How COVID Forbearance Gave Banks A Three Trillion Dollar Boost

How COVID Forbearance Gave Banks A Three Trillion Dollar Boost

Tyler Durden

Wed, 11/04/2020 – 15:24

By Nick Dunbar of Risky Finance

If there was one thing that regulators were sure about at the start of the pandemic, it was that it would not become a bank story. Crisis yes, maybe even a touch of market turmoil for a few weeks in March, but never something that would embroil the world’s mightiest financial institutions, the way that subprime mortgages embroiled them 12 years before.

So starting in March, a series of emergency measures were rolled out that temporarily eliminated or blunted restrictions on bank balance sheets, along with ramped up support for financial markets that in the US at least, was unprecedented. Risky Finance joined forces with Washington DC-based advocacy group Americans for Financial Reform to analyze some of the impact on the six biggest US banks.

Our research showed that the key limiting constraint this year for the banks has been the supplementary leverage ratio (SLR), part of the 2012 Dodd-Frank Act that harmonised US bank regulation with global Basel rules. The Federal Reserve sets the regulatory minimum SLR at 5%. At the end of June, the top six banks had an average SLR of 7%, comfortably far from the minimum.

However, without three critical forbearance measures, some banks such as Citigroup or Goldman Sachs would have been just 30 basis points away from the minimum, which would prompted the Fed to restrict their trading and lending activity.

Some of the forbearance measures increased the numerator of the ratio, the Tier 1 capital of the bank, while another reduced the denominator, the leverage exposure measure. But if we imagine the effect to have been purely in the denominator, then it would be equivalent to reducing the regulatory balance sheets of the six banks by almost $3 trillion.

Now that’s not such a bad thing, you might say, if it allowed the banks to keep lending and trading in the face of a pandemic which so far has killed 1.2 million people globally.

The biggest forbearance measure was a move by the Fed in May to exclude treasury bonds and central bank deposits from the leverage exposure measure. That wiped $2 trillion off the SLR denominator, including $619 billion at JP Morgan alone.

That followed the Fed’s move in March to allow US banks to delay the impact of IFRS 9 current expected credit loss estimates on their CET1 capital. Even though the six banks have collectively increased CECL by $58 billion this year, a resulting $20 billion reduction in their CET1 has been postponed as a result of the Fed’s decision.

Perhaps more controversial though, is what was not a direct easing of capital requirements. The underpinning of markets, in particular the Fed’s buying of $3.5 trillion of bonds, including corporate bonds, had the effect of compressing credit spreads and suppressing volatility. That allowed banks to make outsized trading revenues, which we can see in the chart below.

In our joint study with AFR, we compared this year’s revenues to the average for the previous, pre-pandemic period. In the absence of regulatory intervention, the banks might suffer trading losses. If emergency action by central banks normalized the markets, you might expect the banks’ trading revenues to be at a ‘normal’ level too.

Screenshot of interactive data visualisation available to subscribers

That’s not what happened though. Led by JP Morgan and Goldman Sachs, the six banks collectively made $19 billion of revenues in excess of this average in the first three quarters of 2020. That wasn’t all. Buoyed by Fed support of the market, by the middle of the year the banks were able to offload corporate loan exposure that otherwise would have stayed on their balance sheets.

This appeared as a bonanza in investment banking revenues, which exceeded the average by $4 billion over the same period. Combined with trading income, this amounts to $23 billion of excess revenues, which directly flows into capital as retained earnings, and can then be used to bolster share buybacks, dividends and bonus payouts.

In hindsight, was it worth it? Having a full-blown financial crisis during the pandemic was best avoided. However, Dodd-Frank and other post-Lehman financial reforms were intended to insulate banks from another crisis. If the position of the banks was so weak going into the pandemic that $3 trillion of support (direct and indirect) was needed to protect them, we can surely ask the question: Should capital requirements on banks go further?

That’s a question that deserves to be in the inbox of the next US president.

via ZeroHedge News https://ift.tt/36aYC5Y Tyler Durden

A Big Night for Drug Legalization

Marijuana2
A cannabis plant.

 

Yesterday was a big step forward for drug legalization, as voters in four states approved referendum initiatives to legalize recreational marijuana. That includes Arizona, New Jersey, Montana, and South Dakota. Mississippi voters approved more limited initiatives legalizing medical marijuana. All but the South Dakota measure passed by large double-digit margins, and even in South Dakota legalization prevailed by a solid 6-7 points. It’s particularly notable that legalization prevailed so easily in deep-red Montana and South Dakota, and in the red/trending purple state of Arizona.

Yesterday’s victories build on previous successes for marijuana legalization over the last several election cycles, including in 2018. Once the New Jersey state legislature passes implementing legislation for Question 1, there will be a total of 1t states where recreational marijuana is legal (plus the District of Columbia), covering one-third of the American population.

