Securities Attorney Briefing 12 August 2016

Securities Attorney Tom Krebs


I.M.F. Lends $12 Billion to Egypt to Fix Ailing Economy

CAIRO — The International Monetary Fund said Thursday that it would grant Egypt a $12 billion loan over three years to help Egypt mend its ailing economy after years of unrest. The I.M.F. said the loan, which is subject to approval by its executive board, comes in support of a government overhaul that aims to stabilize Egypt’s currency, reduce the budget deficit and government debt, and bolster growth and create jobs. “Egypt is a strong country with great potential but it has some problems that need to be fixed urgently,” I.M.F. said in a statement, adding that the government planned to increase taxes and cut energy subsidies. Egypt said this week that it would raise electricity prices by a least a quarter, which is part of a plan to eliminate the subsidies altogether by 2019. Egypt’s economy has struggled since the 2011 uprising that overthrew the country’s longtime autocrat, Hosni Mubarak, with high inflation, foreign currency shortages and low tourism and investment. Cairo appealed to the I.M.F. as a last resort after exhausting billions of dollars in aid from wealthy Arab nations in the Persian Gulf, recently humbled by low oil prices — and now turned off by persistent bureaucratic hurdles to investing in Egypt. Egypt hopes that the loan can generate momentum that will bolster growth and reassure potential investors. More:

Russian Hackers of DNC Said to Nab Secrets From NATO, Soros

Weeks before the Democratic convention was upended by 20,000 leaked e-mails released through WikiLeaks, another little-known website began posting the secrets of a top NATO general, billionaire George Soros’ philanthropy and a Chicago-based Clinton campaign volunteer. Security experts now say that site,, with its spiffy capitol-dome logo, shows the marks of the same Russian intelligence outfit that targeted the Democratic political organizations. The e-mails and documents posted to the DCLeaks site in early June suggest that the hackers may have a broader agenda than influencing the U.S. presidential election, one that ranges from the Obama administration’s policy toward Russia to disclosures about the hidden levers of political power in Washington. It also means the hackers may have much left in their grab bag to distribute at will. The subjects of the DCLeaks site include a former ranking intelligence official who now works for a major defense contractor and a retired Army officer whose wife serves on the USS Nimitz, the nuclear-powered aircraft carrier. Some of the e-mails go back years. Open Society Foundations, the Soros group, reported the breach to the Federal Bureau of Investigation in June, said spokeswoman Laura Silber, who added that an investigation by a security firm found the intrusion was limited to an intranet system used by board members, staff and foundation partners. More:

The Brexit Hangover Just Got Worse

Theresa May has left London with her husband, Philip, for a walking holiday in Switzerland, a country that is not a member of the European Union, although it does allow the free movement of people—even British prime ministers. May has said that she enjoys the peace and quiet of the Alps, which she will certainly need before the Brexit phony war ends in September and her government faces the challenge of extricating the United Kingdom from the European Union—an operation that will likely be worse than amputation without anesthetic. Right now, I can report no advance in the understanding of what Brexitactually means, or what the three ministers charged with overseeing the surgery—David Davis, Dr. Liam Fox, and the buffoonish Boris Johnson—are planning. What is becoming clear, however, is that the U.K. is much more entangled with the European Union than the Brexit campaigners ever admitted, or even understood, at the time of the referendum. And as with any amputation there is never a plus, only one very large minus. The Brexit camp is keen on citing the example of Greenland, which voted to leave the E.U. in 1982, a few years after the country won home rule from Denmark. But even with a population of just 56,000 and an economy that is tiny in comparison to that of the United Kingdom, it took three straight years of negotiations for Greenland to realize its emancipation. If Article 50, the mechanism that formally triggers Britain’s exit, is invoked, the U.K. is somehow expected to complete the process in two years. Should that article be triggered, however, the clock would tick. As as each day elapses, Britain’s bargaining position with the rest of Europe would become gradually worse. (You can imagine how much the French are going to enjoy that slow torture.) No wonder the man who negotiated the Greenland deal, Denmark’s former foreign minister Uffe Ellemann-Jensen, told Bloomberg, “Basically, the British need to take time to understand what an enormous task they took upon themselves. . . . Asking for a Brexit and expecting it to be clear-cut simply can’t happen.” There is nothing to give us confidence that anyone in the U.K. government fully comprehends the reality of the situation. After all, the government minister in charge of Brexit, the aforementioned David Davis, only realized in the last few months that it would not be possible for the U.K. to forge individual trade deals with different E.U. member states. As an old debating partner of mine—we have shared many platforms on civil liberties—I hesitate to be too brutal about Davis’s failure to grasp that E.U. countries cannot make discrete trade deals. But, frankly, it beggars belief that he lived for so long under this illusion, and that these wildly optimistic fantasies weren’t challenged.


Romantic Relationship With Fannie Mae CEO Prompted Firing of Fifth Third Lawyer

Fifth Third Bancorp, Ohio’s largest bank, fired its general counsel last month because she was having a romantic relationship with the chief executive of Fannie Mae, Timothy Mayopoulos. Fifth Third last month said Heather Russell, who was chief legal officer and corporate secretary for less than a year, departed following “a personal matter“ that represented “a conflict of interest.” Following inquiries from The Wall Street Journal, Ms. Russell said in a statement Wednesday that she “proactively informed Fifth Third’s senior management about my personal relationship with Tim Mayopoulos, and they terminated me as a result of it. During my time at Fifth Third, I never had any interactions or dealings with Fannie Mae in any regard, and there was never any conflict of interest.” Fifth Third declined to comment beyond its initial statement, which also said that the conflict had “nothing to do with any of the legal work done by Heather during her tenure.” Ms. Russell, who is separated from her husband, previously went by the last name Russell Koenig. Mr. Mayopoulos, who is separated from his wife, disclosed the relationship to Fannie Mae’s compliance and ethics office in March, according to people familiar with the matter. The office at the mortgage giant said no further action was required so long as business decisions with Fifth Third didn’t come before Mr. Mayopoulos, the people said. If a business conflict had surfaced, Mr. Mayopoulos would have then needed to seek additional guidance from the board. A statement from a Fannie Mae spokesman Wednesday said Mr. Mayopoulos had disclosed his relationship to the company’s compliance and ethics office. That office “provided appropriate direction to Mr. Mayopoulos, and he followed it,” the company said. “Further, Mr. Mayopoulos has no involvement in Fannie Mae’s relationship with Fifth Third Bank. Quite simply, there is no conflict of interest under Fannie Mae’s corporate policies,” the statement said.

