Krebs Daily Briefing 29 February 2015


Iran reformists cheer election gains, conservatives play down shift

President Hassan Rouhani and his allies won big gains in elections that could deepen Iran’s engagement with the world after his government ended years of sanctions by agreeing to curb its nuclear program. The outcome in the results for Tehran on Monday was a blow to the conservative Islamic establishment, although it retains decisive power due to Iran’s unwieldy dual system of clerical and republican rule. Most of the lawmakers who did not make it to the new parliament strongly opposed the nuclear deal, including Mehdi Koochakzadeh, who called Foreign Minister Mohammad Javad Zarif “a traitor”, and Roohollah Hosseinian, who threatened to bury the negotiators under cement for agreeing to concessions to world powers. “This election can be a turning point in the history of the Islamic Republic,” said an editorial in reformist newspaper Mardom-Salari, whose managing editor, Mostafa Kavakebian, won a parliamentary seat in Tehran. “The biggest achievement of this election is the return of reformists to the ruling system … so they won’t be called seditionists or infiltrators anymore,” he said, referring to hardliners who accused reformists of links to the West. Rouhani and allied centrists and reformers won 15 out of the 16 Tehran seats in the 88-member Assembly of Experts, which is tasked with choosing the country’s next supreme leader, final election results for Tehran showed. Two prominent conservatives, including the speaker of the powerful clerical body, were among those ousted in the capital. Candidates on the reformist list also took all 30 parliamentary seats in the Tehran constituency, up from just two previously, final results released by Interior Minister Abdolreza Rahmani Fazli showed. Beyond the capital, their gains were more limited, with conservatives keeping hold of many seats in both bodies. More:

China Moves to Bolster Lending by Easing Banks’ Reserve Ratio

HONG KONG — China said on Monday evening that it would lower the amount of cash that banks must set aside as reserves, freeing them to lend more as the government attempts to preserve liquidity in the financial system. The measure, effective Tuesday, is the latest example of the fine line that China’s policy makers are attempting to walk as they fight persistent capital outflows amid expectations that the currency, the renminbi, could weaken further because of slowing economic growth. By lowering the reserve requirement ratio, or R.R.R., by half a percentage point, the central bank is partly seeking to offset its own actions in support of the currency. For the biggest banks, the ratio of total deposits that must be kept in reserve was reduced to 17 percent, from 17.5 percent. The central bank, the People’s Bank of China, has been selling dollars and buying renminbi to prop up the value of the renminbi, which has been under pressure. But that has siphoned liquidity out of the system. To counteract that, the central bank has been injecting billions of renminbi through open-market operations. The R.R.R. cut serves the same purpose, essentially representing a lending quota. In a news release on Monday, China’s central bank said the reduction was intended “to maintain adequate and reasonable liquidity in the financial system and guide the steady moderate growth of money and credit.” More:

Donald Trump Elicits Shock and Biting Satire in European Media

LONDON — He has been depicted as a snarling demagogue in France, equated with Donald Duck in Spain, and described as worse than Lord Voldemort in Britain. In Europe, the birthplace of the Enlightenment, Donald Trump has been treated variously as a disturbing curiosity or an entertaining political show barker. His nearly every move and pronouncement has been reported from Paris to Berlin to Helsinki, even as commentators on both left and right have dismissed the notion of President Donald J. Trump as the stuff of fantasy, or, at worst, a momentary lapse of reason. That is changing. With a series of wins in key Republican primary states, and with the billionaire’s expected strong showing when 12 states hold primaries or caucuses on Tuesday, the European media, like its American counterpart, is adjusting to the prospect of a seemingly unstoppable Trump juggernaut. The reaction is a mix of befuddlement, outrage and panic, along with admiration in some unlikely quarters. And satire. The Spanish newspaper El País recently published an imaginary letter from the grave in which Philip II, a 16th-century Spanish king who ruled a vast empire, offers advice to Mr. Trump. Noting that his nation had also suffered from roguish subjects demanding free handouts, and Muslim terrorists masquerading as peaceful citizens, the king advises Mr. Trump to “consider bringing back the Inquisition.” More:


Warren Buffett, in Annual Letter, Rejects Candidates’ Message of U.S. Decline

Warren E. Buffett took aim on Saturday at the “negative drumbeat” of this year’s presidential campaign, saying that the view that children today would not live as well as their parents was “dead wrong.”

In his annual letter to shareholders, the billionaire investor — who has endorsed Hillary Clinton for president — wrote that “the babies being born in America today are the luckiest crop in history.”

Employing his typical folksy humor and optimism, Mr. Buffett’s letter discussed such themes as income inequality, climate change, efficiency and prosperity, as well as investments like BNSF Railway and Kraft Heinz. “For 240 years it’s been a terrible mistake to bet against America, and now is no time to start,” he wrote. “America’s golden goose of commerce and innovation will continue to lay more and larger eggs.”

Mr. Buffett cautioned, though, that while the “pie to be shared by the next generation will be far larger than today’s,” the way it is divided will “remain fiercely contentious.” Many of the negative effects of innovation and greater efficiency tend to harm the worker, he said. He gave the example of how competition had forced his Dexter shoe operation to fold, leaving 1,600 employees in a small Maine town without work, many of whom were past the point where they could learn another trade. He said the same situation unfolded at the original New England textile plant of his holding company, Berkshire Hathaway.

Mr. Buffett’s suggested solution: providing safety nets for those who want to work but find their talents out of favor because of market forces. “The price of achieving ever-increasing prosperity for the great majority of Americans should not be penury for the unfortunate,” he wrote. The letter to shareholders was released along with the fourth-quarter and annual results for Berkshire Hathaway. Berkshire’s earnings rose to $24.08 billion last year from $19.87 billion in 2014, while annual revenue increased by $16 billion, to $210.8 billion. In his letter, Mr. Buffett contrasted Berkshire’s pursuit of efficiency with that of 3G Capital, the Brazilian investment firm that he partnered with to acquire Heinz, which was later combined with Kraft last year. While praising 3G’s method as “extraordinarily successful,” Mr. Buffett said that it encompassed buying companies with the intent to immediately cut costs. Berkshire, he said, also “craves efficiency,” but looks for companies that are avoiding bloat, ones that are already run by efficient managers. His example was Precision Castparts Corporation, which was purchased a month ago for $32 billion — the company’s largest acquisition to date. He added that Mark Donegan, the chief executive of Precision Castparts, would be among those deploying Berkshire’s capital through acquisitions. Much smaller acquisitions were also a focus last year, when Berkshire’s subsidiaries made 29 “bolt-on” acquisitions, costing $634 million. Mr. Buffett said that the company would make dozens more such acquisitions in future years. More:


