Krebs Daily Briefing 30 December 2015

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


U.S.-led air strikes kill IS leaders linked to Paris attacks

A U.S.-led coalition has killed 10 Islamic State leaders in the past month with targeted air strikes, including individuals linked to last month’s attacks in Paris, a spokesman for the coalition said on Tuesday. “Over the past month, we’ve killed 10 ISIL leadership figures with targeted air strikes, including several external attack planners, some of whom are linked to the Paris attacks,” said U.S. Army Colonel Steve Warren, a spokesman for the U.S.-led military campaign against Islamic State, also known by the acronym ISIL. “Others had designs on further attacking the West.” One of those killed was Abdul Qader Hakim, who facilitated the militants’ external operations and had links to the Paris attack network, Warren said. He was killed in the northern Iraqi city of Mosul on Dec. 26. A coalition air strike on Dec. 24 in Syria killed Charaffe al Mouadan, a Syria-based Islamic State member with a direct link to Abdelhamid Abaaoud, the suspected ringleader of the coordinated bombings and shootings in Paris on Nov. 13 which killed 130 people, Warren said. Mouadan was actively planning further attacks against the West, he said. The effect of the air strikes on Islamic State leadership can be seen in recent battlefield successes against the group, Warren said. The Iraqi army recently saw its first major victory against the ultra-hardline Sunni militants, declaring the capture this week of Ramadi, a provincial capital west of Baghdad which fell to Islamic State in May. “Part of those successes is attributable to the fact that the organization is losing its leadership,” Warren said. He warned, however: “It’s still got fangs.”

Iran fires rockets near US aircraft carrier

Several Iranian military vessels approached and fired unguided rockets near a U.S. aircraft carrier traveling through international waters, two U.S. officials confirmed to The Hill. The Iranian vessels came as close at 1,500 yards from the USS Harry S. Truman before firing the rockets in a direction away from the carrier, one U.S. military official told The Hill. The official called the incident “certainly unnecessarily provocative” and “unsafe.” It happened last week, on Dec. 26, as the Truman was transiting the Strait of Hormuz, “an internationally recognized maritime traffic lane,” the official said. NBC News first reported the incident.  At around 10:36 a.m., several Iranian navy vessels approached the Truman, as well as other coalition and merchant vessels, the official said. “They were observed quickly approaching their location as they transited the Strait of Hormuz into the Arabian Gulf,” said the official. At 10:45 a.m., Iran set in motion a “previously unannounced live-fire exercise over maritime radio and requested for nearby vessels to remain clear,” the official added. Approximately 40 minutes later, the exercise warnings were repeated, and the ships started to launch the rockets, the official said. It is unclear how many rockets were fired, the official said; however, they were fired in a direction away from the passing commercial and coalition ships. The Truman is the first U.S. aircraft carrier to enter the Gulf, after the USS Theodore Roosevelt left in October, leaving a U.S. carrier gap of several months. When the Roosevelt left in early October, Iran conducted a ballistic missile test.

As U.S. Focuses on ISIS and the Taliban, Al Qaeda Re-emerges

WASHINGTON — Even as the Obama administration scrambles to confront the Islamic State and a resurgent Taliban, an old enemy seems to be reappearing in Afghanistan: Qaeda training camps are sprouting up there, forcing the Pentagon and American intelligence agencies to assess whether they could again become a breeding ground for attacks on the United States. Most of the handful of camps are not as big as those that Osama bin Laden built before the Sept. 11, 2001, attacks. But had they re-emerged several years ago, they would have rocketed to the top of potential threats presented to President Obama in his daily intelligence briefing. Now, they are just one of many — and perhaps, American officials say, not even the most urgent on the Pentagon’s list in Afghanistan. The scope of Al Qaeda’s deadly resilience in Afghanistan appears to have caught American and Afghan officials by surprise. Until this fall, American officials had largely focused on targeting the last remaining senior Qaeda leaders hiding along Afghanistan’s rugged, mountainous border with Pakistan. At least in public, the administration has said little about the new challenge or its strategy for confronting the threat from Al Qaeda, even as it rushes to help the Afghan government confront what has been viewed as the more imminent threat, the surge in violent attacks from theTaliban, the Haqqani network and a new offshoot of the Islamic State. Former administration officials have been more outspoken — especially those who were on the front lines of the original battle to destroy Al Qaeda’s central leadership. “I do worry about the rebirth of AQ in Afghanistan because of what their target list will be — us,” said Michael Morell, the deputy director of the C.I.A. until two years ago, whose book, “The Great War of Our Time,” recounts the efforts of the Bush and Obama administrations to destroy the Qaeda leadership. “It is why we need to worry about the resurgence of the Taliban,” Mr. Morell said, “because, just like before, the Taliban will give Al Qaeda a safe haven.”

Barclays to Pay $13.75 Million to Settle Case Over Mutual Funds

Barclays Capital failed to stop 6,100 unsuitable switches between mutual funds on behalf of its customers over a five-year period that ended in June, resulting in $8.6 million of customer harm, the Financial Industry Regulatory Authority said on Tuesday. The brokerage firm unit of the British bank will pay $13.75 million to settle Finra’s investigation into whether it improperly switched customers in and out of certain mutual funds in violation of suitability standards. The settlement includes $10 million in restitution to affected mutual fund customers and $3.75 million in fines. Barclays neither admitted nor denied the charges, but consented to the findings. A Barclays spokesman had no comment. Broker-dealers have obligations under Finra rules to ensure that customers gain an advantage by switching mutual funds at the recommendation of their broker. Transaction fees associated with switching funds can undermine those advantages. Finra said that Barclays Capital did not have sufficient supervisory systems from January 2010 to June 2015 to prevent unsuitable switching. Barclays failed to act on thousands of alerts about potentially unsuitable transactions, Finra said. The regulator also said that Barclays did not provide adequate guidance to supervisors to ensure that mutual fund transactions for retail brokerage customers were suitable based on the client’s objectives, risk tolerance and account holdings. A review of six months’ worth of transactions found that some 39 percent of mutual fund switches were unsuitable, Finra said, affecting 343 customers who had $800,000 of financial harm, including realized losses.

