Krebs Daily Briefing 28 October 2015

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


Is It Really Better That Saddam’s Gone?

“Of course, you can’t say that those of us who removed Saddam in 2003 bear no responsibility for the situation in 2015” and the rise of ISIS, said Tony Blair, the former prime minister of the United Kingdom and one of the leaders, with George W. Bush, of the drive to forcibly oust Saddam Hussein in Iraq. “But it’s important also to realize, one, that the Arab Spring which began in 2011 would also have had its impact on Iraq today, and two, ISIS actually came to prominence from a base in Syria and not in Iraq.” Blair was speaking to CNN’s Fareed Zakaria in an interview that aired Sunday, and while he apologized for the fact that “the intelligence we received was wrong” regarding Saddam’s possession of weapons of mass destruction, he maintained, as other decision-makers of that era (and their relatives) have, that removing Saddam was a good thing. “I find it hard to apologize for removing Saddam. I think, even from today in 2015, it is better that he’s not there than that he is there,” he said. Saddam was a tyrant and an aggressor, but are Iraq and the region really better off without him? Consider just some of the consequences of the war that removed him. The link between the Iraq War and the rise of ISIS has been well-established, though it is noteworthy to hear such an admission from one of the war’s architects. In his book Black Flags: The Rise of ISIS, the Washington Post reporter Joby Warrick recounts how Abu Musab al-Zarqawi, the founder of al-Qaeda in Iraq—the group that became the Islamic State of Iraq, and then the Islamic State of Iraq and Syria—traveled to Iraq from a base in Afghanistan and then built a terrorist network in the power vacuum created by Saddam’s fall and the U.S.-led purging of members of his Ba’ath party from the new Iraqi government. (It’s worth noting that, contrary to Blair’s claims, the origins of ISIS do in fact lie in Iraq, though the chaos created by the Syrian civil war helped it establish a base in that country as well.) Writes Warrick:

Greece’s Bailout Deal with Europe Is Starting to Show Cracks

The European Union’s agreement to provide Greece with the 86 billion euros, or $95 billion, bailout that Athens needs to stay solvent is beginning to show signs of strain, with creditors threatening to delay an October payment as Greek Prime Minister Alexis Tsipras struggles to implement promised austerity reforms. On Monday, Valdis Dombrovskis, a senior European Commission official charged with assessing how well Greece is abiding by its August commitments, said that the EU and Greece still disagree on how to toughen foreclosure laws. Right now, an estimated 320,000 Greeks are in arrears, or behind in their home loan payments. This represents about 40 percent of all Greek home loans. Tsipras’ government wants cover for borrowers with homes worth up to 300,000 euros, or $331,185, and who earn up to 35,000 euros, or $38,638 per year. That would account for about 75 percent of the loans now in arrears. According to the leftist Greek government, the EU’s counterproposal — protection for homes worth up to just 120,000 euros, or $132,474 — would leave 80 percent of the Greek borrowers who are behind on home payments at risk of losing their homes to foreclosure. The growing foreclosure rift is the latest to strain the deal between Greece and its creditors: the European Commission, the European Central Bank, and the European Stability Mechanism, the fund created to keep stumbling European nations afloat. According to a Tuesday report in the German newspaper Süddeutsche Zeitung, Tsipras has followed through on only 14 of the 48 reforms he promised for a third, 86 billion euro, or $95 billion, bailout he agreed to in August. The paper also reported that Athen’s European creditors plan to hold back an October payment of $3.32 billion. In August, Tsipras agreed to a host of changes, including reforming Greek labor markets, raising taxes, putting state assets up for sale, making spending cuts, and making changes to Greece’s generous pension system, like raising the retirement age. So far, he’s managed to push through bills on a property tax and punishments for early retirement, but he’s failed to put in place taxes on private school tuition or to begin privatizing Greek ports. “There is growing concern in Berlin and among other creditors that reforms are already beginning to slide in Athens,” Mujtaba Rahman, head of the Eurasia Group’s European practice, said Tuesday. “This was expected next year, but the fact it is happening now is an indication of just how challenging the situation remains with Greece.” The German newspaper’s report came as Dombrovskis acknowledged the foreclosure impasse and warned Tsipras’s leftist Syriza party to speed up the reform process. “There is no time to lose. There is a need to work very actively to modernize the Greek state and economy,” Dombrovskis said Monday.  More:

Here’s What US Boots on the Ground in Syria Really Means

In testimony before the Senate Armed Services Committee on Tuesday, Secretary of Defense Ashton Carter said that one of the big components of the US campaign against the Islamic State in the future will be raids in Iraq and (presumably) Syria. This comes on the heels of a difficult week for Pentagon messaging, about the death of a Special Forces soldier, Master Sergeant Joshua Wheeler, during a raid accompanying Kurdish forces last week. In the ensuing debates, people made a lot of hay over whether this actually constituted combat or not, and whether that meant the US was engaged with “boots on the ground,” and if that meant that the US was back at war in Iraq. So, when Carter told Congress members Tuesday that American soldiers would be conducting raids in places including Syria, that must have meant that the US was putting those boots back on the ground, and on ground controlled by the Islamic State no less. But that’s isn’t the same thing as saying the US is about to launch a major invasion of Syria. The Pentagon divides what it calls major combat operations (and the rest of us call a war) into six different phases. The military won’t say that ground combat never ever occurs in this or that phase, but by and large, most of the ground combat should be confined to Phases II and III, which are, respectively about seizing the initiative and dominating the battlefield (or, if you prefer, grabbing the other guy and then punching him.) These two phases occur as part of a broader campaign that includes things like deterring a potential bad guy as well as helping mop up and bringing order to the chaos after the war has passed through. However, as the astute observer might note, that spectrum of stuff wouldn’t cover things like, for instance, the raid that got bin Laden and his porn stash. It’s not like the US completely occupied much of Pakistan outside of a compound in Abbottabad. Thus, it wouldn’t be considered a major combat operation. This debate first came up when President Obama discussed his plans against IS and was immediately pelted by a slew of questions about “boots on the ground“. Now whereas “combat” is a term that can mean several different things, “boots on the ground” or BOTG is hopelessly nonspecific and imprecise. For instance, if a US (or coalition) pilot was flying along when their plane blew up or got shot down, and a search and rescue team swooped in to pick him up before IS got hold of him and turned him into a gruesome video, would that count as BOTG? Well, quite literally, yes, because there would be ground, and there would be soldiers, and they would be wearing boots. Would it count as combat? Well, only if there was fighting that went along with the rescue trip, yes. But would those BOTG and US forces engaged in combat be the same thing as a full-up, across-the-board, giant invasion? Clearly it wouldn’t.

Top Defendant Testifies in First Libor Criminal Trial in U.S.

The lead defendant in the first criminal trial in the United States of traders in the Libor interest rate scandal took the stand on Tuesday, offering point-by-point rebuttals of prosecution charges that he had participated in a conspiracy to help traders at his Dutch bank profit from sham submissions for the widely used financial benchmark. Anthony Allen, the London-based former head of global liquidity and finance at Rabobank, said that when he had sent email or text replies appearing to agree to traders’ demands for higher or lower Libor submissions, he was actually trying to push back or brush them off. In one striking instance, when a trader asked Mr. Allen on Dec. 1, 2006, for a “high” three-month Libor submission, Mr. Allen used colorful language to observe that he was “fast turning into” the other trader’s Libor slave, and soon added, “No worries mate, glad to help.” Explaining the reply, Mr. Allen said he was trying to signal to the trader that his request, which followed a similar entreaty from the same trader two days earlier, was out of line. “In my way, I’ve pushed back on him,” Mr. Allen said. “I was telling him,” he added, “it’s just not right.” In the earlier exchange, when the same trader asked for low one-month and high three-month submissions, Mr. Allen, who was acting as a backup Libor submitter, replied, “O.K. mate, will do my best.” Explaining the message, Mr. Allen testified that he didn’t want “to get into a discussion” with the trader, and it was “easier sometimes just to say that.” The entire email, he said, had a “joking, rather flippant” tone. When Mr. Allen forwarded another request for a six-month Libor “as high as possible” to one of his subordinates, Anthony Conti, with the notation “F.Y.I.,” Mr. Allen explained on the stand that “I was just being noncommittal, really.” He added it was “difficult” to explicitly refuse such requests when they came from colleagues, but he interpreted his response as “almost brushing him off.”


