BTG Pactual CEO Esteves Arrested In Brazil’s Graft Probe, Police Say
Andre Esteves, the Brazilian billionaire who transformed Grupo BTG Pactual into the largest independent investment bank in Latin America, was arrested in the corruption probe that has shaken the country’s political and economic leadership. BTG’s shares tumbled the most ever. Federal police arrested the financier in Rio de Janeiro after first searching for him in Sao Paulo, a police press official said by telephone Wednesday, declining to provide details on why the arrest was made. Esteves is under temporary arrest for a maximum of five days, according to an official for the federal Supreme Court, which authorized the action. Police also detained the government’s leader in the Senate, Delcidio Amaral, on suspicion of harming the investigation, said the official who asked not to be identified because he’s not authorized to comment publicly. Esteves and Amaral are among the highest-profile arrests since the investigation into a pay-to-play scheme between an alleged cartel of builders and state-run oil producer Petroleo Brasileiro SA began in March 2014. The probe has helped tip Brazil into a recession and left Brazilian President Dilma Rousseff fighting for her political survival. The move “takes the Petrobras probe to a whole new level and shows the depth and breadth of a scandal that’s engulfing Brazil’s political and corporate establishment,” said Nicholas Spiro, managing director at Spiro Sovereign Strategy, in London. “The scandal is becoming more debilitating by the day.” Brazil police intercepted a conversation in which Amaral asks someone close to former Petrobras director Nestor Cervero that Cervero not mention him nor Esteves in testimonies, O Estado de S. Paulo reported, without saying how it got the information. “We’re surprised with the arrest, it must be a big mistake,” said Eduardo Marzagao, a spokesman for Amaral, who added that Amaral’s lawyer is traveling to Brasilia. “Certainly this will be showed to have been a great error.” BTG Pactual said in an e-mailed statement that it is cooperating with the investigation and is willing to explain whatever is necessary to authorities, without providing further details. The bank’s stock plunged as much as 19 percent in early Sao Paulo trading. More than 100 people have already been arrested, including former top executives at Petrobras and Brazil’s biggest construction conglomerate.
Turkey shot down a Russian warplane. Why it would happen and why it matters, explained.
- Turkey says it has shot down a Russian warplane that violated its airspace. Russian jets, in the area to bomb neighboring Syria, have violated Turkish airspace previously. Tensions between Russia and Turkey have been rising in recent weeks.
- Russian President Vladimir Putin acknowledged the shoot-down but says the plane was in Syria, 4 kilometers from Turkey’s border. He described Turkey as “backstabbing” Russia and accused it of financing ISIS.
- Several videos have emerged that appear to show the body of the Russian pilot recovered from the plane.
- Turkey is a member of NATO, making it a military ally of the US and most of Europe. NATO has called an emergency meeting over the incident. The risk of a major escalation between Russia and NATO is very low, but this may nonetheless have serious repercussions.
How the rivalry between Russians and Turks shaped the world
It’s a very tense moment for relations between Russia and Turkey. Moscow’s intervention in the Syrian conflict about two months ago, almost explicitly on behalf of the embattled regime of President Bashar al-Assad, has infuriated Ankara, which for years has led international calls for Assad’s departure. The situation now has grown particularly dark. After repeated reports of Russian violations of Turkish airspace, Turkish strike craft on Tuesday appeared to have shot down a Russian fighter jet, operating somewhere along the Turkish-Syrian border. Russian President Vladimir Putin deemed the incident a “stab in the back” and suggested that the Turks were “accomplices of terrorists.” Last month, Turkish President Recep Tayyip Erdogan had warned the Kremlin that its relationship with Turkey was in peril. “Our positive relationship with Russia is known,” he said. “But if Russia loses a friend like Turkey, with whom it has been cooperating on many issues, it will lose a lot, and it should know that.” The thinly veiled threat perhaps foreshadowed what was to come. In recent years, the two countries have shared reasonably close ties, anchored in energy interests. Erdogan’s political style, meanwhile, has a great deal in common with that of Putin. But there is a long, profound history of unease between Russian and Turkish rulers. During the Cold War, Turkey was a heavily armed NATO bulwark in the shadow of the Soviet empire. And well before the advent of the U.S.S.R. and the modern Turkish republic, the jockeying between Russians and Turks had a huge effect on the political fate of a vast sweep of Europe and the Middle East. In the 18th and 19th centuries, the expansionist Russian empire and the Ottomans fought myriad wars. They largely resulted in Ottoman setbacks, with the Russians wresting control of the northern rim of the Black Sea and chipping away at Ottoman domains in Eastern Europe and the Balkans. The Crimean War, a brutal conflict in the 1850s, brought in an alliance of European powers in defense of the Ottomans and saw the continent’s first chilling encounter with the horrors of large-scale trench warfare. The rulers of both empires saw themselves as standard bearers of civilizations — the Ottomans as the seat of Islam, the Russians as the champions of the Orthodox Church and the redeemers, even, of the legacy of the ancient Byzantines. The czars in Moscow coveted Istanbul and saw in its conquest a pathway to the warm waters of the Mediterranean and suzerainty over the Holy Lands. More:
How World War III became possible
It was in August 2014 that the real danger began, and that we heard the first warnings of war. That month, unmarked Russian troops covertly invaded eastern Ukraine, where the separatist conflict had grown out of its control. The Russian air force began harassing the neighboring Baltic states of Estonia, Latvia, and Lithuania, which are members of NATO. The US pledged that it would uphold its commitment to defend those countries as if they were American soil, and later staged military exercises a few hundred yards from Russia’s border. Both sides came to believe that the other had more drastic intentions. Moscow is convinced the West is bent on isolating, subjugating, or outright destroying Russia. One in three Russians now believe the US may invade. Western nations worry, with reason, that Russia could use the threat of war, or provoke an actual conflict, to fracture NATO and its commitment to defend Eastern Europe. This would break the status quo order that has peacefully unified Europe under Western leadership, and kept out Russian influence, for 25 years. Fearing the worst of one another, the US and Russia have pledged to go to war, if necessary, to defend their interests in the Eastern European borderlands. They have positioned military forces and conducted chest-thumping exercises, hoping to scare one another down. Putin, warning repeatedly that he would use nuclear weapons in a conflict, began forward-deploying nuclear-capable missiles and bombers. Europe today looks disturbingly similar to the Europe of just over 100 years ago, on the eve of World War I. It is a tangle of military commitments and defense pledges, some of them unclear and thus easier to trigger. Its leaders have given vague signals for what would and would not lead to war. Its political tensions have become military buildups. Its nations are teetering on an unstable balance of power, barely held together by a Cold War–era alliance that no longer quite applies. If you take a walk around Washington or a Western European capital today, there is no feeling of looming catastrophe. The threats are too complex, with many moving pieces and overlapping layers of risk adding up to a larger danger that is less obvious. People can be forgiven for not seeing the cloud hanging over them, for feeling that all is well — even as in Eastern Europe they are digging in for war. But this complacency is itself part of the problem, making the threat more difficult to foresee, to manage, or, potentially, to avert. More:
A New Military Power Rises in the Mideast, Courtesy of One Man
Martyrs’ Day is a new addition to the United Arab Emirates calendar this November, wedged between the Islamic holy days and the Dubai Shopping Festival. Many nations commemorate their fallen soldiers, but the U.A.E. has always been different. The glittering towers of Dubai and Abu Dhabi are monuments to an alternative Middle East, standing above the fray, where investors can forget the region’s conflicts and make money. If that’s now changing, it’s largely the work of one man. Sheikh Mohamed bin Zayed Al Nahyan, the crown prince of the U.A.E.’s capital Abu Dhabi and the de-facto national leader, controls 6 percent of the world’s oil and its second-richest wealth fund. At 54, young for an Arab leader, he’s trusted by Washington and feted in Moscow. And he’s spent three decades beefing up his small nation’s military, making him one of Lockheed Martin Corp.’s best customers. Sheikh Mohamed has always been security conscious. As a young prince in the air force in 1990, when U.S. troops were massing in the Persian Gulf to fight Saddam Hussein, he drove through the sand dunes to meet an American general for lunch, stashing a rifle under the front seat, just in case he got shot at. Now, to Gulf leaders, the neighborhood looks more dangerous than ever, with Islamic State taking root and Iran rising — and the crown prince wants his country to have more weapons. From the Switzerland of the Persian Gulf to its Sparta, is how one Western official describes the transformation. It’s one full of risks, because the U.A.E.’s business model has largely worked — turning it from a $50 billion economy in 1990 to the Arab world’s second-largest after Saudi Arabia, with output of $400 billion last year. From Dubai skyscrapers, Citigroup and Uber run regional hubs. Abu Dhabi, where Sheikh Mohamed holds court, has Ferrari World and branches of New York University and Paris’s Sorbonne; Guggenheim and Louvre museums are under construction. On Oct. 4, the prince was far from those glitzy landmarks, in the small northern emirate of Umm al-Quwain. There, the family of Ahmed Hebaitan al-Baloushi was in mourning. He was one of more than 50 Emirati soldiers killed by a missile attack in Yemen, while fighting Shiite rebels with ties to Iran. Sheikh Mohamed has engaged the U.A.E. in that war alongside Saudi Arabia, part of a wider effort to roll back Iranian influence. He’s also joined the bombing of Islamic State in Syria and struck at jihadists in Libya. Concerned about a U.S. retreat from a turbulent Middle East, he’s on the offensive across the region. More:
Canada refugee plan revives concerns over porous U.S. border
Standing two feet from Canada on windswept Montana prairie land, U.S. Border Patrol agent Andrew Herdina looks out over a line of crooked old fence posts with no wire between them — the international border. “If somebody is set on doing it, there are plenty of opportunities to cross this border,” said Herdina, surrounded by a vast expanse of prairie grass where there were no border posts, or checkpoints, or any visible signs of security. With U.S. security concerns heightened following the attacks in Paris claimed by Islamic State, the relatively porous state of America’s northern border has attracted little attention as politicians, mostly Republicans, have attacked President Barack Obama’s plans to allow in 10,000 Syrian refugees. But in Montana, which shares a 500-mile (800-km) border with Canada, border agents and some residents say they are concerned about Ottawa’s plan to bring in 25,000 Syrians by year-end, even though the government there insists its screening will be thorough and there are limited indications that militants may be seeking to use refugee status to cross borders. The world’s longest shared land border attracts a fraction of the U.S. attention and security resources taken up by the much shorter southern border with Mexico, which is patrolled by 18,000 U.S. border agents compared to 2,200 in the north. The National Border Patrol Council, the border patrol union, says at least another 2,000 agents are needed on the Canadian border, which runs 5,500 miles from Alaska to Washington State and Maine. Herdina says the most effective tool in tracking illegal border crossers is not the border agents or surveillance airplanes; it’s the roughly 100 ranchers who span Montana’s border with Canada. “They are our best asset,” said Herdina, who is vice-president of the Montana branch of the union. Last year, one rancher called the border patrol to report two strangers on his land, Herdina said. They were two Guatemalans who had crossed the border illegally. Janas Strauser, owner of 66 Ranch on the border, said: “The people up here will report people who cross the border. The ranchers and farmers call them in.” While the border patrol union has a stake in securing more jobs and funding, its view was supported by a 2011 report by the Government Accountability Office, a non-partisan congressional watchdog, which found that only 32 miles of the border was properly secure and that the security risks were genuine.