Exclusive: Wall St. banks ask Fed for five more years to comply with Volcker rule

Big Wall Street banks are asking the U.S. Federal Reserve to grant them an additional five-year grace period to comply with a financial reform regulation known as the Volcker rule, people familiar with the matter said. If the Fed agrees, the extension would give banks more time to exit fund investments that are difficult to sell, but no longer allowed by the law. The added grace period, which follows three one-year extensions, would start next year and run through 2022. The law on Volcker rule implementation says banks can ask for an extra five-year extension for “illiquid” funds, where banks had contractual commitments to invest. In deciding whether to grant Wall Street more leeway, the Fed has asked banks to provide details on their specific investments to prove that they fall under the statutory definition of “illiquid,” said the people, who requested anonymity to discuss non-public regulatory discussions.

Those seeking the extension include Goldman Sachs Group Inc (GS.N), Morgan Stanley (MS.N), JPMorgan Chase & Co (JPM.N) and some other banks, the sources said. They are making their push in part through Wall Street lobbying group the Securities Industry and Financial Markets Association (SIFMA). “SIFMA is working with our members to ensure that regulators have the data they need to adequately appraise the situation,” the association said in a statement to Reuters. Congress intended to provide “an appropriate transition period” so that banks could exit illiquid funds without disrupting markets, SIFMA added. More:

Envisioning Bitcoin’s Technology at the Heart of Global Finance

A new report from the World Economic Forum predicts that the underlying technology introduced by the virtual currency Bitcoin will come to occupy a central place in the global financial system. A report released Friday morning by the forum, a convening organization for the global elite, is one of the strongest endorsements yet for a new technology — the blockchain — that has become the talk of the financial industry, despite the shadowy origins of Bitcoin. “Rather than to stay at the margins of the finance industry blockchain will become the beating heart of it,” the head of financial services industries at the World Economic Forum, Giancarlo Bruno, said in a statement released with the report. The blockchain originally referred to the database where all Bitcoin transactions are recorded and stored. Unlike existing financial ledgers or databases used by banks and other institutions, the blockchain is updated and maintained not by a single company or government. Instead it is run by a network of users. It’s akin to the way Wikipedia is maintained by users around the globe. Initially, bank executives shied away from endorsing Bitcoin because it had been used for drugs and crime. Now, however, many have focused on ways to create blockchains without using Bitcoins for transactions in any way. This is attractive because blockchains — or “distributed ledgers,” as they are often described — could offer a new way to move money and track transactions across borders and other networks in a more secure, transparent and effective way than the current system. More:

While in the White House, Economist Received Personal Loans From Top Washington Lawyer

In 2011, Gene Sperling had a problem. He was working as President Obama’s chief economic advisor but his government salary did not cover his expenses. He and his wife lived in a Georgetown townhouse valued today at around $2 million, but did not have enough equity to qualify for a second mortgage or credit line. He didn’t want to sell the house and he wanted to keep working at a prestigious but relatively low-paid public service job. And so Sperling turned to a close friend from law school: Howard Shapiro. A top partner at the Washington powerhouse law firm WilmerHale, Shapiro had loaned Sperling money before and was willing to do so again. Sperling asked the White House Counsel’s office and the Office of Government Ethics for permission to borrow from Shapiro, whose firm frequently negotiates with the government on behalf of some of the nation’s leading corporations. Officials approved the transactions.

So in 2011, Sperling borrowed between $100,000 and $250,000 from Shapiro at 5 percent, a rate that appears to be well below the interest banks charged at the time for comparable loans. Sperling listed his borrowing on his financial disclosure forms. In each of the next two years, Sperling went to Shapiro again, taking out two more loans that brought his debt to a total of between $300,000 and $600,000. (The forms require disclosure of a range, not specific figures.) The loans are unsecured. Sperling consolidated earlier loans from Shapiro, one made in 2006 and the 2011 loan, into the later ones. Today, Sperling is advising the Hillary Clinton campaign on economics. In a “Funny or Die” spoof shown last month to the Democratic National Convention, he warned that Donald Trump’s policies would lead to dangerous levels of debt for the country. Sperling served as a counselor to the Treasury Secretary in 2009 and 2010. He became the director of the National Economic Council at the White House in January 2011 and served until early 2014. Now in the private sector, he consults with a variety of companies, including the asset manager Pimco, home sharing service Airbnb and Renovate America, a green energy finance company.

Shapiro is a partner and litigator at WilmerHale and the firm routinely represents clients with business before the federal government. Shapiro and WilmerHale’s clients have included major financial institutions, such as Goldman Sachs and JPMorgan Chase.

What’s behind the gold price rally, and will it hold?

There are seemingly endless theories to explain the stunning gold-price rally this year, and most of them support more of the same for the precious metal. Global gold demand reached 2,336 tons through the first six months of the year, led by investment demand — representing a record 1,064 tons — according to the World Gold Council. That growing demand has driven the price of gold up 27% this year, marking the best first-half performance since 1980. Juan Carlos Artigas, director of investment research at the World Gold Council, said unlike 1980, when the price spike was related to macroeconomic uncertainty, this year’s rally is fueled from multiple directions. “There is still the issue of macroeconomic uncertainty, but we are also dealing with a U.S. dollar that is less strong than it has been recently,” he said. Considering that gold has come off a couple rough years while recovering from the 2011 lows, Mr. Artigas said there was some pent-up demand from investors who had been waiting for an entry point.

“Investors reduced gold positions over the past three years and were looking for a reason to get back in to use gold again to hedge portfolio risk and preserve capital,” he said. Another theory behind the gold rally that continues to gain traction is unprecedented global monetary policy, including record quantitative-easing programs, interest rates at historic lows and nearly $12 trillion in negative-yielding government bonds around the world. On that note, Jim Grant, publisher of Grant’s Interest Rate Observer, was quoted saying, “Radical monetary policy begets more radical policy.” During a recent presentation to the New York Society of Security Analysts, Mr. Grant described the case for investing in gold as “not a hedge against monetary disorder, because we have monetary disorder, but rather an investment in monetary disorder.”

With Congress Deadlocked, White House Diverts Funds to Fight Zika

WASHINGTON — The Obama administration on Thursday said it was shifting $81 million away from biomedical research and antipoverty and health care programs to pay for the development of a Zika vaccine, resorting to extraordinary measures because Congress has failed to approve new funding to combat the virus. Sylvia Mathews Burwell, the secretary of health and human services, told members of Congress in a letter that without the diverted funds, the National Institutes of Health and the Biomedical Advanced Research and Development Authority would run out of money to confront the mosquito-borne illness by the end of the month. That would force the development of a vaccine to stop at a critical time, aslocally acquired cases of Zika infection increase in Miami. As of last week, 7,350 cases of Zika had been reported in the United States, most in Puerto Rico, according to the Centers for Disease Control and Prevention. Ms. Burwell said that 15 infants had been born with Zika-related birth defects. The virus can cause abnormal brain development and other serious defects in children born to infected mothers.

