Krebs Daily Briefing 27 April 2016


Sweden on alert for possible IS attack in capital: local media

Sweden has received intelligence about a possible attack on the capital by Islamic State militants, local media reported on Tuesday, and security services said they were investigating undisclosed information. Newspapers Aftonbladet and Expressen as well as public broadcaster Swedish Radio, citing unnamed sources, said the information related to the threat of an attack, possibly in the capital Stockholm. Expressen reported Swedish security police (SAPO) had received intelligence from Iraq that seven or eight Islamic State fighters had entered Sweden with the intention of attacking civilian targets. A security police spokeswoman said she would not comment on any specific details of a threat, but said it was working with regular police as well as national and international partners. “Security police are working intensively to assess received information, and it is of such a nature that our judgment is that we can not dismiss it,” she said. An Iraqi security source said six Iraqis had left Iraq in February 2015 and entered Sweden via Turkey. The ringleader is a veteran insurgent who was close to Abu Musab al-Zarqawi, leader of IS forerunner al Qaeda, and current IS leader Abu Bakr al-Baghdadi, the source said. He was imprisoned multiple times by U.S. forces in Iraq during their occupation. “They want to conduct special operations to force Sweden to withdraw from the international military coalition (against Islamic State),” the source said, referencing recent attacks in Paris and Brussels. Sweden has not been hit by a large-scale militant attack, but a man is currently is awaiting a verdict for allegedly building a suicide bomb with the intent of staging an attack in Sweden. In 2010 a suicide bomber died when his bomb belt went off prematurely in central Stockholm. Norwegian public broadcaster NRK reported Norwegian police were assessing whether or not the Norwegian royal family should proceed with a planned trip to Stockholm this weekend to celebrate the Swedish king’s 70th birthday, given the supposed threat.

U.S. embassy warns citizens in Turkey about ‘credible’ terrorist threats

The United States warned U.S. citizens in Turkey on Tuesday about “credible” terrorist threats to tourist areas in the country. Turkey has been hit by four suicide bombings already this year, most recently in Istanbul last month. Two of the bombings have been blamed on Islamic State, while Kurdish militants have claimed responsibility for the other two. “The U.S. government continues to receive credible indications that terrorist groups are seeking opportunities to attack popular tourist destinations throughout Turkey,” the embassy in Ankara said in a statement emailed to U.S. citizens. “Foreign tourists in Turkey have been explicitly targeted by terrorist organizations,” the U.S. embassy said in what it described as an “emergency message”. Last month’s attack in Istanbul’s main shopping district killed three Israelis, two of whom held dual citizenship with the United States, and one Iranian. A separate attack in the city’s historic heart in January killed 12 German tourists. Turkey is facing multiple security threats. As part of a U.S.-led coalition, it is fighting Islamic State in neighboring Syria and Iraq. It is also battling Kurdish militants in its southeast, where a 2-1/2-year ceasefire collapsed last July, triggering the worst violence since the 1990s.

Spain Set for New Election as King Finds No Party Can Govern

Spain is heading for new elections in the summer after King Felipe said no candidate can count on enough support to form a government. After a third round of talks with party leaders Tuesday, Felipe won’t nominate a candidate, the Palace said in a statement. The official deadline for party reaching an agreement is May 2. The new ballot is likely to take place on June 26. Spaniards will head to the polls for the second time in six months after the parliament elected in December failed to piece together a working coalition for the first time since the nation returned to democracy in 1978. Emerging from his meeting with the king, Socialist leader Pedro Sanchez, the only candidate with a realistic chance of leading a government, said he’d failed to reach the cross-party alliance he needed. Acting Prime Minister Mariano Rajoy said he still doesn’t have the support to govern either.

London Stock Exchange says merger with Deutsche Boerse on track

The London Stock Exchange Group (LSE.L) stuck to its guns on Wednesday over its planned merger with Deutsche Boerse (DB1Gn.DE), saying the deal would be derailed by neither regulators nor any British exit from the European Union. In its first annual shareholder meeting since mapping out a plan in February to create a $30 billion cross-border exchange group, the group tried to ease concerns over the tie-up. Analysts have questioned whether EU competition regulators would approve the deal given the large presence the merged group would have in clearing derivatives trades. “We wouldn’t be embarking on a merger if we thought there would be any problems,” LSEG Chairman Donald Brydon said in response to a shareholder’s question on clearing. Britain, home to Europe’s biggest financial center, votes on June 23 on whether to remain in the EU. Any vote in the referendum to leave the bloc could create major uncertainty for the country’s financial services industry. Asked if he thought a UK exit from the bloc or “Brexit” would affect the planned merger, Brydon replied: “No”. Brydon still expects the merger to be completed by the end of 2016 or early in 2017. The U.S.-based Intercontinental Exchange (ICE.N) said in March it was considering a counter-offer for LSEG. LSEG Chief Executive Xavier Rolet remained silent throughout Wednesday’s meeting, following comments he made in a media interview that were critical of ICE. The company issued a “clarification statement” on Monday after discussions with Britain’s Takeover Panel about recent comments made by Rolet, who will retire if the deal goes ahead. It said Rolet’s views in one interview regarding ICE were his own, and that he has held no discussions with the U.S. exchange regarding its strategy. ICE was not mentioned at Wednesday’s meeting, which focused on matters such as cyber threats, climate change and how to get more listings. LSEG is due to hold an extraordinary general meeting of shareholders in the coming weeks to vote on the merger. ICE would have to present any bid a week before that meeting. LSEG reported a rise in first-quarter revenue on Wednesday, helped by growth at its FTSE Russell, capital markets and clearing units.  The company, which also owns Borsa Italiana, said revenue rose 8 percent to 358.9 million pounds ($522.4 million) in the three months to March 31, beating company-supplied average estimates of 350.1 million pounds. Revenue at its capital markets division, which makes money from fees paid by companies listing on its markets and trading of stocks and bonds, rose 8 percent to 92.4 million pounds. LCH.Clearnet, the clearing house controlled by LSEG, saw revenue increase by 14 percent with growth coming from a rise in volumes of over-the-counter derivative products. Revenue from information services, which includes the FTSE index business, rose 10 percent to 141.5 million pounds. Technology services provided the only weak spot, with revenues down 17 percent, hurt mainly by the timing of customer deliveries.

The One Family That Could Fix VW and Why They Won’t

As the diesel emissions scandal roiled Volkswagen AG last fall, Wolfgang Porsche — the elder statesman of the clan that controls the automaker — did what he does every autumn. He put on his boots, picked up his rifle, and went deer hunting near the half-timbered Austrian farmhouse where he spent his childhood. As he has almost every year for decades, Porsche trekked through the woods above the blue waters of Lake Zell and dined at Schloss Prielau, a 16th-century stone castle he transformed into a luxury hotel. What Porsche didn’t do is take a clear stance as the carmaker his grandfather helped create sank into crisis. In September, Volkswagen acknowledged equipping 11 million diesel vehicles with software designed to trick emissions testers — revelations that have cost the CEO his job and thrown top management into disarray. The crisis has sent the company’s shares down by more than 20 percent, cutting the family’s wealth by $2 billion. Last Friday, VW posted the biggest loss in its history and more than doubled the funds set aside to cover the costs of the emissions scandal to 16.2 billion euros ($18.2 billion). Despite bearing one of most storied names in automotive history, the family — which controls 52 percent of VW’s voting shares via a company called Porsche Automobil Holding SE — wasn’t prepared for a challenge like the diesel crisis. Bound by a tradition of consensus and discretion honed during their privileged upbringing along the German-Austrian border, family members have remained virtually mum. That has left a power vacuum even as VW faces costs that could top $30 billion and become a hit to its reputation that risks eroding sales and profits for years.