U.S. Judge Holds Bank of China In Contempt For Defying Subpoenas
A federal judge on Tuesday held Bank of China in contempt of court for failing to produce account records requested by Gucci and other luxury brands. The decision stems from a 2010 lawsuit brought by the brands against a group of counterfeiters who are accused of selling goods like counterfeit Gucci handbags. To proceed with the lawsuit, Gucci subpoenaed Bank of China, asking for account records located in China that the brands say could help them find out more about the counterfeit operation. The bank has refused to comply, saying that producing the records would violate China’s secrecy laws. At a hearing Tuesday, U.S. District Judge Richard Sullivan was visibly frustrated with the bank’s repeated non-compliance. According to the judge, the bank used “ridiculous” delay tactics in the lawsuit and was essentially telling brand owners to “suck it up.” “You’re basically preventing the plaintiffs and the court from being able to…bring justice to people who have violated U.S. law,” he said to Bank of China’s lawyer. After an hour-long hearing, the judge held the bank in contempt and said he would determine specific monetary sanctions at a later time, likely on Monday. Gucci is asking the judge to order a $12 million payment, as compensation for how much the brands say they would have collected in damages from the counterfeiters, and up to $3 million a day in coercive sanctions. Gucci is also requesting that the bank pay the company’s legal fees. The judge said the coercive sanctions “need to be a big number to make [the bank]…think twice about violating a court order.” A lawyer for Bank of China said at the hearing on Tuesday that the $12 million request is unjustified because the brands have not actually obtained a judgment yet against the counterfeiters. The judge said that’s “kind of hard to do if they don’t have the information I’ve said they’re entitled to.” Allen & Overy LLP, the law firm representing Bank of China, said in a statement afterwards that it was “disappointed” by the judge’s ruling. “Bank of China has not been accused of wrongdoing and is not a defendant in this case,” the statement said. “The district court does not have jurisdiction to order the Bank to produce documents.”
Iranian Hackers Attack State Dept. via Social Media Accounts
WASHINGTON — Four months after a historic accord with Tehran to limit its atomic ambitions, American officials and private security groups say they see a surge in sophisticated computer espionage by Iran, culminating in a series of cyberattacks against State Department officials over the past month. The surge has led American officials to a stark conclusion: For Iran, cyberespionage — with the power it gives the Iranians to jab at the United States and its neighbors without provoking a military response — is becoming a tool to seek the kind of influence that some hard-liners in Iran may have hoped its nuclear program would eventually provide. While American officials doubt cyber skills, or even the most advanced cyber weapons, will ever have that kind of power, Iran’s cyber focus these days is notable. Over the past month, Iranian hackers identified individual State Department officials who focus on Iran and the Middle East, and broke into their email and social media accounts, according to diplomatic and law enforcement officials familiar with the investigation. The State Department became aware of the compromises only after Facebook told the victims that state-sponsored hackers had compromised their accounts. “It was very carefully designed and showed the degree to which they understood which of our staff was working on Iran issues now that the nuclear deal is done,” said one senior American official who oversees much of that operation and who requested anonymity to discuss a continuing investigation. “It was subtle.” Iran’s cyberskills are not yet equal to those of Russia or China. But the attack against the State Department by using the social media accounts of young government employees to gain access to their friends across the administration — a focus that had not been seen before — showed an ingenuity beyond the Russian brute-force attack that infiltrated the State Department’s unclassified email system a year ago. In the aftermath of the nuclear accord, American intelligence officials have warned senior officials that they expect Iran to ramp up its use of cyberespionage. More:
Lew Vows to Resist Congressional Maneuvers to Weaken Dodd-Frank
As an important deadline looms in Congress, the Obama administration signaled on Tuesday that it would push back hard against any legislation that substantially loosens the sweeping 2010 overhaul of the financial system. Republicans in Congress are backing legislation that would soften certain parts of the reforms, which were accomplished through the Dodd-Frank Act five years ago. They are now seeking to insert the changes into a spending bill that has to be passed by Dec. 11 to avoid a government shutdown.
Last year, Congress attached a provision to a wider spending bill that ended up gutting an important part of the law regulating instruments known as swaps. The victory for Wall Street indicated that big banks still had sway in Washington, but it also helped reinvigorate the campaigns of those who want to do more to rein in large financial institutions. On Tuesday, Jacob J. Lew, the secretary of the Treasury, sought to underscore the administration’s opposition to any meaningful concessions on Dodd-Frank. “I have publicly made clear that my recommendation to the president would be that if there are legislative measures that will roll back the clock, that would take us back toward where we were before the financial crisis, I would recommend a veto,” Mr. Lew said via email. Still, such declarations may not deter those in Congress who may believe that the Obama administration is more likely to give ground on financial regulation than on its signature health care overhaul or other policies it holds dear. While they may achieve smaller concessions this year, the critics of Dodd-Frank may also hope to establish a track record of chipping away at the overhaul each year. Their cause may also be helped by the relatively complex nature of the changes they want to make. Their victory last year was over a regulation that governed swaps, financial instruments that Wall Street uses to hedge risks and speculate. But Mr. Lew said attaching financial regulation amendments to spending bills was a stealthy effort to erode important parts of Dodd-Frank. More:
New rules proposed for high-speed traders
NEW YORK — Regulators are proposing new procedures to monitor high-speed trading more closely in response to wild market swings brought on by a series of technical breakdowns. More than 70 percent of all trading is automated, the Commodity Futures Trading Commission said Tuesday as it voted unanimously in favor of new registration standards for high-speed traders. The systems use algorithms to spot variances in market data, allowing trading firms to deliver buy and sell orders in milliseconds. That technology has led to a number of high-profile glitches, including one this summer that shut down the New York Stock Exchange for almost half a day. The proposals would require some traders to register with the commission, specifically those “engaged in algorithmic trading through direct electronic access” to major U.S. markets. The rules, meant to foster greater transparency, are open for a 90-day public comment period. They also call for tools to prevent “self-trading,” when one firm takes both sides of a trade. Key elements of the proposal involve market participants, including merchants, setting up risk controls for the trading orders. They must submit compliance reports describing those controls. CFTC commissioner Timothy Massad said the proposal “provides some common-sense risk controls” that embrace the benefits of automated trading. In a statement, he said the goal is to have risk controls at multiple levels, from the exchange itself to clearing members and trading firms. The approach comes one year after high-speed trading firm Athena Capital Research agreed to pay a $1 million penalty to settle allegations of market manipulation. The Securities and Exchange Commission alleged that the company used an algorithm to manipulate closing prices of thousands of stocks. The company placed a large number of rapid trades in the final seconds of every trading day over a six-month period. New York-based Athena neither admitted nor denied the allegations under the settlement, but it did agree to refrain from violations of the securities laws.
Exclusive: Three Goldman bankers leave for Uber as tech world raids Wall Street talent
Three mid-level bankers in Goldman Sachs Group Inc’s (GS.N) technology investment banking group in San Francisco have left to take positions at ride service company Uber Technologies Inc in recent months, people familiar with the matter told Reuters. The bankers are the latest to leave Wall Street banks for Silicon Valley startups, where the lure of more flexible hours – and in some cases stock options and share grants – can be hard to resist. For tech companies, having bankers on staff can help smooth the path to an initial public offering and other capital raisings. Uber, currently valued at around $51 billion, said in August that it expected an IPO within 18 to 24 months. It has already raised $7.4 billion from multiple financing rounds, and is the biggest so-called “unicorn” – the term for privately held tech startups worth $1 billion or more – that has yet to go public. Goldman does not disclose attrition figures, but it has lost enough employees to startups, private equity firms, and other companies in recent years that it announced earlier this month a series of changes designed to help it retain more junior employees at the analyst and associate level, including promoting them faster. It has also set up a task force to help it retain mid-level employees who hold the vice president title. Spokespeople for Goldman and Uber both declined to comment.The increasing attraction of other fields for Wall Street bankers underscores how increased regulation after the financial crisis has weighed on employees’ potential earnings from careers in the sector.
Trump resurfaces idea of third-party run
Donald Trump is again raising the possibility that he might run for president as a third-party candidate, suggesting that the Republican Party is not meeting its end of their loyalty “deal”. Responding to reports that independent super-PACs are planning attack ads against his candidacy, the billionaire Republican front-runner tweeted on Monday: .@WSJ reports that @GOP getting ready to treat me unfairly—big spending planned against me. That wasn’t the deal! Asked what “reports” Trump was referring to, his campaign manager Corey Lewandowski said in a telephone interview that it was a reference to plans by a super-PAC supporting Ohio Gov. John Kasich to run a $2.5 million campaign against Trump. Trump’s tweet excavates a problem that the Republican National Committee (RNC) thought it had buried three months ago. Republican officials feared earlier in the year that Trump would run as an Independent candidate in the general election, which could vacuum votes away from the Republican nominee and ultimately hand the White House to Hillary Clinton. RNC Chairman Reince Priebus convinced Trump to sign a loyalty pledge that he would support the party’s eventual nominee, and when the front-runner did so, on Sep. 3, the party thought the issue was over. Trump said at the time: “I see no circumstances in which I would tear up that pledge.” Asked what Trump meant by his tweet Monday, Lewandowski said: “He wants to be treated fairly.” “But if Republicans are going to go attack him then maybe he doesn’t think he’s being treated fairly,” he added. Lewandowski did not explain how Trump is equating the super-PAC’s plans to being treated fairly by the national committee, which has nothing to do with the spending. It is the second time in two days that Trump has publicly toyed with abandoning the pledge and running as an independent. Interviewing Trump on ABC’s “This Week” program Sunday, host George Stephanopoulos asked the businessman whether he would launch a third-party bid amid news that GOP operatives are planning to launch an anti-Trump “guerilla campaign.” “You know, when I did this, I said I have to be treated fairly,” Trump told Stephanopoulos. “If I’m treated fairly, I’m fine. All I want to do is a level playing field.” Trump first raised the possibility of a third-party candidacy in an exclusive interview with The Hill in July, saying the RNC “has not been supportive.” Pressed on whether he would run as a third-party candidate if he fails to clinch the GOP nomination, Trump told The Hill that “so many people want me to, if I don’t win.”
Ralph Nader wrote Janet Yellen a sexist letter. Her response is a fantastic short lesson in monetary policy.
The Federal Reserve has been attacked for years by critics, most of them conservative, who insist that its low interest rates are bad for savers. But those attacks recently got more attention when Ralph Nader joined the fray, penning a remarkably sexist open letter suggesting both that Fed Chair Janet Yellen’s policies were hurting savers and also that she would know this if she would only “sit down with your Nobel Prize winning husband, economist George Akerlof” and talk the matter over. Akerlof is, indeed, a very distinguished academic economist, but unlike, say, Janet Yellen he’s not actually known for work on monetary issues. He also, unlike Yellen, doesn’t have more than a decade of experience in central banking. But it’s not unusual for even the most well-known and well-regard women in economics to have trouble gaining recognition. Yellen took the unusual step of responding with a letter of its own. It ignores the bizarre reference to her husband, but does include one of the best short summaries of why this widespread criticism is totally mistaken: Would savers have been better off if the Federal Reserve had not acted as forcefully as it did and had maintained a higher level of short-term interest rates, including rates paid to savers? I don’t believe so. Unemployment would have risen to even higher levels, home prices would have collapsed further, even more businesses and individuals would have faced bankruptcy and foreclosure, and the stock market would not have recovered. True, savers could have seen higher returns on their federally-insured deposits, but these returns would hardly have offset the more dramatic declines they would have experienced in the value of their homes and retirement accounts. Many of these savers would have lost their jobs or pensions (or faced increased burdens from supporting unemployed children and grandchildren). What Nader (or Ben Carson or dozens of congressional Republicans and others offering this line of attack) is missing, and what Yellen is highlighting, is that “savers” who put money in bank accounts aren’t a special class of people who live on Mars isolated from the experience of the rest of the economy. Savers generally also have jobs and own homes. Smart savers don’t just have money in a bank account but are also putting money in a 401(k) or other tax subsidized retirement account where they own shares of stock. Moves that are beneficial to the labor market, beneficial to share prices, and beneficial to house prices aren’t bad for savers, even if they happen to be bad for one particular kind of asset a saver might have.
Calpers Reports It Paid $3.4 Billion to Private-Equity Firms
Private-equity firms reaped $3.4 billion in profit sharing for investing on behalf of the California Public Employees’ Retirement System since 1990, the sort of gains that have led to debate over why Wall Street pays lower taxes than most American workers. The $295 billion pension fund Tuesday disclosed for the first time data on carried interest earned from buying and selling companies. That money is taxed as capital gains rather than income, which faces higher levies. Calpers shares the proceeds with managers of more than 700 private-equity funds, including those run by Carlyle Group LP, Blackstone Group LP and Apollo Global Management LLC. Calpers invests 9.6 percent of its money in private equity, or about $28.9 billion. The pension said it earned $24.2 billion from such investments since 1990. The disclosure by the nation’s largest public retirement fund could spur similar revelations from pensions nationwide as Wall Street’s favorable treatment has drawn scorn from presidential candidates of both parties. President Barack Obama wants to tax carried interest as ordinary income at rates up to 43.4 percent, instead of as capital gains at 23.8 percent. Democrat Hillary Clinton and Republicans Donald Trump and Jeb Bush have said they would rein in the discount. “Private equity has the highest net returns in our portfolio,” Ted Eliopoulos, Calpers’ chief investment officer, said in a statement. “As a long-term investor, it is an important piece of our investment strategy and our mission to provide pension benefits for generations to come.” Private-equity managers typically charge investors a 1 percent to 2 percent annual management fee on committed capital that is taxed as income. They generally also keep 20 percent of investment profits as carried interest, which is taxed at capital-gains rates. In addition, firms sometimes waive some of the management fee in exchange for an equivalent amount from a transaction such as the sale of a company, lowering their tax bills even more.
Consumers Increasingly Vulnerable to Cybercrime, Report Says
Consumers globally spent roughly $150 billion in the past year dealing with the fallout from cybercrime, according to a new report released Monday. Of the 17,000 consumers surveyed in 17 countries, 47% reported that they were affected by cybercrime. In the 12 months to September, more than 348 million identities were exposed as a result of data breaches, according to the report released by Norton, the consumer security unit of cybersecurity company Symantec Corp.SYMC +0.48%. Norton’s findings point to a larger trend — it’s becoming easier than ever for anyone to commit cybercrime, thanks to a flourishing underground market for hackers and hacking tools. This past summer, U.S. authorities shut down Darkode, an online site where hackers could buy and sell malware, or their own skills, to launch cyberattacks. At the time, Darkode was estimated to be one of 800 such sites. Police from 20 countries were involved with the takedown, illustrating the reach of these underground economies. Dozens of people who allegedly participated in the forum were arrested and charged, and their cases are still pending. In a similar case last year, federal prosecutors arrested more than 90 people who had purchased software from Blackshades, a site that sold computer-hacking software to thousands of buyers around the world. The software, called a remote access tool, cost around $40 and allowed buyers to control computers from a distance, including activating victims’ webcams and recording their keystrokes. The leader of Blackshades, 25-year-old Alex Yucel, pleaded guilty after his extradition to the U.S. from Moldova and was sentenced this summer to four years and nine months in prison by a federal judge. What’s frightening about these sites, experts say, is that they potentially allow criminals with little technical expertise to hack into computers at a relatively low cost and steal people’s personal information. Norton says there’s a basic way to shore up cyber defenses: create passwords that are secure (with a combination of at least eight letters, numbers and symbols) and don’t share passwords with friends or family. Another tip from Norton: report any unusual activity in your financial accounts, even if it’s a tiny amount. “Often cybercriminals will charge a small ‘test’ amount before attempting to drain your bank accounts,” the report said.