Paul Ryan walks fine line on budget deal as he prepares for speaker’s chair

Days away from his likely rise to House speaker, Rep. Paul Ryan on Tuesday started walking a fine line between appeasing the conservative lawmakers he will routinely have to corral in his new job and endorsing budget legislation that those conservatives oppose. He did so before entering a morning GOP conference meeting, making a distinction between the substance of the budget deal struck Monday by outgoing speaker John A. Boehner and the way in which it was struck. “I think this process stinks,” Ryan (R-Wis.) told reporters Tuesday morning. “Under new management, we are not going to run the House this way.” That message appears calibrated to avoid alienating GOP lawmakers who have pressed for a more bottom-up approach to House management while also steering clear of the deal’s specifics — which are both deeply unsettling to House conservatives and largely similar to the provisions of the deal Ryan himself struck two years ago with President Obama and Senate Democrats. So far, it appears to be working. Exiting the conference meeting Tuesday, most conservative Republicans said they did not blame Ryan for the new budget deal, which would add $80 billion in federal spending over the next two years. Those feelings, if they persist, could allow the budget deal to pass the House Wednesday with votes from centrist Republicans and Democrats, while allowing Ryan to win the speaker’s chair Thursday with both a united GOP and a clean fiscal slate. “This is John Boehner’s deal,” said Rep. Ken Buck (R-Colo.), a conservative freshman who is a member of the hard-right House Freedom Caucus. Rep. John Fleming (R-La.), another Freedom Caucus member, said Ryan “promises a much more orderly and grass-roots process from the ground up, an organic type of process, and we’re going to take him at his word.” “He’s made those commitments in private, that he’s not going to drop a big bill like this on us at the last minute and expect us to vote for it,” he added. More:

House GOP moves to impeach IRS chief

House Republicans have moved to impeach IRS Commissioner John Koskinen, arguing he violated the public trust. Oversight Committee Chairman Jason Chaffetz (R-Utah) introduced an impeachment resolution Tuesday, days after the Justice Department concluded its investigation into IRS targeting of Tea Party groups with no charges filed. “Commissioner Koskinen violated the public trust. He failed to comply with a congressionally issued subpoena, documents were destroyed on his watch, and the public was consistently misled,” Chaffetz said in a statement. “Impeachment is the appropriate tool to restore public confidence in the IRS and to protect the institutional interests of Congress.” Much of the committee’s impeachment charge centers around the destruction of several backup tapes that could have contained missing emails sent by Lois Lerner, the former official at the center of the IRS’s improper scrutiny of conservative groups. Chaffetz’s resolution charges that Koskinen, who took over the IRS after the controversy emerged, failed to preserve 422 backup tapes that could have contained Lerner emails. Republicans have argued Koskinen was not truthful when he told lawmakers he would hand over all her documents, given the destruction of the backups. Chaffetz also charged that Koskinen failed to notify Congress the evidence was missing. But, in the past, the IRS has said it has fully complied with all investigations.In July, Chaffetz’s panel indicated it could pursue action against Koskinen, after arguing he had misled the committee and impeded its investigation into the improper scrutiny. The committee had previously called for Koskinen to be fired.

House Votes Overwhelmingly to Reopen the Ex-Im Bank

WASHINGTON — The House acted with rare bipartisanship on Tuesday to approve legislation that would reopen the federal Export-Import Bank, after a debate that underscored the split between the party’s traditional pro-business members and ascendant free-market conservatives who are suspicious of big corporations. The lopsided final vote of 313 to 118 belied that split, as a majority of Republicans allied with all but one Democrat to reauthorize the 81-year-old bank agency, but only once the bill’s passage was assured. Late Monday, just a quarter of Republicans supported an earlier vote — and an unusual legislative move — that made the final vote possible over the opposition of most party leaders. The result, a victory for an alliance of business and organized labor, was a big step toward reversing a triumph for hard-line conservatives when they blocked the reauthorization of the small agency four months ago. Since then, the bank has been unable to offer new assistance to foreign buyers of American goods, managing only existing claims. But the bank’s future may not be resolved until December. The House bill now goes to the Senate, which approved a similar bank reauthorization measure as part of an unrelated transportation bill. While the Senate majority leader, Mitch McConnell, Republican of Kentucky, opposes the bank bill, the bipartisan House vote is expected to strengthen the hand of the bank’s proponents in negotiations over the transportation bill’s provisions. Big and small businesses alike have increasingly complained of lost sales opportunities, and General Electric announced that it would move some operations out of the United States to take advantage of foreign countries’ export financing. More:

GOP Rep. Blasts Immigration Reform Because ‘It Changes The Voter Pool’

Citing immigration as a critical issue facing America, Rep. Mo Brooks (R-AL) asked Rep. Paul Ryan (R-WI) to agree to specific limitations on immigration policy in exchange for his support of Ryan’s speaker bid. “Immigration is far and away the most important problem facing America because it changes the voter pool, thereby controlling the outcome of every single public policy challenge America faces,” Brooks said in an interview with TPM. Last week, Brooks, a staunch opponent of immigration reform, delivered a letter to Ryan stating that undocumented immigration has hurt American workers, and asking Ryan confirm that he will not attempt to pass immigration reform while President Obama is in office or without majority support form House Republicans. “Struggling American families have lost more than 8 million job opportunities to illegal aliens. All lower and middle income American workers have suffered from suppressed wages caused by the surge in both illegal alien and lawful immigrant labor supply,” Brooks wrote. Ryan agreed to the terms, according to Brooks. Brooks told TPM on Tuesday that he pushed for a written agreement because written ones are “always more powerful than oral ones.” He said he focused on immigration, rather than other issues discussed between Ryan and the House Freedom Caucus, because it’s the most important issue Congress has to handle. Brooks also opposes the bipartisan deal reached by Congressional leaders on Monday night to raise the debt ceiling and set a two-year budget. “It is wholly and totally financially irresponsible,” Brooks told TPM on Tuesday. “I will definitely vote against such short-sighted legislation that is financially irresponsible and threatens the solvency of America while at the same time burdening our children and our grand-children for decades to come.” Despite his disapproval of the legislation, Brooks said he won’t change his mind about the speakers race if Ryan ultimately backs the bill. “This is John Boehner’s parting shot, and unless I find out information to the contrary, I don’t hold any of the speaker candidates responsible for a bad deal they had nothing to do with,” Brooks said.