Keeping Investors on a Need-to-Know Basis

Trust, but verify. That’s certainly a timeless investing rule. But for anyone interested in vetting regulatory filings made by investment advisers with the Securities and Exchange Commission, it can be easier said than done. Large investment advisers, under S.E.C. rules, must give their clients extensive information about their operations and update it regularly. These materials are, in turn, published online in the Investor Adviser Public Disclosure database for all to view. Two types of documents appear on this website: Part 1 is a factual questionnaire completed by money managers that includes their regulatory records, assets under management and other facts. Part 2 is a descriptive and lengthy brochure explaining crucial aspects of an investment adviser’s operations. Included in this document is a narrative outlining the risks, fee arrangements and potential conflicts that investing with the money manager involves. This brochure, according to the S.E.C., is “designed to promote effective communication” between an investment adviser and its clients. Toward that end, the regulator requires investment advisers to highlight any material changes made to the same document issued previously. A look through these filings shows that investment advisers regularly report that their filings contain no such changes. But checking on previous brochures filed by some advisers raises questions about these statements. Since 2014, for example, Apollo Global Management — the giant private equity firm that owns, among other things, the teenage retailer Claire’s, Norwegian Cruise Line and the gambling concern Caesars Entertainment — has amended three of its investment adviser brochures in meaningful ways. But in each filing, the firm contended that it had made “no material changes” to the document since its last annual update. A spokesman for Apollo declined to comment. Digging into Apollo’s filings shows that some changes involve a central issue: fees the firm levies on portfolio companies its funds invest in. Costs borne by these companies are ultimately paid by private equity investors, including pension funds and endowments. One charge levied by private equity firms is for watching over the operations of companies in their funds’ portfolios. Known as monitoring fees, these charges are typically subject to yearslong contracts. When a portfolio company is sold, it often pays a lump sum consisting of the remaining monitoring fees owed under the contract. This practice of accelerating monitoring fees essentially charges portfolio companies for services that are never actually rendered. And while this has been an all-too-common industry practice, these fees came under S.E.C.scrutiny in early 2014. In a filing that September, Apollo’s brochure discussed its practice of collecting accelerated monitoring fees for the first time. But it did not highlight the change. Why not? Apollo isn’t saying, but the notice may yet be found to be a material change. In fact, regulators are looking at Apollo’s practice in this area. When it announced its 2015 earnings this month, the company said it had set aside $45 million related to an S.E.C. inquiry concerning “the acceleration of fees from fund portfolio companies.” Apollo also added new information to a March 2015 Form A.D.V., as they are called, regarding fee-sharing arrangements through which private equity firms reduce the management fees they charge to investors by deducting other fees levied on portfolio companies. Management feeoffsets, as these are called, include charges for financial advice or merger-and-acquisition transactions. In the March 2015 brochure, Apollo acknowledged that its affiliates may collect fees from portfolio companies that are not subject to the typical offset arrangements. A third change involved disparities between what the firm pays for legal services and what its private equity clients pay for some of that work. The May 2014 brochure noted in a new disclosure that Apollo receives discounts for legal services while its investors may pay a premium. More:

Overdraft Practices Continue to Gut Bank Accounts and Haunt Customers

Angelina Lemus was puzzled. She had no idea why every month as much as $96 was disappearing from her Citibank checking account. Months later, Ms. Lemus finally figured out the mystery — or at least part of it. Citibank was taking out the money to pay a loan, with an interest rate of 18 percent, that was devised to cover the shortfall every time Ms. Lemus overdrew her checking account. The problem was that Ms. Lemus, a home health care worker from Queens, said she never signed up for the line of credit and was unaware that she was borrowing from it every time her account dipped below zero. In all, Ms. Lemus had amassed $3,400 in debt — a tangle of interest, principal and other fees that have damaged her credit. Ms. Lemus is one of millions of Americans tripped up by overdraft practices, a murky corner of consumer banking that, despite a lot of hand-wringing in Washington, costly litigation and customer rancor, remains largely untouched by financial regulation. In a push for transparency since the 2008 financial crisis, regulators require banks to clearly disclose and explain the terms of just about every financial product, including credit cards and mortgages. But overdraft practices still come with hidden costs and confusing terms, bank customers, lawyers and consumer advocates say. Citibank declined to comment on Ms. Lemus’s situation. In a statement on its practices, a bank spokesman said, “Customers who choose overdraft lines of credit must enroll, and any line of credit balance appears on every monthly statement.” Over all, the spokesman said, “Citibank customers pay in fees a small fraction of what customers of other big banks pay.” More:

You Can Start Feeling Bad For Hedge Funders Now

Hard as it may be. Hedge funds just came off their bleakest year since the height of the financial crisis in 2008, and new data suggests they are not finding a way out of the darkness in 2016. Investors pulled $21.5 billion from hedge funds in January, according to data from eVestment reported by Bloomberg. That is the steepest decline in the first month of the year since 2009, when the financial industry was still wading in the cesspool of the economic meltdown. Funds peeled off another $43.2 billion from their assets under management due to investment losses, resulting in the total assets managed by hedge funds across the world falling below $3 trillion for the first time in nearly two years. The research firm Hedge Fund Research called January’s performance decline the worst start for the industry since 2008. Not long ago, hedge funds were a limited-risk place for investors to park their money and wait for more to come rolling back in spades. But, as tends to happen when people get a little taste of success, their eyes got wider and their appetites for success got bigger. As markets rebounded, the typically risk-averse investment vehicles began careening around curves, competing for who realized the highest returns. But this is a dangerous market in which to grind the pedal all the way down, with not enough air in many markets for the throttle to bring in. Global markets have stuttered, commodities have dragged, and concern has once again crept in, weighing on returns. Some hedge funds, particularly those that had their money on foreign currencies, interest-rate moves, and oil, have struggled to keep their doors open. A fund operated by Candlewood Investment Group, which at one point managed $1 billion, is being rolled into another fund managed by the firm, according to The New York Times. SAB Capital founder Scott Bommer told investors that he would return all their money from his fund after 17 years to focus on managing his own wealth—a move also made by Seneca Capital’s Doug Hirsch and BlueCrest Capital’s billionaire Michael Platt, after 20 and 15 years, respectively. Those who are sticking around aren’t faring much better. Bill Ackman’sPershing Square Holdings is down nearly 19 percent so far in 2016, after its worst year ever in 2015. “While no one here is enthusiastic about delivering our worst performance year in history in 2015, it certainly does a good job reinforcing the humility-side of the equation that is necessary for long-term investment performance,” he wrote in a mea culpa to investors last month. Leon Cooperman’s Omega Advisors, Larry Robbins’s Glenview Capital Management, and John Paulson’sPaulson & Co. were all eating similar slices of humble pie. More:

Who’s Regulating For-Profit Schools? Execs From For-Profit Colleges

College accreditors have come under scrutiny recently for allowing for-profit schools to collect billions in federal aid despite low graduation and high default rates. Accreditors are supposed to be watchdogs for college quality. They are not government agencies but colleges need an accreditor’s seal of approval so students can qualify for federal loans. The agency that has received the most heat is the Accrediting Council for Independent Colleges and Schools. ACICS allowed Corinthian Colleges Inc. to keep on operating right up until the for-profit college chain collapsed after evidence emerged that the schools hadlured thousands of poor students into predatory loans. The accreditor placed a Corinthian campus on its “honor roll” just months before the Education Department forced the school to shut down. ACICS, which oversees hundreds of for-profit colleges, is now the target of twogovernment investigations. A ProPublica analysis also found that schools overseen by ACICS had the lowest graduation rates compared with other accreditors. So who are the people behind the beleaguered accreditor? They include executives from some of the most scandal-plagued schools in the country. We looked at all ACICS commissioners since 2010 and found that two-thirds of them have worked as executives at for-profit schools while sitting on the council. A third of the commissioners came from schools that have been facing consumer-protection lawsuits, investigations by state attorneys general, or federal financial monitoring. Consider Beth Wilson. Wilson, the executive vice president of Corinthian Colleges, joinedACICS in 2014, less than three months after the California attorney general had filed a lawsuit against Corinthian for deceptive advertising and falsifying placement numbers. Wilson was no stranger to accreditation, as she had previously been the chair of another accreditor of primarily for-profit schools. And she was also no stranger to Corinthian’s problems. According to the attorney general’s ongoing suit, Wilson ordered employees to alter Corinthian’s job-placement statistics.