Dream of New Kind of Credit Union Is Extinguished by Bureaucracy
Brewster Kahle didn’t need to start a bank. He made a fortune building start-ups and then used his money to build the Internet Archive, a nonprofit organization trying to maintain a copy of everything published on the Internet. In 2008, though, Mr. Kahle saw how hard it was for the employees at his firm to obtain loans, and more broadly, how the existing financial system had helped contribute to the financial crisis. He thought he could do things differently, and he aimed to prove it when he began applying to open a credit union in early 2011. Since then, the credit union has faced a barrage of regulatory audits and limitations on its operations, first when it tried to work with low-income immigrants in New Jersey and especially after it looked at providing banking services to Bitcoin companies that were being rejected by other banks. Now, Mr. Kahle is giving up on his dream of creating a new kind of bank, one for social good rather than profit. He hopes to give the credit union charter to a nonprofit organization in New Jersey that can make use of it — or give it up. Mr. Kahle’s experience and internal documents offer a glimpse into how regulators approach a new technology like Bitcoin, which most banks have refused to touch, partly because of the hesitation of regulators. More broadly, the troubles faced by his Internet Archive Federal Credit Union point to how difficult it can be to try out anything new in the heavily regulated financial industry. After an 18-month application process, regulators let the Internet Archive Federal Credit Union open in 2012, but with restrictions that did not allow it to offer basic banking products, such as debit cards and online banking. Mr. Kahle said the credit union asked its regulators before it took on the first Bitcoin clients — and quickly dropped those clients after the regulators turned sour on the idea — but it has faced a steady stream of official exams since: 11 in 14 months. In August, the credit union, by its own count, spent 187 hours dealing with regulators and only 61 hours dealing with customers. “I think we could really use some new ideas in the banking world — and the credit union offers a nice structure,” Mr. Kahle said. “But they just won’t allow it.” A spokesman for the National Credit Union Administration, a federal agency whose board is appointed by the president, said it would not comment on Mr. Kahle’s specific complaints, but in a statement, the chairwoman of the agency, Debbie Matz, a Democrat, said that “if a credit union thinks it’s going to be cited for breaking the law, sometimes a C.E.O. will push back and blame the regulator. It’s our job to protect depositors.” The chief executive of Mr. Kahle’s credit union, Jordan Modell, said that the N.C.U.A. had never given him any indication that the credit union would be cited for breaking the law. More:
Kentucky Restores Voting Rights for Thousands of Ex-Felons
Governor Steve Beshear, Democrat of Kentucky, only has two weeks left in office, but he’s determined to go out with a bang. Beshear announced today that he is issuing an executive order restoring voting rights for nonviolent ex-felons who have completed their sentences. This will give 170,000 ex-offenders the opportunity to register to vote, according to the Brennan Center for Justice. It’s a huge victory for voting rights in the Bluegrass State. Kentucky is one of only three states, along with Florida and Iowa, where ex-felons cannot vote unless the governor personally restores their rights—preventing 7.4 percent of the voting-age population in the state and 22.3 percent of African-Americans from voting after serving their time. Nationally, 5.85 million Americans can’t vote because of felon-disenfranchisement laws, according to the Sentencing Project, including 2.2 million African-Americans. Thirty-nine states automatically restore the voting rights of all felons, while eight states automatically restore such rights to only some felons, notes Insider Louisville. “The old system is unfair and counterproductive,” Beshear said at a news conference today. “We need to be smarter about our criminal-justice system. Research shows that ex-felons who vote are less likely to commit crimes and [more likely] to be productive members of society.” Beshear’s Republican successor, Matt Bevin, has voiced support for restoring voting rights for ex-felons, as has Kentucky Senator and presidential candidate Rand Paul. “I don’t think it’s fair or appropriate that we would take from somebody something that could be restored to them, that the nation would be better to have them in possession of all their rights,” Bevin said when he ran for Senate in 2013. Voting-rights advocates are hopeful that he will continue Beshear’s executive action.
Sen. Shelby says efforts to reform banking regulations are gaining steam (Video)
U.S. Sen. Richard Shelby said his efforts to ease regulations on smaller financial institutions could move forward in Congress in the next two weeks. In a speech at the Birmingham Kiwanis Club at the Harbert Center Tuesday, Shelby, R-Ala., said he has been negotiating with Democrats to find a “substantive and politically doable” solution that would ease the regulatory burden on small and midsized banks. Big banks caused the economic collapse, he said, and it’s not fair to put the same tight regulations to prevent their collapse again on the smaller banks. “We are treating all the banks the same and putting them all in the same straight jacket,” Shelby told the crowd of about 200. “I want to try to give relief to the small and midsized banks because they didn’t cause the problem, but they’re paying the same price.” Shelby has proposed since the spring a Financial Regulatory Improvement Act that would give regulatory relief for community banks from the Dodd-Frank Act that would stay in effect for larger banks. It has not made it to the Senate floor. Regions Bank and others came out in support of Shelby’s bill in May. The bill would regulate banks with assets greater than $50 billion based on their systematic risk profiles, and not on arbitrary size thresholds. For American City Business Journal coverage on this out of Washington, D.C., click here.
Trump rallies get rough
Last month, protesters interrupted a Donald Trump rally in Virginia with chants of “Dump Trump” and clashed with his supporters, one of whom was caught on camera spitting in a protester’s face. Another video caught a protester chanting “black power” and a Trump supporter responding with “white power” as a police officer stood between the two. Multiple groups of Hispanic protesters interrupted the mogul at a rally in Miami, where video showed a Trump supporter dragging a protester to the ground and kicking him. In September, outside a Trump rally in Dallas, dozens of police officers, some on horseback, pushed back hundreds of shouting protesters after breaking up a tense standoff with the real-estate tycoon’s supporters. On Wednesday, a protester who was once convicted of bringing a bomb to a military facility was arrested at a rally in Massachusetts, and on Saturday video showed supporters punching and kicking a protester who interrupted a rally in Alabama, while Trump himself later suggested that the man had it coming. Welcome to the most combustible presidential campaign in recent memory. The candidate’s angry rhetoric — on subjects like undocumented Mexican immigrants, political correctness and “thugs” in Baltimore — has made his run a magnet for disaffected supporters and for identity politics protesters determined to steal the spotlight and disrupt his events. Trump’s relish for confrontation, where other politicians would seek to minimize it, has only fueled the fire. More:
The Lifelong Republicans Who Love Bernie Sanders
When Tarie MacMillan switched on her television in August to watch the first Republican presidential debate, she expected to decide which candidate to support. But MacMillan, a 65-year-old Florida resident, was disappointed. “I looked at the stage and there was nobody out there who I really liked. It just seemed like a showcase for Trump and his ridiculous comments,” she recalled. “It was laughable, and scary, and a real turning point.” So she decided to back Bernie Sanders, the self-described “Democratic socialist” challenging Hillary Clinton. MacMillan was a lifelong Republican voter until a few weeks ago when she switched her party affiliation to support the Vermont senator in the primary. It will be the first time she’s ever voted for a Democrat. That story may sound improbable, but MacMillan isn’t the only longtime conservative supporting Sanders. There are Facebook groups and Reddit forums devoted entirely to Republicans who adore the Vermont senator. These Republicans for Sanders defy neat categorization. Some are fed up with the status quo in Washington, and believe that Sanders, with his fiery populist message, is the presidential contender most likely to disrupt it. Others have voted Republican for years, but feel alarmed by what they see as the sharp right turn the party has taken. “I have been a conservative Republican my entire life. But the Republican party as a whole has gotten so far out of touch with the American people,” says Bryan Brown, a 47-year-old Oregon resident. “I switched my registration so that I could vote for Sanders in the primary, but the day the primary is over I’m going to register as an Independent.” More:
Military-Grade Luxury Bunker Hits Market, Could be Yours
In the market for a new home? How about a fully-renovated military-grade bunker for you and up to 13 of your closest friends, family and personal staff? The bunker/home comes complete with 3-feet thick concrete walls that can withstand a 20 kiloton nuclear blast. Decontamination showers and a newly installed secure air system make this luxury listing the perfect place to ride out a nuclear war. Harry Norman, Realtors last week posted the Tifton ,Georgia, listing priced at a cool $17.5 million. You can go about conducting business on one of the two conference rooms, equipped with two DSL broadband lines.