Donald Trump Sweeps 5 States; Hillary Clinton Takes 4

Donald J. Trump and Hillary Clinton barreled toward a general election showdown on Tuesday night as they dominated primaries in Pennsylvania, Maryland and other Eastern states, piling up enough delegates to close in on their parties’ nominations. Looking past their fading rivals, the two even taunted each other in dueling election-night events. Mrs. Clinton chided the Republican’s penchant for harsh language by saying that “love trumps hate.” Mr. Trump was more bluntly dismissive of Mrs. Clinton, saying her appeal boiled down to her gender. “Frankly, if Hillary Clinton were a man, I don’t think she would get 5 percent of the vote,” Mr. Trump said. Mr. Trump had the more convincing performance on Tuesday: He swept all five primaries, winning landslides of more than 30 percentage points over his rivals, Senator Ted Cruz of Texas and Gov. John Kasich of Ohio. His routs represented a breakthrough: He received more than half the vote in every state, after months of winning most primaries by only pluralities. The big night for Mr. Trump and Mrs. Clinton intensified the aura of inevitability around their nomination bids and created urgent new challenges for their rivals. More significant, it increased Mr. Trump’s chances of avoiding a fight on the floor of the Republican convention in July and of claiming the nomination on the delegates’ first ballot. “When the boxer knocks out the other boxer, you don’t have to wait around for a decision,” he said boastfully at an election-night appearance before supporters at Trump Tower in New York. He added: “As far as I’m concerned, it’s over.” Mr. Cruz and Mr. Kasich fared so poorly on Tuesday that together they were likely to win just 10 of the 118 bound delegates up for grabs. Rhode Island, Connecticut and Delaware also went for Mr. Trump, who was on track to bring his total to about 950 of the 1,237 needed to clinch the nomination outright. Mr. Cruz is now under growing pressure to beat Mr. Trump in Indiana’s primary next week, perhaps the last real chance the stop-Trump forces have to halt his march to the nomination. He and Mr. Kasich forged an alliance to thwart Mr. Trump in Indiana, but it has yet to show signs of working. Even before polls closed in the East on Tuesday night, Mr. Cruz tried to pre-empt the rush of coverage about Mr. Trump’s dominance. More:


NYSE head challenges stock trading fee reform plans

The head of New York Stock Exchange on Tuesday criticized a plan to test potential changes to stock trading fees, one of the most controversial elements of the US equity market. At issue are access fees, or what exchanges charge market participants to access quotes. In turn, exchanges pay rebates to market participants that place bids or offers in what is commonly known as the maker taker model. The difference between the make and take fee is revenue for the exchange. High quality global journalism requires investment. Maker taker has raised concerns in the industry that brokers may be routing orders to avoid take fees or obtain make fees, rather than to get the best trades for clients. There is also worry about quotes that may not be realistic, especially for investors looking to trade large amounts. “Simply stated, this access fee pilot will not only ensure that there will be more dark trading, but also that there will be worse prices on exchanges and off exchange,” Tom Farley, NYSE’s president said at a meeting of the Equity Market Structure Advisory Committee, a group of the equity market’s most experienced traders, executives and academics assembled by the Securities and Exchange Commission. A subcommittee of the group has proposed a framework for a pilot programme to reduce the access fee cap — now 30 cents for every thousand shares — and monitor the market impact. The scheme will not include a so-called “trade-at” rule where off-exchange venues such as dark pools are required to offer more competitive prices than those available on public exchanges. A memo on the pilot states that the scheme itself is being proposed to determine in part if a trade-at provision is needed. “Spreads are pretty tight because liquidity providers are adequately compensated to make markets,” Eric Noll, chief executive of Convergex, a US brokerage, and a committee member told the Financial Times. “No one really knows what is going to happen if you reduce the access fees.” Jeffrey Davis, deputy general counsel of Nasdaq, the third-largest US stock market operator by daily trading volume, also raised questions about the efforts of the group. Mr Davis and Mr Farley challenged the make-up of the committee. It does not include representatives from the US listing venues, which are NYSE and Nasdaq for corporations, or from listed companies. “This body is charged with examining the structure of a market that exists to serve the needs of investors and publicly traded companies,” Mr David said in prepared remarks. “And yet, it lacks a representative of retail investors, or a representative of a single publicly traded non-financial operating company or a representative of a market that lists them.”


Supreme Court broadens First Amendment protections for public employees

Public employees can sue, claiming their civil rights were violated, as long as their employers thought a constitutional right was in play, the U.S. Supreme Court ruled Tuesday. The decision was a victory for a New Jersey man, Jeffrey Heffernan, who was a police officer in Paterson, New Jersey, when the mayor was running for re-election. Heffernan was demoted after city officials mistakenly assumed he was campaigning for a candidate who was running against the mayor. The officials thought he went to the campaign headquarters of the mayor’s opponent to pick up and later display a campaign sign. But Heffernan said he went there to get the sign for his bedridden mother and had no intention of campaigning for the opponent. Heffernan sued, claiming he was punished for engaging in constitutionally protected speech. The city said, what speech? If he wasn’t campaigning, he wasn’t doing anything protected by the Constitution. The lower courts agreed with the city. But by a 6-2 vote, the Supreme Court reversed those rulings. Justice Stephen Breyer’s opinion for the court said civil rights protections apply “to any employer who punishes an employee because the employer believes the employee has engaged in conduct that the First Amendment protects — even if the employer is factually mistaken about the conduct.” What counts, the court said, is the employer’s motive, because the First Amendment focuses on government actions. Justices Clarence Thomas and Samuel Alito dissented. They said the law does not protect someone whose constitutional rights have not been violated. They city’s action may have been misguided or wrong, they said, but because Heffernan conceded that he was not exercising his First Amendment rights, he had no basis for his claim.


Delaware‘s $1 Billion Opacity Industry Gives U.S. Onshore Haven

Chevron Corp. used a shell company in a tax haven to escape hundreds of millions of dollars in Australian taxes, according to a 2015 court ruling. The subsidiary, which allowed Chevron to eliminate Australian taxes on $1.7 billion in profit earned there, wasn’t secreted away on a remote tropical island — it was set up in the very mundane locale where corporate secrecy was born: Delaware. For more than a century, Delaware has lured companies to file incorporation papers there by offering a specialized court system, laws that allow for avoiding other states’ taxes and a registration system that requires little public disclosure. Today, two-thirds of the Fortune 500 companies and 60 percent of U.S. hedge funds are registered there. That success has become a template for tax havens from Singapore to the Cayman Islands to Panama — where a recent leak of millions of documents has revealed the questionable uses of many shell companies and put financial secrecy in headlines globally. Delaware still stands out for its emphasis on privacy, which garnered for it the label of world’s most secretive jurisdiction twice over the past decade — once by the Tax Justice Network and another by National Geographic magazine. While most businesses registered there are legitimate, critics say the secrecy provides cover for some shell companies owned by miscreants, from corrupt dictators to money launderers, drug dealers, tax cheats and arms merchants. Yet the business of registering businesses is important to Delaware’s economy and state revenue, and residents and leaders are quick to defend it. More:


Official: Expanding Medicaid to net Louisiana $677M savings

Expanding Louisiana’s Medicaid program is estimated to save the state $677 million in its first five years, Gov. John Bel Edwards’ administration said Monday as the Democratic governor announced enrollment will begin June 1. The savings would come, according to the state Department of Health and Hospitals, from taking advantage of enhanced federal financing rates for health services that Louisiana currently provides for the poor and uninsured. The projections presented to the Senate Health and Welfare Committee contrast with estimates provided to lawmakers in previous years under Republican Gov. Bobby Jindal. Jindal opposed Medicaid expansion. Jindal’s health secretary told lawmakers in previous years the expansion would cost Louisiana $1.7 billion over 10 years. Edwards’ health leaders instead estimated more than $1 billion in savings over a decade. Edwards’ health secretary Rebekah Gee told senators the Jindal administration cost estimates were “inflated to be unrealistic,” assuming increased payments to health providers and other administrative costs that were “absolute worst-case scenario.” Medicaid expansion will cover adults ages 19 to 64 making up to 138 percent of the federal poverty level — about $16,200 for a single adult or $33,400 for a family of four. The federal government will pick up the full cost of the health services for a short period of time. Louisiana will later have to pay a share that eventually will increase to 10 percent. Even when Louisiana starts paying its full 10 percent cost share, the enhanced federal financing for other parts of the health budget still offer net savings, Gee said. “When we look at realistic assumptions, the balance sheet looks very good for the state,” she said. Edwards assumes $180 million in savings in his budget proposal for next year. Louisiana will become the 32nd state to expand the government-financed health insurance program to the working poor when the new coverage begins July 1. Republicans in the Louisiana Legislature have blocked expansion efforts in prior years amid Jindal’s opposition. But both GOP and Democratic senators on the health committee appeared Monday to have few objections. More:–medicaid-expansion-20160418-story.html

Judge sets Trump University hearing for first day of GOP convention

As the Republican National Convention kicks off this summer, political mavens will be focused on the maneuvering in Cleveland, but it might be worth keeping an eye on happenings some 2000 miles away in a federal courtroom in San Diego. A federal judge announced this week that on the first day of that convention he plans to convene an important hearing on a class-action lawsuit against Republican presidential frontrunner Donald Trump and his Trump University real estate seminary program. U.S. District Judge Gonzalo Curiel issued an order Monday setting the July 18 hearing on a move by Trump’s lawyers to toss out the Cohen v. Trump case. The judge also plans to take up other motions, including one asking that the case be stripped of its class-action status. In a series of public appearances in February, Trump said Curiel seemed to be biased against him because the judge “happens to be Spanish” and could be expected to disagree with Trump’s strong statements against illegal immigration. The real estate mogul said he might move to disqualify Curiel, but no such motion has been made and Trump’s attorney did not raise any issues about the judge during a hearing last month. (Curiel, who was born in Indiana, is of Latino origin.) Curiel is also considering when to set a trial in a related case involving people in three particular states who paid up to $35,000 to take part in the Trump University program. There has been discussion of a trial in June or August, but at last month’s hearing Curiel seemed uncomfortable with the idea of a jury trial during the campaign if Trump remains an active candidate. Another hearing on that scheduling issue is set for next week. A state judge in New York held a hearing Tuesday in yet another case relating to the now-defunct Trump University education program. The judge rejected a bid by New York Attorney General Eric Schneiderman for an immediate ruling in the state’s favor. The decision appeared to clear the way for a trial in the coming months, although a pending request from Trump’s side for another appeal could forestall that. Trials in any of the cases have the potential to force Trump off the campaign trial and onto the witness stand. And even if he is not present, they would be a significant distraction for the potential GOP nominee. More:

McDonnell’s Supreme Court Appeal Could Change

The Supreme Court hears oral arguments Wednesday in the corruption case against former Virginia Gov. Bob McDonnell over a businessman’s gifts, including $20,000 for a Fifth Avenue shopping spree, more than $5,000 for a monogrammed Rolex and the use of a convertible Ferrari. Put those sensational details aside, however, and the Supreme Court’s decision in the McDonnell appeal could have a chilling effect on how members of Congress and other elected officials do their jobs — as well as how lobbyists and campaign donors interact with them. “I think every politician should be semi-terrified about the implications of the case,” said Washington lobbyist Ken Kies, managing director of The Federal Policy Group, and frequent federal campaign donor. “I’m guessing a lot of members would just say, ‘That’s not me.’ But if you’re thinking seriously about this, you need to consider whether or not what you do could reasonably be described as similar to what McDonnell got convicted of.” Prosecutors said that in 2011 and 2012, McDonnell and his wife, Maureen, solicited and secretly accepted more than $175,000 in money and luxury goods from Virginia businessman Jonnie Williams, including golf outings, vacations and personal loans. The Justice Department contended that in exchange, McDonnell agreed to have his office help Williams seek favorable actions from the Virginia state government. McDonnell, once a rising star in Republican circles and a potential vice presidential pick, was convicted in 2014 on 11 counts and sentenced in 2015 to two years in prison. His one term ended in January 2014, about two weeks before he was indicted. Maureen McDonnell was also convicted in the bribery and corruption scheme, and sentenced to a year in prison. Williams wanted researchers at Virginia’s state medical schools to perform extensive scientific testing on a dietary supplement called Anatabloc developed by his company, Star Scientific, the Justice Department states. Bob McDonnell raised Anatabloc in a meeting with state officials, set up a meeting for Williams with other state officials, recommended that senior state officials meet with Star Scientific executives, and held a lunch at the Governor’s Mansion in Richmond that focused on Anatabloc. McDonnell’s appeal is the last day of oral arguments for the current Supreme Court term, which ends in June. A decision is expected by then. The issue in the Supreme Court case is what qualifies as an “official action” under the federal bribery and honest-services fraud laws, which make it a felony to agree to take “official action” in exchange for money, campaign contributions or anything of value. The Justice Department says that McDonnell — who was in debt at the time — agreed to use the power of his office to help Williams’ company in exchange for the gifts. McDonnell’s lawyers say the “supposedly official acts” in the indictment were not the use of government power but limited to routine political activities of arranging meetings, asking questions and attending events. McDonnell’s lawyers have told the Supreme Court that upholding the former governor’s conviction “would make every elected official and campaign contributor a target for investigation and indictment.” “Officials routinely arrange meetings for donors, take their calls, politely listen to their ideas and refer them to aides,” McDonnell’s lawyers told the Supreme Court in a brief. “In criminalizing those everyday acts, the Government has put every federal, state, and local official nationwide in its prosecutorial crosshairs.” A group of 77 former state attorneys general filed a brief in the case expressing the same concerns about “consequences that would be felt on the ground.” More:

As McDonnell awaits Supreme Court, another governor watches from prison

 Along with the state officials and law professors who are happy that the Supreme Court this week is reviewing the corruption conviction of former Virginia governor Robert F. McDonnell, add inmate No. 24775-001 at the federal prison in Oakdale, La. He is otherwise known as Don E. Siegelman, the former governor of Alabama, whom many of those same people supported when the justices decided — twice — that his conviction did not warrant an extended review. “I’m not the slightest bit bitter about that at all,” Siegelman said last week in a telephone interview from prison. “I’m delighted that the court has taken the McDonnell case, and I’m hopeful the court will clarify what constitutes political quid pro quo bribery.” Most convicted politicians who ask the Supreme Court for relief — former Illinois governor Rod Blagojevich and former congressman William Jefferson of Louisiana being just recent examples — meet fates similar to Siegelman’s. But the longtime Alabama officeholder was the cause celebre — still is, really — for those who believe vague federal corruption laws give politically ambitious prosecutors too much leeway in deciding what and whom to investigate. Such questions about political influence are only likely to grow as relaxed campaign contribution laws give rise to a new galaxy of individual mega-donors. While the Supreme Court never accepted Siegelman’s case for full briefing, McDonnell grabbed the brass ring twice. Not only is the court reviewing his 2014 conviction in its last oral argument of the term Wednesday, but the justices intervened at the final hour last fall to keep McDonnell from having to report to prison while the legal drama played out. That was something the court had never done before, Solicitor General Donald B. Verrilli Jr. told the justices before they acted. But McDonnell and his supporters said the circumstances of his conviction — he, his wife and family received $177,000 in luxury items, vacations and loans from businessman Jonnie R. Williams Sr., although there was no direct evidence McDonnell ordered state officials to take actions that Williams wanted — demanded high-court review. “This case marks the first time in our history that a public official has been convicted of corruption despite never agreeing to put a thumb on the scales of any government decision,” Washington lawyer Noel Francisco, representing McDonnell, wrote in his brief to the court. “Quid pro quo” translates from the Latin to “something for something.” McDonnell’s attorneys acknowledge the governor got something — Virginia’s laws did not forbid the gifts — but said he gave nothing. Siegelman’s case is the reverse. He gave Alabama health-care executive Richard Scrushy a new term on an important industry regulatory board. But Scrushy’s offering was a $500,000 campaign contribution to push a referendum measure for a lottery that would benefit the state’s underfunded school system. “The Siegelman case was different from all others,” Siegelman said, in the detached tone of the Georgetown Law graduate that he is. “There was no personal benefit, not a penny of any financial gain. There wasn’t any self-enrichment scheme. There was no testimony of a quid pro quo, much less an explicit or express quid pro quo. And the contribution was not even to me but to a ballot initiative.” Andrew P. Miller, a former Virginia attorney general, agrees with Siegelman, a Democrat, and McDonnell, a Republican. Miller helped drum up support for both men as they presented their cases to the Supreme Court. “I’m bipartisan in my concern about this,” he said. The similarity he sees is that both men were rising stars in their respective parties brought down by prosecutors appointed by the president of the opposite party. Grant Woods, a former Republican attorney general from Arizona, said that, if anything, Siegelman had the bigger complaint. “The Siegelman case to me is a complete travesty of justice from start to finish,” Woods said. The McDonnell case, on the other hand, “is just more of an interesting legal question.” Defining corruption:  More:

The Man Who Beat Donald Trump

REHOBOTH BEACH, Del.—Sitting here the other day in the library of his house with 40 rooms, 11 fireplaces, four pianos, a wine cellar, a movie theater and an elevator, Marvin Roffman talked about the time Donald Trump tried to destroy him for telling the truth. “Brutal,” said Roffman, 76, wearing loafers, khaki shorts and a pink polo, his elaborate gardens and the sixth hole of the Kings Creek Country Club golf course visible through the windows. “I’m telling you,” he said. “Trump is a brutal guy.” This was March of 1990. Roffman was a veteran securities analyst. He had focused on the gaming industry in Atlantic City since the first casinos opened in 1978. He knew the market as well as anyone and had watched closely as Trump made a typically bold entrance with Trump Plaza and Trump’s Castle in 1984 and 1985. Now the New York real estate tycoon was about to open his third casino, by far his biggest, most lavish and most shakily financed one yet, the Trump Taj Mahal. Roffman was skeptical. He told a reporter from the Wall Street Journal the Taj would fail. What happened next was straight out of Trump 101. The “people I don’t take too seriously,” he had written in 1987 in The Art of the Deal, “are the critics—except when they stand in the way of my projects.” Roffman was in the way. Trump bombarded him with invective, threatened to sue his employer, demanded his firing and then publicly assailed him some more. The fact that Roffman’s assessment was grounded in reality—that he would prove to be right—didn’t stop Trump from attacking Roffman. It was the reason for it. Three days after the quote in the Journal, Roffman was fired. What happened after that, though, was unusual. In the long history of the leading Republican presidential candidate’s use of disparagement, intimidation and forceful warnings of litigation, there is no person quite like Roffman. He filed a lawsuit against Trump and won a clear victory—a fat check drawn on a Donald Trump account. How does one beat Trump? For Roffman, it took time and money, gumption and conviction. Trump v. Roffman was a noisy, blustery harangue in the court of public opinion. Marvin B. Roffman v. Donald J. Trump and Trump Organization, Inc., on the other hand, was a longer, fact-based slog in an actual court. “If you have a brand that strong, associated with success, power and class, that brand name must never be tarnished, ever,” Roffman told me, attempting to explain Trump’s motive for trying to ruin the life and reputation of a person he knew was right. “You must defend it. You must protect it. I was the monkey wrench in the gears. I was the monkey wrench threatening the integrity of the brand.” More:

Inside Donald Trump’s Secret Policy Shop

In the fall of 2015, Donald Trump had an early attempt at reinvention, releasing a series of tax and veterans administration proposals with the intention of adding some policy substance to the businessman’s rhetoric. It was one Trump’s first attempts to transition from entertainer to candidate—a common narrative that has failed to last more than a day or two. In fact, there have been so many reinventions—on so many topics—that it’s hard to know what version of Trump we’re on. But he has established a pattern: as much as he derides the Washington establishment, if he sees that a reinvention is needed, he’ll find an insider to help him do it. This was the case with the recent hires of longtime D.C. lobbyist Paul Manafort and former Republican National Committee political director Rick Wiley. The veterans and tax plan were no different. Initially, it was a mystery who wrote the plans that Trump had put out—the only hint was a $82,000 charge for in policy consulting work listed in Trump’s campaign filings with the Federal Election Commission under the name ‘JBC Research, LLC,’—payments which started in the fall and ended in December 2015. The author, it turns out, is one of the best-known policy and opposition researchers in D.C. The company has not been associated with any other federal campaigns, and there is nothing specific about it online. The only indication of who JBC Research might be affiliated with was the address listed on the Trump campaign’s filing: the eighth floor of a building just south of Dupont Circle in Washington, D.C. If you go to the front desk and asks for JBC Research, you’ll be directed to the offices for Delve, a recently-formed opposition research firm founded by GOP operative Jeff Berkowitz, a veteran of the Republican National Committee, the State Department and the George W. Bush White House—not exactly the first person you’d expect to be involved in the Trump campaign. Berkowitz, according to his LinkedIn page, specializes in “competitive intelligence and opposition research for companies, campaigns and causes.” He worked on a presidential campaign for Rudy Giuliani, who is supporting Trump. He is a longtime activist for conservative and Republican causes stretching back to the 1990s. But nowhere online or in his LinkedIn page is ‘JBC Research’ listed. More:


Appeals court: Alabama man can collect settlement from husband’s wrongful death

A Montgomery man is due the money from a wrongful death lawsuit settlement stemming from the death of his same-sex spouse, the U.S. 11th Circuit Court of Appeals ruled last week. Pat Fancher, the mother of David Fancher, had appealed a ruling by a lower court last year that gave money from the lawsuit to her son’s spouse, Dr. Paul Hard. Hard and David Fancher were married in Massachusetts in May 2011 and returned home to Alabama to live. David Fancher was killed on Aug. 1, 2011 when his car slammed into an overturned UPS truck that was blocking the northbound lanes of Interstate 65. At the time of the wrongful death lawsuit settlement, Alabama refused to recognize same-sex marriages under the state’s Sanctity of Marriage Amendment. That prevented Hard from getting a death certificate from Alabama designating him as the surviving spouse. And it also prevented him from being recognized as the closest living relative and being able to collect any settlement. Hard then filed a federal lawsuit challenging Alabama’s Sanctity of Marriage law. Pat Fancher was allowed to intervene in that federal case. She argued that, as David Fancher’s mother, she was entitled to the full proceeds from the wrongful death settlement because Hard was not David Fancher’s surviving spouse, according to the appeals court ruling. The Foundation for Moral Law in Montgomery represented Pat Fancher. In February 2014, the administrator of David Fancher’s estate agreed to set aside the spousal share – ultimately more than $500,000 – of any proceeds from the wrongful death suit until the federal court determined whether Hard was David Fancher’s surviving spouse, the appeals court explained. Several months later, the estate settled with UPS. The estate’s administrator paid about half of the wrongful death proceeds, after attorneys’ fees, to Pat Fancher because neither party disputed that as David Fancher’s mother she was due those proceeds under Alabama law, the appeals court stated. More:


Gov. Bentley scandal: Rebekah Mason refiles ethics forms to reflect more money and more consulting work

Rebekah Caldwell Mason, Gov. Robert Bentley’s former political advisor and rumored love interest, has filed a series of amended financial disclosure forms showing previously undeclared income for both her and her husband. Filed April 15 under the name “Rebekah Ann Mason,” the amended Statement of Economic Interest forms cover years 2012 and 2013. Mason, who previously filed her forms under the name Rebekah Caldwell Mason, also resubmitted a disclosure for 2011, her first year as Gov. Bentley’s communications director. Mason’s original 2013 disclosure form listed only her consulting company, RCM Communications. The amended version lists RCM as well as JRM, the company owned by her husband, Jon Mason. Jon Mason refiled his own amended financial disclosure forms April 14 to reflect hundreds of thousands of dollars of previously undisclosed money JRM received from the University of Alabama. Rebekah Mason’s amended 2012 form also added Jon Mason’s job as Serve director and added revenue for JRM of between $10,000 and $50,000. The 2011 form – previously unfiled – also lists JRM. reported both Masons had failed to disclose the income received from JRM on reports filed with the Alabama Ethics Commission. In addition to operating JRM, Jon Mason also is director of Serve Alabama, a state agency, a situation that has been called into question due to possible ethical conflicts. More:


Lawyers for credit union seek records from dark money group that paid Rebekah Mason

Alabama Gov. Robert Bentley and Rebekah Caldwell Mason, the woman who served as the governor’s senior adviser and his long-rumored love interest, are being asked by lawyers in the on-going legal fight for control of Alabama One Credit Union to reveal who or what is funding a private non-profit “dark money” group that paid part of Mason’s salary. Bentley, Mason, and the governor’s legal adviser David B. Byrne Jr., however, are fighting the issuance of subpoenas that would require them to turn over documents and provide depositions about Alabama Council for Excellent Government – or ACEGOV – and any discussions the three had about the credit union. Lawyers who represent former Alabama One Credit Union officers state in court documents that the depositions and documents they seek are necessary to prove that the state’s takeover of the credit union “was the result of an agenda of and pressure directly from Gov. Robert Bentley and his top advisors.” As for the ACEGOV documents, the lawyers state in their request for the subpoenas to be issued that Bentley and “Mason, with whom he was engaging in an inappropriate relationship, directed other agencies of state government to attempt to punish persons who these two considered to be opponents of the governor.” “There have been press reports that a party might obtain and audience with the Governor or favorable treatment from him if they made a contribution to his 501(c)(4) ‘Dark Money’ entity, the Alabama Council for Excellent Government, or ACEGOV,” according to the subpoena request. “The Governor and Mason have admitted that she was paid through ACEGOV.” Efforts to reach attorneys for Bentley, Byrne and Mason were unsuccessful Monday. Bentley, Byrne and Mason, however, in court filings last week denied the allegations they pressured anyone or were involved in the state takeover of the credit union. Attorneys for Bentley and Byrne wrote in their court filing that they seek improper discovery of documents that are unduly burdensome and patently irrelevant.” Bentley, Byrne, and Mason were served notices of intent to serve subpoenas on them earlier this month. Byrne was asked to show up for a deposition at the law office of Turner & Turner P.C. in Tuscaloosa on April 28 and for Bentley to appear for a deposition the next day. Mason was asked to appear April 28 for a deposition. Because of their opposition, the subpoenas have not been served and a judge must decide whether they can be issued. The judge in the Alabama One Credit Union case, Circuit Judge Charles Malone, however, retired in February and the governor has not yet announced his choice for a replacement among three candidates submitted by a local committee in Tuscaloosa. “Based on Gov. Bentley’s behavior, it would not be surprising if he attempted to delay the process as long as he could if it kept him and his advisors from being forced to respond to questions under oath,” Paul Toppins, one of the attorneys for former officers and board members of the credit union stated in an email to “We know that regulatory actions were taken against Alabama One Credit Union based on pressure from the Governor and David Byrne on the then-Administrator of the ACUA, Larry Morgan,” Toppins stated. “We want to know more about what instructions were given by Gov. Bentley and David Byrne to Larry Morgan’s replacement, Sarah Moore.” More:

Criminal Probe inot Bentley-Mason Affair Intensifies

MONTGOMERY—Currently, three simultaneously investigations are being conducted into possible wrong doing by Gov. Robert Bentley, and others in his sphere of influence according to law enforcement resource. The Alabama Political Reporter has spoken with several individuals who have been questioned by the FBI, Alabama Ethics Commission, and the State’s Attorney General’s Office. Each person interviewed asked that their name be kept private, because to the ongoing investigation. Federal, State and Ethics commission investigations center on possible corruption related actions taken by Bentley, and his former senior advisor, Rebekah Caldwell Mason. Bentley has admitted to an inappropriate sexting and FaceTime relationship with the married mother of three. Federal investigators according to reliable sources are looking into the possible mishandling of campaign finances, Mason working as an unpaid advisor, Mason’s company RCM Communications, and her husband’s company JRM. Others avenues of inquiry are also underway into relationships cultivated by Bentley and Mason, with regards to the 501(c) 4,, also known by those close to the non-profit as “the girlfriend fund.” Bentley and Mason have been under watch for sometime, but the firing of Alabama Law Enforcement Agency (ALEA) Chief Spencer, triggered an all-out siege by law enforcement. Those with knowledge of the ongoing probe, say they have rarely seen federal prosecutors move with such swift and decisive action. Current ALEA head, Stan Stabler, is under the microscope for allegations he made in the press, accusing Collier and others of misappropriation of State funds or resources. There is also an inquiry into why Stabler and SBI Director Wiggins closed several ongoing criminal investigations being pursued by the agency. Of particular interest was the closing of an investigation into possible ethics violations by Sen. Phil Williams (R-Rainbow City). Staffers have reported that Williams sought Bentley’s help concerning the ALEA investigations.

Report: CBS plucking ESPN broadcaster to eventually replace Verne Lundquist

It looks as though CBS has its replacement for Uncle Verne lined up. According to FOX Sports’ Clay Travis, ESPN’s Brad Nessler will leave the company to do NFL for CBS Sports until eventually sliding into Verne Lundquist’s role as the network’s lead play-by-play commentator for the “SEC on CBS.” Nessler, who turns 60 on June 3, has been a mainstay with ESPN when it comes to college football, having called college football games for the network since 1997. He joined the network in 1992. Lundquist, who turns 76 on July 17, has been doing the same for CBS and specifically for SEC football since 2000.