The state of Oregon went further by becoming the first state to decriminalize noncommercial possession of virtually all previously illegal drugs. Measure 110 also passed by a large margin (58-41). Decriminalization is not the same thing as full legalization. Still, it is a major step forward. If it catches on in other states, it could mark the beginning of the end of the entire War on Drugs, which severely undermines liberty, threatens our constitutional rights, and greatly harms the poor and minorities.

Marijuana possession, of course, still remains illegal under federal law. But that law is increasingly difficult to enforce without state cooperation. Moreover, the growing momentum for legalization might finally persuade Congress and whoever ultimately wins the presidential election to repeal federal prohibition.

In the meantime, those interested in these issues should consult co-blogger Jonathan Adler’s excellent new book, Marijuana Federalism. As Jonathan and other contributors to that volume show, legalization at the state level has had a significant impact, even though it has not—yet—led to the total end of the War on Weed.

 

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Can Donald Trump Really Be This Clueless About How Elections Work?

Trump-election-night-speech-2020-YouTube-2

Donald Trump’s angry, rambling, incoherent, and boastful Election Night speech presents a familiar puzzle: Does the president sincerely believe the weird stuff he says, or is it all part of a clever populist strategy? The distinction should matter to journalists, because it is the difference between a lie and a delusion. By “delusion” I do not mean to imply a psychiatric diagnosis—just the common human tendency to believe things that are not true when they fit one’s self-image or preexisting opinions.

While everyone is prone to that temptation, Trump rarely seems to resist it. If a state’s early election returns show him behind but he eventually wins, as happened in Florida last night, it is only because it took time for voters’ love of him to be revealed. But when Trump has an initial advantage that disappears as more votes are counted, he concludes that “a fraud” has been perpetrated on “the American public.”

For Trump, the ordinary ups and downs of Election Night are immediate cause for suspicion, except when they favor him. “We were getting ready for a big celebration, we were winning everything, and all of a sudden, it was just called off,” he said. “We won states. And all of a sudden I said, ‘What happened to the election? It’s off.’ And we have all these announcers saying, ‘What happened?’ And then they said, ‘Oh.'”

Trump’s explanation: “You know what happened? They knew they couldn’t win, so they said, ‘Let’s go to court.'”

As is frequently the case with Trump, it is not exactly clear what he was talking about. But it seems he was referring to Democrats’ support for expanding mail-in voting, which Trump has been attacking as inherently fraudulent (except in Florida!) for months. “I’ve been saying this from the day I heard they were going to send out tens of millions of ballots,” he said. “Either they were going to win, or if they didn’t win, they’ll take us to court.”

When Democrats challenge voting procedures, in Trump’s view, they are trying to “disenfranchise” his supporters. When Republicans challenge voting procedures, they are trying to protect the integrity of the electoral process, even when they are seeking to invalidate ballots that people cast in good faith based on the rules announced by government officials.

Likewise, when Democrats “go to court,” it is only because they know “they couldn’t win” otherwise. When Republicans go to court, as Trump said he will do if the election does not turn out the way he wants, they are preserving democracy.

This kind of partisan hypocrisy goes both ways. Both major parties can be expected to scramble for whatever advantage they can get, while impugning the other side’s motives and presenting their own as purely in the public interest. But Trump elevates that tradition to a new level: He routinely and recklessly accuses Democrats of criminal activity as well as sneaky legal maneuvers.

“We did win this election,” Trump declared. “So our goal now is to ensure the integrity for the good of this nation. This is a very big moment. This is a major fraud in our nation. We want the law to be used in a proper manner. So we’ll be going to the U.S. Supreme Court. We want all voting to stop.”

At that point, of course, voting had stopped. It was the counting that continued, which is how elections work. If the delay in declaring a winner is longer than usual this year, “a major fraud” is hardly the most parsimonious explanation, given the closeness of the race,  historically high voter turnout, and a surge in mail-in voting during the COVID-19 pandemic—factors that were expected to lengthen the wait.

“We don’t want them to find any ballots at four o’clock in the morning and add them to the list,” Trump said. “OK? It’s a very sad moment. To me this is a very sad moment, and we will win this. And as far as I’m concerned, we already have won it.”

Trump continued that theme on Twitter this morning: “Last night I was leading, often solidly, in many key States, in almost all instances Democrat run & controlled. Then, one by one, they started to magically disappear as surprise ballot dumps were counted. VERY STRANGE, and the ‘pollsters’ got it completely & historically wrong!”

Twitter attached a warning to that post: “Some or all of the content shared in this Tweet is disputed and might be misleading about an election or other civic process.” But even without the company’s pious pronouncement, any mildly skeptical person would recognize that Trump’s conspiracy theory has no basis in fact.