The Storm That Will Unfreeze the North Pole

The sun has not risen above the North Pole since mid-September. The sea ice—flat, landlike, windswept, and stretching as far as the eye can see—has been bathed in darkness for months. But later this week, something extraordinary will happen: Air temperatures at the Earth’s most northernly region, in the middle of winter, will rise above freezing for only the second time on record. On Wednesday, the same storm system that last week spun up deadly tornadoes in the American southeast will burst into the far north, centering over Iceland. It will bring strong winds and pressure as low as is typically seen during hurricanes. That low pressure will suck air out of the planet’s middle latitudes and send it rushing to the Arctic. And so on Wednesday, the North Pole will likely see temperatures of about 35 degrees Fahrenheit, or 2 degrees Celsius. That’s 50 degrees hotter than average: It’s usually 20 degrees Fahrenheit below zero there at this time of year. Winter temperatures have only snuck above freezing at the North Pole once before. Eric Holthaus, Slate’s meterologist, could not find an Arctic expert who had witnessed above-freezing temperatures at the pole between December and early April. 2015 is the warmest year ever recorded. Thirteen of the top 14 warmest years on the books have happened this century. And here in the United States, it has been a hot, strange month. Many cities across the northeast smashed their Christmas and Christmas Eve temperature records not at midday, but at the stroke of midnight. For the hundred-plus years that New York temperatures have been recorded, the city has never been warmer than 63 degrees Fahrenheit on a December 24. Yet at 1 a.m. on Christmas Eve of this year, the thermometer measured 67 degrees. More:

Puerto Rico Debt Crisis Closes In on Jan. 1 Deadline

It is possible, the island’s leaders have suggested in official filings, that enough cash can be found to pay about $330 million due on general obligation bonds — those given top priority by Puerto Rico’s Constitution — but only by diverting cash from other types of bonds. A failure to make payments due on those would leave a mysterious hierarchy of bondholders in a legal quandary over whether to sue now or hope for some payment, even a lower one, down the road. Even the United States Treasury secretary, Jacob Lew, said this week it was “inevitable” for Puerto Rico to start missing bond payments, although he said the coming defaults would not necessarily all happen Jan. 1. “Look, they’re effectively in default” already, he said in an appearance on Fox Business Network on Monday. “They’ve already been taking money out of pension funds to pay current bills. They’ve been shifting money from one creditor to pay for another creditor. That’s effectively default. You don’t have to wait until you miss a coupon payment to say you’re in default.” More:

Putin’s son-in-law boosted by $1.75 billion Russian state loan

The son-in-law of Vladimir Putin stands to benefit from $1.75 billion in cheap finance from the Russian state, a Reuters examination of public documents shows. The money will help fund a petrochemical project at a company in which Kirill Shamalov, husband of Katerina Tikhonova, the Russian president’s younger daughter, has a significant interest. Shamalov is a major shareholder in Sibur, Russia’s largest processor of petrochemicals. This month Sibur obtained $1.75 billion from Russia’s National Wealth Fund to help build a huge new plant in Tobolsk, Siberia. According to corporate documents, Sibur was able to borrow the money at a current interest rate of 2 percent. That is a bargain, according to financial analysts. Artyom Usmanov, an analyst at investment firm BCS, said borrowers on the Russian bond market would expect to pay over 7 percent interest for such a loan. Irina Alizarovskaya, an analyst with Raiffeisenbank called the financing “quite cheap.” Shamalov did not respond to a request for comment. In a statement by Sibur on Dec. 9, Dmitry Konov, its chief executive, described the state finance as having “favorable terms.” A Sibur spokesman said the company had no information “about family relations or relations between the company’s shareholders and the president of Russia.” The state loan, he said, “underwent all necessary procedures and was approved in strict accordance with the … laws.” The country’s National Wealth Fund, which was valued at the start of 2015 at 4.8 trillion roubles (then $72 billion), typically invests in national infrastructure projects such as railways, nuclear technology and major roads. Prime Minister Dmitry Medvedev issued a decree in October to add the petrochemical plant to the list of projects in which the fund can invest. The decision, Medvedev said, would reduce “dependence on imports” and create up to 15,000 jobs. More:

Julius Baer reaches preliminary deal in U.S. tax case

Julius Baer has reached an agreement in principle with U.S. authorities to settle an investigation into allegations it helped wealthy American clients evade taxes, potentially drawing a line under the Swiss bank’s biggest legal issue. Switzerland’s third largest listed bank said it had set aside nearly $200 million in additional provisions for the settlement, bringing the total amount earmarked for potential penalties to $547.25 million, which the bank will charge to its 2015 full-year results. Julius Baer’s penalties potentially look much lighter than those paid by larger rival Credit Suisse, which in 2014 was fined $2.5 billion for helping Americans evade taxes and pleaded guilty to a U.S. criminal charge. U.S. authorities have conducted criminal investigations of several Swiss banks after UBS agreed in 2009 to pay $780 million and identify certain U.S. clients to resolve criminal charges that it helped Americans evade taxes. Julius Baer’s deal with the U.S. Attorney’s Office for the Southern District of New York, which conducted the investigation, remains subject to approval by the U.S. Department of Justice (DOJ), Baer said in a statement. Zurich-based Baer said it hoped to settle the Justice Department investigation, which began in 2011, in the first three months of next year‎. The bank said it still expected to report a net profit for the current financial year and would remain adequately capitalized. Baer’s shares rose as much as 4.4 percent, versus a 0.4 percent fall in the European banking index, on relief that the provisions were lower than expected. A Swiss media report earlier this month suggested a settlement might cost Baer double the $350 million it set aside in June. Resolving the U.S tax case would ‎end the uncertainty over potential fines for the bank. “The exactness of the additional provisions suggests that the agreement with New York authorities is just a formality, while the DOJ fine could still change,” Zuercher Kantonalbank analysts said. “Visibility is still lacking.” It is also not clear whether Baer will need to follow Credit Suisse and Wegelin & Co. in pleading guilty to criminal charges. Wegelin, Switzerland’s oldest private bank, shut its doors permanently in 2013 after over two and half centuries in business following its agreement to plead guilty to U.S. authorities. The U.S. Justice Department is also running a separate voluntary program to allow Swiss banks to resolve potential criminal charges by disclosing cross-border activities that helped U.S. account holders conceal assets.

The Worst Corruption Scandals of 2015

A goat and cash exchanged for shortened sentences in Ghanaian prisons. International soccer games that were bought and sold. Rolexes and vacation clubs traded for Chinese business deals. In 2015, massive corruption scandals embroiled world leaders, high court judges, and the men who run the world’s soccer industry, among many others. Below, Foreign Policy chronicles some of the most egregious:


Regulators Shouldn’t Rubber-Stamp Banks’ CRA Efforts

Plenty of politicians have recently been paying lip service to the issue of wealth disparity. Clearly, polling has told them that it’s at the forefront of many Americans’ minds, which is a good thing for them to know. But a key part of the conversation is missing: the role of banks. It’s time for these public officials and aspiring public officials to say and do more to show they’re truly committed to economic fairness. It is highly lucrative to be in the financial services sector lately. Banks are posting huge profits and the stock market has surged in recent years. And, once again, the wealthy are becoming wealthier. The wealth gap is growing. These same banks are obligated by the Community Reinvestment Act to make responsible loans and investments in the communities where they are chartered, including blue-collar neighborhoods. But unfortunately, the regulators in charge of assessing how well banks are doing seem out of sync with the experiences of Main Street, where mortgages and small-business loans are hard to come by. The best evidence for this comes in what is a clear pattern of grade inflation: In 2014, over 98% of banks evaluated received a passing grade on their CRA exam. Banks are important assets for our communities. Whether it is a mortgage that allows a family to buy a home and build wealth, a small business loan that allows an entrepreneur to start or build a business, or a checking or savings account or other basic banking service, banks play an absolutely critical role in economic opportunity and economic growth. Without them, avenues to climb the economic ladder are sparse. When banks withdraw from communities, opportunities dry up. That’s why it is deeply troubling that too many regulators bring a rubber-stamp mentality to what is an enormously important law that could do a great deal more to increase economic opportunities for working people and communities of color across the country. Regulators need to update the CRA regulations and bring real rigor to the examination process. It’s time to hold these financial institutions, which are highly proficient at building wealth for themselves, to a higher standard when it comes to community prosperity. Too many politicians on both sides of the aisle took the wrong lesson from the financial crisis. A combination of a financial services industry run amok, and a Congress and regulatory agencies asleep at the wheel, were the ingredients that led to the crisis. But many people seem to have come to the bad conclusion that a critical wealth-building mechanism — homeownership — was the problem. This claim is unsubstantiated by any study or data. Homeownership remains the single best mechanism for working families to build wealth and enter the middle class. But how has Congress occupied itself in the face of a growing wealth gap and economic challenges that working people are facing across America? By working to dismantle our system of housing finance through attempts to eliminate Fannie Mae and Freddie Mac and their affordable housing goals, which would severely narrow the options for working-class families seeking to become homeowners. By attempting to roll back the Dodd-Frank Wall Street Reform and Consumer Protection Act, and all of the important consumer protections it put in place, including Consumer Financial Protection Bureau rules. These actions make it pretty clear who these members of Congress are really working for. Our leaders and aspiring leaders need to shine a spotlight on this issue. Financial institutions have an obligation to our communities, by law. It’s time to take that seriously.


When are you officially dead? Well, that may depend on which hospital is making the call

The narrow, inscrutable zone between undeniably still here and unequivocally gone includes a range of states that look like life but may not be: a beating heart, a functioning digestive system, even moving fingers and toes. Death is less a moment then a process, a gradual drift out of existence as essential functions switch off, be it rapidly or one by one. It was exactly midnight when Colleen Burns was wheeled into the operating room at St. Joseph’s Hospital Health Center in Syracuse, N.Y. She had been deep in a coma for several days after overdosing on a toxic cocktail of drugs. Scans of electrical activity in her brain were poor, and oxygen didn’t seem to be flowing. Burns was brain dead, her family was told; if they wanted to donate her organs, now was the time to do it. But there, under the bright lights of the prep room in the OR, Burns opened her eyes. The 41-year-old wasn’t brain dead. She wasn’t even unconscious anymore. And doctors had been minutes away from cutting into her to remove her organs. This is the nightmare scenario, the one that sends doctors and neurologists into cold sweats. It’s the reason that, in 2010, the American Academy of Neurology issued new guidelines for hospitals for determining brain death – the condition that legally demarcates life from whatever lies beyond. Those standards, according to Yale University neurologist David Greer, who worked on them, are meant to ensure that no patient is declared dead unless they really are beyond all hope of recovery. “This is truly one of those matters of life and death, and we want to make sure this is done right every single time,” he told NPR. But five years later, according to a study led by Greer that was published in the journal JAMA Neurology Monday, not all hospitals have adopted the guidelines.


