 2007 — which had also omitted millions of dollars in income — and called the misfiling and irregularities an “oversight” that he chalked up to “filing errors.” “I am extremely disappointed in the filing errors that were made in earlier financial disclosure reports,” he told the Wall Street Journal through a spokesman in December. “After completing a full, third-party review, we have corrected this oversight.”

Here’s the Stunning Amount of Money Top Wall Street C.E.O.s Made in 2015

Wall Street executives have served as a convenient punching bag this election season, with presidential candidates on both sides of the aisle highlighting the gap between their big paydays and the income of ordinary Americans struggling to make ends meet. As the middle class languishes, the campaign narratives go, banking bigwigs are spinning profits out of Main Street’s misfortunes. In reality, the financial sector faced a rocky start to 2015. Bank stocks tanked as fears of a slowdown in the Chinese economy and anemic oil prices shook markets. But the relative hardships of investment bankers are likely cold comfort for Americans still seething from the 2008 financial crisis. And the latest figures showing the take-home pay of the six C.E.O.s of the biggest U.S. banks will do little to temper the populist fire that’s ignited this year’s presidential race. Jamie Dimon’s stack of gold coins was just a bit higher than those of his peers. The JPMorgan C.E.O. took home $27 million last year, a healthy 35 percent boost from a year earlier, according to Bloomberg. He beat out Goldman Sach’s Lloyd Blankfein, who had been the highest-paid C.E.O. at about $24 million in 2014 but had to settle for a little more than $20 million in 2015. For the fourth year in a row, Well Fargo’s John Stumpf raked in $19.3 million. Sure, the element of excitement wears away when your paycheck stays the same—a stagnant salary is always a blow to the ego—but at least it is 360 times what the average American family makes. The lowest-paid among the crew, Bank of America’s Brian Moynihan, still earned $16 million. As frustrating as those figures are for many Americans, who have seen their incomes remain flat and their jobs shipped overseas while their own bosses’ salaries soar, the paychecks of the highest-paid executives at the big banks are chump change compared to what top hedge funders take home. All of the money these six C.E.O.s made in 2015 only make up one-tenth of what Ken Griffin, the top-earning hedge-fund manager, took home in 2014. Three of the top five paid managers made more than $1 billion apiece; the other two just barely missed the third comma. These hedge fund men—and they are all men, both on the high end of the hedge-fund and banking sides—likely spent more on vacations and furniture than these banking heads made in a year, and all without the very public shareholder headaches, Wall Street anxiety, Washington scrutiny, and personnel problems that come with running a large corporation. Hedge funders, of course, have also had a rough year, with even the most prominent among them, like Pershing Square’s Bill Ackman, facing big losses on some of their bigger bets. And they still answer to their investors, though there are far fewer of them. However you choose to put bank C.E.O.s’ salaries in perspective, it is worth noting that these banks do create wealth for a far greater number of people than do hedge-fund managers, whose gains are concentrated among a much smaller pool of investors. It is all relative in this envy cycle, where Main Street begrudges Wall Street executives, who are themselves green over hedge funders, who earn more for themselves and their tiny pool of investors than anyone. The only unambiguous winners here may be the presidential candidates making political hay of it all. A rage monster with two heads is better than one.

Congress needs more and better-paid staff

Recently, Sen. Mike Lee, R-Utah, announced a new project to re-invigorate the first branch of government. “The premise of the Article I Project is simple,” he explained in a statement. “The federal government is broken, and congressional weakness is to blame.” Lee is among a growing number of conservatives who have come to see congressional dysfunction is a problem of Congress’s own making, and who wants to do something about it. Yet, for all the growing interest in “restoring congressional power,” there’s something fundamentally missing from these plans – the capacity to actually do it. Congress relies on staff. And yet, over the last several decades, and particularly the last few years, Congress has steadily disinvested in staff. More than ever, congressional offices lack experienced people who have the institutional knowledge and policy know-how to do much more than react and play defense. Consider the following changes between 2009 and 2013, based on Congressional Research Service reports (Salaries are listed in constant dollars). In the House:

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Trump begins to peel back curtain on foreign policy team