Sex traffickers use social media to research victims to groom

Images of prostitutes walking the streets and picking up johns are pervasive in popular culture. But the reality is that commercial sex is just a click away. These days, johns set up “dates” from the privacy and comfort of their homes. So do the pimps and predators who lure vulnerable youths into the sex trade. These predators can fix on a potential victim, then do their research online, mining social media accounts for information that can help them exploit victims, said Jeffrey Veltri, an FBI agent and lawyer who works to recover and rescue victims of human trafficking. Veltri and Assistant U.S. Attorney Alessandra Serano, who is the Project Safe Childhood coordinator for the Southern District of California, spoke about their experiences working with trafficked children at an ABA Midyear Meeting program, “The Gateway to Vulnerability: Youth Internet Use and Human Trafficking.” The program, sponsored by the Young Lawyers Division, explored where the victims come from (everywhere) and who the perpetrators can be (anyone). Often, the perpetrators come from organized gangs—and social media is a powerful recruiting tool at their disposal. Much like law enforcement uses social media to gather information about targets, Veltri said, gang members and predators use it to find vulnerable teens, mostly girls they can groom for the sex trade. That’s why it’s so important for parents and caregivers to be fully aware of who their children are talking to online, he said, and the broader community should be more aware of sex trafficking, as well. “We’re never going to arrest and prosecute our way out of this problem,” Veltri said. “This is … everyone’s problem. We need to care more about our society.” Who are the victims Veltri and Serano see on a regular basis? “The victims are anybody who is willing to hook up with someone who says to them, ‘You are beautiful. I love you,’ ” Serano said. These girls—often runaways or foster children—don’t have strong support systems at home. And they’re led to believe the sex trade will empower them to be in control of their bodies and destinies, she said, but it’s their handlers who keep the money and maintain control through threats and coercion. Yet when the FBI shows up after a sting and is prepared to rescue trafficked victims, agents are met with hostility. Both Serano and Veltri said they’ve never encountered a victim eager to be rescued. Rather, these victims are hostile and unwilling to accept help. More:

Debt swaps become a tough sell for cash-strapped U.S. energy firms

Highly-leveraged U.S. energy companies are struggling to carry out debt swaps as part of their survival strategy because plummeting oil and gas prices make investors either avoid such deals or demand tougher terms. Last year, at least 10 exploration and production companies, including California Resources Corp (CRC.N), managed to ease financial pressure by persuading investors to accept some losses on their bond holdings in return for new debt that often matures later and offers better collateral. Yet since prices tumbled further early this year, investors have grown more worried that some firms may not survive the rout. They see no point in accepting debt with potentially better collateral if it could mean nothing once the firm hits the wall. The deepening slump also means that producers need to offer more attractive terms – higher interest payments and more collateral – to win over investors and avoid the brutal equity wipeout that happens in most bankruptcies. “Investors are less desperate now since they’ve already taken a lot of the pain,” said Roopesh Shah, global chief of Goldman Sachs’ restructuring group. “They have less downside they’re trying to protect,” he said. Shah said debt exchanges were still viable, but needed to offer better protection and potential gains for investors. That is a tall order for producers, which must conserve cash to make it through the price slump, and whose ability to issue new debt is limited by provisions in bond documents that tie debt to commodity prices. Pennsylvania-based Eclipse Resources Corp (ECR.N) that acquires and develops oil and natural gas properties in Ohio, canceled a debt exchange launched in January. Denbury Resources Inc (DNR.N), a Texas company with operations in the Rocky Mountains and along the Gulf of Mexico Coast, pulled a debt swap even after sweetening the deal for investors. “Ultimately we terminated because it wasn’t attractive enough for us,” said Denbury spokesman Ross Campbell, adding that the company is still deciding whether to try another swap. Eclipse declined to comment. More:

Hillary Clinton, ‘Smart Power’ and a Dictator’s Fall

BY THE TIME Mahmoud Jibril cleared customs at Le Bourget airport and sped into Paris, the American secretary of state had been waiting for hours. But this was not a meeting Hillary Clinton could cancel. Their encounter could decide whether America was again going to war. In the throes of the Arab SpringCol. Muammar el-Qaddafi was facing a furious revolt by Libyans determined to end his quixotic 42-year rule. The dictator’s forces were approaching Benghazi, the crucible of the rebellion, and threatening a blood bath. France and Britain were urging the United States to join them in a military campaign to halt Colonel Qaddafi’s troops, and now the Arab League, too, was calling for action. President Obama was deeply wary of another military venture in a Muslim country. Most of his senior advisers were telling him to stay out. Still, he dispatched Mrs. Clinton to sound out Mr. Jibril, a leader of the Libyan opposition. Their late-night meeting on March 14, 2011, would be the first chance for a top American official to get a sense of whom, exactly, the United States was being asked to support. In her suite at the Westin, she and Mr. Jibril, a political scientist with a doctorate from the University of Pittsburgh, spoke at length about the fast-moving military situation in Libya. But Mrs. Clinton was clearly also thinking about Iraq, and its hard lessons for American intervention. Did the opposition’s Transitional National Council really represent the whole of a deeply divided country, or just one region? What if Colonel Qaddafi quit, fled or was killed — did they have a plan for what came next? “She was asking every question you could imagine,” Mr. Jibril recalled. Mrs. Clinton was won over. Opposition leaders “said all the right things about supporting democracy and inclusivity and building Libyan institutions, providing some hope that we might be able to pull this off,” said Philip H. Gordon, one of her assistant secretaries. “They gave us what we wanted to hear. And you do want to believe.” Her conviction would be critical in persuading Mr. Obama to join allies in bombing Colonel Qaddafi’s forces. In fact, Mr. Obama’s defense secretary, Robert M. Gates, would later say that in a “51-49” decision, it was Mrs. Clinton’s support that put the ambivalent president over the line. The consequences would be more far-reaching than anyone imagined, leaving Libya a failed state and a terrorist haven, a place where the direst answers to Mrs. Clinton’s questions have come to pass. This is the story of how a woman whose Senate vote for the Iraq war may have doomed her first presidential campaign nonetheless doubled down and pushed for military action in another Muslim country. As she once again seeks the White House, campaigning in part on her experience as the nation’s chief diplomat, an examination of the intervention she championed shows her at what was arguably her moment of greatest influence as secretary of state. It is a working portrait rich with evidence of what kind of president she might be, and especially of her expansive approach to the signal foreign-policy conundrum of today: whether, when and how the United States should wield its military power in Syria and elsewhere in the Middle East. More:

In 1927, Donald Trump’s father was arrested after a Klan riot in Queens

When he was asked on CNN’s “State of the Union” on Sunday whether he would condemn the praise of former Ku Klux Klan grand wizard David Duke, Donald Trump declined to disavow Duke’s comments. “I don’t know anything about David Duke, okay,” Trump said. “I don’t know anything about what you’re even talking about with white supremacy or white supremacists. I don’t know, did he endorse me? Or what’s going on. Because I know nothing about David Duke. I know nothing about white supremacists.” In 2000, Trump declined to run for president as a member of the Reform Party because the “Reform Party now includes a Klansman, Mr. Duke, a neo-Nazi, Mr. Buchanan, and a communist, Ms. Fulani. This is not company I wish to keep.” As Trump himself noted on Twitter, he also disavowed Duke in a press conference earlier this week. But this incident also brings to mind another report, unearthed in September by the technology blog Boing Boing. On Memorial Day 1927, brawls erupted in New York led by sympathizers of the Italian fascist movement and the Ku Klux Klan. In the fascist brawl, which took place in the Bronx, two Italian men were killed by anti-fascists. In Queens, 1,000 white-robed Klansmen marched through the Jamaica neighborhood, eventually spurring an all-out brawl in which seven men were arrested. One of those arrested was Fred Trump of 175-24 Devonshire Rd. in Jamaica. This is Donald Trump’s father. Trump had a brother named Fred, but he wasn’t born until more than a decade later. The Fred Trump at Devonshire Road was the Fred C. Trump who lived there with his wife, according to the 1930 Census. More:

Gawker: We fooled Trump into retweeting Mussolini

Gawker is claiming it’s behind the Twitter account Donald Trump retweeted attributing a Benito Mussolini quote to the Republican front-runner.  “[L]ast year, Gawker’s Ashley Feinberg created a Twitter bot that would post quotes from the writings and speeches of the Italian fascist dictator Benito Mussolini, but with all of them attributed to the businessman and Republican presidential candidate Donald Trump,” Gawker wrote in a post on Sunday. Gawker also detailed how it set the “trap” for Trump.

Fact-checking Donald Trump’s claims about Trump University

Republican frontrunner Donald Trump’s challengers have called him many things; add to that list the charge from Florida Sen. Marco Rubio that Trump is a con man. Rubio’s recent attacks have focused on allegations of false marketing by Trump University. It wasn’t a real university — and had to change its name to Trump Entrepreneur Institute because of that. It was largely a seminar program that promised to teach its students the real estate secrets that turned Trump into a billionaire. With some participants paying as much as $35,000, the project drew investigations and lawsuits in at least three states. The university registered as a private company in New York in October 2004 and largely shut down by 2011. When NBC host Chuck Todd raised issues with the university, Trump defended the program, noting that nearly all the students thought it was “great.” “They signed these documents saying, they rated the course, 98 percent approval rating and high marks,” Trump said on Meet the Press on Feb. 28, 2016. And he added, “We have an A from the Better Business Bureau.” We went to the Better Business Bureau website and saw that as of today, the Trump Entrepreneur Institute has no rating. The website explained, “This business has no rating because BBB has information indicating it is out of business.” Trump spokeswoman Hope Hicks told us, “When the school was operational it was rated A.” We asked Hicks to document that rating and didn’t hear back. Katherine Hutt, director of communications for the Council of Better Business Bureaus, said that as a matter of policy, they don’t provide any ratings from previous years. But the organization issued a statement that “Over the years, the company’s BBB rating has fluctuated between an A+ and a D-.” We don’t know when the bureau might have given Trump University a top grade, but there’s no shortage of news articles saying the Better Business Bureau gave the Trump program a D-minus rating in 2010. That year, the New York Daily News reported that “the Better Business Bureau in January slapped a D-minus rating on Trump U., a rating now under review after Trump U. objected.” CBS News said the same thing in an April 21, 2010, article. And  in May, 2011, the New York Times wrote “The Better Business Bureau gave the school a D-minus for 2010, its second-lowest grade, after receiving 23 complaints.” The Washington Post had the same information in May 2011 when it reported that the New York State Attorney General was investigating the Trump Entrepreneur Institute. The Attorney General’s Office did file charges but lost on the grounds that the statute of limitations had passed. Trump said about his entrepreneur institute that “we have an ‘A’ from the Better Business Bureau.” Literally speaking, that is inaccurate. The Better Business Bureau gives the program no rating today because it’s no longer a going concern. Trump University had an A at some point. The Better Business Bureau doesn’t release details of its past ratings, but it did say Trump’s program had ratings that ranged from A+ to D-. What we do know, from several published reports, is that the university had a D from 2009 to 2011. Trump’s claim is literally wrong and also ignores the university’s lower Better Business Bureau scores. We rate it False.


Birmingham raises minimum wage and Alabama takes it away

Birmingham, Alabama, raised the city’s minimum wage to $10.10 an hour on Tuesday. Two days later, the state took it away. Alabama passed a bill Thursday, largely along party lines, that bars cities and counties from raising the minimum wage or requiring employers to provide leave or other benefits. Because the law applies retroactively, it wipes out Birmingham’s raise. Republican legislative leaders fast-tracked the bill in order to pass it before Birmingham’s raise was set to take effect March 1. The GOP enjoys super-majorities in both houses. Within an hour or so of the bill’s passage, Gov. Robert Bentley (R) announced he had signed it. “Alabama is a poor state. But I say we are poor by choice, because of bills like this that keep people poor,” State Sen. Linda Coleman-Madison (D) said as the measure was being debated. Alabama currently has no minimum wage of its own, so Birmingham’s largely black low-wage workforce, many of whom work for fast-food outlets, can continue to be paid $7.25 an hour, the federal minimum. Coleman-Madison has proposed a constitutional amendment to raise the minimum wage statewide to $10 an hour. Supporters of the state bill said Alabama needs one uniform minimum wage in order to provide simplicity for employers. They also argued that raising the minimum wage leads to job losses. “I can promise you employment will go downhill,” State Sen. Jabo Waggoner (R) said Thursday. In fact, different studies have drawn different conclusions, but an award-winning 2014 book that combined thousands of results from hundreds of studies found that raising the minimum wage has “very modest or no effects on employment, hours, and other labor market outcomes.”

Alabama’s presidential primary is set for Tuesday, and Hillary Clinton’s campaign has denounced the state bill.  More:


Attorney General announces weapons permit holders can now purchase guns without background check

Attorney General Luther Strange has announced a streamlining of state law for gun enthusiasts: if you already have a concealed weapons permit, you no longer have to submit to a background check for additional firearms purchases. Strange said Thursday the move to lift the background requirement for up to five years just makes good common sense. “Alabama concealed carry permit holders in good standing have already passed a background check and there is no need to force them to submit to additional checks if they intend to buy a firearm within five years of receiving their permit,” said Strange, a Republican first elected in 2010. Until now, holders of Alabama’s Permit to Carry Pistol in Vehicle or Concealed on Person had to submit an additional background check request for each subsequent weapon they purchased. Strange negotiated the change with the federal Bureau of Alcohol, Tobacco and Firearms, housed in the U.S. Department of Justice. “I’m pleased that the ATF has approved my request to exempt Alabama conceal carry permit holders from having to undergo additional background checks each time they want to buy a firearm,” said Strange. Alabama now joins 23 other states given National Instant Criminal Background Check exemptions for concealed carry permit holders.