For the Wealthiest, a Private Tax System That Saves Them Billions

WASHINGTON — The hedge fund magnates Daniel S. Loeb, Louis Moore Bacon and Steven A. Cohen have much in common. They have managed billions of dollars in capital, earning vast fortunes. They have invested large sums in art — and millions more in political candidates. Moreover, each has exploited an esoteric tax loophole that saved them millions in taxes. The trick? Route the money to Bermuda and back. With inequality at its highest levels in nearly a century and public debate rising over whether the government should respond to it through higher taxes on the wealthy, the very richest Americans have financed a sophisticated and astonishingly effective apparatus for shielding their fortunes. Some call it the “income defense industry,” consisting of a high-priced phalanx of lawyers, estate planners, lobbyists and anti-tax activists who exploit and defend a dizzying array of tax maneuvers, virtually none of them available to taxpayers of more modest means. In recent years, this apparatus has become one of the most powerful avenues of influence for wealthy Americans of all political stripes, including Mr. Loeb and Mr. Cohen, who give heavily to Republicans, and the liberal billionaire George Soros, who has called for higher levies on the rich while at the same time using tax loopholes to bolster his own fortune. All are among a small group providing much of the early cash for the 2016 presidential campaign. Operating largely out of public view — in tax court, through arcane legislative provisions and in private negotiations with the Internal Revenue Service — the wealthy have used their influence to steadily whittle away at the government’s ability to tax them. The effect has been to create a kind of private tax system, catering to only several thousand Americans. The impact on their own fortunes has been stark. Two decades ago, when Bill Clinton was elected president, the 400 highest-earning taxpayers in America paid nearly 27 percent of their income in federal taxes, according to I.R.S. data. By 2012, when President Obama was re-elected, that figure had fallen to less than 17 percent, which is just slightly more than the typical family making $100,000 annually, when payroll taxes are included for both groups. The ultra-wealthy “literally pay millions of dollars for these services,” said Jeffrey A. Winters, a political scientist at Northwestern University who studies economic elites, “and save in the tens or hundreds of millions in taxes.”

Wave of regulation looms in 2016

President Obama is preparing to unleash a wave of new regulations in 2016 as he looks to shore up his legacy on public protection issues during his final year in office. The Securities and Exchange Commission, the Food and Drug Administration and the Department of Labor are all expected to finalize major federal rules that critics say are long overdue. The regulations include a final rule from the 2010 Dodd-Frank financial reform law that will force companies to compare the paychecks of their top executives with company performance, final rules for cigars and electronic cigarettes proposed well over a year ago, and a final regulation to protect constructions workers from deadly silica dust. Here’s a look at the top regulations expected to come from the administration in 2016:

2015’s wildest moments on the House floor

From a showdown with the White House over immigration to electing a new Speaker, 2015 was a tumultuous year in the House. Political theater played out on the House floor in nail-biting votes, emotional speeches and occasional downright comedy. Here’s a look at the year’s most captivating moments:

Suicide Claims Another Marine as Holes in Safety Net Persist

LONGMONT, Colo. — Tyler Schlagel slipped out of his parents’ house while they were asleep three weeks ago and drove through the wintry darkness to his favorite fishing lake high in the Rockies. Mr. Schlagel, a 29-year-old former Marine corporal who was stocking shelves at a sporting goods store, carried with him the eight journals he had filled during tours in Iraq and Afghanistan. He also carried a .40-caliber pistol. Under the bright mountain stars, he kindled a small campfire. When the flames grew high, he threw the journals into the fire, then shot himself in the head. Mr. Schlagel’s death Dec. 9 was the 14th suicide in his military unit — the Second Battalion, Seventh Marine Regiment — since the group returned from a bloody tour in Afghanistan in 2008. Many other members have attempted suicide, one just three days after Mr. Schlagel’s death. The suicide rate for the 1,200 Marines who deployed together — most now out of the military — is nearly four times as high as for young male veterans as a whole and 14 times as high as that for all Americans. After a New York Times report in September about the suicides underscored shortcomings in the government’s ability to monitor and treat mental health problems among veterans, members of Congress called for the military and the Department of Veterans Affairs to address the issue. But those efforts have remained halting and incomplete, critics say. A big part of the problem is that the veterans of the unit, like hundreds of thousands of other young veterans, fall between the cracks of the two enormous institutions. The military’s authority stops when troops leave active duty. The V.A.’s starts only if veterans come in for benefits or medical care — and many do not seek that care. There is also little formal tracking of suicides among veterans, so although members of other units say they have high suicide numbers like the 2/7, as the battalion is known among members, the extent of the problem remains unknown. The Marine Corps formed a task force this fall in response to the battalion’s plight, but it has largely focused on how to prevent suicides in future veterans. The V.A. said in a statement that it could not contact members of the battalion and other war-scarred units because some members may still be in the military and therefore outside the V.A.’s authority. More:

Another VA Headache: Privacy Violations Rising at Veterans’ Medical Facilities

When Anthony McCann opened a thick manila envelope from the Department of Veterans Affairs last year, he expected to find his own medical records inside. Instead, he found over 250 pages of deeply revealing personal information on another veteran’s mental health. “It had everything about him, and I could have done anything with it,” McCann said in an interview. It wasn’t the first time McCann had received another veteran’s medical records. In the past, he informed the VA, then threw away the misdirected documents. This time, after failing to make contact with the other veteran on his own, McCann took the documents to a town hall meeting held by the director of the VA’s Tennessee Valley Healthcare System. When the floor opened for questions, McCann was the first to raise his hand. “I got 256 pages of another person’s extremely confidential, extremely explicit mental health records,” he said, waving the documents in his hands, an exchange captured by local media. When an official asked for the documents back, McCann refused, doubting the VA’s ability to safeguard the material or make sure it ended up in the right hands. “I don’t trust them,” McCann told ProPublica. “They don’t do what they say they’re going to do.” Employees and contractors at VA medical centers, clinics, pharmacies and benefit centers commit thousands of privacy violations each year and have racked up more than 10,000 such incidents since 2011, a ProPublica analysis of VA data shows. More:

The Floods of Five Rivers Heading for the U.S. Industrial South

Brace yourself, U.S. South. The Mississippi River is coming, and so are the Arkansas, the Red, the Ohio and the Missouri. The water on the Mississippi River is already so high that Missouri has closed interstate highways. Governor Jay Nixon activated the National Guard to stave off disaster. And the floods only stand to get worse. Warmer-than-usual weather through December has precipitation falling as rain. Some areas have seen 5 to 10 inches (12 to 24 centimeters) above normal flowing into the rivers instead of being locked up as snow and ice on solid ground until spring. Flooding on the lower Mississippi may become severe enough to force the opening of the Bonnet Carre Spillway protecting New Orleans, according to the Lower Mississippi River Forecast Center. “It is very unusual,” said Jeff Graschel, a hydrologist at the forecast center, an arm of the National Weather Service. “We have a pretty significant flood event over the Mississippi and Ohio rivers. The magnitudes are a little less than 2011.” In other words, this year’s water levels are just shy of modern records. Four years ago, flooding was so severe that Charles Camillo, an Army Corps of Engineers historian, wrote a book about it. Overflowing rivers deluged cities, slowed barge traffic and threatened refinery and chemical plant operations. The only difference is the 2011 flood happened in May. Flood Stage:  Today, the Missouri River is at a major flood stage, and it’s pouring into an already swollen Mississippi, forecast to reach its second-highest crest at St. Louis around the start of the new year. All of that water will join the Ohio and together flow toward some of the most densely packed industrial river fronts in the country. “We are going to exceed records for this time of year for the Mississippi and the Ohio,” said Graschel, based in Slidell, Louisiana. Barges on the Mississippi handle about 60 percent of U.S. grain exports entering the Gulf of Mexico through New Orleans, as well as 22 percent of its petroleum and 20 percent of its coal. Flooding had raised the costs for barge delivery to export terminals in New Orleans by 10 cents a bushel for soybeans and 5 cents for corn since Friday, INTL FCStone Inc. said Tuesday. Refineries, Factories:  Dow Chemical Co., Archer-Daniels Midland Co. and Valero Energy Corp. are among the companies with refineries, factories and shipping sites along the river. They’re all still weeks away from seeing flooding, as Graschel said it isn’t forecast to reach New Orleans until the third week of January. Even after the flood bulge makes its way into the Gulf of Mexico, the vigil will have to continue, he said. There is still a winter’s worth of rain and snow coming, in part because of this year’s strong El Nino. “We will certainly have to be more watchful,” Graschel said.

How the Koch network rivals the GOP

The political machine that Charles Koch launched a dozen years ago in a Chicago hotel conference room with 16 other rich conservatives has exploded in size and influence in the past few elections and now eclipses the official GOP in key areas. Koch and his brother David Koch have quietly assembled, piece by piece, a privatized political and policy advocacy operation like no other in American history that today includes hundreds of donors and employs 1,200 full-time, year-round staffers in 107 offices nationwide. That’s about 3½ times as many employees as the Republican National Committee and its congressional campaign arms had on their main payrolls last month, according to POLITICO’s analysis of tax and campaign documents and interviews with sources familiar with the network. And the staggering sum the network plans to spend in the 2016 election run-up ― $889 million ― is more than double what the RNC spent in the previous presidential cycle. While rich donors have held considerable sway over the political process in past eras, the Kochs’ network is different. Its mission is in some ways more ambitious than the Republican Party’s ― to fundamentally reshape American public life around a libertarian-infused brand of conservatism ― but it also is encroaching on the GOP’s traditional turf. The Koch network’s data operation is now regarded by many candidates and campaigns as superior to the party’s, and it has invested in efforts to become the leading force on the right for training activists and registering voters. Its biggest group, Americans for Prosperity, plans to place full-time staff in all but eight states by late 2016 and aspires to copy the National Rifle Association’s broad-based membership plan for longevity, according to a POLITICO investigation. It found that the group has even discussed expanding its influence by writing and pushing model state budgets, a technique similar to the one used by the American Legislative Exchange Council to push various state legislative initiatives. As the network has grown, though, internal audits at times have raised concerns about its management culture, spending and lack of coordination among core groups that compose the network. Insiders have questioned huge staff bonuses, fancy restaurant meals, purchases of Twitter followers and sporting event-related costs, as well as contracts directed to firms connected to top network operatives. More:

The Speech That Set Off the Debate About America’s Role in the World

Seventy-five years ago this evening, on December 29, 1940, Franklin Delano Roosevelt—recently reelected to an unprecedented third term in office—took to the airwaves at 9:30 p.m. Eastern time to address an increasingly restive nation on the sobering topic of war mobilization. Across the Atlantic, Britain was engaged in a death struggle with Hitler’s Germany, which had already laid claim to vast regions of Europe, from France and the lowlands in the west to Poland in the east. In Asia, Japan had swallowed up large parts of China and cast a watchful eye toward the Central and South Pacific. For over 36 minutes and 53 seconds, Roosevelt spoke to his captive audience about the imperative of American engagement in the conflict. Staying true to his campaign pledge of several weeks earlier, that America would not declare war on the Axis powers unless it were attacked, the president still made a forceful case for American military support to Britain. “If Great Britain goes down,” he warned, “the Axis powers will control the continents of Europe, Asia, Africa, Australia and the high seas. … It is no exaggeration to say that all of us, in all the Americas, would be living at the point of a gun.” To preserve universal freedom, the president urged, “we must have more ships, more guns, more plans—more of everything. We must be the great arsenal of democracy.” More:

The Student Who Once Nudged His Way To The Oval Office Now Hopes To Move In

This story is part of NPR’s series Journey Home. We’re going to the places presidential candidates call home and finding out what those places tell us about how they see the world. Few presidential candidates go around invoking Richard Nixon. But that’s exactly what GOP hopeful John Kasich does. It all goes back to a complaint Kasich had about his dorm room and a meeting with a university president 45 years ago. Kasich is nothing if not persistent. He was a kid from the working class McKees Rocks, Pa., but he went to college at Ohio State University, and that’s where he kicked off his presidential campaign this summer. OSU football legend and two-time Heisman trophy winner Archie Griffin warmed up the crowd at Kasich’s campaign launch. He led a cheer that anyone who’s attended a Buckeye football game knows — Griffin shouted “O-H” and the crowd replied with a loud “I-O.” Moments later, Kasich was onstage at his alma mater and reminiscing about his old dormitory. “I came here to Ohio State,” he said. “I found myself on the 19th floor of one of those towers. You could hit it with a stone from here. The place was 23 floors high. The tower next door the same size. Ohio State can be a pretty intimidating place.” But Kasich the student was anything but intimidated. There’s one tale from back then that’s become a campaign staple for him. As a college freshman, he had some complaints about that high-rise dormitory, including a rule forbidding residents from opening the windows. He says he got nowhere with housing officials, “so I called the President’s Office and started badgering them until they finally let me in.” The university president in that fall of 1970 was Novice Fawcett. Kasich says he immediately took notice of the nice desk, the leather upholstered chairs, the beautiful rugs. And after raising his complaints, he asked what exactly a college president does. Fawcett noted his academic and fundraising responsibilities —then he mentioned something else. “He says, ‘Tomorrow I’m going to go down and visit with President Nixon. And I said ‘Well sir, there’s a number of things that I would like to talk to him about also do you think I could go with you?’ And he said ‘No, you can’t go.'” But Kasich — quick on his feet — asked if Fawcett would deliver a letter to Nixon for him. “And he said, ‘Well, I guess I could do that.'” Kasich wrote the letter, praising Nixon as “not only a great president but an even greater person.” He asked to come visit him in Washington. Days later, there was a letter in his dormitory mailbox — from President Nixon himself. Kasich immediately called his parents. “My mother answers the phone and I said, ‘Mom, I”m going to need an airline ticket, the president of the United States would like to have a meeting with me in the Oval Office,'” Kasich recounted. “And my mother is shouting ‘Honey, pick up the phone there’s something really wrong with Johnny.'” In the official White House photo of Kasich in the Oval Office he looks even younger than his 18 years as he shakes Nixon’s hand. Both are smiling. It’s dated Dec. 22, 1970. There’s no telling exactly what they talked about because there aren’t any notes detailing the conversation. And it was just two months before Nixon’s infamous Oval Office taping system was installed. Back at Ohio State, Kasich’s friends and acquaintances all heard the story —over and over. More:

10 Billionaires Who Got More Billionaire-y in 2015

Long has the adage “the rich get richer” stood, and so it was true again in 2015. But it was particularly apt for certain American billionaires, who saw their fortunes balloon, multiply, and expand more than their super-rich compatriots. So you know whom to envy, emulate, or cozy up to in 2016, here are the 10 U.S.-based billionaires whose billions grew the most over the last year, based on numbers from Bloomberg’s Billionaire Index.

Ashley Madison adds 4 million members in months since massive data hack

An infidelity website claims its membership is growing months after more than 30 million users were exposed during a massive online data breach. A rolling count on shows the service has over 43 million users, up from 39 million when the website was hacked this summer. Ashley Madison parent company Avid Life declined to provide details about the membership spike to CNNMoney. “Despite having our business and customers attacked, we are growing,” ALM said in a statement in August. “This past week alone, hundreds of thousands of new users signed up for the Ashley Madison platform—including 87,596 women.” Millions of customer accounts, including names, home addresses, and credit card information, were exposed during the data hack. Ashley Madison, which faces several class-action lawsuits related to the breach, has tightened security on the site since the incident. The hack exposed several public officials, including former Hartselle Mayor Don Hall, who denied using the website. He stepped down from his position in August after the city council denied his request for an indefinite leave of absence. The Washington Post reported the identities of other leaders whose names were included in the leak, such as Family Research Council Executive Director and reality TV star Josh Duggar, Florida state prosecutor Jeff Ashton, Louisiana Republican Party Executive Director Jason Doré and Baton Rouge, La., City Councilman Ryan Heck.


Federal assistance to AL may take time to arrive after severe weather

MONTGOMERY, AL (WSFA) – Federal assistance from FEMA may take “a couple of weeks”, according to Alabama Gov. Robert Bentley, as a procedure must be followed to secure the funds. The first part of the procedure is damage assessment, something that is being delayed as high flood waters have left some areas inaccessible. Throughout the state, though, crews have tried to assess the damage from the recent band of severe weather to make it’s way through Alabama. According to EMA Director Art Faulkner, the assessment stage should be done around the end of this week.  If the damage is determined to exceed $7 million, then the state can request federal assistance. With multiple bridges, roads, and homes destroyed, reaching that threshold seems likely. FEMA cannot come into the state until the state requests aid, which it may do by the end of this week. According to the governor, FEMA would do a quick assessment of its own before providing assistance. According to Gov. Bentley, if Alabama receives federal assistance it would do so with a 75 to 25 percent match. That means for each dollar the state would put up, the federal government would put up three. Bentley said the matching can vary, adding that the federal government picked up 95 percent of the tab after the 2011 Tuscaloosa tornadoes. Bentley said the local level usually splits the state’s part of the recovery money.


As if flooding isn’t bad enough, here come the snakes

One of the byproducts of Alabama’s recent warm, wet weather has been the reappearance of slithery creatures we usually don’t see until spring. Alabama’s Christmas Day flooding has resulted in snakes washing up in yards around Alabama. Once such occurrence reported in North Alabama happened when several large snakes, appearing to be cottonmouths (water moccasins), were deposited by flood waters. While those snakes may have been victims of the flood, the warm, wet weather could have reptiles out and about. Snakes, as well as other reptiles, are normally hibernating this time of year in many part of the U.S. Weather in Alabama doesn’t often get cold enough for reptiles to hibernate for a complete season, according to Dr. David Steen, assistant research professor for the Auburn University Museum of Natural History. “Snakes, along with all other reptiles, are ectothermic (formerly called “cold-blooded”),” Steen said. “That means they rely on the external environment to regulate their internal body temperature. When it is too cold out they are typically underground and inactive. Once it starts to warm up in the spring these animals tend to emerge. “In the Southeastern United States it doesn’t often get cold enough to knock these animals out, so to speak, for the whole season, so you may see them poking their head out on particularly warm days,” he added. There’s also the chance that snakes – dead or alive – could be washed up in flood waters. In May, Texas residents found not just snakes but alligators in their homes following devastating floods there. South Carolina saw the same thing in October.

Where can you Uber in the Birmingham metro area?

Uber officially launched in the Birmingham metro area Tuesday, and dozens of drivers have already hit the roads. But where exactly can you Uber in and around the Magic City? Downtown Birmingham is essentially the center of the range area. From there, extend about 20 miles in each direction, and that’s included within the coverage area. The Birmingham-Shuttlesworth International Airport is included within the coverage area. The only major exception is the city of Hoover, which still has not approved a ridesharing ordinance in its city code. Hoover city councilman John Lyda tweeted Tuesday that the city council will not vote on the ordinance until January 19, 2016. So until at least then, Hoover residents and folks wishing to catch a ride to the Hoover city limits are out of luck. For the a detailed map, visit the Uber Birmingham website here. Using the map at the top of the site, zoom in and out to determine the exact width and scope of the Uber coverage area.

Photo shows bearded Don Siegelman fresh out of solitary confinement

Former Gov. Don Siegelman on Sunday shared a photo of himself sporting a beard and fresh out of solitary confinement. Siegelman was released Dec. 11 after having spent nearly two months in solitary following an interview he gave to a talk radio host. “My first day of “freedom’ after having spent 57 days in “THE HOLE” or Solitary Confinement or as the Federal Bureau of Prisons terms it, in its “Special” Housing Unit (The SHU, pronounced shoe), no matter how one says it, it is the way death row inmates spend their time. It’s the worst of the worst,” the Facebook post stated.

Southern Traditions for New Year’s Eve

From MoonPies to giant pickles, celebrating the New Year in the South is a unique experience. Sure, Times Square has its giant crystal ball—a New Year’s Eve tradition that New York Times owner Adolph Ochs started in the early 1900s to mark the opening of the paper’s new headquarters—but when it comes to originality, NYC has nothing on Dixie. Mobile, Alabama:  MoonPies, not beads, are the favorite item tossed from the Gulf Coast town’s Mardi Gras floats. Home to the New World’s first Carnival, Mobile drops a large-scale replica of the sweet Southern treat each New Year’s Eve. Fayetteville, Arkansas:  Home to thousands of dedicated Razorback fans, the Arkansas college town saw no reason not to include its beloved mascot in its annual celebration—a locally sculpted, winged hog drops in Fayetteville Square at midnight. Key West, Florida:  When legendary Key West drag queen Sushi first descended from the balcony of Bourbon Street Pub in a giant ruby-red high heel made of papier-mâché and two-by-fours, it sparked a tradition that still draws a crowd sixteen years later. Because, well, why not? Miami, Florida:  Never one to conform, Miami kicks off its annual festivities by raising a thirty-five-foot neon orange to the top of the InterContinental Miami hotel, backed by fireworks and live music from nearby Bayfront Park. Atlanta, Georgia:  Hailed as the largest New Year’s Eve celebration in the Southeast, Atlanta’s Peach Drop regularly draws more than 100,000 revelers to witness the eight-foot, 800-pound fruit’s descent at Underground Atlanta. Havre De Grace, Maryland:  Fiercely loyal to the area industry, one buoyed by duck hunting and hand-carved decoys, the tiny coastal town lowers an illuminated decoy—designed by a local carver—to honor the favored waterfowl each year. Mount Olive, North Carolina:  What started off as a joke among a few Mt. Olive Pickle Company employees quickly became an institution in the company’s small-town home base. Today, residents ring in each New Year by plunging a three-foot, brightly lit pickle into a redwood pickle tank.

Alabama and Michigan State cheerleaders played the world’s largest game of cornhole

Before the Crimson Tide and Spartans face off in the College Football Playoff semifinals, Alabama and Michigan State cheerleaders played the world’s largest game of cornhole by throwing beanbeags out of the Goodyear blimp. Goodyear set a Guinness world record by constructing the largest cornhole game on Earth, with a gigantic 2,048-sqaure-foot target sitting 200 feet below the blimp. The game — which looks far tougher than normal cornhole — ended in a 1-1 draw.


In the Year of Trump, the Joke Was On Us

It started out as a joke: Donald Trump running for president! What better way to spoof the thinness of the Republican field than to shove a bombastic reality star with orange hair, a sixth-grade vocabulary and no behavioral filter onto the debate stage with the likes of Ted Cruz, Rick Santorum, Scott Walker and Lindsey Graham? The only thing more perfect would have been to add a head of lettuce and Koko the signing gorilla to round out the candidate slate. Trump seemed like a perfect foil in particular for Jeb Bush, a hesitating, gelatinous aristocrat who lacked the cocksure brainlessness the previous Bush used to sell himself as a “regular guy.” In an era when Republican voters were more distrustful than ever of the Same Old Politics, stiff, birthright-bearing Jeb was exactly the wrong candidate for the party elders to back. And they seemed to realize it, too. Once the Republican race got going, the party appeared too disorganized and fractured to throw its institutional weight behind anyone. This left a comically enormous cast of hopefuls to duke it out in the equivalent of a schoolyard rock fight. And without the gravitas of party and media support, the candidates on the Republican side turned out to be just a bunch of chattering, defenseless, fourth-rate flesh-bags, exquisitely vulnerable to any strong personality. The entrance of Trump into the race on June 16th therefore offered the potential of an entertaining car wreck of awesome proportions. But things turned ugly less than 45 minutes into his run. In his announcement, Trump told the world that Mexican immigrants were “rapists” who needed to be stopped. Then, in an interview with CNN’s Don Lemon, he doubled down on the remark instead of recanting. “Well, somebody’s doing the raping,” he seethed. A week later, Mexicans, to Trump, were not just rapists but “rapists and killers,” and he was now adding a proposal to build a giant wall across the Mexican border to stop the Army of Darkness-style invading rape-murder horde. The wall would be “tall” and building it would be “easy,” he said, adding that he would get Mexico to pay for it, because he knew the “art of negotiating” and wasn’t a “clown.” To the astonishment of most observers, Trump soared to second place in Iowa and New Hampshire, and was the clear frontrunner by mid-July. Except for a brief surge by crazy-ass Ben Carson in the fall, he’s remained there ever since. Heading into the holiday season, he was pushing 40% in some national polls, more popular than ever. The appearance of a onetime Spy magazine punchline and WWE performer as the real leader of a real screwball nationalist movement has been at least partly an accidental phenomenon. The ancient report that he used to keep a book of Hitler’s speeches by his bedside notwithstanding, it’s very likely that Donald Trump never in his life thought seriously about things like nativism, fascism, eugenics, or any kind of ideology at all. This was not someone who likely ever dreamed of cattle cars and rivers of blood. Trump is a narcissist, not a demagogue; his pathology is himself, not politics. More:
The Big Short tells a complicated story, but the Great Recession is very simple

The Big Short has earned acclaim from critics and financial journalists alike for the skillful way in which it dramatizes and humanizes financial products and concepts that are complicated, and at times deliberately obscure. But like many other financial crisis narratives, it fundamentally misses the part of the story that turned the 2008 financial crisis into the sort of epochal event that people would make movies about in 2015 — the Great Recession that sent the unemployment rate soaring to 10 percent and kept it above 8 percent for two more years. The thing about this recession is that it’s a lot simpler than the financial machinations that blew up and then deflated the housing bubble. So simple that it would make a terrible movie. But despite its simplicity, it’s a story that is oddly missing from American political dialogue.

The banking crisis never came. Excavations of the plumbing behind the financial crisis often seem to be implicitly written from an alternate universe in which the events of the fall of 2008 played out entirely differently. In this universe, the Federal Reserve wasn’t able to organize a rescue for Bear Stearns, or allow Goldman Sachs to hastily convert to bank holding company status, Congress didn’t approve the Troubled Asset Relief Program, AIG wasn’t nationalized so the claims it had underwritten didn’t get paid off, and the Bush-Obama lame duck period was characterized by a series of epic bankruptcies of large, diverse financial institutions. If all that had happened, then we would be sitting around saying that economic devastation visited upon American working people in the subsequent years was caused by a massive banking crisis. We would note that there’s a certain irony in the fact that Fed Chairman Ben Bernanke was a leading academic proponent of the view that an uncontrolled series of bank failures caused the Great Depression, and yet an uncontrolled series of bank failures rolled out under his watch, followed by a second Great Depression. Except none of that happened. The unsound bets on mortgage-backed securities that are detailed and explicated in the Big Short nearly brought the American banking sector to its knees, but with the exception of poor Lehman Brothers none of the major banks actually did fail. Everyone got access to the Fed’s discount window. AIG’s bills were paid even though it had no money. New capital was injected by the federal government on a generous basis, and an implicit guarantee halted runs. There was a scary near-miss on the “all the banks fail” thing, but it didn’t happen. Before the crisis, Citigroup, Wells Fargo, JP Morgan Chase, Bank of America, and Goldman Sachs were the biggest and most important financial companies in America, and that’s still the case today. More:


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The house will return on January 6, 2016 and the Senate on January 11, 2016