The local spread of the illness in the continental United States, with the first cases reported late last month, has raised the political stakes surrounding the federal government’s response. Hillary Clinton on Tuesday made a campaign stop in Wynwood, the Miami neighborhood that has had a rash of locally transmitted Zika cases, and pressed Congress to return from its five-week break to approve emergency funding to fight the virus. President Obama and congressional Republicans have been at odds for most of the year over Zika. In February, Mr. Obama requested $1.9 billion in emergency funding. Republicans balked, demanding a more detailed accounting of where the money would go. Lawmakers have feuded for months over how much money should be earmarked and how it should be spent. Last month, Democrats blocked consideration of a Republican measure that would have allocated $1.1 billion to fight Zika but included provisions that would have banned funding for Planned Parenthood to provide contraception related to the virus, which can be sexually transmitted. More:

Exclusive: Congressional leaders were briefed a year ago on hacking of Democrats – sources

U.S. intelligence officials told top congressional leaders a year ago that Russian hackers were attacking the Democratic Party, three sources familiar with the matter said on Thursday, but the lawmakers were unable to tell the targets about the hacking because the information was so secret. The disclosure of the Top Secret information would have revealed that U.S. intelligence agencies were continuing to monitor the hacking, as well as the sensitive intelligence sources and the methods they were using to do it.

The material was marked with additional restrictions and assigned a unique codeword, limiting access to a small number of officials who needed to know that U.S. spy agencies had concluded that two Russian intelligence agencies or their proxies were targeting the Democratic National Committee, the central organizing body of the Democratic Party. The National Security Agency and other intelligence agencies sometimes delay informing targets of foreign intelligence activities under similar circumstances, officials have said. The alleged hacking of the Democrats and the Russian connection did not become public until late last month when the FBI said it was investigating a cyber attack at the DNC. The DNC did not respond to a request for comment for this story. The congressional briefing was given last summer in a secure room called a Sensitive Compartmented Information Facility, or SCIF, to a group of congressional leaders informally known as the “Gang of Eight,” the sources said.This group includes four Republicans: Senate Majority leader Mitch McConnell and House of Representatives Speaker Paul Ryan, and Senator Richard Burr and Representative Devin Nunes, the House and Senate intelligence committee chairs. Their Democratic counterparts are Senator Harry Reid and Representative Nancy Pelosi, and Senator Dianne Feinstein and Representative Adam Schiff of the intelligence committees. More:


Education Level Emerges as Sharp Dividing Line in Clinton-Trump Race

There are many demographic fault lines emerging in this year’s presidential campaign, but few are deeper than the division among likely voters based on educational attainment. Those with the least number of years of education are far more likely to support Donald Trump, while those who have had the most schooling are much more likely to back Hillary Clinton, according to a Bloomberg Politics national poll released this week. “The presence or absence of a college degree is more predictive of the vote in this election than we’ve seen in past elections,” said pollster J. Ann Selzer, who oversees many political surveys for Bloomberg Politics. Another trend may also be developing in the campaign that could pose a threat to Clinton: apathy among potential voters under age 35. Both of these subplots were revealed in the new poll, with educational level offering the starkest contrast. Clinton wins the college-educated segment by 25 percentage points, 59 percent to 34 percent. Trump’s edge among those without a college education is 10 points, 52 percent to 42 percent. Trump’s lead is 4-to-1 among white men with less than a college degree, 76 percent to 19 percent. Clinton’s advantage with college-educated women is 64 percent to 31 percent. That’s vastly different from what was recorded in the 2012 presidential election, when exit polling showed 47 percent of voters were college graduates. In that contest, President Barack Obama only narrowly beat Republican challenger Mitt Romney among college graduates, 50 percent to 48 percent. More:

Man who scaled Trump Tower in New York facing criminal charges

The man who scaled Trump Tower in New York on Wednesday in a failed effort to meet the building’s famous namesake will instead have a different sort of appointment: an arraignment in criminal court.

Stephen Rogata, 19, was formally charged with reckless endangerment and criminal trespass, New York City police said on Thursday, a day after he used suction cups to ascend the 68-story glass building in midtown Manhattan. The campaign headquarters for Donald Trump, the Republican presidential nominee, are inside the tower, along with the penthouse condominium he calls home. Wearing a backpack, shorts and climbing equipment, Rogata spent two hours steadily moving up the glass facade as the New York Police Department’s special operations division made repeated attempts to coax him into the building. The stunt drew hundreds of onlookers onto the sidewalks below and countless more to computer screens, where they watched as officers finally grabbed him and pulled him through a 21st-story window after removing the glass panel. In a video uploaded to YouTube a day earlier, Rogata, who lives in Great Falls, Virginia, addressed Trump, saying he was an “independent researcher” who needed a private audience with the billionaire to discuss an unspecified important matter. “The reason I climbed your tower was to get your attention,” he said, before encouraging people to vote for Trump. Rogata was taken to a hospital for evaluation, police said. It was not clear when he would be arraigned. It was not known whether Rogata had a defense lawyer.  “Great job today by the NYPD in protecting the people and saving the climber,” Trump tweeted on Wednesday night.

Donald Trump’s Supreme Court Pick Would Kill the ‘Right to Remain Silent’ Warning