Donald Trump on Monday offered the longest list yet of his foreign policy and national security advisers, after months of refusing to detail the experts he consults. In a meeting with The Washington Post’s editorial board, Trump named five people who have been added to an advisory team led by Sen. Jeff Sessions. The Alabama Republican was previously his only confirmed adviser on the issue. First up is Walid Phares, a professor at the National Defense University who has testified on Capitol Hill about the Middle East and international security. “He’s a counter-terrorism expert,” Trump explained, according to the Post. Also on the national security advisory committee, according to Trump, is Carter Page, an energy industry executive and former investment banker. So is George Papadopoulos, a former adviser to Ben Carson who directs the London Center of International Law Practice’s center on international energy law and security. “He’s an oil and energy consultant,” Trump said. “Excellent guy.” Trump also listed “the honorable Joe Schmitz,” a former Pentagon inspector general who now runs a consulting firm. Schmitz confirmed his presence on the advisory team to the Post and told the newspaper he has been a part of a series of conference calls and briefings in recent weeks. The final name on Trump’s team is Keith Kellogg, a former lieutenant general in the Army who now works with a IT security consultant in Virginia. “And I have quite a few more,” Trump insisted to the Post. “But that’s a group of some of the people that we are dealing with. “We have many other people in different aspects of what we do,” he added. “But that’s pretty representative group.” The figures listed by Trump are not household names, and few appear to be veterans of the upper reaches of former Republican administrations, as is common for leading presidential contenders. Yet his decision to outline the framework of his national security team is likely to calm some nerves among GOP officials. Trump’s campaign had previously refused to outline whom the GOP front-runner was listening to on national security and defense issues, worrying Republicans who feared that the billionaire real estate developer and reality TV show host was out of his depth. Last week, Trump said that his top foreign policy adviser was himself, “because I have a very good brain, and I’ve said a lot of things.” In previous instances, he has said that he watches “the shows” for advice. The lack of clarity from Trump was especially notable given a strong backlash to his candidacy from a wide section of the Republican Party.

N.Y. Attorney General Eric Schneiderman says case against Trump University is ‘a straightforward fraud case’ 

New York Attorney General Eric Schneiderman on Sunday rejected suggestions that his office’s case against presidential candidate Donald Trump’s defunct “Trump University” was at all political.  “This is a straightforward fraud case. We never had any idea in 2013 the guy was going to run for president,” Schneiderman said on John Catsimatidis’ “Cats Roundtable” program on AM 970. “This is not a political case. This just a case where a lot of New Yorkers were ripped off.” “There were thousands of folks who thought they were going to learn from real estate experts who were handpicked by Trump and that they would learn his personal secrets,” Schneiderman said. “Thousands of people (who) paid as much as $35,000 to $45,000.” Schneiderman’s office filed suit against the now shuttered school in August 2013 after getting almost 70 complaints from students who said they were deceived into paying thousands of dollars for investment advising services they never received after getting lured in for “free” seminars. But after years of stalled litigation, a state appeals court last month gave a green light to the civil fraud claim against the GOP front-runner and his former education business. In a unanimous ruling, a four-judge panel of the state Appellate Division said the state attorney general’s office was “authorized to bring a cause of action for fraud.” Schneiderman had charged Trump University, which operated between 2004 and 2010, was a scam that ripped off its students. Through “their deceptive and unlawful practices, (Trump and the school) intentionally misled over 5,000 individuals nationwide, including over 600 New Yorkers, into paying as much as $35,000 each to participate in live seminars and mentorship programs with the promise of learning Donald Trump’s real estate investing techniques,” the AG’s office said. Lawyers for Trump and his now-defunct school had contended that the suit should be tossed, pointing to a statute of limitations they say expired.

Congress setting new bar for doing nothing

The biggest achievement in the House last week was a party-line vote to file a brief in a court case. In other action, GOP leaders all but conceded they won’t be able to pass a budget, the party’s first order of business, this year. Over in the Senate, lawmakers have been busy debating whether it’s good or bad to sit on the president’s Supreme Court nominee for the next nine months. Call it the Seinfeld Congress — all about nothing. It’s gotten so small-ball that one congressman, a chairman of a highly influential committee, introduced legislation last week to recognize the national significance of magic. “It doesn’t surprise me at all. They are going to need magic to save their party,” joked Rep. Steve Israel of New York, who heads the House Democrats’ messaging arm. “The American people are used to a Republican do-nothing Congress, they are now getting used to a Republican ridiculous Congress.” All this non-activity comes as the House is set to take a nearly three-week vacation. The Senate skipped town last week. This is my eighth year here, and by far this is the thinnest of thin gruel years,” said Rep. Gerry Connolly (D-Va.). “We’re in session, I think, less than 111 days (for all of 2016) and the time we’ve been in session, we haven’t done much.” House members have griped that their major legislative work a few weeks ago was naming post offices. Last week’s win for Republicans was passing a resolution giving the House authority to file an amicus brief in US v. Texas, the Supreme Court case challenging President Barack Obama’s executive orders on immigration. Senior Republican aides say the brief is a big win for House Republicans who’ve been fighting the president’s executive orders for years. The big action before the House adjourns this week is to keep the Federal Aviation Administration running for another four months — a lowest-common-denominator outcome brought about by Congress’ inability to do anything more. When it comes to more substantive bills — like helping Puerto Rico avoid default, tackling the Zika virus or finding money to help Flint fix its corroded water system — there’s been hardly any movement. Democratic leaders formally urged Speaker Paul Ryan (R-Wis.) to cancel the upcoming recesses until the House passes emergency funding bills to deal with the Zika crisis and opioid addiction. A typical tactic employed by the minority to make the party in charge look bad and pressure it to act, it unsurprisingly went nowhere. More:

In a Florida Party Town, Last Call Leaves a Financial Hangover

PANAMA CITY BEACH, Fla. — The sun was sublime, the flour-soft sand could scarcely have been more tempting and the D.J. music thumped loudly enough to jiggle the beer cups resting on nearby tables. All that was missing were the throngs of booze-soaked, sunburned spring breakers who usually swarm this beach town during March. The scarcity of the party-hard population was no accident. Last year, after a particularly rowdy spring break that saw an alleged sexual assault on a crowded beach in broad daylight (it was recorded and went viral) and gunfire at a house party that injured seven partygoers, local officials clamped down. They passed more than 20 ordinances to curb the debauchery, drinking and violence that they had concluded was marring the town’s image. In response, students sprinted to Facebook, Twitter, Snapchat and Instagram, quickly spreading the news — using the hashtag #RIPPCB (Rest in Peace Panama City Beach) — that the party here was over. Amplified through the social media megaphone, the drop was far steeper than even the businesses who opposed the measures had anticipated. Last week, peak time for spring break, scores of bars, restaurants, clubs, hotels, fast-food franchises and taxi companies that typically see their March profits bulge sat forlorn, with some reporting a 90 percent drop in customers. “There were a lot more unintended consequences than anyone imagined,” said Jack Bishop, the owner of the popular waterfront restaurant and bar Harpoon Harry’s. “We never dreamed it would be this bad so quickly. This tells you the power of the 24-hour news cycle and social media. I’m down 72 percent for the month.” In instituting a crackdown, Panama City Beach, perched on the Gulf Coast a two-hour drive from Alabama, joined a roster of other more urban Florida beach towns that have for decades whipsawed from inviting, to rebuffing, to ultimately tolerating spring breakers.

Elizabethkingia, the rare and deadly bacteria that’s sickening people in the Midwest, explained

Since last November, more than 50 people in Wisconsin have been sickened by mysterious bacteria called Elizabethkingia anophelis. This is the largest recorded outbreak caused by what’s to date been a rare microbe — and the same bug was identified last week in a patient who died in Michigan. Public health officials in both states don’t yet know what sparked the outbreaks or how people became infected, but they’re worried. So far, 18 people have died from the infection, and researchers believe this particular strain is resistant to many of the antibiotics that could stop it. There’s another problem: There’s a lot the research community has yet to learn about Elizabethkingia and its effects on people. I spoke to one of the few researchers — Michigan State University microbiologist Dr. Shicheng Chen — who’s studied the species that’s sickening people in the US. Here are five facts to know.

Kindle users: Go update your device right now.

If your Kindle is collecting dust somewhere, now is the time to brush it off: Older versions of the Amazon e-reader will stop being able to connect to the Internet unless their software is updated by basically right now. The update is needed for the first generation of the Kindle Paperwhite, which was released in 2012, and all of the other Kindle models that came out before it. Amazon, whose founder Jeff Bezos also owns The Washington Post, is warning customers to install the update before March 22. For the calendar-challenged, that’s tomorrow. Without the update, it will be much harder to add books to your device because it won’t be able to connect to the Kindle Store or automatically sync with Amazon’s cloud. In theory, your Kindle should automatically update if it’s connected to a wireless network while it sleeps. But if you only break out your device for the occasional vacation, there’s a good chance it hasn’t gotten the newest version of the software. You can follow Amazon’s instructions here to make sure it updates. What you’ll need to do differs slightly depending on which model you have, but it basically amounts to connecting the device to the Internet, telling it to sync, and then leaving it plugged in overnight. If you end up missing the update deadline, not all is lost — although you’re in for a steeper hill to climb. This error message will start showing up on your device:


Alabama Medicaid, once protected, sees funding questioned

It used to be that whatever else happened with the General Fund, legislators would give the Alabama Medicaid Agency the funding it requested. But legislators are discussing the possibility of passing a budget without the full amount of Medicaid’s requested funding, a move that could doom regional care organizations (RCOs) which the Legislature approved in 2013 in the hopes of slowing the growth in health care costs. That has Medicaid and health care groups concerned about major consequences for Alabama’s health care system, which depends on the program, and the loss of hundreds of millions of dollars from the federal government to implement RCOs. “The fact of the matter is the agency needs $85 million to sustain current operations, with or without the RCOs,” said Danne Howard, executive vice president and chief policy officer for the Alabama Hospital Association. Legislators say that they want to stop Medicaid from continuing to divert needed funding from other state agencies. The federal government pays for more than two-thirds of Alabama’s Medicaid program, but anemic growth in existing General Fund revenues, and the Legislature’s resistance to new ones, has forced legislators to struggle each year for the state money needed to match federal funds. “I’ve had committee hearings this week on bills that could raise revenue and I don’t think I can get them out,” said Senate Finance and Taxation General Fund chairman Trip Pittman, R-Montrose, on Friday. More:


Who is lobbying Alabama’s Legislature?