The bunker can sleep 13 comfortably in one of its luxury apartments, with enough space left over for five more in its staff bedrooms. Oh, and there is also a modernized kitchen, 12 full bathrooms, built-in move theater and a 100-yard outdoor shooting range. Remember, just because you’re preparing for the worst, doesn’t mean you have to can’t live in the best. The Sister Hood of Harry Norman, REALTORS Buckhead Office are touting the property as a one-of-a-kind find. All told, the bunker is 14,000 square feet inside, situated on 32 acres of southeast Georgia commercial real estate-appearing property. The property’s listing managers a calling it “the ultimate safe haven” in an “increasingly dangerous world.” “As the recent events in Paris and Mali have shown, we are living in an increasingly dangerous world,” Chris Salamone, co-owner of Bastion Holdings, said in a release. “This property offers the ultimate safe haven for any family, business or government that wants the ultimate in security and comfort. Renovations include amenities that rival any 5-star hotel, except located 45 feet underground, impenetrable and undetectable.”
The bunker was built in 1969 for $7 million. That’s about $100 million today, adjusted for inflation. “It’s the only fully renovated nuclear hardened underground bunker in the southern United States,” according to a release. See photos:
Canceled Birmingham City Council meeting delays decisions on Uber, bond projects, more
Birmingham residents will have to wait at least another week to learn whether they can take an Uber ride this Christmas, whether the fast-approaching Birmingham Bowl will get city funding and more. At 10:30 a.m., an hour after the meeting was scheduled to begin, City Council President Pro Tem Jay Roberson announced to a sizable crowd of citizens and stakeholders that it was canceled because there weren’t enough council members present to vote on items. Four of the nine council members were in attendance: Valerie Abbott, William Parker, Kim Rafferty and Roberson. The remaining five council members did not attend: Sheila Tyson is out of town, and Steven Hoyt told other council members that he had work obligations. Also absent were Marcus Lundy, Lashunda Scales and President Johnathan Austin, who told AL.com’s John Archibald that “most people are out of town visiting family for Thanksgiving.” Many residents and council members in attendance expressed frustration that important issues were delayed and that city business in general was disrupted. “We have items that were very important to our city, important to our community, as you can see from the presence in council chambers today, the constituency and citizens throughout the city of Birmingham,” Roberson said after the meeting was canceled. Missing meetings is not the ideal way to handle contentious issues or to represent voters, he said. “We’re elected to serve the people, elected us to serve in these seats and represent them and speak on their behalf,” he said. “I don’t have an answer for every council member… Sometimes when it gets contentious, or there are long deliberations, you have to stand firm in what you believe in.” Rafferty acknowledged that several items on the agenda had been especially difficult to address, but the council should have those discussions in committee meetings and take care of business on Tuesdays. “It does nothing but delay the inevitable,” Rafferty said. “The items are going to come before us. The items are going to be dealt with, whether to the pleasure of one side of issue or the other side remains to be seen. It would have been better to move the items forward than delay them for whatever justification there was.” In the past, she said, there has always been ample notification if there was the possibility they would not reach a quorum at a council meeting. Whether council members are traveling, tied up in other city business or at work, they inform the others in advance. “Today nobody knew anything until 10:30, when final confirmation came through,” she said. “Nobody was answering their phones, and every councilor up there was calling somebody to find out what was going on.” Roberson also said they tried unsuccessfully to contact absent council members, some of whom he believed would be in attendance after conversations late Monday night. “We all have responsibilities as leaders in our certain districts, so I’m just glad we had the four council members that were here,” Roberson said. “And really, as it reflects on the council, these things happen sometimes, we don’t have attendance or don’t have a quorum. The business of city will move forward next week.” The items will be moved onto the agenda for next week’s council meeting, he said. Delayed items include:
The time an Alabama senator mistook his wife’s panties for a handkerchief, in public
Washington Post national political correspondent Karen Tumulty was packing up some of her things to move to a new office when she unearthed some old documents, including a press release from the late U.S. Sen. Howell Heflin (D-Ala.) that she called the “best ever.” Heflin served as Alabama’s junior U.S. senator from 1979 until being succeeded by Sen. Jeff Sessions (R-Ala.) in 1997. “There are some artifacts that you come to realize are real treasures,” Tumulty explained on Time Magazine’s blog. “Like my favorite press release of all time. It is dated July 19, 1994, and was issued by then-Senator Howell Heflin’s office. That morning, the Senator had been dining in the Capitol with some Alabama reporters, and suddenly felt a sniffle coming on. The reporters were aghast when the Senator reached into his pocket, pulled out a bit of fabric and began to wipe his nose with … a pair of ladies underwear. Hence the following:
STATEMENT OF SEN. HOWELL HEFLIN
JULY 19, 1994
I mistakenly picked up a pair of my wife’s white panties and put them in my pocket while I was rushing out the door to go to work. Rather than take a chance on being embarrassed again, I’m going to start buying colored handkerchiefs. “Yep,” Tumulty concluded, “that’s one press release that I’m hanging on to.”
CDC: Deadly ‘kissing bug’ reported in GA, AL
ATLANTA (WTVM) – According to the Centers for Disease Control and Prevention, the pest known as the “kissing bug” has made its way to the United States, and has been reported in both Georgia and Alabama. Saw a story on-air and want to learn more? Find the social media talkers and big news stories here from our social media pages and News Leader 9 shows! Officially named the triatomine bug, it is a type of reduviid bug that carries a parasite called Trypanosoma cruzi that causes Chagas disease, the CDC says. The bug also comes in 11 different species. The bug is known as “kissing” bugs, assassin bugs, cone-nosed bugs, and blood suckers. It is unclear to the CDC, however, how many reports there have been or where, according to the Atlanta Journal-Constitution. More:
8 cool things to see and do at the new Grand Bohemian Hotel Mountain Brook
Birmingham hasn’t seen anything quite like the swanky, luxurious and enthusiastically eclectic Grand Bohemian Hotel Mountain Brook, which quietly opened to guests Wednesday and officially celebrates its grand opening with a ribbon-cutting ceremony on Friday. The 100-room boutique hotel, which is located on Lane Park Road in Mountain Brook, is the 11th such property in the Kessler Collection of artistically-inspired hotels founded by Orlando, Fla., entrepreneur and developer Richard Kessler. Each of the 11 Kessler Collection hotels is unique to its particular location, and the Mountain Brook property features bold colors and a garden-like atmosphere that reflects the nearby Birmingham Botanical Gardens.
“You see a lot of botanical influences that were obviously inspired by the gardens across the way,” Mark Kessler, Richard Kessler’s son and the president and COO of Kessler Collection Design and Development, said at a media luncheon at the hotel today. “We have our own interior design team in-house. . . . We used a local ironsmith here, local stone artisans here, people from other Southeastern locations that we worked with on other properties.” The hotel property features everything from a health spa and an art gallery to a cooking school and a wine blending room. Below are 8 cool things to see and do at the Grand Bohemian. For a quick visual tour of the hotel, click on AL.com photographer Tamika Moore‘s photo gallery at the top of this story.
Alabama No. 3 in the country for Black Friday brawls. Of course
Who doesn’t love a bargain? And if you consider yourself a serious bargain hunter, who doesn’t love Black Friday? If you’re one of the brave souls who is planning on hitting the stores this Black Friday (Nov. 26), you’ll want to keep this in mind: you’re more likely to get in a shopping fight in Alabama than almost anywhere else in the country. Estately.com recently ranked the states where you are most likely to encounter a Black Friday fight. The rankings were determined by looking at social media interest in Black Friday combined with the frequency of aggravated assaults. The theory is that places with an increased interest in Black Friday that also have higher levels of violence will result in smackdowns over the latest Elmo must-have toy or Apple i whatever. Alabama comes in at number three on the list. Here’s the top 10:
Alabama man charged with carrying loaded gun in New York airport
A Guntersville man is facing a felony weapon charge from the Port Authority of New York & New Jersey. Port Authority police arrested Thomas T. Whitten, 43, at LaGuardia Airport at about 7 p.m. Sunday. Port Authority spokesman Joe Pentangelo said Whitten was in possession of a loaded .380 Ruger pistol inside Terminal D at the Delta ticket counter. The gun was allegedly loaded with six rounds. Whitten also had two loaded magazines and 50 additional rounds of ammunition, authorities said. Whitten was charged with second-degree criminal possession of a weapon. He was arrested without incident. Pentangelo said Whitten does not have a New York permit for the gun and was in New York since Nov. 19. He is due back in court on Jan. 16. Whitten could not be reached for comment.
Alabama federal employees getting ‘your data was stolen’ notices
This summer’s huge cyberattack on the federal government is getting personal for thousands of Alabama residents this month as letters arrive from Washington saying “your Social Security Number and other personal information was included in the intrusion.” In Huntsville, home of Redstone Arsenal, letters have been steadily appearing in mailboxes for at least a week. The arsenal, Huntsville’s largest employer and the largest federal center in Alabama, has a workforce of nearly 38,000 people including thousands who work for contractors in Cummings Research Park. The arsenal is now a “federal center of excellence” and home to several major Army commands and NASA’s Marshall Space Flight Center, plus training facilities for other agencies federal including the FBI and Bureau of Alcohol, Tobacco and Firearms. The U.S. Office of Personnel Management could not say Tuesday how many letters are being mailed to Alabama, but it has mailed 13.5 million letters nationwide so far. Earlier reports said 21.5 million people’s data was exposed. The letters have a return address of “OPM NOTIFICATIONS, 4 COLUMBIA PIKE ANNEX, WASHINGTON, D.C.” See a sample letter below. The government gathered the now-stolen data as part of the background investigations it conducts of applicants for employment and security clearances. The stolen data included not only employee information but also “information about immediate family as well as business and personal acquaintances,” the letters say. “Our records also indicate your fingerprints were likely compromised during the cyber intrusion,” reads the letter. “Federal experts believe the ability to misuse fingerprint data is currently limited. However, this could change over time as technology evolves.” The letter says the government is “not aware of any misuse of your information,” but is offering “a comprehensive suite of identity theft protection and monitoring services” for three years. A PIN number to enroll in the protection and monitoring is included. Additional information including what information employees can share with family members is at the website opm.gov/cybersecurity. Press reports have attributed the cyberattack to the Chinese government, and “legacy” federal computers have also been blamed. More:
How racism explains Republicans’ rise in the South
Even if candidates don’t talk about it, race will be among the most important factors in the outcome of the 2016 presidential election. The Democratic Party has the support of 56 percent of Latinos, 65 percent of Asian Americans and 80 percent of the black population, according to the Pew Research Center. The share that supports the Republican Party is disproportionately white. For decades, those racial divisions have shaped how individual candidates expect to perform at the polls. If Republican candidates were as popular among minority voters as they are among white voters, winning elections would be much easier. And Democrats would dominate the polls today if they had maintained the support of the white electorate. They didn’t. Democrats began losing the support of white voters after World War II, particularly in the South. During the civil rights movement, white Southerners left the Democratic Party in droves. Some scholars have argued that changes in the South’s economy caused the party’s decline there. Since wealthier voters tend to be more conservative, it’s plausible that Southerners’ move to the Republican Party is a reflection of the region’s economic growth. Other historians, though, have long argued that civil rights legislation supported by President Kennedy and other Washington Democrats led to the party’s loss of power in the South. And a study published this month by the National Bureau of Economic Research, based on more than half a century of newly available polling data, supports that interpretation. It was the issue of race, the review of Gallup archives shows, that undid Democrats in the former Confederacy. Economists Ilyana Kuziemko of Princeton University and Ebonya Washington of Yale University are among the first to analyze Gallup’s data. Their study looks back to 1963, when activists boycotted segregated businesses and public facilities in Birmingham, Ala. More:
Take a One-Way Trip From Tatty to Natty
On evenings before I travel, it is my custom to set out the following day’s clothes on my bedroom chair. I do this in tandem with packing my suitcase, attending as much to the details of my travel costume as to the items being curated for use later in the trip. This is a useful habit for more than one reason: When I wake and must dash to some inconveniently located transit hub, I won’t need to make any snap decisions. And I can also thoughtfully incorporate the various elements of my travel-day outfit into the larger set of options I’ve brought along for the ride—these chinos will pair nicely with a different shirt, and those dressier shoes will come in handy when that friend takes me out for dinner later in the week. However, the primary reason I make the extra effort to plan my travel outfit is because, well, no one else does. Among the cavalcade of pajama pants, tracksuits, nightgowns, painting rags, and ill-fitting sweatshirts that one encounters in the world’s terminals and stations these days, the competently dressed individual stands apart as a beacon of civilized life, an island of class amid a swamp of schlumps. By dressing myself as a decent human being who is aware that he is in public, I like to think I am performing a small act of resistance against the increasingly slobbish status quo. Having just faced this onslaught of sartorial neglect yet again on an overseas trip, I’m pleading with you: Join me. Dress decently when you travel. Seven hours to Madrid in la clase turista is trying enough without your mangy old T-shirt adding to the sensory assault. Now, before I’m accused of elitism, understand that I am not calling for a three-piece suit on every JetBlue hop or Megabus jaunt (though that would not have been abnormal mere decades ago), nor do I mean to dictate what you should wear within the tinted confines of your own car. I am simply suggesting that, when traveling by public means, each of us dress “nicely” or “respectably” according to our means. I certainly don’t have the funds for a dedicated travel ensemble, but I can manage to pull together an attractive trouser, a pressed shirt, close-toed shoes, and perhaps even a light sport coat or cardigan—the kind of thing I generally wear to work—with little effort or expense. Sure, you say, but why bother dressing up (I’d say not dressing down) for a trip? Allow me to begin with a few practical considerations. As I say, it is wise to wear some of the clothes you’d like to have access to again while in transit. It saves room in your luggage, and you don’t plan on wearing that jogging suit when you’re out in the “real world” of your destination anyway, right? Why drag it along in the first place? Plus, unless you are flying in an un-air-conditioned cabin nonstop from L.A. to Sydney, you can probably wear your clothes again (perhaps with a brief dewrinkling in the shower steam) before needing to wash them. Also, a number of coworkers and friends have observed to me that dressing decently seems to garner superior treatment from transit staff. Combine that preferential treatment with any goodwill garnered via “The Kindly Brontosaurus” maneuver, and you are liable to end up sipping cocktails just behind the cockpit with a well-heeled new friend simply by taking basic care for your appearance. And guess what? When you and your new friend arrive at your destination, you needn’t extinguish the sparkle of the conversation in order to go change into something becoming at the hotel. Simply freshen up in the airport bathroom and head right out to take a coffee or a drink, as your arrival time dictates. More:
Petulant Birmingham City Council snubs Uber, issues and people
Get this. The Birmingham City Council thinks it deserves a big, fat pay raise. Ha. The Birmingham City Council thought so much of itself, in fact, that in the summer it used guile and deception to triple its pay. Ha. And that same city council on Tuesday thought so little of its own responsibilities — and of the people of Birmingham — that it failed to show up for a regularly scheduled city council meeting. If failed to appear for a meeting with a packed agenda and a packed house. It’s nothing to laugh about. Uber – which was on the agenda — will have to wait. Birmingham’s attempt to change ALDOT’s mind about how to reroute I-20/59 – which was on the agenda — will have to wait. Funding for the Birmingham Bowl – which was on the agenda — will have to wait. The regular course of Birmingham business, which is always on the agenda and always requires citizens to attend, will simply have to wait. And perhaps most importantly bonds for neighborhood and street improvements that have already been sold and must close by Dec. 3 must wait. And put the whole promise of neighborhood progress at risk. Because five members of the Birmingham City Council thought more of themselves and the petty politics they practice than they think of the city they are sworn to serve. Council President Johnathan Austin did not show up. Councilman Steven Hoyt did not show up. Councilwoman Sheila Tyson did not show up. Councilwoman Lashunda Scales did not show up. Councilman Marcus Lundy did not show up. Those who did come to work – Jay Roberson, Valerie Abbott, Kim Rafferty and William Parker – waited an hour before announcing to a perturbed crowd that the meeting would be cancelled. There was no quorum. There was no consideration. There was no class. It’s all about petty politics, about fights over contractors and lobbyists. The mayor wants to continue to pay Ralph Cook Jr. at Handprint Government Affairs – that was on the agenda, too – and some council members want to cut the strings. Which is fine. Cook, of Handprint Bell, has been paid more than $2 million by the city since 2009, and some of us are still trying to figure out why. But council members want their own consultants paid, including lobbyist Daryl Perkins. But the mayor’s office has moved like molasses to get it done. With every day that passes the mayor and council seem more like oil and water, or like gunpowder and a match. Like bad news and worse. Because the daily business of the city is being affected. Because somebody wants somebody to get paid. Tuesday no-show Johnathan Austin said the failure of the city council to meet was not about politics but because “most people are out of town visiting family for Thanksgiving.” Which is laughable. And which, if it is possible to be so, is even worse. Because that would mean the five preoccupied council members simply did not have the courtesy, the responsibility or the sense to show up for a regular meeting, or to notify their constituents in advance. So hard-working Birmingham people sat and waited for an hour on the Tuesday morning before Thanksgiving. To be stood up by the people they elected. Austin said the absence will not affect the city’s plan to vote on Uber. But it will not happen this week, because the council had a point to make. And boy, did they make it. They made it to every person who wants a reasonable and responsible government in the city of Birmingham. They made it to everyone who wants better. This Birmingham City Council – which has hiked the annual pay for their part-time job to $60,000, or twice the city’s median income — does not need a pay raise.. It needs a replacement.
Trump and math: His numbers don’t add up but his problems stack up
Let me tell you about a fish story. If you showed me 3,000 people and you told me there were 4,000 there, I’d give you the benefit of the doubt. I’m not great at estimating crowd sizes, and as long we are in the same ballpark, I’m not going to argue with you. It’s kind of like if I put two pounds of weight in your hand, you might have trouble telling it from three, but I expect you would be able to tell it wasn’t 10.
Unless, that is, you let Donald Trump convince you it was a ton. On Saturday, Trump drew a healthy-sized crowd in Birmingham, certainly more than any other candidate to come through Alabama this election cycle. That’s something to brag about. But with Trump, the fish he caught doesn’t merely get bigger each time he tells the story. It turns into a gargantuan sea monster the first time he tells the story.
Twice on the Sunday talk shows, Trump claimed there were 10,000 people at his rally here. Trump says he saw ‘thousands and thousands’ cheering on 9-11 On Saturday in Birmingham, Ala., Donald Trump first said he saw “thousands and thousands” cheering in New Jersey when terrorists attacked New York.
“I had 10,000 people in the room yesterday — 10,000 people — and this guy started screaming by himself,” Trump said on Fox & Friends Sunday morning when talking about the Black Lives Matter protester who got roughed up in the crowd there. Likewise, on This Week with George Stephanopoulos, he said the same thing. “I had 10,000 people yesterday,” Trump said. “Every place I go, if I have crowds smaller than 10,000, it’s like a small crowd for me.” If less than 10,000 is small for Trump, his Birmingham crowd was a minnow. Unfortunately, we don’t have a real head-count. Before the event, a Trump staffer told us that the Secret Service would be doing a head-count, but after the event, the Secret Service said they don’t do that. That’s the campaign’s responsibility, not theirs. Since then, we’ve reached out twice to Trump’s campaign. They haven’t responded. But before the Donald buffaloed the Sunday talk shows, on Saturday three of my colleagues and I, who were all there, made our best guesses. They ranged from 2,000 to 3,000. When writing about it, we hedged by saying “more than 2,000.” But there are other ways of counting heads, The North Exhibition Hall where he spoke at the BJCC has a capacity of 11,250. Trump filled at most a third of that room. Had Trump said he had 4,000 people there, I’d say, OK. If he’d stretched it to 5,000, I might have said it was baloney to friends and coworkers, but I wouldn’t be writing this column. But it wasn’t 10,000. Ain’t no way. That’s a lie. And the frustrating thing is that Trump didn’t need to lie about the crowd size. Hillary can’t draw those numbers here. Ben Carson can’t, either.
“But it wasn’t a five-pound bass. It was Moby Dick! ” Those aren’t the only numbers Trump has struggled with lately. He has repeatedly claimed that President Obama plans to admit 200,000 Syrian refugees into the country. The White House has, in fact, proposed permitting 10,000 to enter. When called on it, Trump only upped the stakes, now saying Obama wants to let 250,000 in. Again, the truth is enough. For many opposed to allowing Syrian refugees to come here, one is too many. “But it wasn’t a whale, it was a leviathan!” If Trump can find evidence to back up his claims, he doesn’t really care where that information comes from, or if it’s even real. On Sunday, Trump shared on Twitter a bogus chart showing that the overwhelming majority of whites and blacks who are murdered in this country are killed by black people. Never mind the fact that the chart undermines his previous assertions that Latin American illegal immigrants are on murderous rampages in the United States (according to the bogus chart, they didn’t even register). The numbers cited a source that doesn’t exist and could have been easily disproved with a Google search. “A hydra, I tell you! It might not have even been from Earth.” And on Saturday, Trump claimed he’d seen thousands of Muslims in New Jersey celebrating the 9-11 attack. There is no evidence to back this up. Lots and lots of people have tried to prove this was true, but all have failed. But not only did Trump insist he saw it. Ben Carson claimed he saw it on TV, too. “I’m not saying it was aliens. But it was aliens!” I’ve covered two public people like Trump — former HealthSouth CEO Richard Scrushy and former Birmingham mayor Larry Langford. Their stories were fishy, too, but thousands followed them into disaster. In not-make-believe real life, these fish stories always end the same way. The boat tumps over.
M.M. PREDICTION CONTEST: RUBIO DOMINATES — Thanks to all for the many submissions to MM’s 2016 prediction contest. In the early going, Marco Rubio is dominating on the question of who will win the GOP nomination. Rubio scored 26 picks to 13 for Jeb Bush, 8 for Ted Cruz, 4 for Donald Trump, 3 for John Kasich and one each for Ben Carson, Chris Christie, Mitt Romney and Paul Ryan (on third ballot of a brokered convention!). More results on who will win the general election and when the Fed will raise rates coming soon. You can still send your answers to email@example.com.
We got two political science papers as responses from students at Washington and Lee.
Paul Lagarde makes the case for Trump: “He is the man few political experts are willing to cast as the probable Republican nominee for President of the United States, perhaps because a self-financed, billionaire, extreme outsider candidate like Trump has never before emerged victorious once the dust settles.
“But the past is, at best, an imperfect predictor of the future, and I suspect that many of the so-called experts are writing off Trump due to disdain for his crass style and controversial opinions, rather than on the actual strength of his candidacy. It is not polite to support The Donald in elite circles after all. Were Donald Trump not, well, Donald Trump, it seems likely that many more prognosticators would be touting him as the hands-on favorite to win the nomination”
Cole Schott makes the case for Rubio: “The primary structure for 2016 presents a clear path to the nomination for Marco Rubio. … [S]tates that hold their primaries or caucuses during the March 1st to 15th window are required to allocate delegates proportionally. During this window, nearly all of the most conservative states will hold their nominating contests. … In fact, of the eighteen states whose GOP electorates are comprised of more than 50% white evangelicals, sixteen will allocate their delegates proportionally.
“For candidates who appeal to white, evangelical Christians, namely Ted Cruz and Ben Carson, this structure is incredibly damaging. Unlike winner-take-all primaries, in which a more moderate candidate like Rubio would fail to pick up any delegates if he did not win the state, Rubio will impede any effort by Cruz or Carson to use the ‘SEC primaries’ as an avenue”
LEAST SURPRISING PICKS — Jeb Bush campaign manager Danny Diaz: “Who wins the GOP nomination? Jeb. 2.) Who wins the White House? Jeb.”
BIGGEST SURPRISE STORIES — A sampling of the many responses, the majority of which focused on domestic and international terrorism: David Wellen: “Recession in Asia (mainly Japan and serious drop in growth in China)” … Walton Harrison Reeves III: “GOP Primary voters use sound reason and logic, rather than reactionary fear mongering and far right dramaticism when determining their candidate. Left-center see the GOP version of Biden in Kasich, and JFK in Rubio.
Greg Kamstra: “Immigration and economy will take back seat to nat’l security as 2016 is littered with add’l terror attacks and confrontations with Russia & Iran” … Stephanie Collins: “Hillary is charged with breaking the law in regards to her emails.” … Dianne Armer: “US troops in Syria/ war on ISIS escalates due to terror event in US.”
… Scott Munley: “[S]wiftly rising wage pressures are going to be a big factor in the economy and an issue for the Fed next year. … Richard Ward: “Pipeline disaster in the Midwest.” … Marisel Morales: “A major natural disaster with a catastrophic impact on the nation as a whole; a disaster directly related to climate change … .in a red state”
Sam Colt: “Tax reform — or Pizza Rat, who knows.” … Ann White: “ISIS threatening to use a nuclear weapon.”
BONUS ANSWER — From Paul Equale: “M.M. will continue to be sleep deprived by the craziest schedule in modern journalism.” Here’s hoping that one doesn’t come true.
WALMART: ALWAYS WATCHING — Bloomberg Businessweek’s new cover story “Walmart Is Always Watching” “reveals details of the never-before-confirmed employee surveillance practices of the world’s largest retailer and private employer” http://buswk.co/Walmart49 Cover image: http://bit.ly/1R5MiXu
GOOD WEDNESDAY MORNING — Happy Thanksgiving everyone! The world is a scary place right now. No better time than to unplug and connect with friends and family. See you back here on Monday. Email me on firstname.lastname@example.org and follow me on Twitter @morningmoneyben.