Lawmaker to Gov. Bentley: You are ‘Lying Alabama Governor’

Rep. Johnny Mack Morrow won’t let up on the governor. Not now, he says, and not ever. “It’s very personal to me,” he said. “I’m not giving up on it.” The Democrat from Red Bay, who has already filed an ethics complaint against the governor’s former legal adviser, Rebekah Mason, today fired off another letter to Gov. Robert Bentley himself. In it he tells Bentley his actions in recent years have earned him the title “Lying Alabama Governor.” “What lies have you told?” he asks rhetorically, and then he proceeds to list them. He said the governor lied when he campaigned on a slogan of “More Jobs, Less Government, No New Taxes.” He says he lied when he said consolidation of law enforcement would save $30 million, that he lied when he closed rural driver license offices, lied when he closed rural ABC stores, lied about closing state parks and lied about pay raises to his cabinet and staff. Morrow says Bentley lied to his family and friends, and to the state of Alabama. He says Bentley fired his ex-friend Spencer Collier when Collier refused to lie like him. Bentley lied about having his wallet flown to the beach, Morrow wrote. He lied about renovating the state beach house with BP money, and lied about last year’s special session. Whew. From a guy who claims he was once friends with Bentley, it was one pointed letter. Perhaps because the No. 1 lie on his list is that Bentley lied about killing two of Morrow’s local bills in 2013. Morrow has alleged in his ethics complaint that Mason used her influence with the governor to have them killed. “When he screwed with my local bills, that was unacceptable,” he said. One of the bills would have allowed Franklin County teachers to arm themselves. Bentley’s office did not immediately respond to questions about Morrow’s letter. Not that there’s much you can say. After all, Morrow is the same guy who wrote Bentley last week demanding to know why “Wanda’s desk” outside the governor’s office had to be moved. “What were you and Rebekah Caldwell Mason doing that would require that Wanda’s desk be moved and the door locked?” he asked. And now this. “You have shamed yourself and the state we both love,” Morrow wrote. “Alabama is now a joke for late night comedians and I see no end in sight until you come clean and begin undoing all the damage cause by your lies.” Hollywood has drama. But it ain’t got nothing on Alabama politics. And so it goes. Johnny Mack Morrow 'Lying' letter

Alabama GOP stands by its principals, Bentley and Hubbard, not its principles

It must be hard defending the party of Gov. Robert Bentley and Alabama House Speaker Mike Hubbard.

The former is tangled in a Goat Hill sex scandal most folks were reluctant to believe because it seemed too gross to be true. The latter led a political revolution that passed toughest-in-the-nation political ethics laws, which he is now accused of breaking almost immediately upon their passage. Under Mike Hubbard’s leadership, the Alabama GOP stormed the State House, and then they ran that State House like a racketeering conspiracy. But this week, Alabama Republican Party Chairwoman Terry Lathan tried to defend her party. To her credit, Lathan waited until about halfway through to boast about the party’s dominance over Alabama Democrats, an organization whose chairwoman once wrote a Christmas letter to party members about her experience getting stuck on a toilet. Comparing yourself to the Alabama Democratic Party isn’t setting a low bar. It’s smelting that bar and pouring its molten remains down a bottomless pit. Like most Alabamians, I’ve given up hope on the Democrats ever again providing us with a viable alternative to the Alabama GOP. Regardless, Lathan saw it necessary to give us a bullet list of the Alabama GOP’s accomplishments, which are worth considering one-by-one. The only person working harder to defend Alabama’s Republican elected officials are the Democratic trial lawyers they hire when the grand jury convenes. According to Lathan, the Alabama GOP has …Saved $1 billion annually by slashing government employment, consolidating agencies and deleting duplicate services while also passing strong economic incentives. “Saved” is a nice spin, but it implies something that just isn’t true. When I save money, I can put it in an interest-free savings account, invest it in “Now Under New Management” Jefferson County sewer bonds, or hide it in a coffee tin where periodically I can take my money out and look at it. The state can never say any such things, because it never did any such thing.

A better description would be “our revenue fell through the floor, and the state constitution wouldn’t let us run a deficit — not that we didn’t try — and that’s only if you don’t count balancing the budget with borrowed money from state trust funds that have to be paid back later as a deficit; so yeah, we did engage in deficit spending, followed by panicked cutting when that borrowed money ran out and … and … Oh, God, how are we ever going to pay that back! Maybe we can just cut Medicaid because who cares if poor people die?” But “saved” sounds good. It’s shorter and requires less explanation. More:


I want my South back

I want my South back. You know the place. It recognized the past, but didn’t wallow around in it. My South could laugh at itself, because it knew deep down it had it made. It had food to make you drool and music to make you feel, and it had the prettiest of people. It blushed at compliments and shook off insult, because the quirks other folks ridiculed were the wrinkles that gave it character. And characters. It was proud, but it was not afraid. It was welcoming, and it was – I swear it’s true – gentle. I miss that place. But then, maybe it never really existed at all, outside my head and my hopes. Maybe it was just an aspiration and an ideal, passed along by Southerners who knew this place and its people were nothing more or less than the sum of their scars. Where they came from shaped who they were, but did not dictate where they’d go. That South was real to me. And I want it back. I’m talking about my South, the way Morgan Freeman would say it or Harper Lee would write it, with pain up front and promise on the back end. I’m talking about the South the way we wanted it to be, the way some of us believe it can still be. Not the Confederacy, or George Wallace. Not even Lynyrd Skynyrd, though the band will play on my soundtrack. I want the Southern Pride, but also that Southern Promise. My South is not a place that blames everyone and everything for the unfairness of it all. It’s not one that pines for a day that probably never was and never should have been.  My South could not watch unaffected as old people suffer, or stand by as children go without. It was never a place so insecure that it barred its doors, never so offended by the ways of others that it wished them suffering. It saw needs and filled them. It saw hurt and eased it.

Oh, there was always hate and pain and righteous wrong in the real South, in a land built on man’s inhumanity to man. But centuries of sins brought together a magical blend of cultures that made us something better than our parts. Our Eden was already perfumed with clover and honeysuckle, and together we added barbecue and collard greens. You can smell it today. It’s a place where you can laugh long and joke about anything. Except mama. It’s a place where being a gentleman has nothing to do with a seersucker suit, where it’s OK to disagree about politics or policy or even football, but it’s never an excuse to be rude. Maybe it’s true that my South only existed in my head. Perhaps it was just a romantic notion, as misguided as those who look back at the good old days and see only good. But my South is not just the past. It is the hope for a better future. In my South we are one people in one amazing place. Proud of who we are and proud of where we have been. And in my South we are proud of the changes we have made. We look at each other and see … each other. We know pain, but we believe in promise.

Because we know we can be more, and better, and kinder, and fairer. We can be more giving and more forgiving than the world would ever imagine. And we can do all that better together. In my South.


Morning Money

PRIMARY WRAP: CLINTON/TRUMP WIN BIG — As expected, Hillary Clinton and Donald Trump rolled to big wins in the northeastern primaries on Tuesday night. Trump went five for five and added at least 105 delegates, bringing him to 950 of the 1,237 he needs. Clinton went four for five, taking Pennsylvania, Maryland, Delaware and Connecticut while Bernie Sanders won only Rhode Island. Clinton now has 2,141 of the 2,383 delegates she needs.

The Democratic race is over (and has been for a while). Sanders cannot catch Clinton in bound delegates and will not be able to flip super delegates. He acknowledged as much in his statement Tuesday night, pledging to solider on to the convention to have an influence on the party platform rather than competing for the nomination.