Alabama’s lawmakers are in the middle of another busy legislative session. And while we assume the key decisions are being made by them alone, the fact is there are hundreds of lobbyists who are paid to sway a position their way. The Centers for Public Integrity analyzed lobbying registrations from all 50 states from 2010 through 2014 to determine which companies, trade associations, unions and other advocates had the widest lobbying presence across the U.S. Overall, they found there are six entities registered to lobby for every one Alabama legislator. According to the study, the top five lobbying organizations in the Alabama Legislature are Alabama Education Association (AEA); Southern Company; AT&T; Business Council of Alabama; and Blue Cross and Blue Shield of Alabama. Nationally, the top lobbying groups from 2010 to 2014 were Mylan Inc., a UK-based pharmaceuticals company and maker of EpiPen; Uber Technologies Inc., which represents the ride-sharing company; Excellence in Education National, an organization formed by former Florida Gov. Jeb Bush to promote charter schools; business service company Xerox; Reckitt Benckiser Group, the British manufacturer of the opioid addiction drug Suboxone; and Takeda Pharmaceuticals, Japanese drug maker and producers of the diabetes drug Actos. Each of those organizations are registered to lobby in Alabama, according to data from the Secretary of State’s office. Other organizations with lobbying presences in all 50 states include:

Verizon; tobacco manufacturer Reynolds American; drug manufacturer Pfizer; the National Rifle Association; American Insurance Association; and the National Federal of Independent Business.

You can see the complete list of registered lobbyist in Alabama here. You can see the national list here.


Shoals theme park money man hit with 2 lawsuits

The Alabama businessman touted as a benefactor for the proposed theme park in Muscle Shoals was hit with two lawsuits last week. One suit stems from an investment deal now under investigation by the Alabama Securities Commission and the other involves a Christmas musical in Tennessee. Bryan Robinson of Killen and his company, Provident Global Capital LLC, were each named in the lawsuits. Robinson was to be one of the top investors in what’s now considered an abandoned plan to build a theme park 10 times the size of Disney World’s Magic Kingdom in northwest Alabama. The investment suit was filed by Allan Neill of Florence, who described himself in the suit an investor with Robinson – who accepted $250,000 from Neill and promised to return a $25,000 profit in eight days, according to the suit. Robinson has failed to pay anything back to Neill, the suit said. The suit seeks $275,000 from Robinson as well as additional interest on the promissory note of $10,541.48. The suit was filed by attorney James Stanphill of Florence. The Christmas musical lawsuit was brought by Christmas of Lights Productions, which is based in Lauderdale County. The suit said Robinson and his Provident Global Capital company would work with two other companies – in:ciite media and Triple Horse Productions – to provide Christmas of Lights Productions the necessary components to produce the musical in Sevierville, Tennessee. Triple Horse Productions and in:ciite media have also been named as defendants. According to the lawsuit, Robinson and his company that all assets associated with the musical that it was transferring to Christmas of Lights Production was “free and clear of all liens, claims or other encumbrances.” Christmas of Lights Production said that Triple Horse and in:ciite media are demanding payment from COLP for assets COLP said it was due through Robinson’s company and in:ciite media has refused to turn over assets to COLP, according to the lawsuit. “Pursuant to the Purchase Agreement, Provident and Robinson expressly agreed at all times to indemnify and hold COLP harmless from and against any and all claims, damages, liabilities, costs and expenses, including legal expenses and reasonable attorneys’ fees, arising out of any breach of any warranty or representation contained in the Purchase Agreement,” the lawsuit said. The lawsuit was filed by attorneys Kevin Heard and Angela Ary of Huntsville. Investment deal suit filed against Bryan Robinson


Bill Quietly Introduced to Allow Governor to Appoint State Auditor, Ag Commissioner

MONTGOMERY – A bill that would stop voters from electing the state auditor, as well as the state agriculture commissioner, and instead give the power to appoint both to the governor, has been introduced into the Alabama House of Representatives. HB432, sponsored by Rep. Paul Beckman, R- Prattville, had its first reading March 17. It was referred to the Constitution, Campaign and Elections Committee. “This change would represent a major power grab for the executive branch and the Governor’s office,” read a statement from State Auditor Jim Zeigler’s office. Zeigler said the bill’s inclusion of the agriculture commissioner “could be a strategy to make it look like they are not targeting me. I believe that I am the main target of this legislation.” During his first 14 months as state auditor, Zeigler has been an outspoken critic of Gov. Robert Bentley. “Having the governor appoint the state auditor would be the fox guarding the hen house,” Zeigler said. The Constitution, Campaign and Elections Committee will take up the bill, perhaps as early as this week. If the committee gives a favorable report on the bill, it would go to the House floor, possibly by the week of April 5. Zeigler is urging citizens to contact their state representatives, especially if he or she is a member of the Constitution, Campaign and Elections Committee. For a list of committee members, see “Simply ask the committee member to vote ‘No’ on HB432, and keep the state auditor an elected office that represents the people of Alabama instead of the interests of the governor,” Zeigler said. Zeigler was elected Alabama State Auditor in November 2014. His wife, Jackie Zeigler, will face Bentley appointee Matthew Brown in the April 12 runoff election for the District 1 seat on the Alabama State Board of Education. The district includes Baldwin, Escambia, Conecuh, Butler, Crenshaw, Covington and parts of Mobile counties.