DRIVING THE DAY — President Obama pardons the National Thanksgiving Turkey and its alternate at 2:30 p.m. and once again opens himself up to criticism as soft on turkeys … Personal Income and Spending at 8:30 a.m. expected to rise 0.4% and 0.3% … Durable goods orders at 8:30 a.m. expected to rise 1.5% … New Home Sales at 10:00 a.m. expected to rise to 500K from 468K … Univ. of Michigan Sentiment at 10:00 a.m. expected to rise to 93.1 from 90.0 …
GDP BOOSTED TO 2.1 — Reuters: “The U.S. economy grew at a healthier clip in the third quarter than initially thought, but strong inventory accumulation by businesses could temper expectations of an acceleration in growth in the final three months of the year.The Commerce Department … said the nation’s gross domestic product grew at a 2.1 percent annual pace, not the 1.5 percent rate it reported last month, as businesses reduced an inventory bloat less aggressively than previously believed.
“The pace of economic growth, which was also boosted by upward revisions to business spending on equipment, suggests a resilience that could help give the Federal Reserve confidence to raise interest rates next month … While consumer spending was revised down a bit, its pace remained brisk, suggesting consumers were cash-flush” http://reut.rs/1P7zL6o
GDP AT A GLANCE — Hamilton Place cheat sheet: http://bit.ly/1SiOGbT
TURKEY SHOOTS DOWN RUSSIAN PLANE — FT: “Turkey shot down a Russian fighter jet on Tuesday after it veered into its airspace for 17 seconds, in a long-feared clash that starkly demonstrated the dangers for international security of Syria’s war. … Russian president Vladimir Putin warned that the ‘tragic incident’ would bring ‘serious consequences’ for Turkey, following Russia’s first loss of life in a military engagement with a Nato country since the cold war. … In a sign that the incident might jeopardise co-operation over Syria, Mr Putin went on to accuse Ankara of supplying finance and military support to jihadist extremists, asking: ‘Do they want to put Nato at Isis’s service?’
“US president Barack Obama said Turkey ‘has the right to defend its territory and airspace’ but also called for both countries to calm down. ‘This points to an ongoing problem with Russian operations in Syria in the sense that they are going after the moderate opposition,’ he said. Washington was prepared to work more closely with Moscow if it made a ‘strategic shift’ and focused its efforts on Isis. ‘We may differ with Russian policy elsewhere but we should be able to agree that we are all working to defeat Isis.’ The downing of the Russian jet on Tuesday morning threatens diplomatic efforts over Syria, at a time when divisions between Moscow and the west over the conflict appeared to be narrowing” http://on.ft.com/1SiVNRG
BEZOS VS MUSK IN RACE FOR SPACE — Bloombeg: “For the past 15 years, Jeff Bezos’s Blue Origin has been the great mystery of the space industry. The rocket company, founded by the Amazon.com chief executive officer, received attention because of its super-rich backer and the occasional test-launch video that wowed space geeks. For the most part, though, Blue Origin avoided publicity and, frankly, didn’t seem to be accomplishing all that much relative to its peers — namely, Elon Musk’s SpaceX. But it’s now very clear that Blue Origin is ready to move into the limelight and that a modern, thrilling space race is well underway.
“On Monday, Blue Origin sent its New Shepard ship into space and brought the body of the rocket back down to earth. The spaceship landed just four and half feet from where it took off, despite 120-mile-per-hour crosswinds. ‘Now safely tucked away at our launch site in West Texas is the rarest of beasts — a used rocket,’ Bezos said in a statement. ‘Full reuse is a game changer, and we can’t wait to fuel up and fly again.” http://bloom.bg/1I9xtkK
TRUMP RALLIES TURN UGLY — POLITICO’s Ben Schreckinger: “Last month, protesters interrupted a Donald Trump rally in Virginia with chants of ‘Dump Trump’ and clashed with his supporters, one of whom was caught on camera spitting in a protester’s face. Another video caught a protester chanting ‘black power’ and a Trump supporter responding with ‘white power’ as a police officer stood between the two. Multiple groups of Hispanic protesters interrupted the mogul at a rally in Miami, where video showed a Trump supporter dragging a protester to the ground and kicking him. In September, outside a Trump rally in Dallas, dozens of police officers, some on horseback, pushed back hundreds of shouting protesters after breaking up a tense standoff with the real-estate tycoon’s supporters.
“On Wednesday, a protester who was once convicted of bringing a bomb to a military facility was arrested at a rally in Massachusetts, and on Saturday video showed supporters punching and kicking a protester who interrupted a rally in Alabama, while Trump himself later suggested that the man had it coming. Welcome to the most combustible presidential campaign in recent memory. The candidate’s angry rhetoric — on subjects like undocumented Mexican immigrants, political correctness and ‘thugs’ in Baltimore — has made his run a magnet for disaffected supporters and for identity politics protesters determined to steal the spotlight and disrupt his events” http://politi.co/1TdGgmX
LEW PLEDGES TO BLOCK DODD-FRANK CHANGES — NYT’s Peter Eavis: “As an important deadline looms in Congress, the Obama administration signaled on Tuesday that it would push back hard against any legislation that substantially loosens the sweeping 2010 overhaul of the financial system. Republicans in Congress are backing legislation that would soften certain parts of the reforms, which were accomplished through the Dodd-Frank Act five years ago. They are now seeking to insert the changes into a spending bill that has to be passed by Dec. 11 to avoid a government shutdown. …
“On Tuesday, Jacob J. Lew, the secretary of the Treasury, sought to underscore the administration’s opposition to any meaningful concessions on Dodd-Frank. ‘I have publicly made clear that my recommendation to the president would be that if there are legislative measures that will roll back the clock, that would take us back toward where we were before the financial crisis, I would recommend a veto,’ Mr. Lew said via email. Still, such declarations may not deter those in Congress who may believe that the Obama administration is more likely to give ground on financial regulation than on its signature health care overhaul or other policies it holds dear” http://nyti.ms/1MQgmkO
REPORT FAULTS CFPB — WSJ: “When federal regulators launched a controversial crackdown on alleged discrimination in auto lending two years ago, they knew their methodology would be questioned. But they calculated they could secure a market-shaping settlement by going after a company unlikely to fight the charges because it needed to avoid a complaint to clinch government approval for a broader restructuring. That is the conclusion of a report, based on internal documents and emails written by the staff of the [CFPB] … released Tuesday by congressional Republicans who have long been harshly critical of the discrimination probe.
“‘Some of the claims being made in this case present issues … that would pose litigation risks … ,’ CFPB staff members wrote in one 2013 memo addressed to the bureau’s director, Richard Cordray, which was included in the report. But such concerns, the officials said in the same 23-page document, would be offset by the likelihood of a settlement by the target company, Ally Financial Inc. ‘Ally may have a powerful incentive to settle the entire matter quickly without engaging in protracted litigation,’ the agency’s lawyers wrote, noting that the company’s failure to secure approval to become a holding company would force it to divest key businesses, primarily its insurance subsidiaries” http://on.wsj.com/1T1wnrB
10:00 am || Receives the Presidential Daily Briefing
10:45 am || Meets with his national security team
2:45 pm || Pardons that Thanksgiving turkey; Rose Garden
4:00 pm || Participates in a service event; Washington area
All times Eastern
None, Congress is out for Thanksgiving break.
IRS Tax Tips for Deducting Gifts to Charity
The holiday season often prompts people to give money or property to charity. If you plan to give and want to claim a tax deduction, there are a few tips you should know before you give. For instance, you must itemize your deductions. Here are six more tips that you should keep in mind:
- Give to qualified charities. You can only deduct gifts you give to a qualified charity. Use the IRS Select Check tool to see if the group you give to is qualified. You can deduct gifts to churches, synagogues, temples, mosques and government agencies. This is true even if Select Check does not list them in its database.
- Keep a record of all cash gifts. Gifts of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. You must have a bank record or a written statement from the charity to deduct any gift of money on your tax return. This is true regardless of the amount of the gift. The statement must show the name of the charity and the date and amount of the contribution. Bank records include canceled checks, or bank, credit union and credit card statements. If you give by payroll deductions, you should retain a pay stub, a Form W-2 wage statement or other document from your employer. It must show the total amount withheld for charity, along with the pledge card showing the name of the charity.
- Household goods must be in good condition. Household items include furniture, furnishings, electronics, appliances and linens. These items must be in at least good-used condition to claim on your taxes. A deduction claimed of over $500 does not have to meet this standard if you include a qualified appraisal of the item with your tax return.
- Additional records required. You must get an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. Additional rules apply to the statement for gifts of that amount. This statement is in addition to the records required for deducting cash gifts. However, one statement with all of the required information may meet both requirements.
- Year-end gifts. Deduct contributions in the year you make them. If you charge your gift to a credit card before the end of the year it will count for 2015. This is true even if you don’t pay the credit card bill until 2016. Also, a check will count for 2015 as long as you mail it in 2015.
- Special rules. Special rules apply if you give a car, boat or airplane to charity. If you claim a deduction of more than $500 for a noncash contribution, you will need to file another form with your tax return. Use Form 8283, Noncash Charitable Contributions to report these gifts. For more on these rules, visit IRS.gov.
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.