
(205)401-2383
International
EC gives green light for derivatives clearing
The nod from the EC, which was confirmed in a statement from the body on August 6, is the strongest step yet towards making central clearing an obligatory aspect of the European OTC market. It is designed to minimise risk in derivatives trading by placing a clearing house between both sides of a trade, guaranteeing the successful settlement of the transaction if either counterparty defaults. The approval means the clearing mandate for interest-rate swaps could begin at the earliest in April 2016, as Lord Jonathan Hill, the European Commissioner for financial services, promised earlier this year. Interest-rate derivatives are by far the largest segment of the OTC derivatives market, comprising roughly 80% of all global derivatives, with a daily turnover in the EU of around €1.5 trillion as of April 2013, according to statistics from the EC included in the statement. The central clearing mandate will cover plain vanilla interest-rate swaps, basis swaps, forward rate agreements and overnight index swaps, and will be phased in over three years for different types of market participants, ranging from dealer banks and interdealer brokers through to end users who use the contracts to hedge commercial activities including farming and milling. The adopted rules, which come in the form of a delegated act, will now pass to the European Parliament and Council for final approval, under the legislative process of the EU. They can review the rules for two to three months, and extend by an additional three months if they want to, either approving or rejecting them. If approved, they will enter into force 20 days after its publication in the Official Journal of the European Union, and then for category one participants, compliance begins six months after its entry into force.
http://www.efinancialnews.com/story/2015-08-06/ec-adopts-clearing-mandate-interest-rate-swaps
Why Iran Isn’t Nazi Germany
Mike Huckabee’s sin was being too vivid. Last week, after the Republican presidential hopeful said that by signing the Iran nuclear deal, President Barack Obama “would take the Israelis and basically march them to the door of the oven,” a parade of organizations and politicians accused him of inflammatory language and bad taste. But in both the United States and Israel, Huckabee’s core assumption—that the Iranian government is genocidally anti-Semitic—is mainstream. In January, Israeli Prime Minister Benjamin Netanyahu warned that “The ayatollahs in Iran, they deny the Holocaust while planning another genocide against our people.” Last month, Fox News host Sean Hannity called the Iran deal “the equivalent of giving Adolf Hitler weapons of mass destruction.” The fact that a nuclear attack on Israel would also kill Palestinians, argued Texas Senator Ted Cruz recently, would not deter Tehran because “they would view the murder of those Palestinians” as “perfectly acceptable collateral damage to annihilating millions of Jews.” Far from being marginal or extreme, Huckabee’s claim—that Iranian leaders seek another Holocaust—sits at the emotional core of the debate over the nuclear accord with Tehran. But the closer you look, the weaker that claim is. In asserting that Iran seeks to murder all Jews, politicians like Huckabee, Cruz, and Netanyahu focus overwhelmingly on the regime’s words. “When people who are in a government position continue to say they’re going to kill you,” said Huckabee, “I think somebody ought to wake up and take that seriously.” “If history teaches one lesson,” added Cruz, “it is that if somebody tells you they want to kill you, believe them.” But that’s not actually history’s lesson. It’s not true that the best way to predict a regime’s behavior is by its most menacing words. In 1956, Soviet Premier Nikita Khrushchev famously told Western diplomats, “We will bury you” (also translated as, “We will be present at your funeral”). In the 1970s, Soviet officials openly boasted that they could win a nuclear war. In 2005, Chinese Major General Zhu Chenghu warned that in the event of a conflict with the United States over Taiwan, “we will have to respond with nuclear weapons,” and that “the Americans will have to be prepared that hundreds … of cities will be destroyed by the Chinese.” This February, North Korea’s National Defense Commission threatened the United States with the “most disastrous final doom on its mainland.”In foreign relations, as in life, what people do is a far better guide to their future actions than what they say. And while Iran’s rhetoric can sound genocidal, not only toward Israel but toward the United States, Iran’s behavior has not come close.
http://www.theatlantic.com/international/archive/2015/08/iran-nuclear-deal-nazi-germany/400631/
The Crew of the Enola Gay on Dropping the Atomic Bomb
On August 6, 1945—70 years ago today—the B-29 bomber Enola Gay dropped an atomic bomb on the city of Hiroshima. Twelve men were on that flight. Some chose to keep a low profile and others spoke out about their place in history. Almost all had something to say after the war. The 509th Composite Group was formed in by the US Army Air Force to deliver and deploy the first atomic bombs during World War II. The group was segregated from the rest of the military and trained in secret. Even those in the group only knew as much as they needed to know in order to perform their duties. The group deployed to Tinian in 1945 with 15 B-29 bombers, flight crews, ground crews, and other personnel, a total of about 1,770 men. The mission to drop the atomic bomb on Hiroshima, Japan (special mission 13) involved seven planes, but the one we remember was the Enola Gay. Read about the crew:
http://mentalfloss.com/article/24269/crew-enola-gay-dropping-atomic-bomb
National
Coal Industry Wobbles as Market Forces Slug Away
In April 2005, President George W. Bush hailed “clean coal” as a key to “greater energy independence,” pledging $2 billion in research funds that promised a new golden age for America’s most abundant energy resource. But a decade later, the United States coal industry is reeling as never before in its history, the victim of new environmental regulations, intensifying attacks by activists, collapsing coal prices, and — above all — the rise of cheap alternative fuels, especially natural gas. This week President Obama slammed the industry with tougher-than-expected rules from the Environmental Protection Agency limiting power plant carbon emissions, which will accelerate an already huge shift from coal to natural gas and other alternatives. “Clean coal” remains an expensive and thus far impractical pipe dream. Coal is the world’s biggest source of carbon emissions by far and the leading culprit in global warming. Coal advocates like Mitch McConnell, the Kentucky senator and Republican majority leader, have accused the president of an out-and-out “war on coal.” But it’s collapsing prices and heavy debt loads that are driving the industry into bankruptcy. Alpha Natural Resources, the nation’s fourth-largest coal producer after it doubled down on coal two years ago in acquiring Massey Coal for $7.1 billion, filed for bankruptcy protection on Monday. It follows Walter Energy, which filed last month; Patriot Coal, which sought court protection in May; and numerous smaller mining companies. The demise of the two biggest surviving publicly traded coal companies — Peabody Energy and Arch Coal, the nation’s two largest producers — may just be a matter of time, based on their recent stock performance.