Lost in the “Second Amendment people” controversy was Trump’s point about Supreme Court justices. The one he wants is truly radical. Lost in the furor surrounding Donald Trump’s remark that “Second Amendment people” might be able to do something about Hillary Clinton was the ad-lib’s context: Trump was talking about appointing judges and justices. Just a few sentences after the “Second Amendment” remark, Trump boasted, “we have such great Justices, you saw my list of 11 that have been vetted and respected.” At the top of the list—prepared not by Trump but by the Heritage Foundation, the conservative-to-libertarian think tank funded by the Coors family, the Koch Brothers, the Bradley Foundation, the Scaife Foundation, and the Olin Foundation, some of the same funders who have blocked the nomination of Judge Merrick Garland—is Judge William Pryor of the Eleventh Circuit Court of Appeals. Now, Bill Pryor is, by all accounts, a distinguished and ethical jurist. Born in 1962, he has had a brilliant career, serving as Alabama’s youngest attorney general from 1997-2003 before being nominated by President George W. Bush to a federal appeals court. During Pryor’s confirmation hearings, though, he emerged as a fierce ideologue, particularly on the issue of abortion. Pryor was the polar opposite of Judge Merrick Garland, President Obama’s Supreme Court nominee who is widely praised as a circumspect centrist. Pryor didn’t back offfrom his past remark that Roe v. Wade was “the worst abomination in the history of constitutional law.” Nor did he disavow his shocking statement that “I will never forget Jan. 22, 1973, the day seven members of our highest court ripped the Constitution and ripped out the life of millions of unborn children.” On the contrary, when pressed to explain such statements, Pryor doubled down, saying that Roe “has led to the slaughter of millions of innocent unborn children” and created “out of thin air a constitutional right to murder an unborn child.” “I believe that abortion is the taking of human life,” he said in response to a question from Senator Orrin Hatch. “I believe that abortion is morally wrong.” Of course, Pryor, who is Catholic is entitled to hold any moral beliefs he wants. Hillary Clinton’s choice for vice president, Tim Kaine, for example, is personally pro-life. Yet while Pryor told Hatch that “I am able to put aside personal beliefs and follow the law, even when I strongly disagree with it,” he clearly was not able to do so even in the context of the confirmation hearing, in which he disregarded the careful “substantive due process” reasoning of Roe and the legal conclusion that embryos, blastocysts, and fetuses before viability are not legally “children,” despite some religious teachings to the contrary. The National Review called the hearings “one of the most extraordinary Judiciary Committee sessions in recent memory.” Following the hearings, Democrats filibustered Pryor’s nomination until Republicans threatened the “nuclear option” of eliminating the filibuster altogether. Pryor is also (in-)famous for a2000 speech he gave (to the Heritage Foundation, incidentally) in which he called Miranda v. Arizona one of the two “worst examples of judicial activism.” (The other, of course, was Roe.) If you’ve ever watched a cop series on TV, you know Miranda—that’s the case that required police to tell arrestees “you have the right to remain silent.”  In Pryor’s world, those warnings wouldn’t exist. Then there’s the time in 2002 Pryor argued before the Supreme Court that cuffing a prisoner to a hitching post in the hot Alabama sun, with his hands tied over his head, was not “cruel and unusual punishment.” The Court disagreed, noting “obvious cruelty inherent in the practice.” More:

Too good to check: Sean Hannity’s tale of a Trump rescue

“The Trump campaign has confirmed to that Mr. Trump did indeed send his plane to make two trips from North Carolina to Miami, Florida to transport over 200 Gulf War Marines back home.”
— quote in article titled “200 Stranded Marines Needed A Plane Ride Home, Here’s How Donald Trump Responded,” Sean Hannity Show website, May 19, 2016 It seemed like such a sweet story — Donald Trump sending his personal plane down to Camp Lejeune, N.C., when 200 Marines were stranded after fighting in the 1991 Persian Gulf War. At least that is the story that Sean Hannity of Fox News has touted on his website for several months. But a reader, Lazer Cohen of Brooklyn, was suspicious and asked The Fact Checker to check it out. The Hannity story mostly relied on the recollections of Cpl. Ryan Stickney, who was a squad leader in a Marine Corps Reserve antitank (TOW) company that was called up for duty for the 1990-91 conflict that took place after Iraq invaded Kuwait. After five weeks of airstrikes, the United States and its allies ousted Iraqi forces in a 100-hour ground assault. The command chronology shows that 209 officers and Marines of the TOW Company (part of the 8th Tank Battalion for Operation Desert Shield) were activated on Nov. 26, 1990. The company arrived in Saudi Arabia on Dec. 22 and served through the end of March, before returning to Camp Lejeune. Stickney is listed as receiving a certificate of commendation. After a few weeks in Camp Lejeune, the part-time troops were scheduled to return to their base in Broward County. An article in the Sun-Sentinel newspaper on the April 22 homecoming reported that it had been “marred by flight delays,” forcing well-wishers to wait for hours in the sun. The article said the Marines arrived on two flights, one at noon and one after 5 p.m. “Stickney recalls being told that a mistake had been made within the logistics unit and that an aircraft wasn’t available to take the Marines home on their scheduled departure date,” reported. But then Trump supposedly came to the rescue: “The way the story was told to us was that Mr. Trump found out about it and sent the airline down to take care of us,” Stickney said. Our reader was suspicious because of the language “recalls being told.” That sounds more like a rumor than any confirmation. Moreover, take a close look at the photograph. That was not Trump’s private plane at the time. That’s a Boeing 727 jet that was part of a Trump Shuttle fleet — an airline that Trump briefly owned before it was essentially seized by the banks because he failed to make payments on his loans. It had a white fuselage. Here’s what Trump’s private plane, with a dark fuselage, looked like in 1991:  Trump’s private plane only had 24 seats, according to news reports; Trump Shuttle jets had at least 130 seats. Trump had put the Trump Shuttle up for sale on April 27, 1990, but by September couldn’t make loan payments and needed to cut a new deal with his bankers. By the time the TOW company went off to war, Trump had not paid interest on a $235 million Citibank loan for months. When the warriors returned from Saudi Arabia, the banks had made it clear they would determine how and when the shuttle was sold. Trump was in such financial straits that he had even agreed to sell his personal jet for $6.5 million in a bid to raise cash. So how did the Trump Shuttle end up helping the Marines at Camp Lejeune? Well, it turns out when Trump bought the shuttle from Eastern Airlines, he made a bad deal, accepting an additional five planes instead of a lower purchase price because the market had turned south. As the Daily Beast noted, in an entertaining account of Trump’s foray into the airline business, “the shuttle needed only 16 planes to operate a full hourly schedule at its three cities, with one or two jets as spares, and extra aircraft are anathema to an airline — they don’t make money sitting on the ground.” So some of those extra planes were contracted out to the U.S. military to ferry personnel in the United States during Operations Desert Shield/Storm in 1990-1991. Lt. Gen. Vernon J. Kondra, now retired, was in charge of all military airlift operations. He said that relying on commercial carriers freed up the military cargo aircraft for equipment transport. More:\


Despite three decades of intense speculation, the identity of “Deep Throat”—the source who leaked key details of Nixon’s Watergate cover-up to Washington Post reporters Bob Woodward and Carl Bernstein—has never been revealed. Now, at age 91, W. Mark Felt, number two at the F.B.I. in the early 70s, is finally admitting to that historic, anonymous role. In an exclusive, Vanity Fair puts a name and face to one of American democracy’s heroes.


On a sunny California morning in August 1999, Joan Felt, a busy college Spanish professor and single mother, was completing chores before leaving for class. She stopped when she heard an unexpected knock at the front door. Upon answering it, she was met by a courteous, 50-ish man, who introduced himself as a journalist from The Washington Post. He asked if he could see her father, W. Mark Felt, who lived with her in her suburban Santa Rosa home. The man said his name was Bob Woodward.