Last night, for example, Trump claimed “we won” in Michigan because he was ahead of Joe Biden by “107,000 votes” with 81 percent of ballots counted. But that still left hundreds of thousands of ballots that could shift the advantage to Biden. Likewise in Pennsylvania, where Trump claimed “we’re winning” by “a tremendous amount.”

As I write, Trump is ahead by more than 460,000 votes in Pennsylvania, but more than a third of the ballots have yet to be counted. If mail-in ballots favor Biden—a partisan tilt fostered by Trump’s unfounded scaremongering about this voting method—Biden could still end up winning the state’s electoral votes.

Biden is beating Trump by just 45,000 votes in Michigan, with more than 200,000 ballots left to be counted. Would Biden be justified in demanding that the count stop now, while he is ahead?

“They are finding Biden votes all over the place—in Pennsylvania, Wisconsin, and Michigan,” Trump complained today. “So bad for our Country!” To which Rep. Justin Amash (L–Mich.) dryly replied: “It’s called an election.”

So we come back to the question we started with: Can Trump really be this clueless? After nearly four years of this president’s self-flattering nonsense, I am beginning to suspect the answer is yes.

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A Big Night for Drug Legalization

Marijuana2
A cannabis plant.

 

Yesterday was a big step forward for drug legalization, as voters in four states approved referendum initiatives to legalize recreational marijuana. That includes Arizona, New Jersey, Montana, and South Dakota. Mississippi voters approved more limited initiatives legalizing medical marijuana. All but the South Dakota measure passed by large double-digit margins, and even in South Dakota legalization prevailed by a solid 6-7 points. It’s particularly notable that legalization prevailed so easily in deep-red Montana and South Dakota, and in the red/trending purple state of Arizona.

Yesterday’s victories build on previous successes for marijuana legalization over the last several election cycles, including in 2018. Once the New Jersey state legislature passes implementing legislation for Question 1, there will be a total of 1t states where recreational marijuana is legal (plus the District of Columbia), covering one-third of the American population.

The state of Oregon went further by becoming the first state to decriminalize noncommercial possession of virtually all previously illegal drugs. Measure 110 also passed by a large margin (58-41). Decriminalization is not the same thing as full legalization. Still, it is a major step forward. If it catches on in other states, it could mark the beginning of the end of the entire War on Drugs, which severely undermines liberty, threatens our constitutional rights, and greatly harms the poor and minorities.

Marijuana possession, of course, still remains illegal under federal law. But that law is increasingly difficult to enforce without state cooperation. Moreover, the growing momentum for legalization might finally persuade Congress and whoever ultimately wins the presidential election to repeal federal prohibition.

In the meantime, those interested in these issues should consult co-blogger Jonathan Adler’s excellent new book, Marijuana Federalism. As Jonathan and other contributors to that volume show, legalization at the state level has had a significant impact, even though it has not—yet—led to the total end of the War on Weed.

 

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Can Donald Trump Really Be This Clueless About How Elections Work?

Trump-election-night-speech-2020-YouTube-2

Donald Trump’s angry, rambling, incoherent, and boastful Election Night speech presents a familiar puzzle: Does the president sincerely believe the weird stuff he says, or is it all part of a clever populist strategy? The distinction should matter to journalists, because it is the difference between a lie and a delusion. By “delusion” I do not mean to imply a psychiatric diagnosis—just the common human tendency to believe things that are not true when they fit one’s self-image or preexisting opinions.

While everyone is prone to that temptation, Trump rarely seems to resist it. If a state’s early election returns show him behind but he eventually wins, as happened in Florida last night, it is only because it took time for voters’ love of him to be revealed. But when Trump has an initial advantage that disappears as more votes are counted, he concludes that “a fraud” has been perpetrated on “the American public.”

For Trump, the ordinary ups and downs of Election Night are immediate cause for suspicion, except when they favor him. “We were getting ready for a big celebration, we were winning everything, and all of a sudden, it was just called off,” he said. “We won states. And all of a sudden I said, ‘What happened to the election? It’s off.’ And we have all these announcers saying, ‘What happened?’ And then they said, ‘Oh.'”

Trump’s explanation: “You know what happened? They knew they couldn’t win, so they said, ‘Let’s go to court.'”

As is frequently the case with Trump, it is not exactly clear what he was talking about. But it seems he was referring to Democrats’ support for expanding mail-in voting, which Trump has been attacking as inherently fraudulent (except in Florida!) for months. “I’ve been saying this from the day I heard they were going to send out tens of millions of ballots,” he said. “Either they were going to win, or if they didn’t win, they’ll take us to court.”

When Democrats challenge voting procedures, in Trump’s view, they are trying to “disenfranchise” his supporters. When Republicans challenge voting procedures, they are trying to protect the integrity of the electoral process, even when they are seeking to invalidate ballots that people cast in good faith based on the rules announced by government officials.

Likewise, when Democrats “go to court,” it is only because they know “they couldn’t win” otherwise. When Republicans go to court, as Trump said he will do if the election does not turn out the way he wants, they are preserving democracy.