Fannie Mae, Freddie Mac to send taxpayers $8.3 billion this quarter
Fannie Mae and Freddie Mac will send taxpayers $8.3 billion in second-quarter profits, an increase of nearly 50 percent, the government-supported mortgage giants said this week. The companies, which help support the mortgage market, have gotten a boost from the improving housing market, and both said this week that rising interest rates had improved their bottom lines. Fannie, based in the District, and Freddie, based in McLean, Va., have returned to the black in recent years, and they are required to hand their profits over to the U.S. Treasury under the terms of a government bailout that rescued the companies during the Great Recession. With their latest payments, the two will have paid taxpayers a combined $239 billion in dividends, well above the $187 billion they received from their bailouts. Fannie Mae said Thursday that it expects to stay profitable “for the foreseeable future,” but cautioned that its profits this year could end up being “substantially lower” than they were in 2014, when its bottom line swelled with legal settlements dealing with bad mortgages. Freddie Mac hasn’t publicly made similar predictions, spokeswoman Lisa Gagnon said. “We reported another strong quarter of financial performance with solid revenues and an impressive book of business that only continues to improve,” Fannie Mae chief executive Timothy Mayopoulos said in a statement. Created by the government decades ago to oil the mortgage market by buying home loans, selling bundles of them to investors and guaranteeing their value, the future of the companies is uncertain. The Obama administration has said it wants to push that responsibility to the private sector, but Congress hasn’t approved any plans to do that. The two companies also drew renewed scrutiny last month when the Federal Housing Finance Agency, the agency that oversees Fannie and Freddie, approved looser rules on their executives’ pay. Under the new rules, their chief executives could earn up to $4 million a year; they had been limited to $600,000 in pay by the terms of the bailout. That riled the White House and a group of lawmakers in both parties, who have proposed legislation to reinstate pay limits. The House Financial Services Committee last week advanced one such proposal to the full House of Representatives. The head of the Federal Housing Finance Agency has defended the move, saying it was meant to retain top leadership. Speaking to reporters this week, Freddie Mac chief executive Donald Layton declined to discuss the issue, saying the company doesn’t comment on matters of public policy.
Bitcoin startups lure quant whizzes from Wall Street
Armed with a doctorate in financial engineering, 34-year-old Timo Schlaefer was on his way to a promising career at Goldman Sachs in London. Previously with the bank’s mergers and acquisitions team, he became an executive director of credit quantitative modeling at Goldman, where quants like Schlaefer are highly valued. In February he gave that up, and launched a company called Crypto Facilities Ltd, a bitcoin derivatives trading platform, which now has six employees. For now, the platform trades bitcoin forwards, which are directly linked to the price of bitcoin, but it’s also developing other digital currency derivative products. “This is uncharted territory,” said Schlaefer. “It’s an exciting opportunity to participate in a new area of technology that has massive potential.” Bitcoin is a virtual or online currency created through a “mining” process where a computer’s resources are used to perform millions of calculations. Once mined, bitcoins can be stored in an online wallet, traded in an online exchange, or used to buy goods and services. Once the province of small-time investors driven by their distrust of government-backedcurrencies, now Wall Street bankers and traders are leaving high-paying jobs to join bitcoin start-ups, while big firms hire in-house to get their arms around bitcoin and the related ‘blockchain’ technology. “A lot of people are entering the bitcoin space as the sector has reached an overall level of funding that’s hard to ignore,” said Jaron Lukasiewicz, founder and chief executive officer at New York-based bitcoin exchange Coinsetter. Lukasiewicz, 29, moved to the bitcoin world in late 2012, having left behind a six-figure salary in private equity at The CapStreet Group in New York. Bitcoin is not backed by a government and its value fluctuates. On Thursday, it was trading at $278 BTC=BTSP, making the value of outstanding bitcoin worth about $4 billion. It has had a volatile history, with a rapid rally in 2013 that boosted its value to more than $1,150 per bitcoin at one point.