Woodward’s name did not register with Joan, and she assumed he was no different from a number of other reporters, who had called that week. This was, after all, the 25th anniversary of the resignation of President Richard Nixon, disgraced in the scandal known as Watergate, and hounded from office in 1974. The journalists had all been asking whether her father—the number-two man in the F.B.I. during the Watergate years—was “Deep Throat,” the legendary inside informant who, on the condition of anonymity, had systematically passed along clues about White House misdeeds to two young reporters. Joan figured that similar phone calls were probably being placed to a handful of other Deep Throat candidates.

These names, over the years, had become part of a parlor game among historians: Who in the top echelons of government had mustered the courage to leak secrets to the press? Who had sought to expose the Nixon administration’s conspiracy to obstruct justice through its massive campaign of political espionage and its subsequent cover-up? Who, indeed, had helped bring about the most serious constitutional crisis since the 1868 impeachment trial of Andrew Johnson—and, in the process, changed the fate of the nation? Joan was suddenly curious. Unlike the others, this reporter had come by in person. What’s more, he claimed to be a friend of her father’s. Joan excused herself and spoke to her dad. He was 86 at the time, alert though clearly diminished by the years. Joan told him about the stranger at the door and was surprised when he readily agreed to see “Bob.” She ushered him in, excused herself, and the two men talked for half an hour, Joan recalls. Then she invited them to join her for a drive to the market nearby. “Bob sat in the backseat,” she says. “I asked him about his life, his job. He said he’d been out here on the West Coast covering [Arizona senator] John McCain’s [presidential] campaign and was in Sacramento or Fresno”—four hours away—”and thought he’d stop by. He looked about my age. I thought, Gee, [he’s] attractive. Pleasant too. Too bad this guy isn’t single.” More:



Gov. Bentley’s ex-protector Wendell Ray Lewis breaks silence

Wendell Ray Lewis didn’t say much, but he spoke briefly Thursday evening, his first public comment since questions arose in 2014 about overtime pay he received while guarding the governor. I wrote about Lewis two years when he began to rack up huge amounts of overtime. Though his base salary at the time was about $80,000, Lewis was paid so much in overtime while traveling with Gov. Robert Bentley that he averaged $140,816 a year while on the detail. In four years he made $563,000. Lewis, who became head of the governor’s security detail, later left the unit and retired. Since revelations surfaced that Bentley was involved with former aide Rebekah Caldwell Mason during the time Lewis guarded the governor, he has been considered one of the keys to understanding what took place between Bentley and Mason. Alabama wanted to hear from Lewis. But he has repeatedly refused to talk publicly. Until Thursday.

Lewis said he felt he could break his silence after Rep. Allen Farley on Thursday released a recorded conversation he had with Bentley last year after the governor’s divorce. Farley, who taped the phone call, brought up the overtime pay, among other things. He told the governor he intended to ask the attorney general to investigate Bentley’s activities. More:

Lawmaker releases tape of Gov. Bentley discussing divorce, gambling

Rep. Allen Farley says he recorded a phone call last year with Gov. Robert Bentley because he’d already been burned once by the governor and didn’t trust him not to do something similar again. Now that conversation is on the internet, posted on YouTube by the political blog Yellowhammer News, and as Farley puts it, all the puzzle pieces are on the table. “Everybody in the state of Alabama deserves to see every piece of the puzzle,” Farley said Thursday. n the conversation, which took place shortly after the governor’s then-wife, Dianne Bentley, filed for divorce, Bentley denies rumors then that he was having an affair with his political advisor and he tells Farley that gambling interests are behind a campaign to discredit him, even going so far as to sabotage his marriage. It was another conversation with the governor two years earlier that caused Farley to reach for his recorder. According to Farley, he and the governor once had talked about whether prison commissioner Kim Thomas was capable of doing his job. Farley says he told the governor that the state needed someone else in charge of the prisons and that Bentley needed to find an interim commissioner in the meantime. After that conversation, another political blogger and TV show host, Bill Britt, said on his program that Farley wanted the governor to appoint him prison commissioner. Farley says that was a mischaracterization of what he told the governor, but he believes that only the governor could have given Britt that idea. So when the governor called again last year, this time Farley recorded everything that was said. Throughout the conversation Bentley assured Farley that he is not having an affair, but conspicuously he kept those denials in the present tense, often interrupting when Farley asked if there is not nor ever was an affair. Bentley said he had been working too much than that Dianne had gotten jealous. Ultimately, when she filed for divorce, he had been completely surprised. More:

Robert Bentley wants impeachment probe suspended

Gov. Robert Bentley Thursday asked the House Judiciary Committee to suspend his impeachment proceedings, arguing the charges he faces are vague and violate his due process rights…. In a motion filed with the committee, which is considering charges brought against the governor, Bentley’s attorneys argued that since under the Alabama Constitution requires officials removed from office upon impeachment – and not conviction – the charges against him should be specific to allow him to prepare his defense. The current charges say Bentley willfully neglected his duty and unlawfully used state property. His attorneys argue they do not allow him to prepare an adequate defense. “This is particularly troublesome in the context of an impeachment, where only grave crimes or other similarly egregious misconduct that have occurred during the Governor’s current term and have seriously crippled the administration of justice in all its department warrant impeachment,” the motion said.

Last spring, 23 House members signed the articles of impeachment, which stemmed from accusations that Bentley had an affair with a former adviser. The House Judiciary Committee is investigating the charges, and whether to put them before the full House for a vote. In a separate motion, Bentley asked that three members of the committee who signed the articles – Republican Reps. Mike Ball of Madison; Allen Farley of McCalla and Mike Holmes of Wetumpka – to recuse themselves from the investigation. “Due process requires the recusal of any member of this Committee who acted as accuser to Governor Bentley or otherwise evidenced personal bias against him,” the motion said. More:



Josh Moon: Sessions is perfect Trump spokesperson

Donald Trump wasn’t being serious. When the man who is the current Republican nominee for president of the United States – the most powerful and important position in the world – sort of advocated that his opponent be shot before she can pick Supreme Court justices, it was a light-hearted attempt to encourage voting. Speaking to supporters at a rally, Trump told the crowd that Hillary Clinton wants to abolish the second amendment, and if she gets to pick Supreme Court justices, “there’s nothing you can do.” And then added: “Although, the second amendment people, maybe there is, I don’t know.” A few hours later, Trump was on Twitter claiming the whole thing was a media conspiracy and that he was merely encouraging pro-second amendment people to “organize and get out the vote to save our Constitution.” That would be a believable explanation if not for one small detail: When Trump was speaking of “second amendment people” doing something about Clinton picking Supreme Court justices, he was talking about a time after the election. Honestly, you’d have to be a complete dolt to believe Trump’s explanation. Even among those who support the guy, it would take a dolt to go on TV and publicly push that explanation. And to that end, I give you Sen. Jefferson Beauregard Session III. The unofficial Trump Campaign Apologist. The Baghdad Bob of Racism. The In for a Dime, In for a Dollar Trump Super Supporter. Yes, Alabama’s contribution to the U.S. Senate – and you are all so welcome – has never met a Trump “policy” proposal or comment that he couldn’t support or bend into something that he could support. Build a wall! Something racist? Jeff Sessions is on board. Ban Muslims from entering the U.S.! Jeff Sessions is down with the anti-religious freedom movement.  The federal judge is biased because he’s Mexican! Jeff Sessions didn’t hear your question. The Muslim parents of the fallen American soldier are shills for Hillary! Jeff Sessions thinks they should thank Trump for his kind words.