This kind of partisan hypocrisy goes both ways. Both major parties can be expected to scramble for whatever advantage they can get, while impugning the other side’s motives and presenting their own as purely in the public interest. But Trump elevates that tradition to a new level: He routinely and recklessly accuses Democrats of criminal activity as well as sneaky legal maneuvers.

“We did win this election,” Trump declared. “So our goal now is to ensure the integrity for the good of this nation. This is a very big moment. This is a major fraud in our nation. We want the law to be used in a proper manner. So we’ll be going to the U.S. Supreme Court. We want all voting to stop.”

At that point, of course, voting had stopped. It was the counting that continued, which is how elections work. If the delay in declaring a winner is longer than usual this year, “a major fraud” is hardly the most parsimonious explanation, given the closeness of the race,  historically high voter turnout, and a surge in mail-in voting during the COVID-19 pandemic—factors that were expected to lengthen the wait.

“We don’t want them to find any ballots at four o’clock in the morning and add them to the list,” Trump said. “OK? It’s a very sad moment. To me this is a very sad moment, and we will win this. And as far as I’m concerned, we already have won it.”

Trump continued that theme on Twitter this morning: “Last night I was leading, often solidly, in many key States, in almost all instances Democrat run & controlled. Then, one by one, they started to magically disappear as surprise ballot dumps were counted. VERY STRANGE, and the ‘pollsters’ got it completely & historically wrong!”

Twitter attached a warning to that post: “Some or all of the content shared in this Tweet is disputed and might be misleading about an election or other civic process.” But even without the company’s pious pronouncement, any mildly skeptical person would recognize that Trump’s conspiracy theory has no basis in fact.

Last night, for example, Trump claimed “we won” in Michigan because he was ahead of Joe Biden by “107,000 votes” with 81 percent of ballots counted. But that still left hundreds of thousands of ballots that could shift the advantage to Biden. Likewise in Pennsylvania, where Trump claimed “we’re winning” by “a tremendous amount.”

As I write, Trump is ahead by more than 460,000 votes in Pennsylvania, but more than a third of the ballots have yet to be counted. If mail-in ballots favor Biden—a partisan tilt fostered by Trump’s unfounded scaremongering about this voting method—Biden could still end up winning the state’s electoral votes.

Biden is beating Trump by just 45,000 votes in Michigan, with more than 200,000 ballots left to be counted. Would Biden be justified in demanding that the count stop now, while he is ahead?

“They are finding Biden votes all over the place—in Pennsylvania, Wisconsin, and Michigan,” Trump complained today. “So bad for our Country!” To which Rep. Justin Amash (L–Mich.) dryly replied: “It’s called an election.”

So we come back to the question we started with: Can Trump really be this clueless? After nearly four years of this president’s self-flattering nonsense, I am beginning to suspect the answer is yes.

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With Ant Crackdown, Beijing Puts China’s Richest Man Squarely In Its Sights

With Ant Crackdown, Beijing Puts China’s Richest Man Squarely In Its Sights

Tyler Durden

Wed, 11/04/2020 – 14:45

For years, entrepreneur Jack Ma’s spectacular rise to multi-billion wealth and global fame was cited as a sterling example of how China’s transformation to a capitalist society (with Chinese characteristics) could actually work: after all, if a simple teacher could launch the Alibaba empire and accumulate $64 billion in wealth, making him China’s richest man (and #17 in Forbes global listing of billionaires) anyone could do it. All that was torpedoed over the past 48 hours when the snarling communist tiger hiding just behind the scenes, emerged demonstrating vividly that in China, winners and losers come and go with a simple thumbs up – or down – by the Politburo.

Because with the shocking and unprecedented pulling of the Ant Financial IPO, which was supposed to break for trading on Thursday in what would have been the world’s biggest Initial Public Offering, Beijing made it clear that it would no longer tolerate the criticism of the notoriously outspoken Ma. And to make sure his life is miserable from this point on, the suspension of his IPO is just the beginning of a renewed campaign by China to rein in the fintech empire controlled by Jack Ma.

According to Bloomberg, just one day after the world was rocked by the sudden pulling of the dual-listed public offering, Chinese authorities are now setting their sights on Ant’s biggest source of revenue: its credit platforms that funnel loans from banks and other financial institutions to millions of consumers across China, according to people familiar with the matter.

In a direct attempt to cripple Ant’s business model, and ultimately dismantle China’s fintech quasi-monopoly, the China Banking and Insurance Regulatory Commission plans to discourage lenders from using Ant’s platforms and has already asked some to ensure their portfolios are compliant with stringent draft regulations announced on Monday, said Bloomberg sources.