McCaskill, Democrats slam Obama’s financial adviser regs
Moderate Democrats slammed President Obama’s proposal to regulate financial advisers, arguing that the administration’s proposed regulations would decrease low- and middle-income Americans’ access to financial advice. The administration is battling the business community to implement new disclosure requirement for financial advisers. Obama and Labor Secretary Thomas Perez argue that the requirements are needed because some financial advisers sell faulty investment advice to consumers so that they can pocket payments from financial institutions off the sale. But in a letter to Perez on Wednesday, Sen. Claire McCaskill (D-Mo.) wrote that “there are still risks in this proposal.” “More individuals may completely lose access to in-person investment advice,” McCaskill wrote in the letter, an argument that Republicans have made for months. McCaskill Letter DOL Fiduciary Rule 08052015
http://thehill.com/policy/finance/250476-mccaskill-democrats-slam-obamas-financial-adviser-regs
The Tangled Web Pennsylvania’s Attorney General Allegedly Wove
Pennsylvania Attorney General Kathleen Kane was charged Thursday with leaking grand-jury documents in order to embarrass a political rival—and then lying about it to another grand jury in an attempted coverup. “Kane devised a scheme to secretly leak confidential information and secret grand jury items directly to media,” Risa Ferman, the district attorney in Pennsylvania’s Montgomery County said at a news conference. She said Kane, the first Democrat elected as attorney general in the state, “lied repeatedly about her own actions, about the law and about other matters.” Kane was charged with, among other things, perjury and obstruction of justice. In a statement, Kane denied wrongdoing and said she looked “forward to the opportunity to present my case in a public courtroom and move beyond the behind-the-scenes maneuvering that has defined the process to this point.” And despite calls for her resignation, including from Governor Tom Wolf, a fellow Democrat, Kane said she would not step down. Kane’s troubles began last year when the Inquirer published a story that said she shut down an investigation into corrupt Philadelphia Democrats. Kane blamed Frank Fina, the lead investigator on that case, for the newspaper’s story. So, prosecutors allege, to punish him, Kane leaked information to the Philadelphia Daily News concerning Fina’s handling of an older corruption case involving an official from the NAACP. The Daily News story, also published last year, said the attorney general’s office had begun a grand-jury investigation into the official in 2009—before Kane’s time at the office—and found evidence the official had misused funds, but never charged him. The article itself relied on confidential grand-jury information, which prosecutors say Kane released to the newspaper in order to embarrass Fina and her political opponents.
Carly Fiorina was the clear winner of Fox News’s first debate
Fox News’s second-tier debate had an impressive lineup of experienced politicians. It included Rick Santorum, the runner-up in the 2012 GOP presidential primary; Rick Perry, the longest-serving governor in Texas history; George Pataki, the three-term governor of New York; Bobby Jindal, the sitting governor of Louisiana; and Lindsey Graham, a two-term US senator. But the most compelling candidate on the stage, by far, had never held elected office. The only campaign Carly Fiorina has ever run was a failed challenge to Sen. Barbara Boxer in 2010. Her résumé comes from the corporate world — she led Hewlett-Packard from 1999 to 2000, and her record was, shall we say, mixed — but you wouldn’t have known it by watching her performance on Thursday. The debate was humiliating. It took place in an empty arena and the moderators, seemed intent on rubbing the participants’ noses in their failure to qualify for the primetime clash. They began by asking, in so many words, why they were such losers that they hadn’t made the cut for the bigger debate. Fiorina had the most graceful response: Well, I would begin by reminding people that at this point in previous presidential elections, Jimmy Carter couldn’t win, Ronald Reagan couldn’t win, Bill Clinton couldn’t win, and neither could’ve Barack Obama. The moderators then moved on to asking why Donald Trump was crushing in the polls. Perry rambled through his reply. Fiorina responded with a nice zinger, a clear understanding of what was powering Trump’s rise, and a fairly devastating closing line: I didn’t get a phone call from Bill Clinton before I jumped in the race. Did any of you get a phone call from Bill Clinton? I didn’t. Maybe it’s because I hadn’t given money to the foundation or donated to his wife’s Senate campaign. Here’s the thing that I would ask Donald Trump in all seriousness. He is the party’s frontrunner right now, and good for him. I think he’s tapped into an anger that people feel. They’re sick of politics as usual. You know, whatever your issue, your cause, the festering problem you hoped would resolved, the political class has failed you. That’s just a fact, and that’s what Donald Trump taps into. I would also just say this. Since he has changed his mind on amnesty, on health care and on abortion, I would just ask, what are the principles by which he will govern? In a strange way, Rick Perry also made the case for Fiorina. In his closing statement, he said: Our best days are in front of us. We can reform those entitlements, we can change that corporate tax code and lower it. We can put America back on track on a growth level and a growth rate that we’ve never seen in the history of this country. Manufacturing will flow back into this country. It just needs a corporate executive type at the top that’s done it before. That seems like an argument for a used-to-run-a-company type, not a long-serving-governor type.
http://www.vox.com/2015/8/6/9113989/carly-fiorina-fox-news-debate
This Economist’s Computer Model Is Forecasting a Clinton Victory
Hillary Clinton will win the 2016 presidential election by the narrowest of margins — if a computer model put together by Moody’s Analytics Inc. is to be believed. The model, which uses economic and political data to predict the election’s outcome on a state-by-state basis, has the Democratic Party’s nominee for president garnering the minimum 270 electoral votes needed for victory to 268 for the Republican contender. While the model uses only generic candidates for each party in forecasting the future, Clinton is the favorite by far to be the Democrats’ nominee. The “2016 election will be a nail-biter,” Moody’s chief economist Mark Zandi and his colleagues wrote in a report. While the economy’s performance will strongly favor the Democrats, the political backdrop — including voter fatigue with a two-term incumbent president — will benefit the Republicans, they said. Moody’s results depend crucially on its economic and political projections heading into the November 2016 ballot. Even small changes in those assumptions could tip the race to the Republican nominee. To predict the popular vote in each state, Moody’s looks at three economic variables in the two years leading up to the presidential poll: household incomes after taking account of inflation and house and gasoline prices.