UA Adapted Athletics program receives $3 million gift from Mountain Brook couple

TUSCALOOSA, AL (WBRC) – Thursday, a fundraising campaign for a facility for the University of Alabama’s Adapted Athletics program got a huge financial boost. Michael and Kathy Mouron of Mountain Brook, both University of Alabama (UA) graduates, donated $3 million toward a $10 million facility which was recently approved by the UA System Board of Trustees. “When we began to look more into the matter, we were shocked to learn that no university in the country had an arena specifically dedicated to adapted athletes,” Mike Mouron said. “What we also quickly learned was that a number of dedicated people on the Alabama campus were already deeply involved in the planning for the arena – the best location had been identified, the initial design had been completed by University staff, a preliminary budget had been compiled, and support from key decision-makers had been sought and secured.”

The Adapted Athletics facility will be a two-story building which will include a game venue for wheelchair basketball, locker rooms, a workout/training room, team meeting rooms and study halls. The facility will be located south of the UA recreation center. Construction could begin in November. “The university and I thank the Mourons for their generous gift toward this project, which will provide state-of-the-art facilities and support for our adapted student-athletes and coaches,” University President Dr. Stuart Bell said. “The University of Alabama will be the first school in the country to have an arena dedicated strictly to collegiate adapted athletics.” The UA Adapted Athletics Program began in 2003 with women’s wheelchair basketball. The program has since grown to include 30 student-athletes in women’s basketball, men’s basketball, wheelchair tennis, para-rowing and adapted golf. More than 100 students participate in the program’s noncompetitive sports options. The program has won seven national championships: four in women’s basketball, one in men’s basketball and two in tennis. More than 20 current and former athletes and coaches are expected to compete in the 2016 Paralympics in Rio.

NFL legend Bart Starr was victim of ‘brutal’ secret Alabama hazing

They beat Bart Starr with a wooden paddle until his back resembled a piece of raw meat. The quarterback was never the same again. For more than 60 years, Bart Starr and his wife, Cherry, have kept a dark secret hidden away from the narrative of the Hall of Fame quarterback’s career. No more. One of the most respected football players in the history of the game, and arguably one of the toughest, was hazed so badly while at the University of Alabama that it derailed his college career, disqualified him from military service and affected him throughout his 16 years with the Green Bay Packers. Starr’s career at Alabama fizzled before his junior season due to a back injury sustained from a punting exercise. That’s the cover story the Starrs have used since 1954, and it’s not true, according to Cherry Starr. Wanting to set the record straight on a fundamental aspect of her husband’s career and their lives together, Cherry recently told exclusively that Bart’s injury in college happened during a gruesome ritualistic paddling for initiation into the university’s A-Club for varsity lettermen. “He was hospitalized at one point in traction,” Cherry said. “That was in the days when they were initiated into the A-Club, and they had severe beatings and paddling. From all the members of the A-Club, they lined up with a big paddle with holes drilled in it, and it actually injured his back.” Bart never disclosed the incident involving the lettermen’s club, says Cherry, because he thought “it would make him look bad.” In declining health following two strokes in 2014, Bart, 82, is no longer able to discuss the events of his career, but the trauma he experienced at Alabama and its aftereffects are things the couple lived through together and have shared throughout their lives. More:


Jeff Sessions endorsed Donald Trump for president: Here’s why that’s a big deal

The blonde-haired woman in the metallic Captain America body suit wasn’t that impressed when someone joined Republican presidential front runner Donald Trump on stage at his North Alabama rally Sunday afternoon. “Who is that?” she asked, holding her hand to her eyes to ward off the sun shining down on the 30,000-plus people who filled the municipal football stadium. Those around her filled her in: Joining Trump on stage – and donning his own “Make America Great” hat- was Jeff Sessions, Alabama’s junior Senator. It’s the first time Sessions, a Republican, has endorsed a presidential candidate, Trump said, adding that that Senator is just the sort of person with whom he wants to work. Sessions is the first U.S. Senator to endorse Trump, a political outsider who has courted controversy while amassing a groundswell of public support. The importance of Sessions’ endorsement has been noted before. “Sessions’ endorsement would carry a lot of weight. Sessions has more credibility with Trump’s voters than Trump does,” Mark Krikorian, executive director of the Center for Immigration Studies, told Politico in January. Here’s why Sessions’ endorsement is a big deal for Trump:


The Republican Party’s implosion over Donald Trump’s candidacy has arrived

 MADISON, Ala. — The implosion over Donald Trump’s candidacy that Republicans had hoped to avoid arrived so virulently this weekend that many party leaders vowed never to back the billionaire and openly questioned whether the GOP could come together this election year. At a moment when Republicans had hoped to begin taking on Hillary Clinton — who is seemingly on her way to wrapping up the Democratic nomination — the GOP has instead become consumed by a crisis over its identity and core values that is almost certain to last through the July party convention, if not the rest of the year. A campaign full of racial overtones and petty, R-rated put-downs grew even uglier Sunday after Trump declined repeatedly in a CNN interview to repudiate the endorsement of him by David Duke, a former grand wizard of the Ku Klux Klan. Trump had disavowed Duke at a news conference on Friday, but he stammered when asked about Duke on Sunday. Marco Rubio, who has been savaging Trump as a “con man” for three days, responded by saying that Trump’s defiance made him “unelectable.” The senator from Florida said at a rally in Northern Virginia, “We cannot be the party that nominates someone who refuses to condemn white supremacists.” The fracas comes as the presidential race enters a potentially determinative month of balloting, beginning with primaries and caucuses in 11 states on Tuesday. As the campaign-trail rhetoric grew noxious over the weekend, a sense of fatalism fell over the Republican firmament, from elected officials and figureheads to major donors and strategists. “This is an existential choice,” said former senator Norm Coleman of Minnesota, who is backing Rubio. Asked how the party could unite, Coleman said: “It gets harder every day when you hear things like not disavowing the KKK and David Duke. It’s not getting easier; it’s getting more difficult. . . . I’m hopeful the party won’t destroy itself.” The choice for voters is not simply one of preference but rather a fundamental one about the direction they want to take the country, with the insurgent Trump promising utter transformation. More:



Trump is the GOP’s Frankenstein monster. Now he’s strong enough to destroy the party.