The GOP race is close to over as well though Trump could still fall short of 1,237 if he loses Indiana to Cruz next week. And Republicans hoping to win in November must have cringed hard at Trump’s victory remarks Tuesday night when he claimed that if Clinton “were a man” she would only get 5 percent of the vote.

He also said: “I think the only card she that she has is the women’s card. She’s got nothing else going for her.” … This is, of course, both wildly sexist and quite insane. Another Clinton who IS a man did pretty well in a pair of presidential races. Plus Clinton is a former senator and Secretary of State. She has a couple credentials other than “woman.”

THE HORROR FOR THE GOP — According to Gallup, Trump currently has a 70 percent unfavorable rating among women, who made up 53 percent of a 2012 electorate that handed President Barack Obama an easy reelection victory. Romney beat Obama among men by 7 percent but lost women by 11 percent. Trump could double that gender gap quite easily. The 2012 electorate was also 28 percent non-white. Trump would need an unprecedented number of white male voters (possibly 70 percent of them to win in November.

TOP TWEET — Romney 2012 strategist Stuart Stevens (@stuartpstevens) in response to MM’s Tweet about the 2012 gender gap: “Romney won white women by 14. Trump is losing them by 8. Then move on to real challenge: non-white females.”

TRUMP NEARS VOTE RECORD — POLITICO’s Kyle Cheney: “With his five blowout wins Tuesday night, Donald Trump has passed Mitt Romney’s popular vote total from four years ago and is on a trajectory that could land him more Republican votes than any presidential candidate in modern history — by a lot. Trump surged to 9.86 million votes … That’s about 50,000 votes more than Romney earned in the entire 2012 primary season and 40,000 less than John McCain earned in 2008”

SANDERS STATEMENT — “The people in every state in this country should have the right to determine who they want as president and what the agenda of the Democratic Party should be. That’s why we are in this race until the last vote is cast.

“That is why this campaign is going to the Democratic National Convention in Philadelphia with as many delegates as possible to fight for a progressive party platform that calls for a $15 an hour minimum wage, an end to our disastrous trade policies, a Medicare-for-all health care system, breaking up Wall Street financial institutions, ending fracking in our country, making public colleges and universities tuition free and passing a carbon tax so we can effectively address the planetary crisis of climate change.”

QUOTE OF THE DAY — MM sat down with a top banking industry executive on Tuesday and the topic of Elizabeth Warren as Clinton’s VP came up. The response: “If Warren gets it every bank CEO in this country would poop their pants.”

FED PREP: NO HIKE TODAY — Pantheon’s Ian Shepherdson: “A rate hike today would be a surprise of monumental proportions, and the Yellen Fed is not in that business. What matters to markets, then, is the language the Fed uses to describe the soft-looking recent domestic economic data, the upturn in inflation, and, critically, policymakers’ views of the extent of global risks.

“The bottom line, we think, is that the statement likely won’t offer much hope of action in June, though we doubt it will bluntly state the truth, which is that the U.S. policy establishment is very scared indeed of the risk of Brexit. … Dr. Yellen will feel no compulsion to offer succour to the hawks.”

COUNTER PROGRAMMING TRUMP — House Speaker Paul Ryan in his continuing effort to present an alternative vision for voters holds a “town hall with millennials” at the Georgetown Institute of Politics and Public Service” and will appear on CNN’s New Day at 8:30 a.m. and MSNBC’s Morning Joe at 8:42 a.m.

COMING NEXT MONTH: BIG MM FED EVENT — Please join me in DC on May 17th for a lunch briefing with Dennis Lockhart, President and CEO, Federal Reserve Bank of Atlanta and John C. Williams, President and CEO, Federal Reserve Bank of San Francisco”

DRIVING THE DAY — Trump gives a foreign policy speech in DC (he might use a classy, hugely presidential teleprompter!) … House Financial Services subcommittee has a hearing at 10:00 a.m. on “How Can the U.S. Make Development Banks More Accountable?” … Senate Budget Committee has a hearing at 10:30 a.m. on “Fixing the Budget Process: Better Budgets, Better Results” … FOMC announcement at 2:00 p.m. expected to include no change in rates and one dissent

WHCD EVENT — Join POLITICO’s Chief White House Correspondent Mike Allen as he takes Playbook live for a conversation with Funny or Die D.C.’s head writer/producer and President Obama’s former speechwriter David Litt, Host of “Billy on the Street” and from Hulu’s “Difficult People,” Billy Eichner and President of Production of Funny or Die, Mike Farah. Friday, April 29 — Doors at 11:30 a.m — The Newseum. RSVP:

TRUMP TRAIN ROLLS ON — POLITICO’s Shane Goldmacher: “Donald Trump declared himself the ‘presumptive nominee’ … after he won five Northeastern states in a landslide. ‘I consider myself the presumptive nominee, absolutely,’ the real estate mogul said in a speech at Trump Tower in New York …

“‘As far as I am concerned, it’s over,’ he declared. … He cast Ted Cruz and John Kasich as spoilers and sore losers preventing him from focusing on taking on … Clinton.”

CLINTON CRUSHES BERNIE’S HOPES — POLITICO’s Patrick Reis: “Clinton’s Tuesday night appearance demonstrated that her pivot to the general election is fully underway. She took a conciliatory tone toward Sanders and appealed for party unity in her victory address. ‘There’s much more that unites us than divides us,’

Clinton said, before reciting a list of policy priorities she and Sanders share. … She also directly went after Donald Trump, calling him a divisive candidate and ripping his rhetoric and policies.”

ALL ABOUT INDIANA — WP’s Dan Balz: “After his clean sweep of five primaries Tuesday, the options for denying … Trump the Republican presidential nomination continue to dwindle rapidly — so swiftly, in fact, that next week’s primary in Indiana now appears to be a make-or-break event for the stop-Trump forces and especially … Cruz … Based on raw arithmetic, it’s not unreasonable for Cruz, Kasich and others in the party who don’t want Trump as their nominee to express hope-to-confidence that he can be stopped.

“Under the many possible projected outcomes in the remaining 10 states, Trump will either end up just over that magic number or somewhat short of it. … But there is more at work than just counting numbers. When Trump broke the 60 percent barrier in the popular vote in New York, it forced many Republicans to take notice and begin to acknowledge, if grudgingly, that he seemed more likely than before to prevail. That feeling could gather force on the basis of his powerful showing Tuesday night”

GOOD NIGHT FOR DEM ESTABLISHMENT — POLITICO’s Kevin Robillard: “The Democratic establishment won two major Senate victories Tuesday as Rep. Chris Van Hollen and former White House aide Katie McGinty won heavily contested primaries in Maryland and Pennsylvania. Van Hollen romped over fellow Rep. Donna Edwards in Maryland, taking 52 percent to 41 percent, while McGinty made a comeback against the party’s 2010 nominee in Pennsylvania, Joe Sestak, winning 42 percent to 30 percent.”

PIMCO ON PUERTO RICO — Pimco’s David Hammer, Sean McCarthy and Libby Cantrill: “Diverse interests have emerged seeking to derail a bill aimed at a satisfactory resolution to Puerto Rico’s debt crisis. … PIMCO portfolios do not hold any exposure to bonds from the Commonwealth of Puerto Rico or its various governmental entities … In our view, PROMESA represents a responsible framework for managing the unavoidable restructuring of Puerto Rico’s debt and other liabilities.