The proposed measures, which in theory could be ascribed to a broader deleveraging campaign which recently hammered such massively indebted property developers as China Evergrande (discussed in “China Crackdown On Property Developer Debt Sparks Fears About Systemic Crisis“), call for platform operators to provide at least 30% of the funding for loans, which would render many of Ant’s existing transactions non-compliant and force the company to raise much more capital. The company currently keeps about 2% of loans on its own balance sheet, with the rest funded by third parties or packaged as securities and sold on.

“From the perspective of regulators and investors, they all need Ant to provide a better disclosure on the co-lending business,” Chen Shujin, head of China financial research at Jefferies told Bloomberg. “Ant needs to be aligned with regulations going forward and show that its business model can help lower borrowing costs for the economy rather than raising them with some kind of monopoly.”

But what prompted Beijing’s ire? After all, the IPO was set to be a smashing success as early as Monday when Ant shares were trading as much as 50% higher in the gray market?

As we reported yesterday, Beijing erupted after Ma blasted the nation’s financial system and questioned global regulatory models at a high-profile conference last month, calling banks “pawn shops” saying that China is still a “youth” and needs more innovation to build an ecosystem for the healthy development of the local industry.

And while China is willing to accept foreign criticism of its Ponzi-like financial system, which at $40 trillion is twice as large as that of the US, it has a strict no tolerance policy to domestic criticism: following his remarks, Ma was summoned to a “meeting” in Beijing, to outline an array of concerns and new regulations. At that point, China also abruptly halted Ant’s IPO, with authorities merely saying the offering couldn’t go ahead because of a “significant change” in the regulatory environment. They did not elaborate.

In a commentary published in the official Economic Daily, Beijing “explained” that regulators have decided to postpone Ant’s listing as further investigation into the company “has revealed some problems” adding that the decision was made for the sake of protecting the interests of financial consumers and investors. Noting that Ant Group’s IPO has won the attention of the entire nation and pertains to the interests of millions of investors, the op-ed said that the delay was intended to maintain the long-term healthy development of the capital market.

Most ominously, the authors said that “this incident sends a signal that there are no exceptions when it comes to respecting the rules of the market” and that “companies must abide by the rules under the registration-based IPO reform.”

Which, of course, is laughable because in China there is no market except whatever the PBOC and Beijing agree to; it’s why China’s National Team is so active in the stock market, to prevent another 2015-style crash. However, as with the case of Evergrande, the Ant incident shows that a company with a valuation of nearly half a trillion dollars can be crippled overnight and effectively nationalized, if Beijing finds anything about the company or its owner disagreeable.

And speaking of the backlash against Ant, any funding curbs imposed by Beijing would deal a major blow to China’s fintech giant, whose biggest business now is online lending. The company has underwritten about 1.7 trillion yuan ($253 billion) in consumer loans and 422 billion yuan in small business loans for about 100 banks and other financial institutions Revenue from its CreditTech unit jumped 59% to 29 billion yuan in the first six months of the year, accounting for 40% of the total.

According to Bloomberg, Ant also helped provide small unsecured loans to about 500 million people over the past year through two platforms: Huabei (Just Spend) and Jiebei (Just Lend). The former focuses on quick consumer loans for small purchases, while the latter finances everything from travel to education. Ant typically charges annualized interest rates of about 15% to consumers, well above prevailing rates. Its more than 20 million small business borrowers pay an average lending rate of about 11%, almost double the average 5.94% small borrowers can get from banks.

Hinting that Ant was engaging in usurious practices, Guo Wuping, head of consumer protection at the CBIRC, said in a commentary on Monday that Ant’s Huabei service was similar to a credit card but with higher charges. “Financial technology firms use their market power to set exorbitant fees in partnerships with banks, which provide most of the funds required”, he said. To comply with the CBIRC’s draft rules, Ant would have to set aside 95 billion yuan in capital or 2.7 times the current capital for its two micro-lending arms, according to estimates from Jefferies.

Ultimately, the full scope of China’s plans for Ant are unclear, and it’s possible that lenders will continue to work with the company once it complies with regulators’ requests. Any suggestion that banks would stop using its platforms is “unsubstantiated,” Ant said in a response to questions from Bloomberg. “Ant will continue to support bank partners to make independent credit decisions and leverage Ant’s technology platforms to serve consumers and small businesses.”

That is what they call “spin” – the reality is that Beijing has made it clear to Jack Ma that he is now in their sights, and after allowing him to become stupendously wealthy, China is essentially sending him a warning to keep his mouth shut, not criticize the world’s most rickety financial system, or much more pain is yet to come.

via ZeroHedge News https://ift.tt/3mTscU0 Tyler Durden

Supreme Court Hears Arguments Over Whether Religious Agencies Can Reject Gay Foster Parents

ACB_1161x653

The Supreme Court this morning spent two hours debating whether the city of Philadelphia can decline to contract with a Catholic organization to place foster children with families if that organization holds religious objections to allowing same-sex couples to participate.