Firings Lead to Closing Criminal Cases


MONTGOMERY—Firings at the Alabama Law Enforcement Agency (ALEA) has led to the closing of several criminal investigations, including one involving State Sen. Phil Williams (R-Rainbow City), according to several sources with knowledge of the investigation. Law enforcement officers have confirmed, that Special Agent Jack Wilson was ordered by State Bureau of Investigations (SBI) Director Gene Wiggin to close several high-profile cases after Governor Bentley placed ALEA Secretary Spencer Collier on medical leave. Bentley told, that he was also punishing Collier for not following his order not to give an affidavit to the Attorney General related to Speaker Mike Hubbard’s criminal felony case.

In the days following, Bentley replaced Collier with Acting Secretary Stan Stabler. After Bentley tapped Stabler, ALEA’s internal affairs, known as Standards and Integrity, questioned Agent Wilson about the Williams case and others, according to sources. According to sources familiar with the actions surrounding the cases sometime after the interrogation, Wilson was ordered by SBI Director Wiggins to close the cases. Law enforcement officers confirm that closing these criminal investigations would have been approved by Stabler. Reportedly, Wilson was troubled by what had occurred and wanted to report the cases being closed to other law enforcement agents only to be warned-off his plan by his superior officers. According to a source, Wiggins threatened Wilson with insubordination if he talked to other law enforcement agencies about the file. Sources close to Gov. Bentley report that Sen. Williams had contacted the Governor about his case, Williams’ contact with the Governor was also reported around ALEA. Williams, according to law enforcement, was being investigated for possible ethic violations related to consulting clients. On Williams’ latest ethics Statement of Economic Interests, he lists 43 professional or consulting clients. When elected in 2010, he listed no such clients. More:


Suspect responds to Alabama police Facebook post calling for his arrest


An account that appears to be managed by a man wanted for crimes in Linden responded to a Linden Police Facebook post asking for his arrest. According to Linden Police, Roderick Hill, 31, is wanted for attempting to elude officers in the Marengo County town. Police officials posted to Facebook Sunday morning to inform citizens that Hill should be “considered armed” and that “anyone caught helping him will be charged with Hindering Prosecution.” Monday morning, Roderick Hill responded to the post.

“Wtf??man y’all doing too much,” Hill posted. “It’s murderers out here and y’all worried bout lil ol me?wow…sad.” Other commenters responded in shock to Hill’s brazen rebuttal. Hill has a storied rap sheet in Mobile County, comprised mostly of various non-violent offenses.




Is It Really Students First?

Once upon a time a young girl in Ohio graduated from a private high school, then got degrees from Cornell and Harvard, neither of them in the field of education. She then joined Teach for America which means she had a five week crash course before becoming a teacher at a Baltimore elementary school for three years. Her name was Michelle Rhee. In 1997 she became CEO of The New Teacher Project, a non-profit set up to supply urban school systems with teachers. She was selected by Washington D.C. mayor Adrian Fenty in 2007 to run his 50,000 student school system, even though her only real experience in education was three years in that Baltimore classroom. To say the least, her style was “slash and burn.” How else do you explain someone who invites John Merrow of PBS to film you as you fire a principal? She was so controversial that the mayor lost his re-election in 2010 She resigned shortly afterwards. Today the D.C. school system remains one of the worst in the country with scores far below those of Alabama schools–even though they have had charter schools since 1996 which we are told are the salvation for struggling systems. What does Michelle Rhee have to do with Alabama? A good bit actually. After she left the nation’s capital, she started an organization named StudentsFirst, announcing on the Oprah Winfrey Show that she would get one million members and raise one billion dollars to change education across the nation. While no one knows how much money this non-profit has raised since they do not reveal their donors and file no paperwork with the Alabama Secretary of State, we do know that some has been spent in Alabama. At least $200,000 was spent on political campaigns in 2014.  Senator Del March, the author of the Alabama Accountability Act, the charter school bill and the RAISE bill got $20,000. Rep. Terri Collins, who chairs the Education Policy Committee in the House, got $8,000. Charlotte Meadows of Montgomery, who now works for StudentsFirst and ran for the State House in 2013, got $20,000. But the contribution that catches the eye is the $60,000 given to the Foundation for Accountability in Education. It is listed on the IRS 990 form filed by StudentsFirst for 2013-14. This is a group set up by Senator Marsh to promote the benefits of the Alabama Accountability Act. They spent $18,000 on ads supporting AAA. StudentsFirst has six lobbyists registered with the Alabama Ethics Commission. Three are registered out of Sacremento, CA and three are “contract” lobbyists. One of them is Josh Blades, former staffer for governor Bob Riley and former chief of staff for Speaker Mike Hubbard. Blades also lobbies for BCA. Supposedly Rhee is no longer involved with StudentsFirst and runs a group of charter schools started by her husband in Sacramento, CA. However, the organization is still active.) From all indications StudentsFirst has been a major player in the development of the RAISE/Prep Act. I was watching APTV’s Capitol Journal when Senator Marsh said that he had been consulting with them.
All of which leaves us to ask WHY? Why is a group based in California with no recognizable ties to Alabama education even in the picture when it comes to setting policy for our children and our schools? Where is their dog in this fight? What is their goal? Has anyone associated with the organization ever darkened the door of a school in Bayou La Batre or Bridgeport or anywhere in between? Or did they just buy a seat at the table with campaign contributions?