Russia isn’t so bad, could probably be a great ally! Jeff Sessions has no problem with Russia. It makes no difference what Donald Trump says, Sessions has his back. Which is why, whenever one of these controversies pops up, so does Sessions – on one news channel or another to explain the pro-Trump position on the issue. And really, why wouldn’t you trust Sessions to be the voice for the most racist, intolerant, hateful and belligerent presidential campaign in U.S. history? After all, in 1986, Sessions’ appointment to a federal judgeship failed to make it out of the Senate Judiciary Committee – only the second appointment to fail in 48 years – after his history of racist comments came to light during Senate hearings. Those comments included Sessions referring to the NAACP as “un-American,” saying the KKK was “OK until I found out they smoked pot” and calling the 1965 Voting Rights Act a piece of “intrusive legislation.” And when it comes to the phoniness of the Trump campaign – a billionaire pretending to be the voice of the people and working to fix a system he helped rig – who better than the ultimate phony Republican? Sessions voted for both the Iraq and Afghanistan wars, then voted against increasing funding for an overrun and understaffed VA. He, and many of his fellow Republicans, have used the images and fears from 9-11 to get elected, and they’ve paid great lip service to honoring police and firemen, yet Sessions was one of many GOP congressmen to vote against the 9-11 First Responders bill that would have provided care to the many ailing, 9-11 first responders. Sessions voted against reauthorizing the Violence Against Women Act, voted against aid for Hurricane Sandy victims, voted against equal pay for women, voted against expanded background checks for firearms purchases, voted against adopting the UN’s Rights for Persons with Disabilities and voted for doubling student loan interest rates. I mean, a presidential candidate who is xenophobic, bigoted, racist, misogynistic, makes fun of disabled people and openly advocates assassinating a political opponent is like a Sessions dream.

So, it was no surprise that on the day after Trump’s “second amendment people” comments, there was Sessions on CNN, explaining that the comments were merely Trump trying to encourage voters.

And now you know why only Jeff Sessions believes that.

ABC Board wants my name? Number? Address? My name is ‘no’

By Carie Partain, vice president of Free the Hops, a consumer craft beer advocacy group. It is an all-volunteer, grassroots organization whose mission is to help bring the highest quality beers in the world to Alabama. It was founded in 2004 by Alabama consumers who lobbied for and succeeded in passing the Gourmet Beer Bill in 2009, the Brewery Modernization Act in 2011 and the Gourmet Bottle Bill in 2013. Free The Hops does not speak on the behalf of any tier in the brewing industry, nor individual breweries or brewpubs.

When it comes to a new proposal by the Alabama ABC Board, my name is most certainly “No.”

For the uninitiated, a Meghan Trainor hit describes a put-upon young lady telling a persistent pick-up artist that she will not share her information or time with him. In answer to his pervasive and invasive questioning, the narrator of the song responds: “My name is ‘No.’ My sign is ‘No.’ My number is ‘No.’ You need to let it go.” I was reminded of this catchy – and for many women, biographical – tune when I learned that the Alabama Alcoholic Beverage Control Board has proposed a regulation wherein craft beer lovers would be forced to share personal information with breweries and brewpubs in order to purchase beer to go. Like Ms. Trainor, my answer would be “No.” As vice president of Free the Hops, I have visited many Alabama breweries. Due to my position–and my love of craft beer–chances are high that I will visit more of them in the future. As of June 1, beer enthusiasts have the option to legally purchase packaged beer to go from Alabama breweries. Under the law, each patron may purchase up to 288 oz. per day, which is the equivalent of a case of beer. Brewers have expressed excitement about this new revenue stream, which will help in their quest to survive in the competitive world of craft beer. Beer lovers have expressed their happiness that their choices have expanded. It’s seemingly a win-win scenario that has been successful in the two-months-plus since off premise sales for breweries became legal. There’s been no downside–until now. New regulations proposed by the ABC Board would create a government-sanctioned invasion of privacy that goes far beyond pickup lines from a creepy admirer at the club. If the proposed changes go into effect, I would be required to provide breweries my name, address, phone number and date of birth in order to buy beer to take home. Even more concerning is that the ABC Board states that this information will be subject to their verification.  Does that mean they can show up on my front doorstep in order to verify I am who I am? Or raid my garage and conduct an impromptu audit of my beer fridge? I am a huge proponent of Southern hospitality, but if I wanted to share a beer with the ABC Board, I would invite them. More:

Water Board appointment is shot heard ’round political world

The Birmingham City Council fired a shot this week. Make no mistake. They lobbed a volley at the mayor, at the Alabama Legislature and at all those who see the Birmingham Water Works as an asset for anybody but the city of Birmingham. The council named William Muhammad, community activist and self-described stone-thrower, to a coveted spot on the Water Board. Muhammad replaces Mountain Brook’s Ann Florie, which is like replacing a ceiling fan with a tornado. The appointment itself blew the socks off those who have long followed politics in this town. Not just because Muhammad served time in the pen for the killing of Jimmie Lee Seawright in the 1970s. He later got a pardon and had his rights restored.

Not just because he says words out loud – and owns them — that make others feel uncomfortable.

“I’m from the field,” he said this week, speaking of his feelings after being appointed to the board. “There are field Negroes and house Negroes. I’ve been throwing rocks at the house so long I don’t know how to go inside.” “I didn’t see myself on the inside of the house.” Muhammad’s appointment was a big deal because it drew a line that has never been drawn before. His knowledge about water was not considered, because by his admission it’s not something he has studied. He’s not a banker or an engineer, not a scientist or a lawyer. He is an activist, and he was put on the Water Board to act. “I’m there to protect the interests of the city of Birmingham,” he said. That means fighting for control of the Water Works after the Alabama Legislature voted to expand the board to include suburban representatives – for the first time in history including several from outside the county. That bill limited how and when the board could raise rates, and it cut the amount of pay members can receive to $1,000 a month.

Morning Money

HILLARY HITS TRUMP’S ECON PLAN — Hillary Clinton used her economic speech in Michigan to take aim at Donald Trump’s tax plans and his business record while attempting to undercut the GOP nominee’s Rust Belt appeal by making her own pledges to stop trade deals including the TPP. Clinton said Trump has “made a career of stiffing small businesses from Atlantic City to Las Vegas.”