Column: Proposed budget bill would have devastating effects on millions’ Social Security benefits

Section 831 of the House’s new budget bill would make radical changes to the way Social Security provides spousal and retirement benefits.​ ​Let me list all the benefit cuts and other problems arising from this truly draconian bill. In six months, benefits now being received by spouses, divorced spouses or children on the work record of a spouse, ex-spouse or parent who has suspended his or her benefits will be eliminated until the worker restarts his/her retirement benefit. I’ve never heard of a change in Social Security law that eliminates benefits for people already collecting, but this is what’s in this bill. This will cost millions of households tens of thousands of dollars. Worse, it will induce those who have suspended their benefits in order to collect higher benefits at 70 to restart their benefits at permanently lower levels in order to maintain their family’s immediate living standards. We’ve been paying 12.4 percent of our income to Social Security since our first job in exchange for a variety of benefits … Now, with a couple of sentences, our government is reneging on what for many households can amount up to $50,000 in lifetime benefits. For those now under 62, the bill extend​s deeming, which now ends at full retirement age (age 66), through age 70. Deeming is the requirement that if a) you take your retirement benefit and are eligible to collect your spousal benefit, you are forced to take both at once and b) if you take your spousal benefit, you are forced to simultaneously take your retirement benefit. Since Social Security effectively only pays the larger of the two benefits, being forced to take both benefits at once means that you lose one of the two benefits. Under the current law, you can wait until full retirement age, take just your spousal benefit if you are eligible for it and then let your own retirement benefit grow. Being eligible requires having your spouse file for his or her retirement benefit. But if your spouse is at full retirement age or over, he or she can immediately file for and suspend his or her retirement benefit and let it grow through age 70. This strategy is called File and Suspend. Some view this as a loophole, but Social Security is so complex that it’s hard to say what is a loophole and what’s not. We’ve been paying 12.4 percent of our income to Social Security since our first job in exchange for a variety of benefits, including spousal and divorce(e) spousal benefits, in retirement age. Now, with a couple of sentences, our government is reneging on what for many households can amount up to $50,000 in lifetime benefits. But the loss in lifetime benefits can be far greater. Receiving full spousal or full divorce(e) spousal benefits between full retirement age (age 66) and age 70 helped tide millions of workers over until age 70 when they would start their own retirement benefit at a 32 percent larger (inflation-adjusted) value than at age 66. This provided them protection against excessive longevity — that is, outliving their assets and other non-Social Security means of support. More:

Federal Investigators Looking at Valeant’s Contact Lens Dealings

 The Federal Trade Commission is investigating whether Valeant Pharmaceuticals International has illegally cornered the market for a key component of rigid contact lenses, according to people familiar with the inquiry. Valeant, a large drug maker, has been under fire in recent months for steep price hikeson its heart medications. Its stock has sharply declined over the past week as investors questioned its convoluted relationship with a network of specialty pharmacies. The company disclosed on Monday that it received a letter on Oct. 16 from the FTC that it had begun a “non-public investigation’’ into its purchase of Paragon Vision Sciences, a company that makes rigid contact lenses. Valeant provided no details about the focus of that inquiry and did not respond to an email seeking additional comment. The FTC confirmed the inquiry but said it could not provide any further information. Four people who have been interviewed by the FTC told ProPublica that the agency was investigating whether the purchase of Paragon had given Valeant monopoly control over a slice of the contact lens market. The FTC is charged with enforcing anti-trust laws that bar companies from obtaining and exercising their dominant market power to the detriment of consumers. Valeant has grown rapidly by buying other companies, and the FTC inquiry appears focused on the cumulative effect of two purchases: Paragon, which it bought in May, and Bausch & Lomb, which it acquired in 2013. The two companies had been competitors in the sale of materials for what are called gas permeable lenses, which are used by people who cannot wear the more-popular soft lenses. The Paragon acquisition gave Valeant control over 85 to 90 percent of the supply chain for gas permeable lenses, according to Jan Svochak, president of the Contact Lens Manufacturers Association, an industry trade group. More:

Fantasy-Sports Companies Agree to Join Self-Regulatory Board

The daily fantasy-sports industry, at the center of legal and regulatory debate about whether their games are gambling, has agreed to join a self-regulatory body led by former acting U.S. Secretary of Labor Seth Harris. The organization, called the Fantasy Sports Control Agency, will be charged with creating a system to ensure ethics and integrity across the fantasy industry. The group was formed by the Fantasy Sports Trade Association, whose biggest daily companies — DraftKings Inc. and FanDuel Inc. — boast billion-dollar valuations. “The reason that the FSTA established an independent authority and asked me to lead this organization is to ensure that it’s not a sham, that it’s not a fake, that it’s not just a publicity stunt,” Harris said in an interview. The new entity will have a staff that’s independent from the companies and the FSTA, he said. “It’s a freestanding ethics and integrity agency.” The industry drew scrutiny from regulators and lawmakers this month after media reports that a DraftKings employee used inside information to win money as a player on FanDuel. DraftKings has said the employee did nothing wrong. Still, the companies have barred employees from participating in online fantasy-sports contests for money. More:

Study Cites Lower Standards in Law School Admissions

As law schools across the country try to keep their classrooms full, many are admitting students with lesser qualifications, including those with a lower admissions test score — considered an important predictor of whether a graduate will earn the credentials to practice law. About a third of the 204 accredited law schools had entering classes last year with at least 25 percent of the class consisting of “at risk” students, or those with law school admissions test scores of below 150, according to a new study by Law School Transparency, a nonprofit advocacy organization. Law school admissions scores closely mirror the final results of the state bar exams, which graduates must pass to qualify as licensed lawyers. Many in legal education consider a score of 150 as a telling dividing line between future success or failure. “Too many law schools are filling their entering classes with people who face serious risk of not passing the bar exam,” said Kyle McEntee, executive director of Law School Transparency, which he helped to found six years ago to promote more open law school practices. He said that last year 45 schools, up from eight in 2010, admitted seriously at-risk students. Most law schools maintain that test scores are only one indicator, albeit an important one, of the ability to pass the bar. They also say they need flexibility in selecting students to assure a diverse population of lawyers. Yet many schools are also facing pressure from plummeting enrollments — the lowest in decades. Law school enrollment reached a peak in 2010, as many students fled a troubled economy to the schools’ safe harbor. With a swelling crop of students, bar passage rates soared, but it all began to come apart quickly when jobs in law seemed to melt away overnight as the industry adjusted to a changed economy. Threatening to further weaken laws schools’ position, initial reports from states show that bar passage rates this year are again slumping. The National Conference of Bar Examiners, a Madison, Wis., organization that oversees the 200-question multiple choice portion of the exam given in most states, found that overall results slipped again, to the lowest point since 1988. Most states have yet to report the complete results of their July 2015 bar exam, but early numbers paint a dismal picture.

The school-to-prison pipeline, explained

When a student at Spring Valley High School, South Carolina captured a cellphone video of a police officer flipping over a student and her desk, then throwing the student across the room, the video quickly got national attention: people were alarmed that a police officer in a school would do that to a teenager who didn’t pose a threat. But to others, it was less surprising that a police officer would behave so aggressively in a school: because school discipline and the criminal justice system have already been intertwined, in a phenomenon civil-rights advocates call the “school-to-prison pipeline.” Especially for older students, trouble at school can lead to their first contact with the criminal justice system. And in many cases, schools themselves are the ones pushing students into the juvenile justice system — often by having students arrested at school by School Resource Officers like the one in Spring Valley. Juvenile crime rates are plummeting, and the juvenile incarceration rate dropped 41 percent between 1995 and 2010. But school discipline policies are moving in the opposite direction: out-of-school suspensions have increased about 10 percent since 2000. They have more than doubled since the 1970s. And it’s hardly racially balanced: Black students are three times more likely to be suspended or expelled than white students, according to the Education Department’s Office for Civil Rights, and research in Texas found students who have been suspended are more likely to be held back a grade and drop out of school entirely. Here’s how the current state of school discipline developed and why some districts and federal officials are working to change the status quo.

The super-interesting reason President Bush resigned membership from the NRA two decades ago.

Which party is more likely to side with the National Rifle Association? The answer might seem obvious today, but in the early 1990s, it was more complicated. President George H.W. Bush took issue with the new direction he saw the NRA headed in and had a very clear response:  The NRA used the the Oklahoma City bombing and the standoff and siege in Waco, Texas, in order to fundraise for itself in 1993 (while President Clinton was in office). And it denigrated upstanding people who protected the public in order to do it:  “In Clinton’s administration, if you have a badge, you have the government’s go-ahead to harass, intimidate, even murder law-abiding citizens.” — Wayne LaPierre, 1993 NRA fundraising letter. Bush was not having it. A lot of NRA members resigned around that time, possibly as disgusted with its leadership’s remarks as President Bush was. Public estimates and the NRA’s self-reported, unsubstantiated claims of enrollment were staggeringly different. One journalist, Osha Gray Davidson, uncovered one potential way the NRA could be covering up some of its lost membership in 2000: lifetime members who’d passed away but not been removed from the lists. Here is the president’s letter resigning his lifetime membership to the NRA.

Obama: I’m not going to ‘take everyone’s guns away’

President Obama on Tuesday dismissed the notion that he is seeking to take away people’s firearms as he delivered his latest call for stronger gun laws. Speaking to police chiefs in Chicago, Obama sought to rebut the argument made by conservatives, which he said is designed to stoke fear. “Some of you are watching certain television stations or listening to certain radio programs, please do not believe this notion that somehow I’m out to take everyone’s guns away,” he told the International Association of Chiefs of Police. “Every time a mass shootings happens, one of the saddest ironies is suddenly the purchase of guns and ammunition jumps up because folks scared into thinking that, ‘Obama’s gonna use this as an excuse to take away our Second Amendment rights,’” he added. “Nobody’s doing that.” “We’re talking about common-sense measures to make criminals don’t get them, to make sure background checks work, to make sure that we’re protecting ourselves.” Obama’s sought to convince top law enforcement officials that enacting tougher national gun laws would cut down on the number of officers killed in the line of duty. The president’s Chicago trip was also designed to rally law enforcement support for his effort to change the nation’s sentencing laws. Obama is seeking to enlist police as allies at an uneasy time for law enforcement. Officers are under greater scrutiny than ever following a string of police-related deaths of unarmed black men across the country, some of which were caught on video. At the same time, an uptick in violent crime in certain U.S. cities has put officers at greater risk in the line of duty. The Justice Department released a new report in conjunction with Obama’s speech showing an increase in ambush attacks against police over the past decade, even though rates are still down from highs in the 1990s. “I understand we won’t all agree on this issue, but it’s time to be honest, fewer gun safety laws don’t mean more freedom, they mean more danger.” Obama said. “Certainly more danger to police. More grieving families, more Americans terrified their loved ones could be next.” Before his speech, Obama met with the spouses and children of law enforcement officers killed in the line of duty, as well as families of bystander victims of gun violence in Chicago, the White House said. “I refuse to accept the notion that we couldn’t have prevented some of those murders, and suicides and kept more families whole,” the president said. Obama has renewed his push for new gun laws following a mass shooting earlier this month at a community college in Oregon. His initial effort, after the 2012 shooting at Sandy Hook Elementary School, included expanded background checks and bans on assault weapons. But the package failed in Congress in the face of opposition from gun-rights groups, including the National Rifle Association, and Republicans who are united in the view that new gun laws would violate Americans’ Second Amendment rights. Obama is now weighing executive actions to impose new background check requirements on certain gun sellers. Seeking to stop Obama’s latest effort, some Republicans have argued the president is prepared to confiscate guns from Americans. More:

New York State’s Financial Regulator Says He Is Leaving

Anthony J. Albanese, the top financial regulator in New York State, announced his pending departure in an internal memorandum on Tuesday, seeking to dispel recent reports that he was resigning over a feud with the office of Gov. Andrew M. Cuomo. In the memo, a copy of which was reviewed by The New York Times, Mr. Albanese informed his staff at the State Department of Financial Services that he “recently accepted an opportunity outside of government and will be stepping down from my current position in the near future.” Mr. Albanese, who expects to remain the acting superintendent until December, added that “it was a very hard decision, but it is the right career move for me.” Mr. Albanese’s resignation comes several months after his high-profile predecessor, Benjamin M. Lawsky, announced he was leaving the Cuomo administration to start his own law and consulting firm. Mr. Lawsky, whose hard-charging style earned him fans and critics alike, was known for having a close relationship with Mr. Cuomo, a Democrat who created the department in 2011 to better regulate Wall Street. In a separate statement to The Times, Mr. Albanese challenged a report of his departure in The Wall Street Journal that implied he was stepping down amid tension with the governor’s office about the independence of his agency. One aide to Mr. Cuomo has in recent months sought to intervene in some of the agency’s business, according to people briefed on the matter, who spoke on the condition of anonymity because they were not permitted to discuss the private conversations. The aide, Brendan Fitzgerald, the deputy secretary for general government and financial services, asked to review and possibly edit requests that the agency sent to financial institutions, the people said. Mr. Fitzgerald’s attempts were broad and not specific to any one company, the people also said, but they irritated Mr. Albanese, causing some tension. Mr. Albanese disputed that the aide’s actions had any impact on the agency, saying in the statement that “the decision of whether or not to issue a subpoena has always been made solely by D.F.S.” In his statement, Mr. Albanese added, “My decision to depart in the near future is due solely to the fact that I received a new opportunity in the private sector; it is not related to the governor’s office,” noting that he would have remained as acting superintendent had another position not been offered to him. Interference from the governor’s office has been the subject of an inquiry by the United States attorney for the Southern District of New York, Preet Bharara, related to the governor’s decision to close down an ethics panel called the Moreland Commission charged with investigating public corruption. More:

Tom Krebs securities lawyer for victims of investor fraud and financial adviser mismanagement.

Need a Lawyer? Legal Ads Are Proliferating, Says New Report

What’s the most desirable place to live in the country? If you’re among those who get a big kick out of attorneys on television and want to live in a region where the airwaves are saturated with lawyers hawking their services, Tampa may be just the place. A new report on the growth in legal advertising says the Tampa area leads the nation in number of attorney ads. The Tampa Bay Times has more on the findings:  A spot count of ads run in major metros for the first eight months of this year placed Tampa Bay first with 164,781, followed closely by Orlando with 142,607, together making Central Florida ground zero for saturation TV advertising in 2015 by trial lawyers. So says a study being released today by the U.S. Chamber of Commerce’s Institute for Legal Reform. The organization is dedicated to fighting what it considers to be too many lawsuits, which, it argues, is a major drag on the U.S. economy… [A]ds by the Morgan & Morgan “For The People” personal injury law firm dominate the local TV air waves — not to mention radio, billboards and bus exteriors. The Orlando-based law firm boasts more than 250 lawyers and a support staff of nearly 1,500 employees and says it has helped more than 75,000 clients nationwide. The firm’s TV ads typically highlight the soothing, lawyerly voice of founder John Morgan, but increasingly feature the next generation of the Morgan legal family. The factors driving Tampa’s attorney advertising boom aren’t exactly clear. The Tampa area does have one of the nation’s highest pedestrian fatality rates and has had high numbers of drunk-driving fatalities. Tampa Bay Times notes that the state is also ground zero for tobacco litigation. Playing devil’s advocate, Reuters legal columnist Alison Frankel questions the assumption underlying the Chamber’s report that the growth in legal advertising is necessarily a bad thing. She writes:  To start with the obvious, lawyer advertising has been blessed by the U.S. Supreme Court, which assured lawyers of their First Amendment rights to commercial speech in the 1977 decision Bates v. State Bar of Arizona. As Justice Harry Blackmun wrote in the Bates opinion, advertising is how suppliers in a free-market economy reach potential consumers. Without it, he said, “the not-quite-poor and the unknowledgeable” might not be informed of their legal rights. “Although advertising might increase the use of the judicial machinery, we cannot accept the notion that it is always better for a person to suffer a wrong silently than to redress it by legal action,” Blackmun wrote.

They See Him Rollin’: GOP Gives Boehner Golf Cart as Parting Gift

With a bipartisan budget deal checked off his to-do list, Speaker John A. Boehner is moving on to greener pastures — and he now has a new ride. As Boehner navigates the fairways of the golf course, he will be able to do so on a new golf cart, which was a parting gift from House Republicans Tuesday morning. The license plate on his new set of wheels reads, “MR SPKR.” “For a minute I thought it might be the popemobile,” Rep. Steve Womack, R-Ark, said Tuesday. The Ohio delegation also gave Boehner a new golf bag and a new set of clubs. Boehner, an avid golfer, sat for an emotional interview with the Golf Channel in July. At the time, he said the two characteristics that helped him as speaker and on the links were perseverance and patience. “Probably one of the secrets to my tenure as speaker is just to be patient,” Boehner told the channel. “Listen to everyone and try to understand. It takes an awful lot of patience.” On Tuesday, Boehner gave what could be his final news conference of his speakership, and reflected on the job. “When you sign up for the job, you have to take everything that comes at you,” Boehner said, “but I feel pretty good about where I am and I like the fact that I see light at the end of the tunnel.”

Even Bentley Owners Aren’t Spared From Recalls

Part of the allure of spending $200,000 on a car—aside from the constant head turns from admirers and general confirmation of a certain level of success—is knowing that common annoyances like recalls, typically reserved for budget-friendly vehicles, don’t apply. But no such luck for owners of 27,640 Bentleys across the world. The company, which is owned by Volkswagen, is voluntarily recalling all Continental GT, GRC, Flying Spur, and new Flying Spur models built between February 2011 and June 2014, according to a statement sent to Nearly 7,800 of these models are in the U.S. The recall, first reported by Reuters, is to address potentially loose battery cable joints. Bentley said it will replace faulty parts for all vehicles, which will take about two hours for each car. Affected Bentley owners, or those who handle their affairs, will be contacted by their local dealers to arrange an appointment. “The safety of our customers is Bentley’s foremost priority and we pride ourselves on the highest standard of quality and service. We are working quickly to ensure that all vehicles are checked and resolved efficiently and effectively,” the company said. The statement made it clear that the Bentley recall is unrelated to Volkswagen Group’s other recent recall nightmares. Earlier this month, the company recalled 8.5 million diesel vehicles in Europe—its whole fleet in the continent—in the wake of its emissions duping scandal, wherein regulators uncovered that the company used illegal software to cheat emissions tests. It has already ordered a recall of about 500,000 cars in the U.S., and 11 million vehicles globally could be impacted. Volkswagen Group, which bought Bentley in 1998, also owns luxury carmakers Lamborghini, Bugatti, and Porsche. In 2013, the grouprecalled 730 Bentley and Lamborghini vehicles in the U.S. for brake issues. If it turns out, then, that money can’t buy you the ability to avoid your local car dealership, what’s the point?

Exclusive: Feds Investigate Hobby Lobby Boss for Illicit Artifacts

In 2011, a shipment of somewhere between 200 to 300 small clay tablets on their way to Oklahoma City from Israel was seized by U.S. Customs agents in Memphis. The tablets were inscribed in cuneiform—the script of ancient Assyria and Babylonia, present-day Iraq—and were thousands of years old. Their destination was the compound of the Hobby Lobby corporation, which became famous last year for winning a landmark Supreme Court case on religious freedom and government mandates. A senior law enforcement source with extensive knowledge of antiquities smuggling confirmed that these ancient artifacts had been purchased and were being imported by the deeply-religious owners of the crafting giant, the Green family of Oklahoma City. For the last four years, law enforcement sources tell The Daily Beast, the Greens have been under federal investigation for the illicit importation of cultural heritage from Iraq. These tablets, like the other 40,000 or so ancient artifacts owned by the Green family, were destined for the Museum of the Bible, the giant new museum funded by the Greens, slated to open in Washington, D.C., in 2017. Both the seizure of the cuneiform tablets and the subsequent federal investigation were confirmed to us by Cary Summers, the president of the Museum of the Bible. From its founding in 1970, the Greens’ Hobby Lobby chain has been more than simply a suite of craft stores. The Greens have used it as a model of a business run on Christian values. Stores are closed on Sundays in order to give employees time to attend church. The company employs four chaplains, and offered a free health clinic to staff at its headquarters long before free health care came into political vogue. The Greens have also used the Hobby Lobby platform to spread their Christian message far and wide: The company annually places full-page ads celebrating—in their words— “the real meaning of Christmas, Easter, and Independence Day” in newspapers across the country. But the Greens went from evangelical players to bona fide Christian celebrities in June of 2014 when they won a Supreme Court case, Burwell v. Hobby Lobby. It granted them exemption from the Obamacare mandate to provide certain forms of contraception to their employees; forcing the company to do so, the Supreme Court ruled, would have violated the Greens’ deeply-held Christian beliefs. If the investigation ends with a decision to prosecute, on either criminal or civil charges, the Greens may be forced to forfeit the tablets to the government. There may also be a fine involved. The Green family, who successfully forced the federal government to legally recognize their personal moral standards, now find themselves on the other side of the docket, under suspicion of having attempted to contravene U.S. laws. More:

Everything you need to know about tonight’s GOP debate

2015 Republican Debate Drinking Game – Round 3

Campaigns erupt over greenrooms at third GOP debate

DENVER, Colo. — Just hours before GOP candidates take the stage here Wednesday night, tensions over the Republican National Committee’s handling of the debates are flaring anew. At issue this time: greenrooms. During a tense 30-minute meeting at the Coors Event Center, which was described by three sources present, several lower-polling campaigns lashed out at the RNC. They accused the committee of allotting them less-than-hospitable greenroom spaces while unfairly giving lavish ones to higher-polling candidates, such as Donald Trump and Ben Carson. The drama began Tuesday afternoon as RNC officials led campaigns on a walk-through of the debate site. After touring the stage, candidates got a peek at what their greenrooms looked like. Trump was granted a spacious room, complete with plush chairs and a flat-screen TV. Marco Rubio got a theater-type room, packed with leather seats for him and his team of aides. Carly Fiorina’s room had a Jacuzzi. Then there was Chris Christie, whose small space was dominated by a toilet. So was Rand Paul’s. After the walk-through ended, RNC officials, led by chief strategist Sean Spicer and director of finance events Anne Marie Hoffman, guided the 35 or so advisers upstairs for a meeting. There, Spicer complained about a series of recent press leaks on RNC-led conference calls with campaigns. He also outlined the planned format for the fourth Republican debate, to be held in Milwaukee and broadcast on Fox Business on Nov. 10. But with some campaign advisers steaming over what they’d seen during the walk-through, the discussion veered back to greenrooms. “This is ridiculous,” fumed Christie’s campaign manager, Ken McKay. “We’re in a restroom.” Paul’s team also piped in, with one adviser, Chris LaCivita, demanding that something be done to remedy the situation. “Was there any advance done on the campaign work spaces?” he asked. “Because it sure as hell doesn’t seem like it.” Another Paul adviser, Mike Biundo, also chimed in. “We didn’t have these issues four years ago when we had 22 debates,” said Biundo, who in 2012 worked for Rick Santorum. Hoffman responded: “Trust me, I was on those walk-throughs four years ago.” “So was I,” Biundo shot back. The RNC officials agreed to address the campaigns’ concerns, saying they would try to fix the problems with their work spaces. At one point during the complaining, Hoffman told the campaign advisers they should reconvene in a sidebar. (Late Tuesday eventing, LaCivita tweeted that his campaign had been granted by the RNC improved facilities and attached a picture of Paul’s new workspace.) Gail Gitcho, an aide to Bobby Jindal, chimed in to say that she’d heard enough about the greenrooms. The focus of the discussion, she said, should be on entry criteria for future debates — which, she argued, had made it hard for her candidate to be seen in prime time. At various moments, the conversation veered to more substantive matters. Brett O’Donnell, an adviser to Lindsey Graham, suggested altering the debate format so in the future there would be two debates with seven or eight candidates onstage — each lasting 90 minutes, with the participants picked at random. Representatives for Paul and Bush, however, pushed back on the idea. By the time the meeting wrapped up, those present say, RNC officials seemed exasperated by the whole thing. On Tuesday evening, campaigns received an email from RNC staffer Madeleine Westerhout about Wednesday morning’s debate-planning conference call. “This call is cancelled tomorrow,” the email said. “We will follow up when it is rescheduled.” RNC officials did not respond to requests for comment.



Former deputy AG questioned about conversations with Hubbard associates

Former Deputy Attorney General Sonny Reagan testified today he could not remember certain details of conversations with associates of House Speaker Mike Hubbard related to the investigation that led to the indictment of the speaker. Deputy Attorney General Andrew Brasher cross examined Reagan during the second day of a pretrial hearing. Reagan’s office memos complaining about Matt Hart, the lead Hubbard prosecutor, are a key part of Hubbard’s effort to have the case dismissed for prosecutorial misconduct. Reagan read from those memos in court on Monday during the hearing before Lee County Circuit Judge Jacob Walker. Today, Brasher pressed Reagan on whether he talked to lawyer Rob Riley in July 2014 about filing an internal complaint against Hart. “I don’t know. It’s certainly possible,” Reagan said. Brasher asked him if he knew at the time that Riley was a lawyer for Hubbard. “I don’t believe I knew that,” Reagan said. Brasher asked Reagan whether he told Hubbard’s former chief of staff, Josh Blades, information Reagan learned inside the attorney general’s office about the investigation. Reagan said he talked to Blades about news articles about the investigation and Reagan’s belief that somebody was leaking information to the media. Reagan said he did not remember if he talked to Blades about what Hart said to him about the investigation. “I don’t recall if I had those discussions or not,” Reagan said. Reagan resigned last year after Attorney General Luther Strange suspended him. Strange accused Reagan of undermining the Lee County investigation by channeling information through attorneys he shared with targets of the investigation. Reagan testified Monday that he did nothing to undermine the investigation, which he had also said last year when he resigned. Hubbard attorney Mark White said today Reagan was an “honest, compelling witness.” Reagan testified that he had met Hubbard only once and that he made the allegations against Hart because, “It was the right thing to do.” Reagan, who specialized in gambling litigation and was not part of the Lee County investigation, said Hart initiated conversations with him in the office that indicated a bias and hostility toward Hubbard. Reagan documented those claims in office memos that became the basis of much of Hubbard’s prosecutorial misconduct claims. Hubbard’s lawyers claim Hart’s bias tainted the Lee County grand jury. Prosecutors say the claims are a baseless fishing expedition to divert attention from the charges. The grand jury last year indicted Hubbard on 23 felony ethics counts, accusing him of using his public positions for personal gain. Hubbard has pleaded not guilty and is scheduled for trial on March 28. Prosecutors opposed the evidentiary hearing on prosecutorial misconduct and have objected to the relevancy of much of the testimony at the pretrial hearing, saying it concerns matters that could not have affected the grand jury’s decision to indict. Hubbard is also seeking dismissal because he says parts of the ethics law, which he voted for, are unconstitutional. And the speaker is claiming selective and vindictive prosecution. Hubbard’s lawyers called former Ethics Commission Executive Director Jim Sumner as a witness today. One of Hubbard’s defenses is that he received preclearance from the Ethics Commission staff about some of the consulting work that is charged as an ethics violation. Sumner testified that informal opinions from the Ethics Commission staff do not shield public officials from potential prosecution. “It’s certainly well known among public officials and employees that a formal opinion is needed for protection,” Sumner said. Formal opinions are approved by the five-member commission. Speaking to reporters after today’s hearing, Hubbard attorney White said informal opinions provide a defense against an allegation that a public official violated the ethics law with intent. Some of the charges against Hubbard concern allegations that he steered Republican Party money to his businesses when he was chairman of the state GOP. Hubbard claims the Ethics Act is unconstitutional as applied to party chairs because the First Amendment protects the free speech rights of political parties to spend their own money. Sumner testified that amendments made to the Ethics Act in 1995 brought party chairs under the law. Sumner said he does not believe the Ethics Commission was consulted on the constitutionality of that change. Sumner said “it served a good and valid purpose” because of the amount of power party chairs have in determining qualified candidates and ultimately leaders of the state. The pretrial hearing resumes Wednesday morning with some witnesses scheduled to testify in closed court. White said that part of the hearing is closed because it relates to the grand jury. Judge Walker said if there are more witnesses for public testimony, the open portion of the hearing will resume at 1:30 p.m. on Wednesday.

Defense blames Indian grandfather at start of new trial, ‘follow our laws and speak our language’

The second time around, the opening statements were far sharper, as the defense looked to blame the leg sweep on the victim. The U.S. Department of Justice once again seeks to imprison a Madison police officer for up to 10 years for using excessive force in the leg sweep takedown that left an Indian citizen in need of spinal surgery. The first trial of Officer Eric Parker ended in a hung jury last month. This time both sides focused much of their opening arguments on the actions of the victim, Sureshbhai Patel, in the moments before the takedown. Defense attorney Robert Tuten this time told the jury that the escalation of force was largely the fault of Patel. “When you come to the U.S. we expect you to follow our laws and speak our language,” said Tuten. “Mr. Patel bears as much responsibility for this as anyone.” Patel speaks Gujarati and has testified he does not understand English. But Tuten said Patel understands the word “stop,” yet he walked two steps, then seven steps and then nine more steps as police attempted to question him. Tuten said Patel reached for his pockets, which could have contained a weapon. The injuries were unfortunate, but the takedown was not criminal, said Tuten, echoing his opening from last trial: “From the very beginning, let me say this a tragic situation and everybody feels real bad for Mr. Patel.” The first jury deadlocked 10-2 in favor of acquittal. That’s 10 males, none black, who favored acquittal. Two black women argued Parker was guilty. More:

Death row and ‘dram shop’ cases to be heard by Alabama appeals courts at Samford University

The Supreme Court of Alabama and the Alabama Court of Criminal Appeals will convene next week at Samford University to hear oral arguments on cases as part of a program to educate students about the judicial system. Supreme Court justices will hear an appeal of a $15 million verdict against a Bessemer convenience store for selling alcohol to an underage driver that led to a 2007 crash that killed a 13-year-old boy and injured three others. The court of criminal appeals will hear an appeal from an Alabama Death Row inmate who was convicted in the 1998 murder of a Talladega man and the rape of his wife. The court sessions will be held from 9 a.m. to noon at the Leslie Wright Center on the Samford University campus, off Lakeshore Drive in Homewood. It is free and open to the public. The event is presented by the Birmingham Bar Foundation and Cumberland School of Law. “Each year, teachers and students look forward to this program because it allows them a unique opportunity to see this aspect of our justice system,” said Nikki Tucker Thomas, Birmingham Bar Foundation Executive Director.  “The Appellate Courts and the attorneys representing parties in the cases always bring an engaging presentation of Alabama’s judicial system at work, and we are very appreciative to the Appellate Courts and Cumberland School of Law for their partnership with this enriching program.” Prior to the event, volunteer attorneys from the Birmingham Bar Association’s Community Education Committee and the Foundation’s Board of Directors make presentations to schools about the cases and give an overview of the legal system. See case outlines:



Pure talk, no action from Birmingham leaders on Uber, ridesharing

By Ben Atnipp, a recent college graduate living in downtown Birmingham working at a global macro investment management firm. Flashback to Wednesday, August 26th, a thrilling day for Birmingham residents. Uber representatives were in town to address the Committee of the Whole about their desire to bring ridesharing services, like UberX, to our great city. That day City Council members and Uber officials spoke about the positive impact that ride-sharing could have on a scattered city like Birmingham, and many city councilors expressed their enthusiasm to bring these services to our city. The outcome of the meeting was to have a ridesharing ordinance drafted as soon as possible so it could be up for vote during the next meeting. It truly seemed like a positive, productive meeting. Birmingham residents, like myself, came away believing we were close to a done deal. Unfortunately, no substantive progress has been made since this meeting.  No ordinance passed, no antiquated laws altered, no material change-nothing. We are now more than 8 weeks later and the Committee of the Whole has yet to discuss ridesharing—let alone a ridesharing ordinance—again. This crawling progress is incredibly disappointing, especially given that ridesharing enthusiasts (like myself) watched City Council President Johnathan Austin declare that he was ready to be the ridesharing champion of Birmingham.  Back in late July, he said, “we’re prepared to do whatever we need to do to make sure that Uber is in the city of Birmingham.” Despite these brave comments, we have seen no practical steps forward from his office. The legislative pace of this issue is unacceptable. The legislative pace of this issue is unacceptable. The merits of ridesharing are well known, especially for those of us who have used its services in other cities. In particular, ridesharing offers a safe and reliable form of transportation at all times. In other cities with ridesharing, ridership peaks at the same hours that have typically seen the highest drunk driving arrests, and demand for rides greatly increase when most bars close down. I’m confident ridesharing will have the same impact in our community. Around the country, entire states—like Tennessee—down to smaller cities like our friends over in Mobile, have been able to pass ridesharing laws that enable this transportation option to thrive. While ridesharing legislation should be deliberate and thoughtful, it should not take months—or years—for a vote. There are more than 60 ridesharing laws around the country that our City Councilors can look toward as examples. It is naïve to believe that other cities have not had similar apprehensions with new technology–let’s learn from their controversies, not create our own. I moved to Birmingham after graduating from college in Virginia because it prides itself on being an attractive place for young professionals and is a fantastic place to start a career. However, we’re never going to realistically compete with other growing cities like Knoxville, Nashville, or Austin for talent if we cannot offer the same transportation options that nearly 200 other US cities do. So let’s flash forward to August 2016 when Birmingham has long embraced ridesharing. Let’s imagine a Birmingham that has connected its scattered neighborhoods and districts. Let’s picture a future where people can move freely throughout Birmingham, no matter the time or place. We’re looking to you, Birmingham City Council, to make this vision a reality—let’s finish the job.

Prosecutor an angry blowhard? The best nuggets from rich corruption hearing

If lawyers for indicted Alabama House Speaker Mike Hubbard wanted only to demonstrate that prosecutor Matt Hart can be a jackass, give them their due. If they were out to prove he’s a prosecutor who hates crooked politicians, who plays hardball in grand jury and talks behind closed doors like a sailor on the salty seas, they win the first day of testimony in a motion to dismiss the charges against Hubbard. Hands down. But none of that is news. Not to the court or the defense or anybody who has followed Hart’s career or the investigation of Hubbard. It doesn’t make Hubbard innocent, and it’s not the thing that’s likely to convince Lee County Circuit Judge Jacob Walker to dismiss the 23 felony ethics violations Hubbard now faces. That will take more. Hubbard’s lawyers have asked that the charges be tossed out because of selective prosecution and prosecutorial misconduct by Hart, and because the ethics law itself (which Hubbard championed) is unconstitutional. But the rule is pretty clear. What happened outside the grand jury isn’t the issue. The only thing that matters is whether grand jury itself was tainted by any misconduct. And we haven’t seen that yet. Perhaps there will be more damning (and new) evidence, for the hearing is expected to last another couple of days. But the first day, Monday, was spent entirely on the testimony of former Deputy AG Henry “Sonny” Reagan, who got into a well-publicized office spat with Hart, complained about Hart’s abrasive behavior, was accused by the AG’s office of trying to undermine the investigation of Hubbard, and eventually resigned from his job. Cross examination of Reagan will continue Tuesday. In the meantime, these are the  best nuggets from Monday’s testimony, which focused on prosecutorial misconduct. Responding to a question from Hubbard lawyer Mark White about Hart’s “animus” for his client, Reagan said Hart told him Hubbard is “a bad guy,” and “If he didn’t commit a crime he’s done everything he could to look guilty.” Reagan, describing what he called “physical threats” by Hart toward Hubbard and others, testified that Hart once said: “I will put a 155mm Howitzer round right through Mike Hubbard and I do not care about the collateral damage to anyone else.” Prosecutor Andrew Brasher on cross examination asked him if he thought that was a real physical threat. Reagan said yes, though he acknowledged that Hart has no Howitzer. He said Hart also said he would “put a gun in his (Hubbard’s) mouth with my hand on the trigger, show him an indictment, and then maybe he will want a plea deal.” Reagan at times glared directly at Hart – stared Howitzers through him. Hart glared back. More:

Editorial: We need smarter government in Alabama

Thanks goes to state Sen. Paul Bussman, R-Cullman, who was the first lawmaker to file a bill ahead of the 2016 session of the Legislature. Bussman’s bill would add more state oversight over at the Department of Human Resources at county offices. While this proposal deserves full consideration, Bussman’s most meaningful accomplishment at this stage is to remind us that the state Legislature’s next session is less than four months away. Unless we want a repeat of the previous session’s debacle, now is the time to start planning for 2016. In other words, Montgomery needs to take steps to avoid the 2015 budget process, one that required one constitutionally mandated session and two special sessions to pass a General Fund. All that wasted time, money and effort to produce a budget that modestly raised taxes on tobacco and eliminated meaningful state services. Face it, we are not getting our money’s worth from our elected officials. In fact, the special sessions merely added more debt on a shortfall that was already a quarter-billion dollars in the hole. Gov. Robert Bentley and our legislators can do better. They must do better. A smarter state government would look at what its residents need, tally the costs and raise the required revenue. A smarter state government would recognize that closing state parks and driver’s license offices merely makes a bad situation worse, especially for economic developers and tourism officials trying to sell Alabama as an attractive and well-run state. A smarter state government would do the math on what Alabama receives and what it loses from having one of the lowest tax burdens in the country. (Hint: The state rankings on a variety of subjects finding Alabama at or near the bottom is a good place to start.) A smarter state government would realize that in a globalized economy, the details matter. The way to stop looking like a dysfunctional state that can’t look after the basics is to stop acting like a dysfunctional state that can’t look after the basics. (Another hint, lawmakers: Standing behind a House Speaker currently under criminal indictment looks bad, real bad.) Most importantly, a smarter state government doesn’t bog down over pointless arguments seeking to deny reality. That reality is that the state is out of money and deeper cuts will make things worse.

The failure of ‘lockin’ em up and throwin’ away the key’

The recent headlines regarding the atrocities, deaths, and mistreatment that have occurred at the Madison County jail should have citizens outraged and embarrassed. County officials, particularly Sheriff Blake Dorning, should make reform an immediate top priority, regardless of the climate embedded in partisan politics that monotonously cries for “lockin’ em up and throwin’ away the key” every election cycle. Surprisingly, in the wake of these wrongful deaths, inmate abuse, and costly litigation, Dorning impotently asked, “What is it we are doing wrong?” Seriously? Isn’t it the sheriff’s job to know or to at least have a good guess? Well, Sheriff Dorning, there may be quite a number of obvious things that we’re doing wrong starting with an overly punitive ideology regarding incarceration, the abysmal lack of adequate funding, the apparent lack of effective and appropriate resources for diversion courts and the scarcity of re-entry programs to ensure that people reintegrate successfully into society after they have completed their sentences. Yeah, that’s a mouthful and no one is suggesting that it’s exclusively your fault, Sheriff, but rather than ask rhetorical questions that sound apologetic and helpless or try to horrify the public with jailhouse anecdotes involving feces, it appears that it’s high time for you to show some real leadership. More:


Morning Money

NOT SO FAST — “House Republicans are facing a last-minute uprising against Speaker John Boehner’s budget deal, as dozens of GOP lawmakers are telling leadership they might vote against the package because of changes to crop insurance programs, and other concerns.”