Morning Money

TRUMP AND THE WASHINGTON POST — If you can manage it, you should read the entire transcript of Donald Trump’s interview with the Washington Post editorial board. It is, as ever, mostly a discursive Trumpian world salad in which the GOP front-runner hardly ever answers a question with anything close to real substance. Here are a couple of our favorite moments. ..

Trump asked for specifics on his desire to “loosen up” libel laws: “I’d have to get my lawyers in to tell you, but I would loosen them up. I would loosen them up. If The Washington Post writes badly about me — and they do, they don’t write good. … I’m not looking for bad for our country. I’m a very rational person, I’m a very sane person. I’m not looking for bad.”

Trump on what he would do about urban decay and racial tension: “When you look at the Ferguson problems and the Baltimore problems and the Detroit problems. And you know there’s a lack of spirit. I actually think I’d be a great cheerleader — beyond other things, the other things that I’d do — I actually think I’d be a great cheerleader for the country.”

Trump on talking about his anatomy during a debate: “This was not me. This was Rubio that said, ‘He has small hands and you know what that means.’ Okay? So, he started it.”

Trump asked if he would use a nuclear weapon against ISIS: “I don’t want to use, I don’t want to start the process of nuclear. Remember the one thing that everybody has said, I’m a counterpuncher. Rubio hit me. Bush hit me. When I said low energy, he’s a low-energy individual, he hit me first. I spent, by the way he spent 18 million dollars’ worth of negative ads on me.”

Post publisher Fred Ryan: “This is about ISIS. You would not use a tactical nuclear weapon against ISIS?”

Trump: “I’ll tell you one thing, this is a very good looking group of people here. Could I just go around so I know who the hell I’m talking to?” Full transcript:

WP edit page’s take on the meeting: “[H]is answers left little doubt how radical a risk the nation would be taking in entrusting the White House to him. There was, first, a breezy willingness to ignore facts and evidence. Are there racial disparities in law enforcement? ‘I’ve read where there are and I’ve read where there aren’t,” Mr Trump said. … His answer to racial disparity and urban poverty is to create jobs. But how? … An empty policy basket makes almost impossible the kind of substantive debate on which democracies depend.”

GOLDMAN CALLS IT FOR TRUMP (ALMOST) — Per Goldman Sachs analysts: “The Republican nomination has not yet been clinched, though Donald Trump is the clear front-runner. While he needs to win around 65 percent of the remaining bound delegates to secure the majority needed for the nomination, this is within reach thanks to several upcoming winner-take-all contests and two other candidates splitting the remaining votes. … Trump is currently leading the race for the Republican nomination in nearly every state where recent polls exist.”

BREAK UP CITI? — KBW’s Brian Kleinhanzl and Michael Brown: “Citigroup is in the midst of a multi-year restructuring; the company has shrunk meaningfully since the financial crisis. However, Citi’s valuation remains near the lows since the financial crisis and we believe that is a reflection of investor views about the ultimate return potential of the company post restructuring. We believe that Citi could be one of the only U.S. G-SIBs (global systemically important banks) that could successfully split up and this should unlock meaningful shareholder value — 50+ percent returns versus the current market capitalization. …

“We believe that the primary motivation for splitting up would be the faster return of excess capital to shareholders. … [W]e believe meaningful return of the excess capital will be difficult given the current and expected regulatory environment that Citi faces. We fully believe that regulators are more than comfortable having capital build at the largest banks, and adding G-SIB surcharges into the stress test process will be the next leg up in capital requirements.”

WARREN RIPS TRUMP … BUT SEES SIMILARITIES — Boston Globe’s Annie Linskey: “The heightening spat between Senator Elizabeth Warren of Massachusetts and … Trump disguises the fact that the two sound a lot alike in one key area: banker-bashing. ‘Other than the hate, the xenophobia, and the downright ugliness, he talks about some important economic issues,’ said Warren of Trump in a brief interview with The Globe. ‘He came out last month and said hedge fund managers should be taxed at the same rates as everyone else. He’s right on that.”