On taxes, Clinton hit the pass-through part of Trump’s corporate tax reform plan as well as his proposal to end the inheritance tax and reduce the top rate to 33 percent: “He would give trillions in tax cuts to big corporations, millionaires, and Wall Street money managers. That would explode our national debt … He’d pay a lower rate than millions of middle class families.”

She also sought to portray Trump’s vision of America as out-of-step with reality: “I just wish my opponent in this election saw the same Michigan I do. When Donald Trump visited Detroit on Monday, he talked only of failure, poverty, and crime. He’s missing so much.”

WEAKEST POINT: TRADE — Clinton flip-flopped on TPP during her campaign against Bernie Sanders and her criticism of the deal still sounds like the worst kind of inauthentic pandering. Where she is strong: “[T]he answer is not to rant and rave — or to cut ourselves off from the world. That would kill even more jobs. The answer is to finally make trade work for us, not against us.

Where she isn’t: “So my message to every worker in Michigan and across America is this: I will stop any trade deal that kills jobs or holds down wages — including the Trans-Pacific Partnership. I oppose it now, I’ll oppose it after the election, and I’ll oppose it as President.”

What’s missing here? Any explanation for how TPP would kill jobs and hold down wages. Perhaps Clinton’s transition from TPP as “gold standard” to TPP as unacceptable was a political necessity. But it’s still pretty pathetic to watch.

CLINTON CAMPAIGN LETS TRUMP BE TRUMP — POLITICO’s Eli Stokols: “In what was billed as a major economic policy speech .. Clinton drew a sharp contrast between her plan and … Trump’s — but she colored softly, content to do or say very little that would divert the media’s attention from her opponent. … Clinton’s criticisms of the GOP nominee were notable in their cool, clipped delivery — not dripping with animosity or the urgency of a candidate in an actual fight.

“It’s a deliberate strategy. As polls show Trump trailing by significant and widening margins in every swing state, the Democratic nominee and her team are eager to keep Clinton’s head down and allow American voters to watch Trump undercut his own economic agenda by spouting incendiary comments”

REACT — Bankrate’s Mark Hamrick: “Clinton clearly was trying to appeal to the sense of loss felt in Michigan and other areas historically reliant on manufacturing … But it is unrealistic, and even misleading, to suggest their previous manufacturing strength can be restored.”

The left loved the TPP stuff. Charles Chamberlain, Executive Director, Democracy for America: “In particular, the clear opposition … voiced to the job-killing [TPP] … is the strongest we’ve heard from her … and will undoubtedly help build the support necessary to kill this miserable trade deal … However, it’s now more important than ever that the country and President Obama hear specifically from Secretary Clinton that a vote on the job-killing TPP during a lame duck session of Congress must not happen.”

MORE CLINTON TREASURY TALK — Per a former Treasury official: “It is important to think about whether Clinton sees Warren and Sanders’ support for her Treasury Secretary pick as essential. Brainard is unlikely to be seen as any sort of give to the left.

“She was central to pushing TPP and other big trade agreements going back decades. She kept China from being labeled as a currency manipulator. And she has done nothing at the Fed to push big banks to shrink. Clinton says regulators need to be tougher on big banks. If not Fed governors, who is she talking about?”

Lew to stay on? Per MM’s mail bag: “I’ve heard rumblings about Dr. Brainard as well, but have also heard the Lew may stay on a while for continuity and one less nomination fight (esp if GOP keeps Senate)”

TRUMP ADDS MORE ECON ADVISERS — Per release: “The newest additions to our economic team include, Diane Hendricks, Darlene Jordan, Betsy McCaughey, Brooke Rollins, Carla Sands, Anthony Scaramucci, Judy Shelton, Liz Uihlein, and Kathleen Hartnett White” Bios:

MORE DONORS — POLITICO’s Shane Goldmacher: “[M]ore than half the additions have either already given Trump money or have pledged to help raise campaign cash for him and the Republican Party. One new addition, hedge fund manager Anthony Scaramucci, contributed $100,000 to Trump’s joint fundraising committee with the GOP, known as Trump Victory. Another, Carla Sands, hosted a multi-million-dollar fundraiser for Trump last month at her southern California home”

GOP TO RNC: CUT OFF TRUMP MONEY — POLITICO’s Anna Palmer: “More than 70 Republicans have signed an open letter to [RNC] Chairman Reince Priebus urging him to stop spending any money to help … Trump win in November and shift those contributions to Senate and House races. The letter comes as a number of Republican senators and high-profile GOP national security officials have come forward saying they cannot vote for Trump.

“Former Sen. Gordon Humphrey of New Hampshire and former Reps. Chris Shays of Connecticut, Tom Coleman of Missouri and Vin Weber of Minnesota are among the Republicans lending their name to the letter. Close to 20 of the co-signers are former RNC staffers”

EMAILS KEEP DOGGING CLINTON — WSJ’s Peter Nicholas and Byron Tau: “The email controversy that … Clinton hoped had died out when federal prosecutors closed their investigation last month now looks likely to shadow her campaign all the way through Election Day. Rolling releases of emails from Mrs. Clinton’s time as secretary of state, combined with her own failure to provide succinct, consistent answers on her email practices, have kept the issue simmering. ….

“The drumbeat is undercutting Mrs. Clinton’s candidacy and hindering her efforts to seize fuller control of the presidential race by painting … Trump as an unacceptable alternative. Last October, 42% of people polled said her use of a private email system while secretary of state was an ‘important factor’ in whether to vote for her, a Wall Street Journal/NBC News poll showed. A survey last month found that figure had jumped to 55%.”

TRUMP CONFRONTS LOSING — For CNBC, I looked at Trump’s comments about losing and going on a long vacation and asked the question: Does he really want to win?”

OLYMPICS BLAST — Yet more gold for Michael Phelps. But silver medal redemption for Aly Raisman and gold for the incredible Simone Biles really topped the day in Rio. What a pair of super stars. Yes MM shed a few tears when Raisman finished her floor exercise. We aren’t made of stone! Also incredible: Simone Manuel becoming the first African-American woman to win gold in an individual swimming event. What a moment. So proud. #USA

TRUMP’S TAX CUT FOR TRUMP — WP’s Jim Tankersley: “A little-noticed provision in … Trump’s tax reform plan has the potential to deliver a large tax cut to companies in the Republican presidential nominee’s vast business empire, experts say. Trump’s plan would dramatically reduce taxes on what is known in tax circles as ‘pass-through’ entities, which do not pay corporate income taxes, but whose owners are taxed at individual rates on their share of profits.