WHEN ALL IS SAID AND DONE — “[I]t would at least temporarily end a bruising era of shutdowns and default freakouts that rattled Wall Street, raised government borrowing costs and crushed business and consumer confidence. It would also clear out one big worry facing the Federal Reserve as it attempts to finally end an era of emergency interest-rate policy that has left the central bank with few weapons in its arsenal if the economy does turn south again.” More from Ben White:

DEAL TARGETS HEDGE FUNDS, PRIVATE EQUITY — The budget compromise hashed out by congressional leaders and the White House would make it easier for the IRS to audit hedge funds and private equity firms. Per a White House official: “The budget deal repeals the obsolete partnership audit rules and streamlines them into a single set of rules for auditing partnerships and their partners at the partnership level. … The reforms are similar to those proposed in the President’s FY16 Budget, and represent a substantial step forward toward ensuring that large partnerships pay the taxes they owe.”

DEAL MEANS MORE WORK FOR BANKS — The agreement on overall budget levels will need to be followed by appropriations legislation to keep the government running. It’s an opening targeted by Republicans and lobbyists who are working to ease rules for a range of financial institutions. Senate Banking Committee Chairman Richard Shelby succeeded in including several proposals in an appropriations bill earlier this year, and he says that talks are ongoing.

Democrats aren’t playing along with the appropriations strategy. Treasury Secretary Jack Lew said yesterday that the spending bills need to be clean. “They can’t be the kinds of bills that create the confrontations that could put us back in a very difficult situation,” he said. “There’s a month or more for that process to work through.”

THAT’S NOT ALL — Lobbyists were on alert Monday for any indication that a proposal to slash a dividend that the Federal Reserve pays to banks had made its way into the budget compromise. The dividend cut has been on the table as a potential pay-for to cover transportation spending. The proposal wasn’t in the budget deal, but top House Transportation Committee members said Tuesday that they could send a long-term highway and transit bill to the floor next week.

IT’S FED DAY, BUT DON’T WORRY — POLITICO’s Jon Prior: No one is expecting the Federal Reserve to announce an interest rate hike when its October meetings wrap up today, but the market will look for clues about whether officials will delay to next year given the recent weak data from the U.S. economy. There is no press conference for Fed Chair Janet Yellen, but she’ll have opportunities in testimony before Congress to explain her expectations before the next round of meetings Dec. 15-16. Nomura’s U.S. Chief Economist Lewis Alexander in a note yesterday wrote that “the key issue for the October meeting is the degree to which the FOMC will use its statement to send a signal about its intentions for December.”

GOOD WEDNESDAY MORNING — You’re planning to watch Ben interview Elizabeth Warren and Richard Cordray this morning, right? You know you should. Details below. He’ll be back tomorrow. Send tips to

DRIVING THE DAY — Sen. Elizabeth Warren and CFPB Director Richard Cordray appear at a Morning Money breakfast briefing with Ben White at The Liaison Capitol Hill. Doors open at 7:30 a.m. … the Federal Open Market Committee meets … the House Republican Conference votes on Paul Ryan’s candidacy for speaker … a Senate Banking subcommittee holds a hearing on the state of rural banking at 10 a.m. … Citigroup chief executive Michael Corbat speaks at The Economic Club of Washington, D.C. at 11 a.m. … the FDIC hosts teleconference on cybersecurity at 2 p.m. … CNBC hosts Republican presidential debates at 6 p.m. and 8 p.m.

HOUSE VOTES TO REVIVE EX-IM, OVERRIDE HENSARLING — POLITICO’s Victoria Guida: “Led by rebellious Republican moderates, the House voted overwhelmingly Tuesday to revive the Export-Import Bank in a major setback for conservatives who wanted to kill an institution they say epitomizes corporate welfare. … A majority of House Republicans and a third of the House Financial Services Committee voted for the measure.”

A SILVER LINING? — “House Financial Services Committee Chairman Jeb Hensarling, who has done more than any other member to destroy the bank, is looking at the bright side. ‘The last time the House voted on a long-term reauthorization of Ex-Im, only 93 members voted against it. Today, 118 voted no. Momentum is moving in favor of those who oppose Ex-Im’s corporate welfare,’ he said in a statement.” More from Victoria:

HILLARY, COLBERT, DODD-FRANK, OH MY — “Hillary Clinton told Stephen Colbert on Tuesday that, as president, she would let the big banks fail if they were to get into trouble. … ‘If you’re president and the banks are failing, do we let them fail?’ asked Colbert, host of CBS’ ‘The Late Show.’ ‘Yes, yes, yes, yes, yes, yes, yes,’ Clinton said emphatically.”

CLINTON BACKS RETIREMENT RULE — The House yesterday passed a bill that would block the Labor Department’s “fiduciary duty” rule, and Hillary Clinton used the opportunity to make clear where she stands on the issue. “The deceptively-named ‘Retail Investor Protection Act’ would stall and ultimately block badly needed protections that prevent conflicts of interest by financial managers from costing hard-working families their retirement savings,” she said in a statement. “This is just the latest example of Republicans stacking the deck for those at the top and putting the interests of Wall Street and big financial actors ahead of Main Street. I stand with House Democrats and President Obama in resisting these efforts.”

BANKS HAPPY WITH @CAJUNBANKER — Per a note sent to members of the Consumer Bankers Association: “The Board of Directors … has re-appointed Richard Hunt as President and CEO of CBA … In addition, Hunt has promoted Jeannie Bunton to Executive Vice President, Communications and Marketing, Chief of Staff.”

SEC TAKES HARD LINE WITH JPMORGAN — WSJ: “Federal regulators want to restrict J.P. Morgan Chase & Co.’s ability to raise funds for clients, in an effort to impose a broader range of consequences on financial firms accused of breaking the rules, according to people familiar with the matter. … [A] settlement has been held up for several weeks by the SEC’s demands that J.P. Morgan also accept limits on its ability to sell stock or bonds via private placements for several years … ”

POST-LAWSKY TUMULT — POLITICO New York’s Jimmy Vielkind: The problem with Anthony Albanese was he was no Ben Lawsky. Albanese, who resigned last week as the acting superintendent of the state’s Department of Financial Services after five months as its leader, clashed frequently with aides in Gov. Andrew Cuomo’s executive chamber who tried to rein in the agency, according to four people familiar with the operation of the agency. The largest source of tension was Albanese’s continuation of an arrangement that Lawsky, whose working relationship with the governor himself stretches to 2007, set up in the four years since the department was created.

“Albanese thought he would have the Lawsky leash, and he didn’t,” said one person familiar with the dynamics of the situation.

All the turnover has left a skeleton crew at DFS, which was created from the 2011 merger of the state’s departments of Insurance and Banking.

POTUS Events

9:35 am CT || Departs Chicago
3:05 pm || Meets with General John Allen, outgoing U.S. envoy for the fight against ISIS
3:50 pm || Meets with Prince Harry

All times Eastern except as noted

Floor Action

The House is in at 10 a.m., with the budget deal on tap. First and last are TBD. The Senate is in at 10 a.m., and they are going to just wait around for the House.