In a Tweet storm, Warren referred to Trump as a “loser” and ripped his multiple corporate bankruptcy filings: Trump fired back in a press conference”

CLINTON ON THE “REVOLVING DOOR” WITH WALL STREET — WP’s Karen Tumulty: “In August, under pressure from liberal groups, Clinton announced her support for legislation, authored by Sen. Tammy Baldwin (D-Wis.), that aims to slow what Warren has described as a ‘revolving door’ between Wall Street and Washington. The measure would prevent financial industry executives from receiving accelerated payouts of restricted stock options and other forms of lump-sum payment if they leave those jobs to take posts in the federal government.

“However, the legislation has little chance of passing before the next president takes office, and Clinton has not said whether she would impose a similar restriction on those she would recruit for high posts in her administration, if she is elected. ‘Hillary Clinton strongly supports Senator Baldwin’s legislation, and is willing to explore other steps that might help end the revolving door between government and financial institutions,’ Clinton spokesman Brian Fallon said Monday.”

SO MUCH FOR “LOSING” TO CHINA — A pro-trade Dem emails: “I’m confused here. I keep hearing Donald Trump casually repeat that China is decisively kicking our ass at everything nonstop. But if that’s true. Why would they be begging the Fed for an anti-downturn manual … from 30 years ago?” He we referring to this Reuters piece: “Confronted with a plunge in its stock markets last year, China’s central bank swiftly reached out to the U.S. Federal Reserve, asking it to share its playbook for dealing with Wall Street’s ‘Black Monday’ crash of 1987.”

GOOD TUESDAY MORNING — Happy Primary Day! Email me on and follow me on Twitter @morningmoneyben

DRIVING THE DAY — Voters head to the polls in Arizona, Utah and Idaho (for Dems). Trump is likely to win Arizona but get crushed in Utah, emboldening the “stop Trump” movement. If Trump somehow drops Arizona, which is not impossible, that would be … yuuuge. … Hillary Clinton is likely to win Arizona but could lose Utah to Bernie Sanders, keeping the Dem race going … President Obama remains in Cuba will he will deliver remarks at the El Gran Teatro de Havana and then attend an MLB exhibition game between the Cuban national team and the Tampa Bay Rays … Obama heads to Argentina later in the day … Treasury Secretary Jack Lew testifies at 10:00 a.m. before House Financial Services on the state of the international financial system … House Financial Services housing subcommittee at 2 p.m. holds a hearing on government regulation of the housing market

FSOC READ OUT — Via Treasury: “During the meeting, the Council discussed its ongoing assessment of potential risks to U.S. financial stability from asset management products and activities, including a discussion regarding potential financial stability risks related to liquidity and redemption risks and risks associated with the use of leverage by asset management vehicles. The Council also discussed certain factors that could mitigate such potential risks. The Council noted that it expects to provide a public update on its analysis this spring.”

MUST READ ON TRUMP’S ECONOMIC VIEWS — Adam Davidson in NYT mag: “It’s easy to dismiss Trump as a loutish ignoramus who simply doesn’t understand how modern economies function. But I’ve come to see him as a canny spokesman for a different sort of economy, one that often goes by the technical name ‘rent seeking.’ … In recent weeks, hearing Trump talk, I’ve realized that his economic worldview is entirely coherent. It makes sense.

“He is not just a rent-seeker himself; his whole worldview is based on a rent-seeking vision of the economy, in which there’s a fixed amount of wealth that can only be redistributed, never grow. It is a world­view that makes perfect sense for the son of a New York real estate tycoon who grew up to be one, too”

FEDS COULD CRACK iPHONE ON THEIR OWN — WSJ’s Daisuke Wakabayahsi: “A federal magistrate judge postponed a highly anticipated Tuesday hearing over the Justice Department’s request for Apple Inc. to help unlock a terrorist’s iPhone, after the government said it may have found another way to view the phone’s contents. In a filing with the U.S. District Court in Riverside, Calif., the government said an ‘outside party’ on Sunday demonstrated to the [FBI] a possible method for unlocking the phone of Syed Rizwan Farook, who, along with his wife, killed 14 people in a December attack in San Bernardino, Calif.

“The government said it must test the method, but that if it is successful, ‘it should eliminate the need for the assistance from Apple’ in unlocking Mr. Farook’s phone. The sudden move, less than 24 hours before the scheduled hearing, is the latest twist in the high-stakes legal battle between the Justice Department and the world’s most valuable company in a closely watched case over the balance between privacy and national security in the digital age.”

SEC TAKES ON COOPERMAN — NYT’s Alexandra Stevenson and Matthew Goldstein: “The longtime Wall Street trader Leon G. Cooperman is preparing for a showdown with regulators. Mr. Cooperman and his $5.2 billion hedge fund Omega Advisors received a notice from the [SEC] on March 14 outlining the possibility that they could face enforcement action over trading violations, the hedge fund manager told investors on Monday.

