Yellen Warns Next Crisis Could Come From ‘Shadow Banks’ And Regulators Must Act

Yellen Warns Next Crisis Could Come From ‘Shadow Banks’ And Regulators Must Act

Authored by Tom Ozimek via The Epoch Times (emphasis ours),

Treasury Secretary Janet Yellen on Thursday said banking rules may need to be tightened after the recent failures of Silicon Valley Bank (SVB) and Signature Bank, while warning of structural vulnerabilities that must be addressed in the “shadow bank” sector that includes things like hedge funds and money market funds.

Treasury Secretary Janet Yellen testifies before the Senate Finance Committee in on Capitol Hill, in Washington, on March 16, 2023. (Chip Somodevilla/Getty Images)

In remarks prepared for delivery to the National Association for Business Economics (NABE), Yellen said that banking regulation and supervisory rules need to be reexamined in the wake of the twin collapses of SVB and Signature, which were sparked by bank runs.

“Anytime a bank fails, it is cause for serious concern. Regulatory requirements have been loosened in recent years. I believe it is appropriate to assess the impact of these deregulatory decisions and take any necessary actions in response,” Yellen said.

Yellen said a 2018 roll-back of bank capital requirements and stronger supervision for smaller and mid-size banks with assets below $250 billion should be reevaluated.

She added that regulatory reforms put in place after the 2008 financial crisis have helped the U.S. financial system cope with shocks, but that gaps remain and there’s scope to bolster resiliency.

“But the failures of two regional banks this month demonstrate that our business is unfinished,” Yellen said, adding that the U.S. financial system is now considerably more robust to shocks than it was during the previous crisis a dozen or so years ago.

This is perhaps best illustrated by the fact that we’ve seen relative stability in the overall banking sector this month, even as concerns grew about specific institutions,” she said.

Smaller community and regional banks have seen a rise in deposit outflows following the failures of SVB and Signature while big banks seen as “too big to fail” and more likely to be bailed out have been the beneficiaries. This has led to concerns that as deposits flee local banks, their provision of credit will dwindle, with negative economic impacts, especially on small businesses.

Yellen said it was important for regulators to assess whether the current supervisory and regulatory regimes are adequate for the risks that banks face and, if not, then policymakers “must act.”

While she made no specific proposals for tighter regulatory and supervisory standards, she said any next steps must take into account the “health and competitiveness of our vibrant community and regional banking institutions,” which could face an outsized impact from more regulations.

She acknowledged that more regulation means bigger and costlier burdens on banks in general, but that such costs “pale in comparison to the tragic costs of financial crises.”

Shadow Banks in Crosshairs

In her speech, Yellen called for tighter regulation of the growing non-bank or “shadow bank” sector, which includes money market funds, hedge funds, and crypto assets.

In the traditional banking sector, there are rules and measures in place to reduce the risk of bank runs. Alongside capital and liquidity requirements for banks, there are also deposit guarantees provided by the Federal Deposit Insurance Corporation (FDIC), which all reduce the likelihood that depositors will rush to withdraw their savings at the first sign of trouble.

“Yet the financial stability risks posed by money market and open-end funds have not been sufficiently addressed,” Yellen cautioned.

Money market funds, in particular, are vulnerable to runs and fire sales, Yellen said, in part due to the so-called “first-mover advantage” that established an incentive for investors to redeem “at the whiff of a problem.”

The first-mover advantage in context of money market funds means that the first redeemers can exit the fund at $1 per share, while those who wait may be subject to a reduced market value and so take a haircut. This creates an incentive for investors to redeem at the first sign of a problem, which can lead to runs and panic sales that pose a risk to financial stability.

During the 2008 financial crisis, expected losses on Lehman Brothers commercial paper led to a run on the $62 billion Reserve Primary Fund, which in turn sparked concerns about commercial paper issued by other banks and led to runs on other money market funds.

The first-mover advantage was also at play in March 2020 amid the pandemic shock, when a record $255 billion flowed out of bond mutual funds, Yellen noted.

This and other structural vulnerabilities regarding money market and open-end funds aren’t new, and the Securities and Exchange Commission (SEC) has, over the past two years, sought to address them through new regulatory proposals.

In particular, the SEC’s proposals would reduce the first-mover advantage and also require new liquidity management tools and mandate that these funds provide investors and the SEC with more comprehensive and timely information.

‘Negative Spiral of Margin Calls’

Hedge funds, meanwhile, which had nearly $10 trillion in gross assets in 2021, face leverage risks, Yellen said.

“Leverage can support economic growth, but excessive leverage is dangerous. It can add fuel to fire sales by triggering a negative spiral of margin calls and rapid asset liquidations,” she said. These fire sales can transmit stress to other market participants, including large, systemically important banks.

Post-crisis banking regulations have helped reduce the potential of spillovers to the banking system. But spillovers from these fire sales to other market participants remain a risk,” Yellen said.

Yellen said that, in an effort to address these risks, the multi-regulator Financial Stability Oversight Council’s restored Hedge Fund Working Group will continue to monitor them and develop policy recommendations.

Also on the Treasury secretary’s radar for systemic vulnerabilities that could seed a financial crisis are digital assets. Of particular concern are stablecoins, which could also be forced into asset fire sales in times of stress.

“A run on one stablecoin can lead to panicked runs on other stablecoins—causing even broader selloffs,” Yellen said, adding that Congress should pass legislation to establish a comprehensive prudential regulatory framework for stablecoin issuers and for other digital assets.

Yellen said the Biden administration is studying the potential for systemic risks from digital assets.

“And we are also exploring broader policy issues around the future of money and payments, including the possibility of a central bank digital currency,” Yellen said.

Meanwhile, global banking regulators have been discussing stepping up scrutiny of how risks from systemically important shadow banks could destabilize lenders.

Pablo Hernández de Cos, chair of the global Basel Committee, which writes bank capital rules that are applied across the world, said in a speech last week that additional guidance for managing shadow bank risks should be rolled out sometime this year.

Tyler Durden
Fri, 03/31/2023 – 15:47

via ZeroHedge News https://ift.tt/TdckR7S Tyler Durden

Social Security Will Be Insolvent by 2033


dreamstime_xl_74243727

Social Security will be insolvent even sooner than previously expected, with automatic benefit cuts now projected to occur in 2033, according to a new report released Friday by the program’s trustees.

The new projections underscore the limited time that’s available for policy makers to deal with the fiscal problems that are quickly rotting away America’s old-age entitlement program. The more quickly approaching insolvency date also draws a stark contrast with leaders of both major political parties—including President Joe Biden, former President Donald Trump, and House Speaker Kevin McCarthy (R–Calif.)—who have all, at times, promised not to touch Social Security during the ongoing negotiations over raising the nation’s debt ceiling.

Ignoring the ticking clock won’t make it run slower. In fact, Friday’s report shows that Social Security’s finances have gotten worse over the past year. The Trustees say that a combination of inflation and a worsening economic outlook for the coming years contributed to their more pessimistic projections.

If nothing changes, Social Security benefits will be subject to a 23 percent cut in a decade.

Though policy makers have been aware of the potential insolvency of Social Security for decades, it’s no longer a problem that will affect Americans in the distant future. It’s now something that will be a major disruption to many current workers nearing retirement and lots of the country’s current retirees.

Since any changes to shore up Social Security’s bottom line will likely require huge tax increases or changes to how benefits are paid, policy makers are also running out of time to implement those changes in ways that don’t cause major disruptions to the economy and Americans’ retirement plans.

“The Trustees continue to recommend that Congress address the projected trust fund shortfalls in a timely fashion to phase in necessary changes gradually,” acting Social Security Commissioner Kilolo Kijakazi said in a statement accompanying Friday’s report. “With informed discussion, creative thinking, and timely legislative action, Social Security can continue to protect future generations.”

Sadly, there’s not much of any of those things in Congress these days. But creative thinking, in particular, is what Social Security needs. Much of the program’s fiscal strain is the result of America’s demographic changes since Social Security was created in 1935. Back then, the average life expectancy for Americans was 61. That means the average person died four years before qualifying for benefits. Now, with Americans living to an average age of 72 and older Americans being generally more financially well off than younger generations, Social Security operates like a perverse conveyer belt that transfers money from young workers to relatively wealthier retirees.

The most straightforward solution to Social Security’s problem is to raise the payroll taxes that fund the program to make up for the shortfall on the benefit side of the ledger. But that would only exacerbate the problem by placing a bigger burden on younger, generally poorer workers.

According to the report, Social Security could be kept afloat for the next 75 years by hiking the payroll tax by 4.15 percentage points in 2034 (or implementing a smaller increase sooner). The payroll tax is currently charged at a 16.5 percent rate, with employers and employees each covering half. That works out to a nearly 25 percent tax hike. Alternatively, the report says, benefits could be cut by about 25 percent.

It’s understandable why politicians are unwilling to choose between those equally unappealing options. But the current trend of ensuring—lying, really—to the electorate that nothing needs to be done must end.

There are some signs that it might. Sens. Bill Cassidy (R–La.) and Angus King (I–Maine), along with a small group of colleagues, are holding preliminary discussions about potential policy changes for Social Security. Semafor reported last month that the group is considering ideas like raising the retirement age to 70, changing the formula used to determine an individual’s benefit payments, and raising the cap on the payroll tax, among other things. Even though the group has not presented anything resembling a fleshed-out plan, they’ve already been attacked for allegedly leading a “trojan horse” attempt at cutting benefits.

That’s an indication of how fraught any attempt at staving off insolvency will be. Nonetheless, America needs a real conversation about Social Security’s future—about whether it makes sense for everyone over 67 to get benefits even if they’re wealthy, especially if it means a tax hike on current workers struggling to make ends meet.

The post Social Security Will Be Insolvent by 2033 appeared first on Reason.com.

from Latest https://ift.tt/XStsZ8c
via IFTTT

Short Circuit: A Roundup of Recent Federal Court Decisions

Please enjoy the latest edition of Short Circuit, a weekly feature written by a bunch of people at the Institute for Justice.

Last year, Brookside, Ala. became the poster child of policing for profit. The town relentlessly towed cars to extract fees and issued dubious traffic citations, without regard for public safety or constitutional rights. Town leaders boasted of their 600% revenue increase, almost all of which went right back to the police to buy expensive SUVs and other goodies. Last week, a federal court rejected the town’s and its towing-company partner’s effort to dismiss IJ’s class action, which demands accountability and the return of the town’s ill-gotten gains.

  • Third Circuit: Even in New Jersey, you can’t sue scientists for libel just because they questioned how well your pharmaceutical works. Left unresolved is whether disparaging comments about the Jets are similarly non-actionable.
  • On the cusp of Easter, the Fourth Circuit resurrects Bivens that it may redeem us from the (constitutional) sins of federal officials—at least if those officials are Park Police flexing against a Secret Service agent by blatantly violating his Fourth Amendment rights.
  • After decades of confusion, the U.S. Supreme Court brought much needed clarity to First Amendment law by holding in Reed v. Town of Gilbert (2015) that a law regulating speech is “content-based” and subject to strict scrutiny whenever the law’s application turns on what is being communicated. Then in City of Austin v. Reagan National Advertising (2022), the Court was like “LOL, except for when what’s communicated is an off-premises advertisement.” Fifth Circuit: And thus, on remand, we apply intermediate scrutiny and affirm this content-neutral regulation that applies only to signs that contain a particular disfavored category of message. Dissent: This one should fail even intermediate scrutiny.
  • After the Great Mississippi of Flood of 1927, the feds built a spillway 33 miles upstream of New Orleans. And lately, the spillway is getting pressed into service with much greater frequency, resulting in toxic algae blooms, beach closures, and harm to wildlife and industry in the Mississippi Sound. Fifth Circuit: Which does not give rise to a need for the Army Corps of Engineers to do a new environmental impact statement. The “true culprit for the plaintiffs’ environmental misfortunes is not the Corps or the Spillway, but the environment itself.”
  • It is hard to win attorneys’ fees against the federal gov’t! Under the Equal Access to Justice Act, it’s not enough that a litigant prevail; he must also show that the gov’t’s position was not substantially justified. But “hard” does not mean “impossible,” as evidenced by this ruling from the Fifth Circuit, granting fees to a Cameroonian man whose testimony that he faced a credible fear of persecution if forced to return to Cameroon was deemed not credible based on documents never referred to at his hearing or entered into evidence. (Unfortunately, as last year’s merits ruling in his case notes, he has already returned to his home country, where both his father and brother were murdered by the government.)
  • Fifth Circuit: If you show up to the DMV in a wheelchair because you suffer a medical condition that causes you to faint regularly, it does not violate the Americans with Disabilities Act for the DMV to request you get a doctor’s note before they will renew your license.
  • The medical attention given to a Texas inmate who suffered a traumatic brain injury when the ceiling of the prison’s hog barn collapsed on his head was sufficiently prompt that qualified immunity is warranted, says the Fifth Circuit (noting that some claims are still a go in state court). Judge Willett, self-concurring: But let’s all take note of game-changing scholarship showing that qualified immunity was wrong the day it was invented. [Ed.: Absolute immunity not looking so hot either.]
  • Disgruntled lawyers may grumble about a judge in private. Really disgruntled lawyers might even post disparaging Facebook comments on the judge’s personal Facebook page. Only super-mega-disgruntled lawyers, though, file First Amendment lawsuits against judges who block them from posting disparaging Facebook comments on the judge’s personal Facebook page. Fifth Circuit (unpublished): And that last kind loses.
  • Columbus, Ohio detective: Given your fingerprints at the scene of an armed robbery, I’m going to get a search warrant and toss your dad’s house unless you start cooperating. Suspect: I’ll just confess then. District court: Confession suppressed. Sixth Circuit: Reversed. Coerced confessions are uncool (and unconstitutional), but this one wasn’t coerced.
  • “[R]egardless of whether it is good public policy to use so many court resources and so handsomely reward litigiousness over annoyances that have been greatly diminished by changes in technology, the plaintiffs are entitled to use the law to enforce their right not to receive unsolicited faxes.” So says the Seventh Circuit, practically daring Congress to quit being a bunch of sissies and take on Big Junk Fax Law.
  • Via the Seventh Circuit: In which the defendant’s connection to Jared Fogle isn’t even close to the weirdest part of the story, which for now results in a remand to determine whether Indiana State Police altered a search warrant to add “bestiality” before or after the judge signed it.
  • After his indictment on drug conspiracy charges, man’s arrest warrant mysteriously vanishes from the FBI’s database. Human error? A technical glitch? Divine intervention? Eighth Circuit: We’ll never know. But what we do know is his Sixth Amendment right to a speedy trial was not violated by the eight-month delay that resulted. Conviction affirmed.
  • In 2016, federal probation officers search man’s Las Vegas home after he fails a drug test and find contraband. He spends 18 months incarcerated. And then the prosecution is dropped? And the officers knew all along he hadn’t failed the drug test? And they planted the contraband? Ninth Circuit (unpublished): Nobody is saying any of this ever gets to a jury. But we are saying this guy can keep trying for now. He had to wait until after the prosecution terminated in his favor to file some of these claims, so they are not in fact untimely.
  • Hollywood Burbank Airport apparently wasn’t listening to the pre-flight safety demonstration because it’s been out of compliance with certain FAA standards since 1980. And attempts since then to get a new terminal off the ground have gone down in flames. The latest effort was cleared for takeoff by voters in 2016, and the pre-flight checklist (environmental review to comply with the National Environmental Policy Act) was completed in 2021. Ninth Circuit: We’re sending you back to the gate to do more studies on construction noise. Dissent: This is literally next to a highway that’s louder than any construction equipment. (Ed.: Is there a builder’s remedy for airports?)
  • Self-described “person of extraordinary wealth” James Batmasian of Boca Raton, Fla. wants to give more of that wealth to charity, but is stymied by his 2008 conviction for failing to pay federal withholding tax, for which he served eight months in the slammer. Despite the governor of Florida having restored his civil rights in 2017 and President Trump having pardoned him in 2020, nobody wants his money! Will equitable expungement end this eleemosynary eschewal? Eleventh Circuit: Whether the expungement motion sounds in equity or the Constitution, we lack jurisdiction to hear it.

Michelle Przybocki has severe digestive issues, and it’s important for her to follow doctor’s orders and maintain what’s called a low-FODMAP diet, consisting of foods with ingredients that are easy to digest. But! She’s had a really hard time finding food that fits the bill, and it turns out the FDA and USDA make it illegal for producers to—perfectly truthfully—use labels like “low FODMAP certified” and “digestible.” Because those labels aren’t on the feds’ outdated list of pre-approved “nutrient content claims,” they are verboten. Which is not awesome for the tens of millions of Americans who suffer from digestive difficulties. Nor is it awesome for smaller producers like Ketan Vakil, founder of Gourmend Foods, who don’t have millions of dollars to spend years petitioning the feds to update the list. Click here to learn more about IJ’s latest case.

The post Short Circuit: A Roundup of Recent Federal Court Decisions appeared first on Reason.com.

from Latest https://ift.tt/45m83W7
via IFTTT

The Shaky New York Case Against Trump Reeks of Desperation To Punish a Reviled Political Opponent


The New York case against Donald Trump is based on debatable facts and untested legal theories.

The New York indictment of Donald Trump, which won’t be unsealed until he is arraigned early next week, reportedly includes “more than two dozen counts.” That’s a surprisingly large number if the case is based entirely on the $130,000 that Trump lawyer Michael Cohen paid porn star Stormy Daniels in 2016 to keep her from talking about her alleged 2006 affair with Trump. The litany of charges reinforces the impression that Manhattan District Attorney Alvin Bragg, a Democrat, is trying to justify this belated and dubious prosecution by transforming minor misconduct into a case that looks serious until you consider the underlying allegations.

According to reporting based on anonymous sources close to the investigation, Bragg is relying mainly on a state law that makes it a misdemeanor to falsify business records “with intent to defraud.” Trump, who reimbursed Cohen for the hush payment to Daniels, allegedly broke that law when his business misrepresented the reimbursement as payment for legal services under a nonexistent retainer agreement. If the Trump Organization recorded the payment in more than one document, those records could be the basis for several counts under this statute. But each of those counts would still be a Class A misdemeanor, punishable by a maximum fine of $1,000 and/or up to 364 days in jail.

Falsification of business records becomes a Class E felony, punishable by up to four years in prison, when the defendant’s “intent to defraud includes an intent to commit another crime or to aid or conceal the commission thereof.” This is where federal election law comes into play: Federal prosecutors argued that Cohen’s payment to Daniels amounted to an excessive campaign contribution, and he accepted that characterization in a 2018 plea agreement.

Since Cohen said he was acting at Trump’s behest, the implication was that Trump had solicited and accepted an illegal campaign contribution. Yet the Justice Department never prosecuted Trump for that alleged violation, even after he left office. In 2021, an evenly divided Federal Election Commission (FEC) declined to pursue charges against Trump, his business, or his campaign.

Federal prosecutors would have faced at least two daunting obstacles in trying to make a case against Trump based on the hush money payment. First, as former FEC Chairman Bradley Smith pointed out after Cohen’s guilty plea, “it is unclear whether paying blackmail to a mistress is ‘for the purpose of influencing an election,’ and so must be paid with campaign funds, or a ‘personal use,’ and so prohibited from being paid with campaign funds.” Smith argued that “the best interpretation of the law is that it simply is not a campaign expense to pay blackmail for things that happened years before one’s candidacy—and thus nothing Cohen (or, in this case, Trump, too) did is a campaign finance crime.”

The distinction between a personal expenditure and a campaign expenditure hinges on the question of whether Trump was trying to avoid publicity that could have hurt his chances of defeating Hillary Clinton or was merely trying to avoid embarrassment and/or spare his wife’s feelings. While the proximity of the payment to the election supports the first inference, convicting Trump of violating federal law would have required proving that hypothesis beyond a reasonable doubt.

The difficulty of doing that was illustrated by the 2012 trial of former North Carolina senator and Democratic vice presidential nominee John Edwards, who was accused of accepting several hundred thousand dollars in illegal campaign contributions from a wealthy supporter. Edwards used the money to hide an extramarital affair and the baby that resulted from it. Federal prosecutors argued that his intent was to avoid a scandal that would have compromised his campaign for his party’s 2008 presidential nomination.

Edwards argued that covering his mistress’s living expenses was a personal expenditure aimed at deceiving his wife, who was dying from cancer at the time. Jurors evidently favored that interpretation, because they acquitted Edwards of one charge while deadlocking on five others.

The other major challenge in proving a case like this is related to the ambiguity that the Edwards jury confronted: Prosecutors have to prove that the defendant “knowingly and willfully” violated federal election law. In Trump’s case, it is not clear that he had the requisite intent, because he seemed genuinely confused about what federal election law requires.

In addition to the count based on the payment to Daniels, Cohen pleaded guilty to causing an illegal corporate campaign donation by arranging for The National Enquirer to pay former Playboy model Karen McDougal $150,000 for her story about sex with Trump, which it kept under wraps. “Those two counts aren’t even a crime,” Trump told Fox News after Cohen’s guilty plea. He emphasized that he reimbursed Cohen with his own money, as opposed to campaign funds, which “could be a little dicey.”

Responding to those comments, CNN political correspondent Chris Cillizza observed, “What Trump doesn’t know about campaign finance law is, um, a whole lot.” But if Trump did not understand the law, which Smith argues is hazy on this point, and/or did not anticipate how federal prosecutors would interpret it, he did not “knowingly and willfully” violate it.

“With respect to both payments,” the sentencing memo in Cohen’s case says, “he acted in coordination with and at the direction of Individual-1″—i.e., Trump. But that does not necessarily mean that Trump understood the payments to be illegal, which would have required rejecting what a former FEC chairman describes as “the best interpretation of the law” and recognizing a distinction that Smith thinks is  “unclear” at best.

In short, federal prosecutors probably had good reasons for declining to charge Trump. Yet now Bragg is relying on that uncharged and unproven federal crime to prosecute Trump for a felony under state law. There are a couple of problems with that.

First, if Trump did not think he was violating federal law, it is hard to see how he could have falsified business records with the intent of concealing that crime. Second, it is not clear that a violation of federal election law counts as “another crime” under the New York statute.

The most promising basis for that claim seems to be Section 17-152 of New York’s election law, which says “any two or more persons who conspire to promote or
prevent the election of any person to a public office by unlawful means and which conspiracy is acted upon by one or more of the parties thereto, shall be guilty of a misdemeanor.” Cohen and Trump are two people, and Cohen says they conspired to promote Trump’s election by paying off Daniels and arranging the National Enquirer payment to McDougal.

The Justice Department (and Cohen) described both payments as violations of federal election law. If that counts as “unlawful means,” the violation of Section 17-152 could qualify as the other crime that Trump allegedly was trying to conceal by falsifying business records.

“Under New York law,” Joshua Stanton and three other attorneys say in a recent Just Security essay, “‘unlawful means’ appears to be construed broadly—and is not limited to crimes….In a 100-year-old opinion, the state appellate court with authority over Manhattan ruled that ‘unlawful means’ as written in another statute does not necessitate ‘the commission of a crime.’ Instead, the court held that ‘unlawful means’ simply refers to conduct ‘unauthorized by law.'”

That definition, Stanton et al. say, “is consistent with what we would expect to find when construing the meaning of section 17-152.” According to the New York Court of Appeals, they note, undefined statutory terms “are generally to be given their ‘usual and commonly understood meaning,'” and “dictionaries are ‘useful guideposts’ in ascertaining that meaning.” They quote the Merriam-Webster definition of unlawful as “not lawful” or “illegal.”

Assuming that New York courts read “unlawful means” broadly, Section 17-152 could supply the underlying “crime” that elevates falsification of business records to a Class E felony. That would essentially mean transforming two misdemeanors (falsifying business records plus conspiring to promote someone’s election through “unlawful means”) into a felony. Based on the same assumption, Trump also could face separate misdemeanor charges under Section 17-152 for the Daniels and McDougal payments.

New York’s statute of limitations ordinarily requires that misdemeanors be prosecuted within two years and that Class E felonies be prosecuted within five years. But that law includes an exception for “any period following the commission of the offense during which…the defendant was continuously outside this state.”

Trump lived largely in Washington, D.C., during his presidency, and in 2019 he switched his official state of residence to Florida. In determining whether the prosecution can proceed, a 1999 ruling by the New York Court of Appeals indicates, the time that Trump spent in D.C. and Florida should be subtracted from the time that has elapsed since the Trump Organization misrepresented Cohen’s reimbursement.

Assuming that Bragg can get around the statute of limitations, the question remains: Why bring this case at all, let alone six years after the conduct underlying it?

There was nothing inherently criminal about paying off Daniels or McDougal. Those payments become criminal only by construing them as illegal campaign contributions. Although that is how federal prosecutors interpreted the law in Cohen’s case, they conspicuously declined to charge Trump under the same theory. Manhattan prosecutors under Bragg’s predecessor for years mulled the possibility of building a state case based on the same conduct and ultimately decided it would not fly.

Bragg’s reconsideration of that conclusion reeks of desperation to punish a reviled political opponent, which is exactly how Trump and his supporters are portraying it. When you decide to make history by prosecuting a former president, especially when that former president is seeking that office again by running against an incumbent who is a member of your own party, you had better have a solid case involving serious crimes. Bragg, who is relying on debatable facts, untested legal theories, and allegations that are tawdry but far from earthshaking, does not seem to have such a case.

“We’re going to indict a former President for, essentially, misdemeanor falsification of business records?” asks former Rep. Peter Meijer (R–Mich.), who voted to impeach Trump after the Capitol riot in 2021. “We’re crossing the Rubicon for that? That seems like f—ing weak sauce.”

The post The Shaky New York Case Against Trump Reeks of Desperation To Punish a Reviled Political Opponent appeared first on Reason.com.

from Latest https://ift.tt/DEHTWfy
via IFTTT

Viewpoint-Based Removal of Books from Public Library Violated First Amendments, Holds District Court

From Little v. Llano County, decided yesterday by Judge Robert Pitman (W.D. Tex.):

In early July 2021, prior to their appointment to the New Library Board, Defendants Rochelle Wells, Rhonda Schneider, Gay Baskin, and Bonnie Wallace were part of a community group pushing for the removal of children’s books that they deemed “inappropriate.” For example, these Defendants objected to two series of children’s picture books, the “Butt and Fart Books,” which depict bodily functions in a humorous manner in cartoon format, because they believed these books were obscene and promoted “grooming” behavior. Defendant Milum, the library system’s director, shared the complaints with the Commissioners Court {the municipal entity that controls the Llano County Library System}. Although several commissioners and librarians stated that they saw no problem with the books, Defendants Moss and Cunningham contacted Milum to instruct her to remove the books from the shelves.

By August 5, 2021, Milum informed Cunningham she would be deleting both sets of books from the catalog system. In the following months, other books, such as In the Night Kitchen by Maurice Sendak and It’s Perfectly Normal, by Robbie H. Harris, were removed because of similar complaints: that they encouraged “child grooming” and depicted cartoon nudity. There was no recourse for Plaintiffs, or anyone else, to appeal these removals to the library system.

In Fall 2021, Wallace, Schneider, and Wells, as part of their community group, contacted Cunningham to complain about certain books that were in the children’s sections or otherwise highly visible, labeling them “pornographic filth.”  On November 10, 2021, Wallace provided Cunningham with lists, including a list of “dozens” that could be found in the library. The books labeled “pornographic” included books promoting acceptance of LGBTQ views. Other books in Wallace’s list of pornographic books [were] about “critical race theory” and related racial themes. In other communications, Defendants refer to them as “CRT and LGBTQ” books.  In the email, Wallace advocated for the books to be relocated to the adult section because “[i]t is the only way that [she] could think of to prohibit future censorship of books [she does] agree with.”

That same day, Cunningham and Moss ordered Milum, “[a]s action items to be done immediately,” to pull books that contained “sexual activity or questionable nudity” from the shelves …. On November 12, 2021, Defendants removed several books on the Bonnie Wallace Spreadsheet from the Llano Library Branch shelves, including, for example, Caste: The Origins of Our Discontents, They Called Themselves the K.K.K.: The Birth of an American Terrorist Group, Being Jazz: My Life as a (Transgender) Teen, and Spinning….

The physical books at issue in this case, although “available” for checkout are hidden from view and absent from the catalog. Their existence is not discernible to the public, nor is their availability. An injury exists because the library’s “in-house checkout system” still places “a significant burden on Library Patrons’ ability to gain access to those books.” …

The Supreme Court has recognized that public libraries should be afforded “broad discretion” in their collection selection process, in which library staff must necessarily consider books’ content. See U.S. v. Am. Library Assn., Inc., 539 U.S. 194, 205 (2003) (plurality). But this discretion is not absolute, and it applies only to materials’ selection. In fact, the Fifth Circuit, adopting the Supreme Court’s plurality in Pico, has recognized a “First Amendment right to receive information” which prevents libraries from “remov[ing] books from school library shelves ‘simply because they dislike the ideas contained in these books.'” Campbell v. St. Tammany Par. Sch. Bd. (5th Cir. 1995). “The key inquiry in a book removal case” is whether the government’s “substantial motivation” was to deny library users access to ideas with which [the government] disagreed.”

Here, Plaintiffs have sufficiently pled that Defendants’ conduct was substantially motivated by a desire to remove books promoting ideas with which disagreed. They plainly allege that Defendants removed, ordered the removal, or pursued the removal of the books at issue “because they disagree with their political viewpoints and dislike their subject matter.”

Defendants do not argue otherwise. Instead, they contend that Plaintiffs have not stated a claim because the removal decisions were “government speech to which the First Amendment does not apply.”  But as Plaintiffs’ note, the cases Defendants cite mostly involve the initial selection, not removal, of materials. See, e.g., Am. Library (“The principles underlying [the precedent] also apply to a public library’s exercise of judgment in selecting the material it provides to its patrons.”); PETA v. Gittens (D.C. Cir. 2005) (analogizing the discretion afforded to library’s book collection decisions to the commission’s art selection decisions). As the Fifth Circuit held in Campbell, removal decisions are subject to the First Amendment and are evaluated based on whether the governments’ “substantial motivation in arriving at the removal decision” was discriminatory. Here, Plaintiff has clearly pled that Defendants had this motivation.

Defendants contend that Campbell and Pico do not apply to this context because those cases dealt with book removals from public school libraries, which may be subject to unique constitutional rules…. [T]he Court agrees that the precedent indicates public school libraries are a unique environment for constitutional analysis. Campbell, Pico, and Chiras suggest that school officials’ discretion is particularly broad for book selection in public school libraries because of schools’ unique inculcative function. However, the right to access to information first identified in Pico and subsequently adopted by the Fifth Circuit in Cambpell has “even greater force when applied to public libraries,” since public libraries are “designed for freewheeling inquiry,” and the type of discretion afforded to school boards is not implicated.

Defendants, like other government officials implicated in maintaining libraries, have broad discretion to select and acquire books for the library’s collection. But the Fifth Circuit recognizes a First Amendment right to access to information in libraries, a right that applies to book removal decisions. Plaintiffs have clearly stated a claim that falls squarely within this right: that Defendants removed the books at issue to prevent access to viewpoints and content to which they objected….

And the district court went on to hold that plaintiffs were likely to prevail on the claim, and therefore granted them a preliminary injunction; the full list of books that had to be reinstated consisted of:

a. Caste: The Origins of Our Discontent by Isabel Wilkerson;
b. Called Themselves the K.K.K: The Birth of an American Terrorist Group by Susan
Campbell Bartoletti;
c. Spinning by Tillie Walden;
d. In the Night Kitchen by Maurice Sendak;
e. It’s Perfectly Normal: Changing Bodies, Growing Up, Sex and Sexual Health by
Robie Harris;
f. My Butt is So Noisy!, I Broke My Butt!, and I Need a New Butt! by Dawn
McMillan;
g. Larry the Farting Leprechaun, Gary the Goose and His Gas on the Loose, Freddie
the Farting Snowman, and Harvey the Heart Has Too Many Farts by Jane
Bexley;
h. Being Jazz: My Life as a (Transgender) Teen by Jazz Jennings;
i. Shine by Lauren Myracle;
j. Under the Moon: A Catwoman Tale by Lauren Myracle;
k. Gabi, a Girl in Pieces by Isabel Quintero; and
l. Freakboy by Kristin Elizabeth Clark.

(The court didn’t separately discuss the objections to the Butt and Fart books, which seemed to be less focused on viewpoint and more on perceived vulgar content.) Note that it’s unsettled whether viewpoint-based removals of books from school library shelves are constitutional—Board of Ed. v. Pico (1982) didn’t resolve the issue—but the Fifth Circuit has indeed held that such removals are unconstitutional. And if even school libraries can’t engage in such removals, the matter is even clearer as to public libraries, for the reason the District Court mentions.

Congratulations to Ellen Leonida, Matthew Borden, J. Noah Hagey, Sarah Salomon, Pratik Ghosh & Amy Senia (Braunhagey & Borden LLP) and Ryan Botkin, Katherine P. Chiarello & María Amelia Calaf  (Wittliff | Cutter PLLC), who represent plaintiffs.

The post Viewpoint-Based Removal of Books from Public Library Violated First Amendments, Holds District Court appeared first on Reason.com.

from Latest https://ift.tt/F6TUR9s
via IFTTT

Simon Black: I Love How Everyone Pretends The Bank Crisis Is Over…

Simon Black: I Love How Everyone Pretends The Bank Crisis Is Over…

Authored by Simon Black via SovereignMan.com,

Practically on cue, politicians began their public hearings yesterday about the recent banking crisis.

This was so predictable; every time there’s a major crisis, Congressmen book a committee meeting to express their shock and outrage. They pass new laws to prevent a future crisis. Then their new laws fail to work properly, so they hold another public hearing to express more outrage.

This is the cycle of political problem solving, and yesterday was no exception.

The Senate Banking Committee summoned key officials from the Federal Reserve, FDIC, and US Treasury Department. And the tone was quite angry.

Senators were flummoxed that their thousands of pages of banking legislation had once again failed to provide adequate protection to the US financial system. And they were looking for someone to blame.

This, too, quite predictably, fell along partisan lines. The people on the left somehow found reason to blame everything on Orange Man, while describing bank regulators as “gutsy” and “courageous”. It was bewildering.

Most absurd was how the officials in the hot seat (who, again, represent the primary bank supervisors in the United States) managed to avoid any culpability whatsoever.

The Fed’s Vice-Chairman for Banking Supervision admitted that his agency’s supervisors had rated SVB as a poorly managed bank. And the Fed was further aware of several material weaknesses in the SVB’s risk compliance.

They acknowledged that they had advanced knowledge of the banks’ problems.

They acknowledged they should have done something about it. They acknowledged they had the tools and authority to do something about it.

Yet they did absolutely nothing… and somehow ended up being praised as gusty and courageous.

It’s natural to blame the bank executives for making such idiotic decisions with their customers’ money. But culpability is not mutually exclusive. It’s not either/or. And the regulators had a major role to play in this crisis.

Not only did they escape culpability at yesterday’s hearing, but the regulators even managed to pat themselves on the back for their swift and decisive response to the crisis.

After SVB’s failure a few week ago, government officials invoked what’s known as the “systemic risk exception”. This exception essentially gives them sweeping power to deal with a crisis by whatever means necessary.

And all the key officials unanimously agreed that SVB, First Republic Bank, etc. posed systemic risk, and that justifies the massive bailout response.

Isn’t it interesting, though, that “systemic risk” only seems to apply to banks?

You never heard these officials say that baby formula shortages pose systemic risk. Or that inflation itself is a systemic risk. Or that dwindling US oil production is a system risk.

Yet whenever the banks and their somnambulant regulators fail, they call it “systemic risk” and pull out all the stops to save them.

Energy companies, on the other hand, which produce the very thing that all economic activity requires, are tossed out in the cold and demonized at every available opportunity by the President of the United States. It’s bizarre logic.

The biggest falsehood of yesterday’s hearing, however, was the continued insistence by all that “our banking system is strong and resilient”. Coincidentally they presented zero evidence to support that assertion.

In fact most evidence would support the opposite conclusion– that there are still a number of major problems in the banking system.

The FDIC itself reported that banks across the US have a total $620 billion in unrealized losses; this is due primarily to the steep decline in bond prices, which are a result of the Federal Reserve’s aggressive interest rate increases.

And bear in mind that the FDIC’s estimate was before the most recent rate hikes. So the updated estimate on unrealized losses right now is most likely higher than $620 billion.

But risks in the banking system don’t go way beyond these unrealized bond losses.

Commercial real estate is an obvious one; Fed data show that banks across the US have loaned out nearly $3 trillion of their customers’ money against commercial property, including office space. Other estimates go up to $5.5 trillion including commercial mortgage-backed securities.

But thanks to new, pandemic-related remote work policies, companies across the US are using less space.

Moody’s Analytics recently reported office utilization rates at roughly 50% of pre-pandemic levels based on security-badge swipe data at office buildings.

Workers simply aren’t showing up to the office like in the past, and office occupancy rates have been steadily deteriorating as a result.

Office vacancy now stands at 12.5% nationwide according to the National Association of Realtors. That’s about a third worse than in 2019.

To make matters worse, the economy is slowing, which will likely trigger additional cuts in office space.

All of this is bad news for banks. They have trillions of dollars of exposure to a rapidly declining commercial real estate market, so even a small increase in loan defaults could spark another panic.

The Wall Street Journal recently reported that estimates of total unrealized bank losses right now, including commercial loans, is a whopping $1.7 TRILLION.

That’s the vast majority of all bank capital in the United States… so this is still an enormous problem.

But everyone keeps playing the same chorus again and again: “the banking system is strong, the banking system is strong.”

Even sophisticated Wall Street investors have joined the sing-along, given that bank stocks are once again on the rise.

As of this morning, shares of financially uncertain banks with enormous unrealized losses are now trading at fairly rich, double-digit valuations as measured by Price/Earnings and Price/Free Cash Flow metrics.

(Meanwhile, valuations of high quality, well-managed real asset businesses in the energy, mining, agriculture, and productive technology sectors are tiny by comparison.)

Everyone seems happy to close their eyes and pretend that the crisis is over despite so much evidence to the contrary.

Tyler Durden
Fri, 03/31/2023 – 14:29

via ZeroHedge News https://ift.tt/mXsF5nS Tyler Durden

Poll: Most Americans Don’t Think a College Degree Is Worth the Cost


Red background with black graduation caps falling

With tuition rates increasing and college attendance rates declining, a new poll from The Wall Street Journal and the National Opinion Research Center suggests that Americans’ confidence in the value of a college degree is fading.

The survey shows a dramatic decline in the percentage of Americans who believe a four-year college degree is worth the costs. Only 42 percent of its respondents agreed that a “four-year college education is worth the cost because people have a better chance to get a good job and earn more income over their lifetime,” down 11 percentage points since 2013. Meanwhile, 56 percent of respondents—a leap of 16 percentage points since 2013—agreed that a college degree wasn’t “worth the cost because people often graduate without specific job skills and with a large amount of debt to pay off.”

Suspicion of college education was highest among 18- to 34-year-olds, more than 60 percent of whom answered that a degree wasn’t worth the costs. While opinions in that age group hadn’t changed much since 2017, views of college declined dramatically among Americans aged 50 or older in that time. For those 65 and older, it dropped 12 percentage points—from 56 percent to 44 percent.

And the gender divide on this question seems to be closing. While women are still slightly more likely to say that a college degree is worth the costs, the rate of women agreeing that a college degree is worth it has declined by 10 percentage points since 2017.

The findings aren’t surprising. The rate of recent high school graduates attending college has been declining in recent years, with a 3.5 percentage point drop, the largest in 30 years, occurring from 2019 to 2020. While the rate of this decline has slowed, high school students are still increasingly wary of attending college after graduation, with many explaining their views by citing the high burden of post-college debt—and the existence of well-paying jobs that require only a high school diploma.

While the rate of college attendance has been declining, participation in apprenticeship programs has increased by more than 50 percent in the past decade. These programs give participants valuable skills that lead directly to well-paying jobs—and without burdensome student loan debt.

The post Poll: Most Americans Don't Think a College Degree Is Worth the Cost appeared first on Reason.com.

from Latest https://ift.tt/xmJUney
via IFTTT

“I Was Screaming Before You Interrupted Me”: Rep. Bowman Raves In Capitol On Gun Control

“I Was Screaming Before You Interrupted Me”: Rep. Bowman Raves In Capitol On Gun Control

Authored by Jonathan Turley,.

I have often discussed in columns what I call our “age of rage.”

There may be no more defining moment of that age than what unfolded today in the Capitol as Rep. Jamaal Bowman, D-N.Y., screamed about gun control. Various Democratic members, including former House Majority Whip Rep. Steny Hoyer, D-Md, tried to calm Bowman. However, after Rep. Thomas Massie, R-Ky, asked him to stop yelling, Bowman shouted “I was screaming before you interrupted me,” which could now go down as the epitaph for our age.

As members filed out of the House floor, Bowman was yelling about Republicans killing children and not caring about the carnage in our schools: “What are they doing about it? Nothing. They don’t have the courage. They’re cowards,” Bowman can be heard shouting as the video begins. “Three 9-year-olds. Are they going to those funerals? No!”

Massie stopped to address the attacks and noted “You know there’s never been a shooting at a school that allows teachers to carry?”

Bowman responded “More guns? More guns leads to more death” and continued to scream: “Republicans won’t do S— when it comes to gun violence.” He then continued on Twitter.

Massie responded:

“He wanted to discuss solutions to school shootings, but when I offered a solution he began shouting. When he asked for data, I gave him data, but then he just shouted more. Bring facts. There’s never been a school shooting in the hundreds of schools that allow staff to carry.”

The point is not the merits. This is an important national debate and the underlying facts continue to be debated, including statements from President Joe Biden that some of us have challenged.

However, this scene captured how rage has replaced reason in our public discourse.

Tyler Durden
Fri, 03/31/2023 – 13:44

via ZeroHedge News https://ift.tt/Hz6o0Z9 Tyler Durden

Small European Countries “Morally & Financially Exhausted” By Ukraine War Effort

Small European Countries “Morally & Financially Exhausted” By Ukraine War Effort

Ukraine’s Western backers have of late expressed more and more skepticism over the future success of the war effort against Russia. This doubt grew louder and more public starting two weeks ago, when Czech President Petr Pavel said in an interview with Polish media that the window is closing on a major new Ukrainian counteroffensive. He then acknowledged that his country may not be able to maintain current levels of assistance to Kiev.

“The window of opportunity is open this year. After next winter, it will be extremely difficult to maintain the current level of assistance,” Pavel was quoted as saying. “War fatigue is not only the exhaustion of human resources and equipment, the destruction of infrastructure in Ukraine, but also fatigue in the countries that provide aid.”

This week another small central European country has echoed the same. Slovak President Zuzana Čaputová said at a foreign policy event that Slovakia is “morally and financially exhausted” after more than a year of support given to Ukraine, and as war refugees pour in.

Czech President Petr Pavel (left): Le Monde/Getty Images

She also observed that the influx of Ukrainian war refugees into her country threatens to harm the economy and her own citizens’ standard of living. Stressing there are limits to Slovakia’s support for Ukraine, she suggested the populace may now see that limit as having been reached or surpassed, and this is leaving the country vulnerable.

“Although the majority of our residents remain willing to accept Ukrainian refugees, the majority feel that their standard of living is falling with the arrival of refugees, despite the data clearly pointing to the successful integration of refugees into the labor market,” Čaputová said.

Slovakia in particular has been sacrificing much of its own military hardware for Ukraine, this month pledging to hand the bulk of its tiny air force over. “The first four of 13 Soviet-era MiG-29 fighter jets that Slovakia decided to give Ukraine have been safely handed over to the Ukrainian air force, the Slovak Defense Ministry said on Thursday,” Reuters reported last week. The country is seeking upgraded replacement aircraft and parts from the United States.

The small central European country has also absorbed tens of thousands of refugees:

However, public attitudes differ, with a poll by Globsec think-tank showing in December that 39% of Slovaks thought NATO and the United States were responsible for the war in Ukraine. Support for NATO is lower in Slovakia than in most other member states, the military alliance’s research shows.

Interestingly, Ukraine’s president Zelensky himself admitted that if his military didn’t start securing victories, support from the West will slide amid the general fatigue of war. Zelensky while speaking to the Associated Press early this week described that loss of Bakhmut will mean that Putin will smell weakness. According to the Ukrainian leader’s words:

Speaking with The Associated Press, Zelenskyy said that if Bakhmut were to fall, Putin could “sell this victory to the West, to his society, to China, to Iran,” as leverage to push for a ceasefire deal that would see Ukraine agree to give up territory.

“If he will feel some blood — smell that we are weak — he will push, push, push,” Zelensky continued. “Our society will feel tired” if the Russians gain victory in Bakhmut, he said. “Our society will push me to have compromise with them.” Implicit in these words are perhaps a first-time admission that significant sectors of the Ukrainian population are ready for compromise and peaceful negotiations to end the war.

And tellingly, CBS commentary on the AP interview included the following observation: “He appeared acutely aware of the risk that his country could see its vital support from the U.S. and Europe start to slip away as the 13-month war grinds on.”

Tyler Durden
Fri, 03/31/2023 – 13:27

via ZeroHedge News https://ift.tt/09MOosf Tyler Durden

Era Of Remote Work Ends For Millions Of Americans

Era Of Remote Work Ends For Millions Of Americans

Authored by Jane Nguyen via The Epoch Times,

Millions of Americans stopped working from home in 2022, according to a Labor Department report released on March 22.

The agency said that 72.5 percent of establishments, defined as each business location, reported little to no telework among employees between August and September 2022, a 12.4 percent increase from 2021.

Before the pandemic upended the workplace, 76.7 percent of companies reported little to no remote work among their employees.

The percentage of employers reporting that all of their employees were teleworking did not see significant change in 2022, at about 11 percent compared to about 10 percent in 2021.

The percentage of establishments reporting that some of their employees were working from home dropped in 2022. About 16 percent reported that they had some employees working from home, compared to about 30 percent in 2021.

Remote work isn’t completely ending, as companies in “university towns, tech hubs, and government centers,” per Bloomberg, have continued to offer remote positions in 2023.

In a survey conducted by the employment website ZipRecruiter, job seekers, on average, said they would take a 14 percent pay cut in order to work remotely.

Hybrid Work

Employers have recently been pushing harder to get staff to work on-site more often, as fears of the economic downturn prompt an increased emphasis on worker productivity.

Major companies such as Twitter, Disney, and Meta are expecting employees to come into the office more frequently.

Elon Musk ended Twitter’s “work from anywhere policy” after acquiring the company last year, saying he would require them to work at least 40 hours a week from the office. Walt Disney Co. has recently pushed for four days a week on-site.

This month, Meta Platforms Inc. Chief Executive Mark Zuckerberg told employees that in-person time helps build relationships and get more done.

“Our hypothesis is that it is still easier to build trust in person and that those relationships help us work more effectively,” Zuckerberg wrote in a letter to employees.

Meta CEO Mark Zuckerberg speaks at an event in New York, on Oct. 25, 2019. (Drew Angerer/Getty Images)

“There’s a sense that innovation, creativity, and collaboration can suffer when teams are apart,” Mike Steinitz, senior executive director at Robert Half, told The Wall Street Journal.

The most common remote work situation is now hybrid work, with employees spending some days in the office and some working remotely, the New York Times reported.

Moreover, it has been a challenge to revoke remote work once it has been implemented.

“Many, many companies in recent months have insisted that people come back to the office five days a week, only to reverse that mandate within about a week after hearing that they’d lose their best and brightest,” Julia Pollak, the chief economist ZipRecruiter, told the outlet.

In a Robert Half survey last year, 66 percent of managers wanted their teams to work on-site full time, and that 50 percent of workers would quit and find a new job rather than be forced back to the office.

Tyler Durden
Fri, 03/31/2023 – 13:05

via ZeroHedge News https://ift.tt/D6RVhfP Tyler Durden