Trump’s corporate website hacked to thank Jon Stewart
Donald Trump’s corporate website was hacked, but according to the hackers, it wasn’t to do any damage. They just wanted to thank comedian Jon Stewart for his work. “We are writing you today via Mr Trump’s website because, seeming, the only way to get anyone to pay attention any more is to grease a Presidential candidate’s website,” an archived version of Trump.com says. Thursday is Stewart’s last night hosting “The Daily Show.” He has hosted since 1999. “Mr Stewart, we at @TelecomixCanada would like to take this opportunity to thank you for the many happy years of quality journalism and entertainment you and your team have undertaken at Comedy Central,” an archived version of website says. “Know, Sir, that your steadfast dedication to the irony and power of Truth has inspired a generation which we ourselves now serve.” “Well that’s about it, other than to join you all in celebrating America’s first openly Asshole Presidential Candidate. Godspeed Mr. Trump,” the letter ends. According to CBC News, who first reported the hack, the letter was live since early Saturday. As of Monday afternoon, it could no longer be viewed. TelecomixCanada posted a news release on pastebin.com explaining what it had done and pointing out that no harm was done to the server. “Given the nature of the many diverse Anonymous flags, TelecomixCanada wishes to again stress that no further action was taken against the server (ie data leaking or infection), nor have they shared access details with other hactivists or repaired the problems allowing access to trump.com in the first place,” the release said.
http://www.politico.com/story/2015/08/donald-trump-website-hacked-121087.html#ixzz3i3RhYV2g
This is how much Apple spends to keep Tim Cook safe
It’s a lot. The life of a one of the world’s best-paid and most powerful CEOs sounds pretty sweet, except for one thing: lot’s of people are out to get you. That’s the conclusion one must draw from taking a look at some of the security budgets of Fortune 100 CEOs. Apple AAPL -0.40% , for instance, spent $699,133 keeping CEO Tim Cook safe in 2014, according to a security filing unearthed by Patently Apple. And while that might seem like a lot of money, it actually pales in comparison to the security budgets of Oracle ORCL -0.81% CEO Larry Ellison and Amazon AMZN -1.41% CEO Jeff Bezos —their companies each spend more than $1.5 million on CEO-security, according to a report by Equilar.
http://fortune.com/2015/08/07/apple-tim-cook-security/?xid=soc_socialflow_facebook_FORTUNE
State/Local
Bentley ends Medicaid contracts with Planned Parenthood
Gov. Robert Bentley Thursday said he was moving to end Medicaid’s contracts with Planned Parenthood, following the release of videos showing members of the organization discussing the sales of fetal parts. “As a doctor and Alabama’s governor, the issue of human life, from conception to birth and beyond, is extremely important,” Bentley said in a statement. “I respect human life and do not want Alabama to be associated with an organization that does not.” The number, size and scope of the contracts, as well as the services they provide, were not immediately clear Thursday afternoon. Messages seeking comment were left Thursday with Alabama Medicaid and Planned Parenthood Southeast. The governor’s statement did not say if the services would be replaced. An email was sent to Jennifer Ardis, a spokeswoman for Bentley, Thursday afternoon. Bentley’s letter to Planned Parenthood Southeast CEO Staci Fox said the contracts would be terminated within 15 days of the organization’s receipt of the letter. Planned Parenthood has 60 days to appeal the decision. In videos released by an anti-abortion activists over the last several weeks, Planned Parenthood staffers discussed the price of parts of fetuses. The organization, which says the program is a donation program for medical research, says it broke no law and does not profit from the practice. Planned Parenthood Southeast said in a statement earlier on Thursday that it does not operate a donation program in Alabama. Planned Parenthood Southeast provides abortion services at clinics in Birmingham and Mobile. However, Medicaid does not pay for abortions except in the case of rape or incest, or if the mother’s life is in jeopardy. Planned Parenthood services include help with access to birth control, testing for sexually transmitted diseases, breast exams and pap tests for cervical cancer. Louisiana Gov. Bobby Jindal earlier this week ended that state’s contract with Planned Parenthood.
Where are we at the end of five days in special session?
MONTGOMERY, Alabama – Here is what we know at the end of the fifth day of a special legislative session called to find a way to plug a $200 million hole in a critical state budget.
- The problem isn’t close to being solved.
• Key state senators say they will not approve a House of Representatives budget passed Wednesday that effectively guts the state’s Medicaid program which provides health care services for over 1 million Alabamians.
• Proposed legislation back by Senate leader Del Marsh that would authorize a public vote to establish a lottery and casino-style gambling and then tax its profits appears to lack the votes for passage in the Senate.
• A Marsh suggestion that the budget be plugged by moving $225 million from the state’s education budget also appears dead in the Senate.
• Gov. Robert Bentley, who has watched his proposed legislation to raise $300 million in taxes to plug the hole wither, said again he will veto a budget that does not fix the problem. With only five days left in the session to pass a budget before time runs out and no variable fix yet in sight, some legislators on Thursday began talking about the new fix to the budget hole being the same fix they approved just two months ago at the end of the regular session: Approving a budget that cuts about $200 million from the General Fund. But unlike the budget passed in the House Wednesday, the budget approved in June does not devastate Medicaid and in fact would contain about $33 million more than the one approved by the House Wednesday. “The Senate budget we passed at the end of the regular session is I think a better alternative than the House budget (the one passed Wednesday),” said Sen. Trip Pittman, R-Montrose. Pittman is the influential chairman of the Senate Finance, Taxation and Education committee. Sen. Arthur Orr, R-Decatur, the influential chairman of the Senate’s General Fund Budget Committee said he is confident the Senate will approve a budget and he thinks it’s likely to be one close the one passed in June.