 When the plague descended on Thebes, Oedipus sent his brother-in-law to the Delphic oracle to discover the cause. Little did he realize that the crime for which Thebes was being punished was his own. Today’s Republican Party is our Oedipus. A plague has descended on the party in the form of the most successful demagogue-charlatan in the history of U.S. politics. The party searches desperately for the cause and the remedy without realizing that, like Oedipus, it is the party itself that brought on this plague. The party’s own political crimes are being punished in a bit of cosmic justice fit for a Greek tragedy. Let’s be clear: Trump is no fluke. Nor is he hijacking the Republican Party or the conservative movement, if there is such a thing. He is, rather, the party’s creation, its Frankenstein’s monster, brought to life by the party, fed by the party and now made strong enough to destroy its maker. Was it not the party’s wild obstructionism — the repeated threats to shut down the government over policy and legislative disagreements, the persistent calls for nullification of Supreme Court decisions, the insistence that compromise was betrayal, the internal coups against party leaders who refused to join the general demolition — that taught Republican voters that government, institutions, political traditions, party leadership and even parties themselves were things to be overthrown, evaded, ignored, insulted, laughed at? Was it not Sen. Ted Cruz (R-Tex.), among others, who set this tone and thereby cleared the way for someone even more irreverent, so that now, in a most unenjoyable irony, Cruz, along with the rest of the party, must fall to the purer version of himself, a less ideologically encumbered anarcho-revolutionary? This would not be the first revolution that devoured itself. Then there was the party’s accommodation to and exploitation of the bigotry in its ranks. No, the majority of Republicans are not bigots. But they have certainly been enablers. Who began the attack on immigrants — legal and illegal — long before Trump arrived on the scene and made it his premier issue? Who frightened Mitt Romney into selling his soul in 2012, talking of “self-deportation” to get himself right with the party’s anti-immigrant forces? Who opposed any plausible means of dealing with the genuine problem of illegal immigration, forcing Sen. Marco Rubio (R-Fla.) to cower, abandon his principles — and his own immigration legislation — lest he be driven from the presidential race before it had even begun? It was not Trump. It was not even party yahoos. It was Republican Party pundits and intellectuals, trying to harness populist passions and perhaps deal a blow to any legislation for which President Obama might possibly claim even partial credit. What did Trump do but pick up where they left off, tapping the well-primed gusher of popular anger, xenophobia and, yes, bigotry that the party had already unleashed? Then there was the Obama hatred, a racially tinged derangement syndrome that made any charge plausible and any opposition justified. Has the president done a poor job in many respects? Have his foreign policies, in particular, contributed to the fraying of the liberal world order that the United States created after World War II? Yes, and for these failures he has deserved criticism and principled opposition. But Republican and conservative criticism has taken an unusually dark and paranoid form. Instead of recommending plausible alternative strategies for the crisis in the Middle East, many Republicans have fallen back on mindless Islamophobia, with suspicious intimations about the president’s personal allegiances. Thus Obama is not only wrong but also anti-American, un-American, non-American, and his policies — though barely distinguishable from those of previous liberal Democrats such as Michael Dukakis or Mario Cuomo — are somehow representative of something subversive. How surprising was it that a man who began his recent political career by questioning Obama’s eligibility for office could leap to the front of the pack, willing and able to communicate with his followers by means of the dog-whistle disdain for “political correctness”? We are supposed to believe that Trump’s legion of “angry” people are angry about wage stagnation. No, they are angry about all the things Republicans have told them to be angry about these past 7½ years, and it has been Trump’s good fortune to be the guy to sweep them up and become their standard-bearer. He is the Napoleon who has harvested the fruit of the revolution. There has been much second-guessing lately. Why didn’t party leaders stand up and try to stop Trump earlier, while there was still time? But how could they have? Trump was feeding off forces in the party they had helped nurture and that they hoped to ride into power. Some of those Republican leaders and pundits now calling for a counterrevolution against Trump were not so long ago welcoming his contribution to the debate. The politicians running against him and now facing oblivion were loath to attack him before because they feared alienating his supporters. Instead, they attacked one another, clawing at each other’s faces as they one by one slipped over the cliff. New Jersey Gov. Chris Christie got his last deadly lick in just before he plummeted — at Trump? No, at Rubio. (And now, as his final service to party and nation, he has endorsed Trump.) Jeb Bush spent millions upon millions in his hopeless race, but against whom? Not Trump. So what to do now? The Republicans’ creation will soon be let loose on the land, leaving to others the job the party failed to carry out. For this former Republican, and perhaps for others, the only choice will be to vote for Hillary Clinton. The party cannot be saved, but the country still can be.

Buckle your seat belt and load your guns, Alabama again takes the cake

A GOP lawmaker looked around the chambers of the Alabama Senate last week, noted the weighty issues facing that august body and – so I’m told — said …What is this, Archibald Day? I blush. I do. Because it was just the kind of day I live for in that palace of the politically absurd. Welcome to the two houses of your Legislature: The inane and the insane. They knew I wouldn’t be able to resist.

If every bill before the Alabama Legislature last week actually came to pass – Heaven help us all – this is what’ll change. We’ll be able to climb into cars with a fully loaded pistol in the front seat, without ever bothering to get a permit. But we’ll still have  to turn around to make sure everybody in the back seat had their seatbelt on. Because it’s safety first.  Except for the thing about guns. And the fact it’s still legal to plunk your kids in the back of a pickup truck and fly on down the road. If all this stuff passes we can head on down to the bakery to buy a Lane Cake — the official state cake of Alabama. So what if a Lane Cake has so much bourbon it would be illegal in parts of 24 counties? Or that I’d never heard of it, outside of To Kill a Mockingbird. We could, if all these things pass, stop at a liquor store for free samples of our favorite booze – no doubt for the Lane Cake. We could take our buzz to any one of the state’s hundreds of historic monuments, which could not, under penalty of law, be removed by anyone who came to find them offensive. Then, finally, we could head off into the woods to hunt deer or hogs over a baited field.

And call it sporting. Heeeere, Bambi, Bambi, Bambi. Boom!But wait. I can’t really complain about hunting over a baited field. That’s pretty much like covering the Legislature. Or is it shooting fish in a barrel? Let’s face it. That’s just the fun stuff. It doesn’t count the bill to strip the attorney general and the district attorneys of their ability to investigate  ethics complaints – which is like giving politicians a license to commit corruption over a baited field. They’re hunting your money. It doesn’t count a bill from the legislator in Mountain Brook — Alabama’s richest city — that bars poorer Birmingham from raising its minimum wage. That was passed and signed before you can say Business Council of Alabama.

Let me be clear: The Birmingham City Council raised its minimum wage in a mad rush, before it could complete studies recommended by the city’s own lawyers, to deflect from the city council’s own pay increase. And Alabama lawmakers – no doubt shouting “Give me liberty or give me death” as they did it — somehow make the city of Birmingham look like … the good guys. Talk about absurd. Another bill would give public school students class credit for leaving school to go to church. This Legislature loves to Jesus almost as much as it loves money. Like Kinky Friedman almost said, watching the Legislature alone on days like this is enough to make you doubt intelligent design. Yeah. It was my kind of day.


Morning Money

WEEKEND POLITICS WRAP: CRAZIER AND CRAZIER — Well, there’s no way you missed it. But to review: Donald Trump on national TV declined to disavow the support of former Ku Klux Klan member David Duke, saying he needed to do “more research” on the subject before taking a position. Trump, who has spoken repeatedly of Duke in the past, claimed that he didn’t “know anything” about the white supremacist. Trump campaigned later in the day in Alabama. Make of that what you will. To be fair, Trump had previously disavowed Duke. But apparently he forgot having done that just days before.