The complicated case pits the general application of discrimination laws against the boundaries of religious liberty. Based on the lines of questioning today, it’s not entirely clear where the Court’s justices will fall.

The case, Fulton v. Philadelphia, revolves around Catholic Social Services (CSS), which contracts with the city to provide a number of child welfare services. Because of religious objections to same-sex marriage recognition, it does not want to screen or certify gay couples as potential foster families and does not place children with them. This violates Philadelphia’s anti-discrimination laws, and in 2018, the city stopped contracting CSS for this service, though to this date apparently no gay couples have actually come to CSS looking to foster kids.

CSS and foster parents connected to CSS have sued for discrimination, claiming that they are exercising their right to religious expression and demanding that Philadelphia restore the contract. The City of Philadelphia argues that this is not a case of religious discrimination—the rules are being applied neutrally and without animosity toward CSS’s religious beliefs. The city’s lawyers point out that CSS is still getting $26 million in annual funding from Philadelphia for the child services they provide. They’ve only cut off the placement contract.

The questioning today probed many different areas about the business relationship between CSS and Philadelphia. Several justices (including newly seated Justice Amy Coney Barrett) questioned whether CSS was a contractor with the city (giving the city more power to set guidelines) or a licensed private partner who provided a service to the city.

That may seem like a strange place to take the discussion, but the reason became clear in Barrett’s line of questioning toward Neal Katyal, the attorney for Philadelphia. The city controls who is permitted to participate in this process of certifying foster parents, which led Barrett to hypothesize a situation where the government takes control of all hospitals but then contracts out with private parties to operate the hospitals. Could the state then say, “You can get exemptions from some medical procedures, but every hospital must perform abortions?”

Katyal’s response was that a government takeover of all hospitals would raise any number of constitutional issues and couldn’t really address the hypothetical. He did attempt to reject the characterization of a city-run foster parent monopoly by arguing that this case involves only those children who are wards of the state. For those children, the government has a compelling interest in establishing and enforcing neutral guidelines about who qualifies as appropriate parents, including same-sex couples.

Much was made of the fact that CSS’s refusal to accommodate same-sex couples does not actually stop these couples from becoming foster parents. CSS is just one of 30 agencies working with foster children in Philadelphia and nobody could find any examples of same-sex parents in Philadelphia being unable to actually become foster parents.

But the city’s attorneys argued that if Philadelphia allowed CSS to cite religious belief for an exemption from its anti-discrimination law, then there could potentially be a domino effect of religious organizations seeking exemptions to discriminate for a whole host of reasons, including the possibility that they’d turn away couples of different faiths. The justices and the lawyers all seemed to agree that the Supreme Court would reject any attempt to use religion as an excuse to deny adoption opportunities to interracial couples. But now the court must contend with real religious conflicts raised by recent Supreme Court decisions mandating same-sex marriage recognition and forbidding workplace discrimination against gay and trans people, and several justices noted back in those rulings this conflict was coming. How do these sincerely held religious convictions intersect with government contract rules?

Justices Samuel Alito and Brett Kavanaugh were both most vocally on CSS’s side. Alito said this dispute stems from Philadelphia not being able to “stand the message that the Archdiocese and CSS are sending” by not wanting to work with same-sex couples. Kavanaugh accused the city of “looking for a fight” and failing to consider a balance between religious rights and same-sex marriage rights with the way they’re enforcing the anti-discrimination law. Katyal resisted this characterization, noting that they had won in the lower courts and that the attorneys representing CSS are forcing the fight.

Toward the end of oral arguments, Justice Sonia Sotomayor asked attorney Jeff Fisher, who was representing nonprofits who agree with the city’s position, if there was a possible compromise here—a strong suggestion the justices really don’t want to establish a big precedent, given the complicated nature of this case and foster care and the different policies that come into play when screening parents versus matching children to homes. Fisher noted that the city was not asking the CSS to endorse same-sex marriage when it certifies that a same-sex couple meets the city’s standards for becoming foster parents and can include a disclaimer as such.

Lori Windham, representing CSS and foster parent Sharonell Fulton on behalf of the Becket Fund for Religious Liberty, is pushing the Supreme Court to reconsider the 1990 precedent Employment Division v. Smith, which held that the government is generally not violating a person’s free exercise clause by enforcing laws as long as such laws are neutrally applied.

While the Smith decision, written by Justice Antonin Scalia, was discussed throughout today’s hearing, there didn’t really seem to be a lot of interest in going so far as to reverse the ruling. It is, however, clear that several justices, including Barrett, are concerned that this case could end up having wider implications for religious liberty regardless of which way they rule. That suggests the possibility of a very specific, narrow ruling and not some new precedent.