http://www.al.com/news/index.ssf/2015/08/where_are_we_at_the_end_of_fiv.html
Tax-free weekend kicking off
It’s the calm before the storm at Davie’s School Supply. The staff has been preparing since January to ready themselves for tax-free weekend, and now the frenzy is upon them. To prepare, they’ve brought in additional employees and have stocked the shelves to the point of overflow. “It’s always crazy like this,” said Caroline Davie, whose father started Davie’s School Supply roughly 40 years ago. “I try to warn the new people (on staff) of what it’ll be like. We’re appreciative that we’re this busy though.” The exemptions began today at 12:01 a.m. and will last until Sunday at midnight. Most areas in the River Region, such as Prattville, Pike Road, Wetumpka, Millbrook and Montgomery, are participating in the weekend, which means a variety of school supplies can be purchased without having to pay state, county or local sales taxes. Sometimes there are discrepancies about which items are tax exempt and which aren’t. Hats can be exempted, for example, but hard hats cannot. Many pieces of clothing such as jeans, dresses and coats won’t be taxed. Neither will diapers. At Davie’s School Supply, a handwritten list of non-taxable items sits on the counter to help guide shoppers. A complete list is available on the Alabama Department of Revenue’s website at: www.revenue.alabama.gov/salestax/STHolidayQuickRefSheet15.pdf
http://www.montgomeryadvertiser.com/story/news/2015/08/06/tax-free-weekend-kicking/31245945/
Ala. Senate could revive vetoed General Fund budget
The General Fund budget didn’t make any progress Thursday. According to its members, the Senate GOP didn’t, either. With the House passing the budget Wednesday, and the Senate unable to take it up in committee until Friday, both chambers left early Thursday to prepare for work over the weekend. Some said a second special session is inevitable. “I think we’re there,” Senate Finance and Taxation General Fund chairman Arthur Orr, R-Decatur, said Wednesday. Possibilities floated Thursday included everything from trying to pass portions of Gov. Robert Bentley’s budget plan in the Senate to reviving a June General Fund budget that cut funding to every state agency, and could trigger layoffs and lawsuits. The chambers remain divided over the approach to the budget. Republican senators said a $156 million cut to Medicaid — approved by the House on Wednesday — would be unlikely to pass. But they’re still unable to agree on a plan within their caucus. “Every time we come close, some wheel falls off,” said Sen. Greg Albritton, R-Range. “And we’re only on a bicycle.” Legislators are floating various ideas have been including transfers of the use tax from the Education Trust Fund to the General Fund and a repeal of a FICA deduction, both of which could fill a General Fund shortfall of at least $200 million. As of early Thursday afternoon, none of those ideas had gotten traction.
Tom Krebs Securities Attorney
Blogs/Opinions
Editorial: Another special session
MONTGOMERY, AL (WSFA) – As this special session winds down and our tax dollars continue to flow down the drain, our legislators are already saying that they need MORE time and another session. As a taxpayer, I am floored by the lack of ANYTHING and I MEAN ANYTHING of substance coming from our legislators. The special session started on July 13. Legislators complained and said that they needed time to meet and discuss issues so they promptly recessed for three weeks to do that. What were they doing during the regular session? This week they came back together to do nothing really. This week the House passed a budget that is in NO WAY a workable budget, cutting $156 million from Medicaid as well as cutting other state agencies by around 5.5 percent. All of these agencies are working at well below standards NOW and all need a revenue boost not a cut. This is not new information to anyone in the legislature. Interesting options like reallocating the “use tax” have been discussed but not acted on. Why not, and why wasn’t this idea floated during the regular session? In the end, we elect our legislators to run our state and do what is best for all of Alabama. They have failed taxpayers and the entire state. Unless we have a miracle, another special session is coming, meaning taxpayers are on the hook for about $800,000, money the state doesn’t have, all because legislators failed to do their job in the regular session.
http://www.wsfa.com/story/29730911/editorial-another-special-session
THE ELEPHANTS IN THE ROOM from the Skimm
The GOP had a big night out in Cleveland, OH. And Fox News moderators wasted no time welcoming the candidates to 2016.
WHAT DO I NEED TO KNOW?
That Donald Trump likes to talk a lot. And everyone else would like some more attention. Trump is going for the White House — even if he doesn’t get the GOP nomination. And he clarified that he doesn’t like to insult all women. Just Rosie O’Donnell. Jeb had to talk about his last name. But he’d prefer if you call him ‘Veto Corleone.’ Dr. Ben Carson reminded everyone that he exists, and that he’s separated Siamese twins. Scott Walker is proud to be normcore. Rand Paul and Chris Christie do not — repeat DO NOT — like each other. Everyone likes the Iran nuclear deal just about as much as they like Hillary Clinton (hint: they don’t, but Kimye does). John Kasich said he still doesn’t like the idea of gay marriage, but he’d still love his daughter if she were gay. Marco Rubio feels #blessed to be on stage with all these candidates, since the Dems can’t even find one. And Ted Cruz and Mike Huckabee were there too. 2016’s officially coming up. In 16 months. Last night set the stage for the rest of the election cycle. Insert “SNL” writers saying ‘thank you.’