The other big story on the GOP side was Marco Rubio’s increasingly pugnacious attacks on Trump as a “con man” with stubby little fingers. Seriously, on Sunday Rubio said: “You know what they say about men with small hands … you can’t trust them.” Many pundits landed on their fainting couches over this, saying Rubio was dropping to Trump’s level. Well, exactly. Trump has risen to dominance on crudeness and a general disregard for serious policy discussion, all of it lapped up by the media. Rubio is now at the center of the media conversation by adopting Trump’s tactics. Will it work? Maybe not. But if you think your opponent is a joke, it makes sense to treat him that way.

On the Democratic side, Hillary Clinton romped to a massive, 47 percent win in South Carolina that sets the stage for her to pretty much bring an end to the Bernie Sanders campaign on Tuesday. Sanders will take his home state Vermont and has a chance in Oklahoma, Minnesota, Massachusetts and Colorado. But even in those states, the delegates will get split up pretty evenly so Clinton’s big lead (aided by super delegates) will only keep growing heading into winner-take-all Florida, Michigan et al on March 15th. Unless Sanders shocks the world, the Democratic race could well be over March 16th.

SUPER TUESDAY GUIDE — POLITICO’s Kyle Cheney: “Super Tuesday could cripple every Republican presidential candidate not named Donald Trump. The best-case scenario for Trump would put him far ahead of his rivals in the race for delegates, and polls have him competitive almost everywhere that Republicans are voting. But even if he stumbles, Trump will leave Super Tuesday with enough delegates to remain at the front of the race.

“Marco Rubio, Ted Cruz, John Kasich and Ben Carson all lack that luxury. Rubio revived establishment hopes with an aggressive debate performance on Thursday, but a weak finish this week would leave him hobbled heading into his must-win home state of Florida on March 15. Cruz is hoping his brand of conservatism will resonate in the seven Southern states that will dole out the largest share of delegates, but polls show Trump uncomfortably close even in Texas, where Cruz allies admit a loss would be disastrous”

OSCARS BLINK — Big night for Leo DiCaprio and “The Revenant” as well as “Spotlight,” which won best picture. “Mad Max: Fury Road” also took home a pile. Chris Rock killed it.

G20 FAIL — Mohamed A. El-Erian on Bloomberg View: “The global economy needed this weekend’s Group of 20 meeting in China to produce a ‘Sputnik moment.’ Instead, and despite growing awareness of the risks to growth and financial stability, the gathering concluded essentially with a reheated version of previous policy statements. This is a far cry from the individual and collective actions that G-20 members must take if the global economy is to avoid even more disappointing growth and greater financial instability.”

FED WAY BEHIND ON INFLATION? — Pantheon’s Ian Shepherdson: “[A]t the point core inflation and wage growth reach the Fed’s targets, both will clearly be rising rapidly. Note that core PCE inflation will hit the target as soon as October — two years earlier than the Fed’s current forecast — if the monthly numbers merely run in line with the average for the past three months.

“And, in the absence of significant prior tightening, we expect the pace of economic growth at that time to be quite strong … The only plausible policy response in this scenario is to raise rates, and quickly … We are of the view that the Fed is now substantially behind the economy”

MORE KASHKARI CHATTER — From a person who knows him well: “Neel’s political ambition is endless, and he’s smart enough to know he can never go back into government if he’s always labeled ‘the bailout guy.’ He’s right to try to change the label to ‘the guy who will make sure it never happens again.’ But he’s being so blatantly self-interested about it”

GOOD MONDAY MORNING — Happy Leap Day! Remember nothing you do today actually counts! Just kidding. Email me on and follow me on Twitter @morningmoneyben.

DRIVING THE WEEK — A dozen states and a territory vote in presidential nominating contests on Tuesday with 661 GOP delegates at stake and 865 Democratic delegates. Trump is likely to further expand his delegate lead but the proportional nature of the allocation means he won’t take them all. And Ted Cruz is likely (but not certain) to win Texas … On the Democratic side, Hillary Clinton is likely to continue her march to the nomination … House Financial Services Committee has a hearing Tuesday at 2:00p.m. on terrorism financing … ISM manufacturing at 10:00 a.m. Tuesday expected to rise to 48.5 from 48.2 … ISM Non-manufacturing Survey at 10:00 a.m. Thursday expected to dip to 53.0 from 53.5 … February jobs report at 8:30 a.m. Friday expected to show a gain of 193K, no change to the 4.9 percent jobless rate and a 0.2 percent increase in wages … FSOC meets at 8:00 a.m. Wednesday … Senate Banking subcommittee has a hearing 10:00 a.m. Thursday “on regulatory reforms to improve equity market structure”

HRC IN NYC — Per release: “On Wednesday, March 2, the day after voters in many states cast their ballots on Super Tuesday, Hillary Clinton will return to New York City for a rally with supporters. … 5:45 PM EST … Jacob K. Javits Convention Center Javits Center North

LATEST “OFF MESSAGE” — “Obama Political Strategist and UBER SVP David Plouffe tells Glenn Thrush that Hillary Clinton has a 98 percent chance of being the Democratic nominee and that she’s a much better candidate today than in ’08. Plouffe warns Clinton not to allow outside voices to dictate or influence campaign strategy and to stick with her team and the plan. On the Republican side, Plouffe suggests that efforts to coalesce around one alternative to Trump are too little too late — ‘It needed to happen two, three weeks ago’ — and that the nomination is completely in Trump’s control — ‘If he can land the plane, he wins.’”

GDP CHEAT SHEET — Hamilton Place Strategies on the revision of Q4 GDP up to 1 percent:

JPM SACKS TWO OVER COMPLIANCE — FT’s Joe Rennison and Kara Scannell: “JPMorganChase sacked the head of its government debt trading desk and another employee after they allegedly circumvented the bank’s compliance procedures following a disagreement in valuing certain trades … Andrew Lombara, then head of US Treasury trading at the bank, and Chi Lee, a junior Treasury trader, both left the bank in early January but the reasons for their departure were not disclosed publicly …

“The traders and the bank’s valuation committee disagreed over the amount of reserves taken for certain Treasury trades known as strips … The JPMorgan traders wanted to increase the size of the reserve and went around the valuation committee to do so … JPMorgan believed this subsequent move violated internal bank procedures and fired the traders … The valuation dispute came amid intense pressure on banks’ fixed-income trading businesses, which have been hit by a combination of much tougher regulation, a shift to electronic platforms and prolonged bouts of risk aversion among clients”

EUROPEAN PRESS RIPS TRUMP — NYT’s Dan Bilefsky: “He has been depicted as a snarling demagogue in France, equated with Donald Duck in Spain, and described as worse than Lord Voldemort in Britain. In Europe, the birthplace of the Enlightenment, Donald Trump has been treated variously as a disturbing curiosity or an entertaining political show barker. His nearly every move and pronouncement have been reported from Paris to Berlin to Helsinki, even as commentators on both left and right have dismissed the notion of President Donald J. Trump as the stuff of fantasy, or, at worst, a momentary lapse of reason.