“We expect no contagion to the broader municipal market from PROMESA. More specifically, PROMESA will not trigger higher borrowing costs for states or municipalities. Some are worried the federal government might take over a state’s finances in a similar manner; yet there are no convincing arguments because the Constitution protects the sovereignty of the states”

McCARTHY STILL HOPEFUL ON PR VOTE — POLITICO’s Rachael Bade: “House Majority Leader Kevin McCarthy on Tuesday said Congress was likely to blow past a looming deadline for Puerto Rico to pay its creditors but was hopeful the House could pass a rescue package before the Caribbean island’s larger multi-billion-dollar July payment is due. McCarthy said he was hopeful the House will act before a $2 billion debt payment is due on July 1 – what many view as the drop-dead endpoint for saving the Caribbean island from a taxpayer bailout.

“Absent congressional action, Puerto Rico is expected to default on a $422 million debt payment on May 1. … House leaders are struggling to rally conservatives behind legislation to restructure Puerto Rico’s debt. Many conservatives fear the proposal could be labeled a bailout. GOP leadership huddled with Republicans more than a week ago to try and dispel that notion, making the case that if Congress fails to act, a bailout is even more likely.”

CITI’S CORBAT ON BANK BASHING — Citigroup’s Michael Corbat at the bank’s annual meeting on Tuesday: “We’re proud of what we do for the citizens and communities of this city and state over the course of more than a century … … I felt obliged to reiterate that commitment because in the heat of an election year, sometimes the facts get lost in the discourse.

“So on behalf of my nearly 70,000 colleagues who live and work in the United States — the vast majority of whom don’t actually work on Wall Street — I’m here to say that what we do is worth doing. … And it’s not just worth doing because it’s personally and professionally rewarding. It’s worth doing because banking is the essential lifeblood of economic and social progress.”

Public Citizen’s Bart Naylor on the failure of his resolution at Citi’s meeting to study a breakup and make senior managers pay penalties from deferred pay: “Hey, I helped developed the resolution to split chair/CEO. That’s how BoA shed Ken Lewis. Half of Corbat’s remarks addressed the essence of our proposal. I clearly lost the vote, but we are not losing the policy goal. “

COMCAST EYES DREAMWORKS — WSJ’s Ben Fritz, Dana Mattioli and Erich Schwartzel: “Comcast Corp. is in talks to buy DreamWorks Animation SKG Inc. for more than $3 billion … in a deal that could make the cable giant a rival to Walt Disney Co. in the lucrative family-entertainment business. Comcast’s Universal Pictures studio has enjoyed success in recent years with its animated ‘Despicable Me’ and ‘Minions’ movies but is still a relatively small player.

“But its parent company has been moving aggressively to mimic Disney by using its animation properties to build out its consumer products and theme parks businesses, a strategy that could be accelerated by the addition of DreamWorks, which makes the ‘Shrek,’ ‘Kung Fu Panda,’ and ‘Madagascar’ movies, among others. … The tentative purchase price represents a healthy premium over DreamWorks’ current $2.3 billion market value. Comcast is set to report its financial results on Wednesday.”

APPLE DISAPPOINTS — NYT’s Vindu Goel: “From the iPod to the iPhone to the iPad, Apple created more than a decade’s worth of new gadgets to fuel its historic growth. But the technology company’s dazzling 13-year run of quarterly revenue growth ended on Tuesday — a casualty of Apple’s already immense size, weakness in key global markets like China and the lack of another hot product to pry open the wallets of customers. Apple … said … that revenue for its second fiscal quarter … declined 13 percent to $50.6 billion as sales of its flagship product, the iPhone, fell, with little else to take its place.

“Nearly half of the smartphones sold in the United States are iPhones, and Apple may be reaching the saturation point among potential customers in other developed countries. Rival smartphone makers using Google’s Android operating system continue to challenge the company with powerful, less expensive devices. Over all, Apple sold 16 percent fewer iPhones in the quarter compared with the same quarter last year.”

TWITTER DOES TOO — FT Hannah Kuchler in San Francisco: “Shares in Twitter dropped more than 13 per cent in after-hours trading as the company missed expectations on revenue, as brand marketers were slower to increase spending on the platform. The San Francisco based company also issued a disappointing outlook for revenue in the second quarter, below the consensus forecast. Sluggish user growth, which has dogged the company, continued in the last quarter.

“Twitter’s revenue rose 36 per cent year-on-year to $595m but was lower than the consensus forecast for $608m. Excluding currency fluctuations, it would have risen 39 per cent. The messaging platform, famous for its 140-character tweets, indicated that investors should expect revenue of between $590m to $610m in the second quarter, below the analysts consensus forecast of $678m.”

CRUDE HITS HIGHS FOR THE YEAR — Reuters: “Crude oil prices hit 2016 highs on Tuesday on the back of a rally in the gasoline market and after an industry group reported a surprise draw in U.S. crude stockpiles. Brent and U.S. crude’s West Texas Intermediate (WTI) futures finished regular trading about 3 percent higher, riding on the coattails of a gasoline rally that hit August highs after a series of refinery hikes.

“In post-settlement trade, both benchmarks rose more than 4 percent after the American Petroleum Institute reported a drawdown of nearly 1.1 million barrels in U.S. crude inventories last week versus a 2.4 million-barrel build expected by analysts in a Reuters poll.”

JACK MA: ASIA’S RICHEST MAN — Bloomberg: “Alibaba Group Holding Ltd. Chairman Jack Ma overtook Dalian Wanda Group Co.’s Wang Jianlin as Asia’s richest man after the e-commerce giant’s financial affiliate raised a record amount in its latest round of fundraising. Ma added $4.3 billion to his fortune on Tuesday after his Ant Financial’s latest deal, expanding his wealth to $33.3 billion, according to the Bloomberg Billionaires Index. That puts him ahead of Wang’s $32.7 billion and Hong Kong tycoon Li Ka-shing’s $29.5 billion.”


COALITION PUSHES CFPB ON PAYDAY LENDERS — POLITICO’s Jon Prior: “A coalition of consumer advocates, small banks, and credit unions is asking the Consumer Financial Protection Bureau to give payday lenders no legal safe harbor in its upcoming proposal to curb abuses in the small-dollar loan market. The Coalition of Safe Loan Alternatives sent a letter to CFPB Director Richard Cordray today asking for ‘a strong ability-to-repay standard that applies to all loans without loopholes or safe harbors that put consumers at risk from unaffordable debt.’”

INSURERS HIT THE HILL — Via the Property Casualty Insurers Association of America (PCI) “Close to 100 home, auto, and business insurance CEOs and senior executives are on the Hill today fighting to protect state-based insurance and prevent federal intrusion. PCI will also be encouraging support for the Transparent Insurance Standards Act of 2016 and International Insurance Capital Standards Accountability Act of 2015”

NAFCU ON DATA STANDARDS — NAFCU sent a letter to the Hill on Tuesday on the “Need for Strong National Data Security Standards in H.R. 2205”

POTUS Events

10:00 am || Receives the Presidential Daily Briefing
12:30 pm || Lunch with Biden
3:00 pm || Presents the Commander-in-Chief Trophy to the United States Naval Academy Football Team; East Room

Live stream of White House briefing at 12:45 pm ET

Floor Action

The House is in at 10 a.m. and will be working on some suspensions and the “Helping Angels Lead Our Startups Act.” Two sets of votes around 2:30 and 4:30 p.m. The Senate is in at 10 a.m. and will take a cloture vote at 11 a.m. on the energy and water spending bill.