http://www.theskimm.com/2015/08/07/skimm-for-august-7th-3
“Ethics Playbook” – Something To Add To Your Summer Reading
In the aftermath of Enron and Worldcom, business schools took the initiative to better prepare future leaders to play by the rules … act ethically. ‘Ethics’ became a buzzword but there was also an emphasis to incorporate ethics into every facet of the business school experience. While students and corporate employees usually hear from inspired leaders who played by the rules, some of the most memorable accounts come from those who have fallen short. One of those is Aaron Beam who was the former Chief Financial Officer at Healthsouth. Beam was one of five CFOs at the company who pleaded guilty to manipulating financial records to overstate earnings in an effort to inflate the company’s stock price. It worked, for a while, but in 2004 the company was the focus of a Security and Exchange Commission investigation. A number of those involved went to prison as a result of the scandal, with the exception of Healthsouth’s CEO Richard Scrushy, who was found not-guilty at the conclusion a federal trial where Beam testified. Scrushy would later go to prison in another case related to bribery charges. Beam, who served three months in federal prison, has been a mainstay on the speaker’s circuit, appearing at both business schools and corporations, sharing his cautionary tale. His latest project was putting his thoughts down on paper and writing the newly released, Ethics Playbook. The message he delivers in the book is done in the same manner as his speeches … he takes full responsibility, has a great sense of humor and is a great story teller. From the opening of the inside cover, the reader is drawn in by his folksy and sincere words: “Avoiding ethical landmines takes hard work, sharp senses and more than a little courage. I wish I had had that courage when it mattered most. Maybe you will. Maybe this book will help you.” Ethics Playbook is an easy read book that presents reflections of a man who was once at the height of the business world. Now, he uses his story and puts it into context with some of the insights from pioneers in the research of ethics and cheating, Dr. Dan Ariely and Professor Marianne Jennings. “This book is a guide or playbook for those who want to lead a more ethical life,” Beam said in an interview. Like other books on ethics, it is a reminder of how to the importance of character, but unlike other books, it provides the insights of someone who let their guard down. “Professionals can learn that trying to be ethical takes hard work and is always a work in progress,” Beam added.
Morning Money
WELCOME TO JOBS DAY — Easy to forget it’s happening with all the GOP debate excitement (more on which below) but it’s a huge number for the Fed (and the political world). Consensus is a solid gain of 225K and no change to the 5.3 percent jobless rate. Such a number would likely keep the Fed on track for an initial hike in September. But a very soft number (and no increase in wage growth) could push things back to December if not later.
Moody’s Mark Zandi emails: “[E]verything points to a status quo number. … The only technical complications are 1) auto retooling, which may be less this year given booming auto production and should lift jobs; and 2) the timing of when K-12 schools close, could be later this year given bad winter weather … I expect payroll employment to increase by 215,000 in July, and for the unemployment rate to hold steady at 5.3 percent. Average hourly earnings should increase a strong 0.3 percent, putting the year-over-year gain at 2.3 percent.
Story Continued Below
HOW THE FED WILL READ IT — Mohamed A. El-Erian on Bloomberg View: “The Fed doesn’t need a super strong jobs report in order to act in September. What it needs is a relatively solid assurance that the labor market, having grown by more than 2.9 million jobs during the past 12 months, retains its firm footing.
“With concerns lurking behind the scenes that the Fed has gone too far in decoupling financial markets from the economy’s fundamentals, just a slight strengthening of labor market conditions (particularly on the wage front) would be enough to increase the probability of a September rate hike.” http://bv.ms/1eW5wiv
COMING THIS FALL: NASDAQ EVENT WITH BEN BERNANKE — Very excited to announce that former Fed chairman Ben Bernanke will by my guest at the next America’s Fiscal Future Event at Nasdaq Marketsite in NYC on Oct. 21st. Doors open at 7:30 a.m. For info email POLITICOEvents@POLITICO.com
GOP DEBATE WRAP: WELCOME TO THE JUNGLE — Quite a circus last night with Donald Trump going bananas as usual, refusing to rule out a third party run, calling everyone in Washington stupid, saying he forced Hillary Clinton to attend his wedding and claiming to have created the debate on illegal immigration (which is ludicrous). Trump made very little sense on substantive questions from the Iran deal, to actual immigration policy (beyond a wall) to his views on health care reform. He defended his previous support for a single payer system but said he’d evolved and would now get rid of Obamacare and replace it with … well it was hard to tell.
A Fox News focus group after the debate showed many previous Trump supporters souring on the billionaire after the performance. But M.M. knows better than to predict what will happen to The Donald’s poll numbers. They could tank, they could rise, they could stay the same. Who knows? Marco Rubio probably won the debate with his optimistic, detailed, confident answers to questions on a range of policy issues. No one else stood out very much. Chris Christie did well, especially sparring with Rand Paul on national security and Mike Huckabee on entitlement reform.
John Kasich showed why he quickly made it into the top ten with his folksy delivery and a focus on non-traditional GOP issues like drug treatment and prison reform. Kasich is probably too far from the GOP base on issues like Medicaid expansion but he certainly made a good case for a VP slot and he comes from the critical state of Ohio (as does another potential VP, Sen. Rob Portman).
Scott Walker was fine. So was Jeb Bush who started off shaky but got stronger and made robust defenses of his positions on immigration and education while talking up his aspirational 4 percent growth target, his record in Florida and his very conservative stances on abortion and government spending. It was a B- performance but he didn’t need an A the first time out. He is in it for the long haul. Rand Paul didn’t help himself. Neither did Mike Huckabee. Ben Carson was quite strong at points including a funny closing statement.
Financial reform issues did not get much play beyond a Rubio pledge to repeal Dodd-Frank and Bush and others pledging thorough reviews and changes to all regulations. M.M. didn’t catch all of the undercard but apparently financial regulation came up more often. One GOP aide emailed: “How did the kids table address crony capitalism and Dodd-Frank and the adult table didn’t even get close to those topics?!”