“In a letter to investors, Mr. Cooperman said the trading involved a single security in July 2010 and a possible third party. Omega had been invested in the security since 2007, he said. Mr. Cooperman, 72, did not identify the stock in the letter, but later said that it was Atlas Pipeline. … The investigation into his firm may signal that regulators have not given up on pursuing improper trading cases against the nearly $3 trillion hedge fund industry despite an unfavorable federal appellate court ruling more than a year ago.”

OIL PLUNGE HITS BONDHOLDERS — FT’s Eric Platt and Ed Crooks: “Investors have suffered losses of at least $150bn in the value of oil and gas company bonds, as the slump in crude prices since the summer of 2014 has fuelled fears of a wave of defaults in the US and emerging markets. The 300 largest global oil and gas companies have also seen $2.3tn sliced from their stock market value over the same period, a 39 per cent slide since oil began its decline …

“The losses show how intense the financial strain on oil producers from falling crude prices remains, in spite of the partial recovery in prices since January. Oil is still down about 65 per cent from its June 2014 peak. Banks have also been increasing their provisions for energy-related losses on their lending.”

CUBA GOLD RUSH — WP’s Nick Miroff: “Instead of blocking off the forces of American capitalism, the Obama administration now wants them to come flooding in — and leave it up to the Cuban government to cope with the consequences. On the afternoon of his first full day in Havana, Obama hosted a business summit at a beer brewery in the harbor, and it seemed to signal the beginning of a business comeback. He was heartily cheered by Cuban small-business owners, American executives and others who support his stated goal of ending the embargo, which would require congressional action. …

“As Obama spoke Monday, in front of a backdrop of huge Cuban and U.S. flags, the cruise line operator Carnival Corp. was reaching agreement on its own deal with the Cuban government under which some of its cruise ships will begin visiting the island starting in May. Western Union on Monday announced expanded service, as well. Obama said that Cisco Systems would partner with a Cuban university to develop an Internet technology academy and that General Electric is working on an aviation and energy deal.”

PUERTO RICO HEADS TO SCOTUS — Reuters: “Puerto Rico will ask the U.S. Supreme Court on Tuesday to validate a law that could let it cut billions of dollars from what it owes in debt at some public agencies, a key test in the island’s efforts to weather a massive fiscal crisis. The U.S. territory, facing what its governor has called an unpayable $70 billion debt and a 45 percent poverty rate, will argue its case against financial creditors, including Franklin Advisers and OppenheimerFunds, who want to keep contentious restructuring talks out of court.”

POTUS Events

10:10 am || Delivers remarks to the Cuban people; El Gran Teatro de Havana, Havana, Cuba
11:20 am || Meets with members Civil Society U.S. Embassy Havana
1:25 pm || Attends a Major League Baseball exhibition game between the Tampa Bay Rays and the Cuban National Team; stadio Latinoamericano, Havana
3:50 pm || Departs Cuba

All times Eastern

Floor Action

The House votes between 2 and 3 p.m. The Senate is out of town.


Tax Refund Offsets Pay Unpaid Debts

If you can’t pay your taxes in full, the IRS will work with you. Past due debts like taxes owed, however, can reduce your federal tax refund. The Treasury Offset Program can use all or part of your federal refund to settle certain unpaid federal or state debts, to include unpaid individual shared responsibility payments. Here are five facts to know about tax refund offsets.

  1. Bureau of the Fiscal Service. The Department of Treasury’s Bureau of the Fiscal Service, or BFS, runs the Treasury Offset Program.
  2. Offsets to Pay Certain Debts. The BFS may also use part or all of your tax refund to pay certain other debts such as:
    • Federal tax debts.
    • Federal agency debts like a delinquent student loan.
    • State income tax obligations.
    • Past-due child and spousal support.
    • Certain unemployment compensation debts owed to a state.
  1. Notify by Mail. The BFS will mail you a notice if it offsets any part of your refund to pay your debt. The notice will list the original refund and offset amount. It will also include the agency that received the offset payment. It will also give the agency’s contact information.
  2. How to Dispute Offset. If you wish to dispute the offset, you should contact the agency that received the offset payment. Only contact the IRS is your offset payment was applied to a federal tax debt.
  3. Injured Spouse Allocation. You may be entitled to part or the entire offset if you filed a joint tax return with your spouse. This rule applies if your spouse is solely responsible for the debt. To get your part of the refund, file Form 8379, Injured Spouse Allocation. If you need to prepare a Form 8379, you can prepare and e-file your tax return for free using IRS Free File.

Health Care Law: Refund Offsets and the Individual Shared Responsibility Payment

While the law prohibits the IRS from using liens or levies to collect any individual shared responsibility payment, if you owe a shared responsibility payment, the IRS may offset your refund against that liability.

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