“Those entities are the most common structure for small businesses and increasingly popular for larger ones as well. They are also a cornerstone of the Trump Organization. On his 2015 presidential financial disclosure report, Trump listed holdings of more than 200 limited liability corporations, which is a form of pass-through. … [T]he provision highlights the tensions between Trump’s policy proposals and his personal financial interests. He would also benefit from his proposals to cut top income tax rates and eliminate federal taxes on inherited wealth”

GOOGLE IS THE NEW GOLDMAN (IN D.C.) — Bloomberg View’s Justin Fox: “You remember ‘Government Sachs,’ right? It’s the nickname that gained currency during the financial crisis for the Wall Street firm and its alumni, who seemed to occupy every crucial position in Washington. Well, now there’s Govergle. Or maybe it’s Googlement. Alphament, anyone? … Google/Alphabet’s annual spending on lobbying, for example, went from less than $1 million a decade ago to $16.7 million in 2015, putting it behind only Boeing and General Electric …

“But there is also a weirdly tight relationship between the company and the Obama administration. Since Obama took office in January 2009, at least 250 people have left Google and related companies for jobs in the administration or vice versa. Oh, and in 2012 Schmidt actually helped recruit the Obama campaign technology team and spent election night in the campaign ‘boiler room’ in Chicago”

NO TAX TRUMP? — NYT’s James B. Stewart: “Mitt Romney was excoriated during the 2012 presidential campaign for paying $4.9 million in federal income tax, or an average of just 14 percent of his adjusted gross income, in the two years for which he released returns. No one should be surprised, though, if Trump has paid far less — perhaps even zero federal income tax in some years. Indeed, that’s the expectation of numerous real estate and tax professionals I’ve interviewed in recent weeks.

“Even with hundreds of millions in gross revenue from his vast real estate empire, ‘it’s both possible and legal that Donald Trump would pay little or no income tax,’ said Len Green, an accountant and chairman of the Green Group, a tax and accounting advisory firm. … ‘I would expect he’s paying little or no tax,’ agreed Steven M. Rosenthal, a veteran tax lawyer and senior fellow at the Urban-Brookings Tax Policy center.”

STOCKS PARTY LIKE IT’S 1999 — WSJ’s Corrie Driebusch and Aaron Kuriloff: “A troika of stock indexes hit highs in tandem for the first time since 1999. The question is whether the party is just getting started. On Thursday, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite all rose to new highs on the same day, an alignment that hasn’t occurred since Dec. 31, 1999. …

“The Dow is up 6.8% this year, the S&P 6.9% and the Nasdaq Composite 4.4%. For some traders, the trend suggests stocks could enjoy a sudden surge. The bump could happen once investors return from summer vacations and begin taking some cash off the sidelines, they say. U.S. stock-trading volumes have been below the 2016 average in recent weeks. The consensus one-year target for the Dow Jones Industrial Average is now more than 20000”

MACY TO SHUTTER 100 STORES — NYT’s Rachel Abrams and Sapna Maheshwari: “The great American consumer is very much alive. It’s just that people aren’t shopping like they used to, reluctant to pay full price or even leave the couch … For legacy stores, the fallout from this shift has been profound, perhaps never more apparent than this week. Macy’s, the country’s largest department store, said on Thursday that it would close 100 stores, saying they were more valuable as real estate properties.

“Walmart, the world’s largest retailer, announced on Monday that it would buy a small online rival for more than $3 billion. The hope is that the deal will reverse its sputtering online growth. Other retailers have taken aggressive action, too, trying to turn their fortunes around. Billions of dollars have been poured into e-commerce efforts. Stores have turned to sharp discounting, temporarily lifting sales but hurting profits and upsetting partners. But almost always, these efforts have led to mediocre results”

BANK LAWYER FIRED OF FANNIE MAE RELATIONSHIP — FT’s Ben McLannahan: “The largest bank in Ohio fired its top lawyer last month after she said she was in a romantic relationship with the chief executive of Fannie Mae, the government-backed mortgage company — who has been allowed to keep his job. The case highlights differing views of the best way to handle relationships between executives at connected companies.

“Like many banks in the US, Cincinnati-based Fifth Third Bancorp has a big business supplying Fannie Mae and its sibling company, Freddie Mac, with mortgages that are later bundled into securities guaranteed by the government. When Timothy Mayopoulos, chief executive of Fannie Mae, told an internal office of compliance and ethics in March that he was in a relationship with Heather Russell, former chief legal officer at Fifth Third, his employer had no problem with it … But Fifth Third considered the relationship represented ‘a conflict of interest’”

CHINA FALTERS — Bloomberg: “China’s recent economic stabilization faltered in July as factory output, retail sales and investment all slowed. Industrial production rose 6 percent from a year earlier in July, the National Bureau of Statistics said Friday. Retail sales climbed 10.2 percent last month, while fixed-asset investment increased 8.1 percent in the first seven months of the year. All three readings missed economists estimates.

“Bloomberg’s monthly gross domestic product tracker slipped to 6.94 percent in July, from 7.13 percent a month earlier. The slowdown sharpens the dilemma facing the nation’s policy makers — boost growth with cheap credit that risks undermining financial stability, or curb debt expansion even if that slows the economy.”

Mohamed A. El-Erian on Bloomberg View on the coming retirement crisis: “With interest rates extremely low and the prices of stocks and bonds at historic highs, finding safe investments that can help guarantee a comfortable retirement has become increasingly difficult.

“This has put the managers of pension funds and other institutions that invest on behalf of future retirees in a difficult position, driving them to take ever greater risks in hopes of meeting their performance objectives — targets that are unlikely to be met absent a major revamp of economic policies and corporate prospects. As a result, individuals are increasingly being exposed to the threat of losses that can not be recouped quickly”

TIME FOR BETTER ONLINE LENDING DISCLOSURE — Brayden McCarthy in an American Banker op-ed: “Since 2000, the so-called Schumer box has been to credit cards what nutrition labels are to food. Instead of listing calorie and carbohydrate counts, the summary table requires disclosure of basic numbers like the interest rate and annual fee at the top of credit card solicitations. … Yet when that same consumer applies for a small-business loan, he or she is left in the dark.”

POTUS Events

The President and family are vacationing in Martha’s Vineyard.

Floor Action

Capitol Hill gets moving again in 25 days.

The House will not return until Sept. 6, according to the calendar. The House will then be in session until Sept. 30, and adjourn until Nov. 14, after the elections.

The Senate is running on a similar summer schedule, with its recess formally running from July 18 through Sept. 5. Senators are scheduled to be in session during the fall a bit longer than the House, with the Senate’s target pre-election adjournment date set for Oct. 7. The chamber will also return Nov. 14 after the elections.

For the entire year, the House is scheduled to be in session for 111 days.