“That is changing. With a series of wins in key Republican primary states, and with the billionaire’s expected strong showing when 12 states hold primaries or caucuses on Tuesday, the European media, like its American counterpart, is adjusting to the prospect of a seemingly unstoppable Trump juggernaut. The reaction is a mix of befuddlement, outrage and panic, along with admiration in some unlikely quarters”

GOP CIVIL WAR — WP’s Philip Rucker and Robert Costa: “The implosion over Donald Trump’s candidacy that Republicans had hoped to avoid arrived so virulently this weekend that many party leaders vowed never to back the billionaire and openly questioned whether the GOP could come together this election year. At a moment when Republicans had hoped to begin taking on Hillary Clinton — who is seemingly on her way to wrapping up the Democratic nomination — the GOP has instead become consumed by a crisis over its identity and core values that is almost certain to last through the July party convention, if not the rest of the year.

“This is not how Republican officials imagined their party would be entering the spring of 2016. They had wanted to unite around a nominee with an inclusive and broadly appealing message and begin prosecuting the case against Clinton. Instead, they are wondering anew whether mainstream voters could accept Trump as the nominee. ‘It’s scary,’ South Carolina Gov. Nikki Haley, who has endorsed Rubio, said on ABC’s “This Week.’ She added: ‘I think what he’ll do to the Republican Party is really make us question who we are and what we’re about. And that’s something we don’t want to see happen.’”

ASIA OFF TO SOFT START POST-G20 — Reuters: “Asian stocks were off to a cautious start on Monday after a weekend meeting of the Group of 20 economic policymakers ended with no new coordinated action to spur global growth and as solid U.S. data revived expectation of a U.S. rate hike before year-end. … G20 finance ministers and central bankers agreed to use ‘all policy tools — monetary, fiscal and structural — individually and collectively’ to reach the group’s economic goals, citing a series of risks to world growth. Some market players say the statement could mildly underpin market sentiment, but the lack of any concrete action plans provided for few catalysts”

CHINA DROPS SHARPLY — Bloomberg: “Chinese stocks sank, with the benchmark index approaching the lowest level since November 2014, as some investors were disappointed by a lack of specific measures to boost growth during the Group of 20 meeting in Shanghai. The Shanghai Composite Index dropped 3.5 percent, after tumbling as much as 4.4 percent earlier. Declines were led by commodity producers and technology companies. The measure has lost 25 percent this year, the worst performer among 93 global equity gauges, on concern capital outflows will accelerate as the economic slowdown deepens”

POTUS Events

10:00 am || Receives the Presidential Daily Briefing
11:15 am || Presents the Medal of Honor to Senior Chief Special Warfare Operator Edward Byers, U.S. Navy; East Room

All times Eastern
Live stream of White House briefing at 12:45 pm

Floor Action

The Senate plans to take up legislation addressing the opiod epidemic this week, while the House is expected to consider measures regarding Iran and environmental regulations.

Senators are poised to take up legislation from Sens. Rob Portman (R-Ohio) and Sheldon Whitehouse (D-R.I.) aimed at combating heroin and prescription drug abuse.

But the legislation—which passed out of the Judiciary Committee by a voice vote—is facing hurdles from Democrats who want to attach $600 million in emergency funding. They argue that the spending is necessary to get help immediately to communities ravaged by the addiction epidemic.

While Democrats have sidestepped saying they will sink the larger bill if the provision backed by Sen. Jeanne Shaheen (D-N.H.) isn’t included, Minority Leader Harry Reid (D-Nev.) stressed last week that the amendment should get “every consideration.”

The otherwise bipartisan bill authorizes—but doesn’t appropriate—funding for programs to combat prescription drug and heroin abuse, in addition to increasing the availability of naloxone, a drug to treat overdose.

Republicans are hoping to avoid an unexpected floor fight that could threaten to stall the legislation, with Senate aides suggesting that negotiations are playing out at the leadership level.

Majority Leader Mitch McConnell (R-Ky.), separately, said late last week that he’s “hopeful we can reach an agreement to finish this bill with just a handful of amendments.”

The ability to successfully navigate the legislation through the upper chamber would also be a boon to Portman, who faces a tough reelection bid. He’s touted his efforts to combat drug addiction as he looks to localize his Senate race.

Portman told The Hill last week that while he wants to keep his legislation non-partisan, he’s open to having votes on amendments.

The Senate will take its first procedural vote Monday at 5:30 p.m. on whether or not to end debate on proceeding to the bill. The move will require 60 votes, including the support of at least six Democrats.


The House is expected to vote Monday on a resolution that would call on Iran to assist with the case of Robert Levinson, a retired FBI agent who disappeared in 2007.

The Iranian government released five Americans detained in Iran in January after months of delicate negotiations with the Obama administration. Those citizens included Washington Post journalist Jason Rezaian, former Marine Amir Hekmati and pastor Saeed Abedini.

“Even as we rejoice in the safe return of others, we will never forget about Bob,” President Obama said at the time. “Each and every day, but especially today, our hearts are with the Levinson family, and we will not rest until their family is whole again.”

The FBI has offered a $5 million award for information that leads to Levinson.

Clean Air Act, Medicaid payments

The House has a relatively light workweek through Thursday, with only noncontroversial bills considered under suspension of the rules slated for consideration on Monday and Tuesday.

On Tuesday – the same day as the Super Tuesday presidential contests – eleven out of the 12 bills on tap are measures to name federal buildings.

A bill to prohibit federal payments for nonemergency services from providers that no longer participate in Medicaid, Medicare or the Children’s Health Insurance Program (CHIP) is expected to come up for a vote on Wednesday.

Thursday’s agenda will consist of legislation that would exempt the brick making industry from having to comply with Clean Air Act regulations for air pollutant emission standards.

Meanwhile, Republicans are still weighing their options for a budget this year. House GOP leaders initially envisioned scheduling floor votes on the budget for early March. But that goal has slipped given the intraparty divisions over whether to abandon last year’s budget deal, a move that would risk the fate of the appropriations process.


Determine if the Net Investment Income Tax Applies to You

If you have income from investments, you may be subject to the Net Investment Income Tax. You may owe this tax if you receive investment income and your income for the year is more than certain limits. Here are some key tips you should know about this tax:

  • Net Investment Income Tax.  The law requires a tax of 3.8 percent on the lesser of either your net investment income or the amount by which your modified adjusted gross income exceeds a threshold amount based on your filing status.
  • Income threshold amounts.  You may owe this tax if your modified adjusted gross income is more than the following amount for your filing status:
Filing Status Threshold Amount
Single or Head of household $200,000
Married filing jointly $250,000
Married filing separately $125,000
Qualifying widow(er) with a child $250,000



  • Net investment income.  This amount generally includes income such as:
    • Interest,
    • Dividends,
    • Capital gains,
    • Rental and royalty income, and
    • Non-qualified annuities.

This list is not all-inclusive. Net investment income normally does not include wages and most self-employment income. It does not include unemployment compensation, Social Security benefits or alimony. It also does not include any gain from the sale of your main home that you exclude from your income.

Refer to Form 8960, Net Investment Income Tax, to see if this tax applies to you. You can check the form’s instructions for the details on how to figure the tax.

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