M.M.’S DEBATE GRADES — Rubio: A; Christie: B+; Walker: B; Bush: B- Kasich: B; Carson: B; Huckabee: C; Paul: C; Cruz: C; Trump: Classy
SPEAKING TIMES via @LaurenLeatherby: Trump 10:30 Bush 8:33 Huckabee 6:32 Carson/Cruz tie 6:28 Kasich 6:25 Rubio 6:22 Christie 6:03 Walker 5:43 Paul 4:51
HOT CLICK: Trump’s nine craziest comments: http://politi.co/1KUyOwk
THE UNDERCARD: FIORINA SHINES — POLITICO’s Eli Stokols: “On a stage filled by several faltering also-rans, Carly Fiorina stood out for her seriousness, fluidity and her willingness to strongly criticize not just Democrats but her Republican opponents as well. Fiorina … didn’t just criticize Donald Trump, the current GOP front-runner, but she went out of her way to rip the recently gaffe-prone Jeb Bush, who will take the debate stage later Thursday evening. … But it’s unclear whether out-debating her six struggling rivals in the undercard will do much to elevate her in the sprawling GOP field …
“The former Hewlett-Packard CEO has struggled to gain traction, despite her assiduous campaigning in New Hampshire and having impressed many in the party’s donor class. As the debate drew to a close, Fiorina used much of her 30-second closing statement to question Bush’s abilities as a campaigner in light of another unforced error by him earlier this week. ‘2016 is going to be a fight. A fight between conservatism and a Democrat Party that is undermining the very character of our nation,’ she said in her closing argument. ‘We need a nominee who is going to throw every punch … someone who cannot stumble before he even gets in the ring.” http://politi.co/1Ipr5lW
GOOD FRIDAY MORNING — M.M. heads out on vacation for two weeks starting today. But you will be in good hands with members of the crack POLITICO financial services team. For the next two weeks please send tips, news, gossip and hot takes to Clea Benson (cbenson@politico.com). Column is dark the week of Aug. 24th. See you back here Aug. 31.
DRIVING THE DAY — July jobs report at 8:30 a.m. expected to show a gain of 225K with no change in the 5.3 percent jobless rate and a 0.2 percent increase in wages … Consumer credit at 3 p.m. expected to expand by $17.0B … President Obama heads to Martha’s Vineyard this afternoon for vacation … Steaming hot takes throughout the day on the #GOPDebate
DEBATE GETS RAUCUS — WSJ’s Patrick O’Connor, Janet Hook and Rebecca Ballhaus: “Donald Trump created a raucous atmosphere in the first Republican debate, kicking off the event by refusing to say he would support the eventual nominee if he doesn’t win, then sparring with other contenders and setting a contentious tone for the evening. … His strident objection to pledging to endorse the eventual nominee — which was met with boos from the audience and an immediate rebuttal from Kentucky Sen. Rand Paul — opened a rollicking debate in Cleveland on Thursday night that illustrated the carnival atmosphere Mr. Trump has brought to the race.
“But it wasn’t only Mr. Trump stirring the waters. New Jersey Gov. Chris Christie and Sen. Paul had several tense exchanges, including one over government surveillance programs. The 10 candidates on the Fox News debate stage seemed to divide into those eager to mix it up and those — former Florida Gov. Jeb Bush, Sen. Marco Rubio and Govs. Scott Walker of Wisconsin and John Kasich of Ohio — who seemed more intent on sounding presidential. The real-estate mogul’s tell-it-like-it-is performance Thursday may turn unease among the Republican establishment about his candidacy to outright opposition.” http://on.wsj.com/1IRu7Rt
NO BIG CHANGES — WP’s Dan Balz: “The first Republican debate of the 2016 campaign appeared to leave the nomination contest just as it was before. … Trump brought to Thursday’s debate the same sharp tongue and controversial style that has propelled him to the top of the polls in the Republican nomination contest. He was outspoken, bombastic and unapologetic. He did exactly what he has been doing up to now, and it hasn’t hurt him yet. … From here forward, the others in the race might be forced to recalibrate their assessments of whether Trump is a comet flashing across the political skies or someone who eventually will have to be confronted directly in order to stop him.
“Anyone who thought a calmer, cooler — yes, more presidential — Trump would show up in Cleveland, as he had hinted in the days heading into the debate, was probably as surprised as they were earlier this summer when he left his rivals in the dust in poll after poll. … At one point he seemed to cross a line when he sarcastically responded to Megyn Kelly after she had asked an unfriendly question that quoted some of the abusive language he has used to describe women. He later offered a tutorial to Chris Wallace about business and bankruptcy laws when Wallace asked him about the various times his company has declared bankruptcy” http://wapo.st/1K6nG9W
ACKMAN GOES BIG ON OREOS — NYT’s Michael J. de la Merced and Alexandra Stevenson: “By putting $5.5 billion into Mondelez International, a hedge fund billionaire is wagering that the company, which makes Oreos, Cadbury chocolates and Trident gum, could be prodded into selling itself. That would make it only one of many possible takeover targets in the food industry. The emergence of William A. Ackman and his Pershing Square Capital Management as a major investor in Mondelez highlights the widespread belief that opportunities for deals abound in the food sector.