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Supreme Court Hears Arguments Over Whether Religious Agencies Can Reject Gay Foster Parents

ACB_1161x653

The Supreme Court this morning spent two hours debating whether the city of Philadelphia can decline to contract with a Catholic organization to place foster children with families if that organization holds religious objections to allowing same-sex couples to participate.

The complicated case pits the general application of discrimination laws against the boundaries of religious liberty. Based on the lines of questioning today, it’s not entirely clear where the Court’s justices will fall.

The case, Fulton v. Philadelphia, revolves around Catholic Social Services (CSS), which contracts with the city to provide a number of child welfare services. Because of religious objections to same-sex marriage recognition, it does not want to screen or certify gay couples as potential foster families and does not place children with them. This violates Philadelphia’s anti-discrimination laws, and in 2018, the city stopped contracting CSS for this service, though to this date apparently no gay couples have actually come to CSS looking to foster kids.

CSS and foster parents connected to CSS have sued for discrimination, claiming that they are exercising their right to religious expression and demanding that Philadelphia restore the contract. The City of Philadelphia argues that this is not a case of religious discrimination—the rules are being applied neutrally and without animosity toward CSS’s religious beliefs. The city’s lawyers point out that CSS is still getting $26 million in annual funding from Philadelphia for the child services they provide. They’ve only cut off the placement contract.

The questioning today probed many different areas about the business relationship between CSS and Philadelphia. Several justices (including newly seated Justice Amy Coney Barrett) questioned whether CSS was a contractor with the city (giving the city more power to set guidelines) or a licensed private partner who provided a service to the city.

That may seem like a strange place to take the discussion, but the reason became clear in Barrett’s line of questioning toward Neal Katyal, the attorney for Philadelphia. The city controls who is permitted to participate in this process of certifying foster parents, which led Barrett to hypothesize a situation where the government takes control of all hospitals but then contracts out with private parties to operate the hospitals. Could the state then say, “You can get exemptions from some medical procedures, but every hospital must perform abortions?”

Katyal’s response was that a government takeover of all hospitals would raise any number of constitutional issues and couldn’t really address the hypothetical. He did attempt to reject the characterization of a city-run foster parent monopoly by arguing that this case involves only those children who are wards of the state. For those children, the government has a compelling interest in establishing and enforcing neutral guidelines about who qualifies as appropriate parents, including same-sex couples.

Much was made of the fact that CSS’s refusal to accommodate same-sex couples does not actually stop these couples from becoming foster parents. CSS is just one of 30 agencies working with foster children in Philadelphia and nobody could find any examples of same-sex parents in Philadelphia being unable to actually become foster parents.

But the city’s attorneys argued that if Philadelphia allowed CSS to cite religious belief for an exemption from its anti-discrimination law, then there could potentially be a domino effect of religious organizations seeking exemptions to discriminate for a whole host of reasons, including the possibility that they’d turn away couples of different faiths. The justices and the lawyers all seemed to agree that the Supreme Court would reject any attempt to use religion as an excuse to deny adoption opportunities to interracial couples. But now the court must contend with real religious conflicts raised by recent Supreme Court decisions mandating same-sex marriage recognition and forbidding workplace discrimination against gay and trans people, and several justices noted back in those rulings this conflict was coming. How do these sincerely held religious convictions intersect with government contract rules?

Justices Samuel Alito and Brett Kavanaugh were both most vocally on CSS’s side. Alito said this dispute stems from Philadelphia not being able to “stand the message that the Archdiocese and CSS are sending” by not wanting to work with same-sex couples. Kavanaugh accused the city of “looking for a fight” and failing to consider a balance between religious rights and same-sex marriage rights with the way they’re enforcing the anti-discrimination law. Katyal resisted this characterization, noting that they had won in the lower courts and that the attorneys representing CSS are forcing the fight.

Toward the end of oral arguments, Justice Sonia Sotomayor asked attorney Jeff Fisher, who was representing nonprofits who agree with the city’s position, if there was a possible compromise here—a strong suggestion the justices really don’t want to establish a big precedent, given the complicated nature of this case and foster care and the different policies that come into play when screening parents versus matching children to homes. Fisher noted that the city was not asking the CSS to endorse same-sex marriage when it certifies that a same-sex couple meets the city’s standards for becoming foster parents and can include a disclaimer as such.

Lori Windham, representing CSS and foster parent Sharonell Fulton on behalf of the Becket Fund for Religious Liberty, is pushing the Supreme Court to reconsider the 1990 precedent Employment Division v. Smith, which held that the government is generally not violating a person’s free exercise clause by enforcing laws as long as such laws are neutrally applied.

While the Smith decision, written by Justice Antonin Scalia, was discussed throughout today’s hearing, there didn’t really seem to be a lot of interest in going so far as to reverse the ruling. It is, however, clear that several justices, including Barrett, are concerned that this case could end up having wider implications for religious liberty regardless of which way they rule. That suggests the possibility of a very specific, narrow ruling and not some new precedent.

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Bitcoin Tops $14k As Billion-Dollar ‘Silk Road’ Wallet Moves For First Time Since 2015

Bitcoin Tops $14k As Billion-Dollar ‘Silk Road’ Wallet Moves For First Time Since 2015

Tyler Durden

Wed, 11/04/2020 – 14:25

After a tempestuous 24 hours, Bitcoin prices are back above $14,000 this afternoon, officially trading for 100 straight days above $10,000…

Source: Bloomberg

This move comes as CoinTelegraph’s Turner Wright notes that CipherTrace speculated that the anonymous user made the transactions “to stay up to date with the Bitcoin network,” but it may have been hacked.

image courtesy of CoinTelegraph

An anonymous crypto user has just moved 69,370 Bitcoin from an address associated with the Silk Road darknet market that more recently has become a popular hacking target.

According to a Nov. 3 report from crypto intelligence firm CipherTrace, the recent movement involving two transactions adding up to 69,370 Bitcoin (BTC) — or more than $960 million at the time of publication — originated from an address connected with the Silk Road marketplace shut down in 2013. The crypto user first sent 1 BTC — likely as a test transaction — before moving the bulk of the coins.

CipherTrace speculated the anonymous user made the transactions “to stay up to date with the Bitcoin network” by switching between address formats. As the last time anyone moved funds associated with the defunct darknet market was in April 2015, the BTC wallet would reportedly also have access to all Bitcoin Cash (BCH) and Bitcoin SV (BSV) associated with the tokens’ hard forks.

However, the firm didn’t rule out hacking as a possibility:

“These movements could possibly mean that the wallet owner is moving funds to new addresses to prevent hackers from accessing the wallet.dat file or that hackers have already cracked the file.”

The Silk Road funds were contained in a wallet that has been circulating among hackers for more than two years. In September, a Twitter user claiming to have the wallet.dat file for the wallet put out a call to the crypto community for solutions on how to gain access to the 69,370 coins, even suggesting a quantum computer as a potential way to determine the private keys.

Silk Road was a darknet market that let users buy and sell illicit goods such as weapons and stolen credit card information, but the majority of listings were for illegal drugs. Ross Ulbricht, the site’s founder, is currently serving two life sentences without the possibility of parole after being found guilty of money laundering, computer hacking and conspiracy to traffic narcotics. He still provides periodic analyses on the Bitcoin market from prison.

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Massachusetts Voters Affirm the Right To Repair Your Own Car

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The most expensive ballot initiative campaign in Massachusetts history ended with a resounding victory for property rights as voters approved the so-called “right-to-repair” ballot initiative.

With more than 96 percent of precincts reporting by Wednesday afternoon, nearly 75 percent of voters had approved Massachusetts Question 1. The initiative’s passage means that car manufacturers will be required to provide vehicle diagnostic data to consumers and independent mechanic shops. Voters in the state approved a similar right-to-repair ballot measure in 2012, but this year’s election closes a loophole that auto manufacturers had been using to skirt the requirements established by that earlier vote.

The state’s existing law—which became the basis for new national standards implemented by the auto industry in 2014—required that vehicle diagnostic data was made available via an open platform. In short, that means that if you own a Toyota, you don’t have to go to a Toyota-affiliated repair shop to find out why your “check engine” light is on. Any repair shop can plug a device into any car and read the data.

But the earlier law exempted wireless data transmitted via a car’s telematics system. Increasingly, car manufacturers have been relying on telematics to transmit crucial data, potentially leaving independent repair shops in the dark. The new ballot initiative closes that loophole and requires wirelessly transmitted data to fall under the same open platform rules starting in 2022.

What might seem like a technical adjustment to a pretty uncontroversial rule, however, turned into a major political battle in the state. The Massachusetts Right To Repair Coalition, a campaign group formed by independent mechanics and national car repair chains like Auto Zone and O’Reilly Auto Parts, dumped more than $24 million into the race. The Coalition for Safe and Secure Data, a group backed by Ford, General Motors, Toyota, and other car manufacturers, spent more than $26 million opposing the initiative.

Much of the campaign centered around sensational accusations that the initiative’s passage would allow cars to be remotely hacked for nefarious reasons. Even the National Highway Traffic Safety Administration waded into the fight, warning in a letter to lawmakers in July that Question 1’s passage would create “an incredible amount of danger.”

Even though there are “some genuine concerns that increasing access to a car’s data could set the platform up for cybersecurity vulnerabilities,” Reason’s Scott Shackford explained last month, “that’s an argument about being careful with technological development, not an excuse for depriving consumers of access to the data produced by the vehicles that they own.”

Consumers should have the right to control the data created by the products they own—and that’s true not only for automobiles. Consider the outcome of this expensive ballot initiative fight in Massachusetts to be one more small victory for freedom on an Election Day where that was an under-the-radar trend.

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