“Though Pershing Square’s regulatory filing on Thursday disclosing its 7.5 percent stake does not elaborate on the hedge fund’s investment thesis, a person briefed on the move has said that the firm believes Mondelez must cut costs, or consider a sale. Mr. Ackman is said to like the aggressive cost-cutting measures announced by the company’s chief executive, Irene Rosenfeld, last year … The cuts followed months of pressure from another activist investor, Nelson Peltz, who had built a stake of more than $1 billion in the company and suggested that Mondelez merge with PepsiCo’s Frito-Lay snack business. He later dropped the campaign and joined the Mondelez board.” http://nyti.ms/1gOeZdr
INVERSIONS DEFY TREASURY CRACKDOWN — FT’s Arash Massoudi in London, James Fontanella-Khan in New York and Barney Jopson in Washington: “An Obama administration crackdown to stop US businesses pursuing takeovers that let them escape the country’s high corporate tax regime was dealt a sharp rebuke on Thursday, after two deals paved the way for more companies to move their domicile to Europe. In separate transactions, three of Coca-Cola’s European bottlers agreed a $27.5bn merger to form the region’s largest distributor of Coke products, while fertiliser maker CF Industries acquired assets from rival OCI for $8bn including debt.
“Both will create new UK-based companies in so-called tax inversion deals, highlighting corporate America’s desire to move its tax base overseas. The deals are a further indication that efforts last year by the US Treasury … have failed to stem interest in the manoeuvre. At least 15 companies successfully struck inversions last year before the Treasury took action to limit the attraction of such deals. Including Thursday’s activity, five large inversions have been agreed in 2015 and several more attempts are under way, including Monsanto’s $45bn pursuit of Switzerland’s Syngenta.” http://on.ft.com/1HuLXo9
AMALGAMATED BACKS $15 MIN WAGE — Amalgamated Bank become the first bank in the nation to pay a $15 minimum wage. http://bit.ly/1T9nmMt
JUDGE OUT AT PEGCC — Bloomberg: “Steve Judge, the private equity industry’s top lobbyist, told executives of the leading firms he will step down later this month … Judge, 61, plans to leave the post Aug. 15, he wrote in a letter to members of the Private Equity Growth Capital Council, a copy of which was obtained by Bloomberg. James Maloney, a spokesman for the council, confirmed the contents of the letter and said the board will begin a search for a replacement.
“The eight-year-old council represents Blackstone Group, Carlyle Group and KKR & Co., as well as smaller private equity firms, in their dealings with U.S. regulators and lawmakers. KKR’s Ken Mehlman, a former chairman of the Republican National Committee, is the current chairman of the council.” http://bloom.bg/1IRtkA9
POTUS Events
WASHINGTON (AP) — Eager for a break from Washington, President Barack Obama is returning to his summer vacation spot of choice, the Massachusetts island of Martha’s Vineyard, a day earlier than originally planned for more than two weeks of hoped-for rest coupled with extended pursuit of his favorite leisure sport: golf.
Obama apparently was so anxious to join the hordes of lawmakers, lobbyists and others who turn Washington into a political ghost town every August that he moved up his departure by a day. He was leaving the White House on Friday afternoon with his wife, Michelle, and teenage daughters Malia and Sasha, instead of on Saturday as initially planned.
Obama plans no public events during the 17 days he will spend on the island situated south of Cape Cod and known as a summer hangout for the wealthy. The vacation will be his sixth on the Vineyard since taking office in 2009. Obama skipped a trip to the island during his 2012 re-election campaign.
He was returning to the same secluded estate he rented last year, a seven-bedroom, nine-bathroom property in Chilmark, on the western part of the island, and valued at $12 million, according to local news reports. The property’s amenities include a dual basketball and tennis court.
With no official appearances on the schedule, Obama will spend his time away from Washington dabbling in his usual vacation activities: leisurely rounds of golf, beach outings, hikes and bike rides with the family, and dinner with Mrs. Obama at some of the island’s top restaurants. He will travel with a cluster of top aides who will update him as developments warrant.
Floor Action
Congress will return September 8.
Announcements
Eight Things to Know about the Taxpayer Advocate Service
- TAS is Your Voice at IRS. The Taxpayer Advocate Service, or TAS, is your voice at the IRS. We are an independent organization within the IRS.
- TAS Helps Resolve Problems. TAS helps individuals, businesses and exempt organizations who are not able to resolve their tax problems with the IRS. Our service is always free. TAS can help if:
- Your problem is causing financial difficulty for you, your family, or your business.
- You, your business or your organization is facing an immediate threat of adverse action.
- You have tried repeatedly to contact the IRS but no one has responded. We will also help if the IRS has not responded by the date promised.
- Taxpayer Bill of Rights. The IRS has adopted a Taxpayer Bill of Rights that includes 10 basic rights that every taxpayer has when interacting with the IRS:
- The right to be informed.
- The right to quality service.
- The right to pay no more than the correct amount of tax.
- The right to challenge the IRS’s position and be heard.
- The right to appeal an IRS decision in an independent forum.
- The right to finality.
- The right to privacy.
- The right to confidentiality.
- The right to retain representation.
- The right to a fair and just tax system.
- TAS Protects Your Rights. TAS protects taxpayers’ rights by ensuring that the IRS treats all taxpayers fairly and that you know and understand your rights. Our taxpayer rights web page can help you understand what these rights mean to you and how they apply.
- TAS on the Web Toolkit Can Help. The TAS Tax Toolkit at TaxpayerAdvocate.irs.gov explains common tax issues. It also offers self-help videos and documents. You can use the site’s information to solve your tax problem or help you understand it when you work with the IRS and your tax preparer.
- Report a Problem that Affects Many Taxpayers. TAS also handles large-scale or “big picture” problems that affect many taxpayers. You can report these issues at www.irs.gov/sams.
- TAS in Every State. We have offices in every state, the District of Columbia and Puerto Rico. Your local advocate’s number is in your local directory and at taxpayeradvocate.irs.gov. You can also call us at 877-777-4778.
- TAS on Social Media. Keep up with us via social media:
IRS YouTube Videos:
IRS Podcasts: