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How Should the European Union Respond to Rising Greece-Turkey Tensions?

Published by Anonymous (not verified) on Mon, 31/08/2020 - 2:13pm in

Can the EU de-esclate increasingly testy Greece-Turkey dealings ?

Scotty From Marketing Attributes Fall In Polls To Cooking Curries Over Spag Bol

Published by Anonymous (not verified) on Mon, 31/08/2020 - 9:00am in

ScoMo Curry

Australia’s Prime Minister Scotty from marketing has told his advisors to not worry too much about a fall in polling as it’s simply Australian’s being sick of him cooking curries instead of a more simple dish like spag bol.

”The Prime Minister is relatively calm after seeing the polling numbers last night,” said a Parliamentary Insider. ”He didn’t panic and do anything rash like sack the Minister for Aged Care, instead he simply told his advisors to set up the camera and get him the ingredients to cook a spag bol.”

”He also did ask them to grab some meat and three veg just in case the spag bol doesn’t fly.”

When asked why the PM was so sure that his social media cooking posts were to blame for a fall in the polls rather than his actions on areas like aged care or border control, the Insider said: ”It’s always easier to blame the foreigners, I mean let’s face it curries aren’t everyone’s dish of choice.”

”Whereas everyone loves a good spag bol and fixing a spag bol is a heck of a lot easier than fixing up the aged care sector.”

”Now, if you’ll excuse me, I need to drop by Engadine Maccas, the PM said he left something there for me.”

Mark Williamson

@MWChatShow

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MoD Records Show Britain Training Repressive States

There was a very interesting piece by Cahal Milmo in yesterday’s edition of the I, for Saturday, 29th August 2020. The MoD has released a series of papers in response to a question in parliament, showing that the British armed forces are training those of 17 states guilty of human rights violations. The article, ‘Britain trains soldiers for repressive regimes’ runs

The British military has provided training to the armed forces of a succession of repressive regimes from Belarus to Bahrain, according to official records.

A list of countries receiving training from UK armed forces since 2018 includes 17 nations formally designated by the British government as “human rights priority countries”, where there is particular concern about repression or other abuses. 

The training ranges from instruction on piloting state-of-the-art fast jets for allies such as Saudi Arabia to officer training for China.

In Belarus, where the authorities have this month been condemned for a brutal crackdown on pro-democracy demonstrators and armed forces have been placed on a state of high alert, Britain provided an advanced command course for senior officers.

The training,k detailed in records released by the Ministry of Defence (MoD) following a parliamentary question, drew condemnation from campaigners who said it put Britain at risk of becoming “complicit” in gross breaches of human rights.

Andrew Smith, of Campaign Against Arms Trade, said: “Many of these armies have appalling human rights records and have been linked to brutal oppression as well as international aggression.

“By training and collaborating with despots, dictatorships and human rights abusers, the UK risks making itself complicit in the abuses that are being inflicted.” The group said it wanted to see an investigation into precisely which military forces the UK had given training to and whether they had been subsequently linked to repressive actions or other breaches of basic liberties.

However, the defence ministry insisted that all of its training abroad emphasised the observation of human rights protections.

A spokesman for the MoD said: “Every defence relationship is taken on a case-by-case basis. Any defence engagement is designed to educate where necessary on best practice and compliance with international humanitarian law.”

The figures suggest that more than half of the 30 countries on the Foreign and Commonwealth Office’s human rights priority list have received training assistance from British forces. They include Uzbekistan, Sir Lanka, Bahrain, Egypt and Pakistan.

I’m not surprised by any of this. We already sell armaments to vicious, repressive regimes like Saudi Arabia. Britain has also used private mercenary companies as a method of unofficially sending military assistance to repressive regimes, such as Keenie Meenie Services, (KMS), founded by retired Brigadier Mike Wingate Gray, a friend of Maggie Thatcher, and whose son Arthur is a mate of princes William and Harry. Among other nasty regimes, KMS has provided troops for Sri Lanka, the Nicaraguan Contras and the Mujahideen in Afghanistan, as well as Sultan Qaboos of Oman. On the other hand, they don’t seem to have provided any assistance to the Khmer Rouge during the 1980s. This was probably done by the SAS. See ‘Profiting from War’, John Newsinger’s review of Phil Miller’s Keenie Meenie: The British Mercenaries Who Got Away with War Crimes (London: Pluto Press 2020) in Lobster 79, Summer 2020 . See https://www.lobster-magazine.co.uk/free/lobster79/lob79-keenie-meenie-review.pdf

I’ve no doubt that the training given by the official British armed forces does stress the observance of human rights. However, this still does not absolve us of training the troops of brutally oppressive regimes, which those providing the assistance must know will ignore anything they are taught about observing human rights.

The mercenaries, however, are rather different. They don’t just providing training, but have actually participated in atrocities. During the proxy war against the Soviet Union in Afghanistan, the head of the CIA’s Afghan Task Force declared that Thatcher was to the right of Attila the Hun and remarked on the lack of any legal restraint on MI6. Miller’s book quotes him as saying that they had a willingness to do jobs he wouldn’t touch. This comes from a senior figure in the organisation that helped overthrow Salvador Allende in Chile and install the Fascist dictatorship of General Pinochet.

Britain has spent too long training and providing guns and troops to the world’s thugs and butchers. It’s long past time we stopped. But the last time anyone suggested we should have an ethical foreign policy was Robin Cook under Tony Blair. Which after the Iraq invasion sounds like a very sick joke.

Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis

Published by Anonymous (not verified) on Sun, 30/08/2020 - 9:00pm in

The economic cataclysm brought on by the coronavirus caught American consumers in an extremely precarious position — one that was evident well before more than 50 million people filed for unemployment. By the end of last year, Americans had racked up nearly $4.2 trillion in consumer debt, not including mortgage debt — a record high. The greatest contributor to this surge was not credit card spending or student debt or auto loans, but something newer and, for many borrowers, even riskier: high-interest personal loans, increasingly offered by online financial technology companies known as “fintechs.”

These fintech firms have eclipsed banks and other traditional credit suppliers to become the nation’s No. 1 source of personal loans — the kind of loans people take out when they need extra cash to stay afloat, or when they have already amassed large amounts of debt and are looking to refinance. At the end of 2019, an unprecedented 20.8 million Americans owed money on at least one personal loan — more than one-third of which came from a fintech company.

This surge in fintech lending may have dire consequences for American consumers. Just as financial engineering by Wall Street banks fueled unsustainable consumer borrowing in the 2000s, online fintech companies’ quest to squeeze more debt out of borrowers through loans signed via a few clicks on screens has helped set the stage for a new consumer financial crisis today, an investigation by The Intercept and Type Investigations reveals.

Such borrowing might provide short-term relief to some Americans. And, in light of the current crisis, some fintech firms are working with borrowers to defer payments temporarily. But ultimately, the surge of fintech lending in recent years will likely result in a massive wave of loan defaults over the coming months, as borrowers burn through enhanced unemployment benefits, which have been reduced since the end of July, and the stimulus payments that the federal government began sending out in April. The resulting spike in defaults will be catastrophic for consumer credit.

“The significant GDP decline and unemployment spike in 2020 will pressure borrowers’ income levels and ability to make loan payments,” analysts at Fitch Ratings warned in May. Online fintech loans may be the first to go unpaid, as consumers prioritize keeping up with payments on their most essential possessions, such as homes and cars.

Moreover, Trump administration banking officials have begun to deregulate the industry. Those rule changes are poised to vault already aggressive lending into overdrive, capitalizing on desperation.

A man walks by the Office of the Comptroller of the Currency logo as it appears on OCC headquarters in Washington, D.C., as seen on September 9, 2019.

A man walks by the Office of the Comptroller of the Currency logo as it appears on OCC headquarters in Washington, D.C., on Sept. 9, 2019.

Photo: Graeme Sloan/Sipa USA via AP

In late May, the Office of the Comptroller of the Currency, which regulates federally chartered banks, finalized a rule that would supercharge the online lending industry by bowling over the state interest rate limits that currently protect consumers. In June, the Federal Deposit Insurance Corporation finalized an equivalent rule that would cover the state-chartered financial institutions that currently dominate the online lending industry.

The attorneys general of California, New York, and Illinois have sued the OCC, contending that its rule violates federal banking law and other statutes, “and would facilitate predatory lending.” If those rules stand, borrowers in many states will face even higher interest rates than they do today, with state regulators powerless to stop them. A second lawsuit targets the FDIC rule.

The OCC is now taking comments on a separate proposed rule that declares a national bank the “true lender” in any partnership, further adding to fintechs’ ability to sidestep state banking regulations.

The mass unemployment brought on by the coronavirus, which has heightened uncertainty about who will be able to pay the loans back, has made investors who fund these loans skittish about pouring more money into the fintech industry, analysts say.

But once the pandemic eases and the economy improves, the new rules mean that the fintech industry — particularly the companies with the largest cash reserves, which are best positioned to weather the current crisis — will be poised for a major comeback. Even now, companies with cash reserves are pressing ahead with new loans, using invasive technologies to scrutinize borrowers’ bank accounts and other assets.

Many fintech companies offer loans in four and five figures while charging interest rates that can range up to 25 percent, 30 percent, or more per year — at a time when the cost of funds to bankers remains at near-historic lows. Some fintechs charge annual interest rates between 160 and 299 percent, in payday lender territory. But the fintech industry is operating at a scale that rivals the storefront payday lending industry.

Their expansion has been driven by firms that position themselves as consumer-friendlier alternatives, with names such as Best Egg, Prosper Marketplace, LendingClub, Avant, SoFi, and Upstart, which lend larger sums of money: often $15,000 or more, to be paid back over three or five years.

These companies are backed by pools of investors that include funds managed by George Soros’s wealth management fund and Goldman Sachs.

Fintechs market themselves as helping struggling Americans by offering cash more quickly than banks or other traditional institutions. And, indeed, for some people, these loans can be a godsend: providing them a financial cushion that allows them to ultimately dig themselves out of debt. Personal finance blogs and online chat boards teem with fintech loan success stories and advice for those struggling to bring their debt balances down and their credit scores up.

On the whole, however, the high-interest loans offered by fintech companies leave borrowers even worse off than before: drowning in an ever-rising sea of debt, with sizable numbers of borrowers unable to keep up with bills. Researchers have found that even before the coronavirus crisis, fintech borrowers were prone to fall behind on their debt payments.

So far, fintech companies have been constrained in many parts of the country by state interest rate limits that protect consumers from excessively costly loans. While fintechs are typically new to the banking industry, seeking fertile ground for profitable business disruption, they rely on old-school, state-chartered bank partners to actually issue the loans.

With the Trump administration mobilizing to deregulate those banks, however, borrowers will be at increased risk.

Members of both the Obama and Trump administrations have also pushed for a federal fintech charter that would allow fintech companies to sidestep state regulators, on the premise that it would help improve consumers’ access to credit. Raj Date, a Prosper Marketplace board member and the founding deputy director of the Consumer Financial Protection Bureau, sees fintech loans as “streamlining distribution into people’s lives” — a convenience for consumers in the era of Uber and Airbnb. “It’s about making the look and feel in financial services as easy as every other thing in your life,” he said in an interview.

In their quest to sign up new borrowers, however, fintechs are pushing the limits of what consumers can actually pay back. The parallels to predatory subprime mortgage lending are too close to ignore, said Diane Standaert, director of the Hope Policy Institute, a consumer advocacy group, and former executive vice president of the Center for Responsible Lending: “It’s like we’re repeating history.”

Preying on Desperate Borrowers

Finding customers whose finances have already spun out of control is a key to the fintech business model. Fintech companies decide what interest rates to charge by analyzing the risk profiles of prospective borrowers. Some base their calculations largely on a borrower’s FICO score. Others use custom algorithms. The higher the risk, the higher the interest rate.

“Part and parcel of the thinking [was] the customer we wanted to serve,” said Jeffrey Meiler, the founder and CEO of Best Egg, on a podcast for fintech investors. “When we really analyzed who we were going to be working with, who we were going to be helping here, it was typically a consumer who is 46 years old, is an individual that has liabilities that exceed assets, and they’re carrying typically $15,000-plus in credit card debt. And they’re looking to make a change.”

In Cleveland, Ohio, Kenneth Gibson fit that description. In the mid-2000s, he opened a restaurant and nightclub down the road from a strip mall in Cleveland Heights. Business was good. But in the winter of 2014, the movie theater in the strip mall closed, along with the nearby Walmart, leaving the area largely desolate during a rough winter. Business at the nightclub fell precipitously, Gibson recalled.

Gibson, now 63, was determined to keep the business going. He ran up tabs on multiple credit cards. But the business still wasn’t making enough money for him to pay back the debts that were piling up or to carry out the renovations he wanted to make on a new location in nearby Shaker Heights. He needed another source of funds.

In the summer of 2016, Gibson’s son suggested that he try getting a loan from Best Egg. It was simple for Gibson to apply online. Initially, he said, Best Egg turned him down. An agent got back to him a few weeks later, however, to discuss some adjustments to Gibson’s application, Gibson said. Once the updated application went through, $17,576.85 appeared in his bank account: the result of an $18,500 loan, minus a 5 percent cut for the lender.

That lender, the loan papers spelled out, was not Best Egg, nor its Delaware-based parent company Marlette Funding. The money actually came from a New Jersey financial institution called Cross River Bank. That meant Gibson’s loan would be subject to New Jersey’s interest rate, not Ohio’s.

Not that Gibson was paying attention to the details. “I don’t even know the amount they gave me,” he said. “I was scrambling. That wasn’t enough to do what I needed to do, so I got other loans, from credit cards or something, to upgrade the business.”

The annual interest rate on Gibson’s loan from Best Egg was a steep 27.25 percent, which vastly exceeded Ohio’s 8 percent annual interest rate limit. With broad exceptions, including payday lending, charging higher interest is barred as usury. But Best Egg and other fintech companies leapfrog over state interest rate caps via a legal springboard that allows lenders from elsewhere in the country to rely on their home state laws — and New Jersey allows interest of up to 30 percent for consumers.

Other online lenders charge even more to some borrowers by piggybacking on Utah banks with a special charter that licenses them to charge interest without any maximum at all. Utah’s WebBank supplies loans for Prosper, Avant, and other mainstream fintech lenders.

According to the terms of his loan, Gibson was required to make monthly payments of $567.67 for 60 months. For five months, he managed to stay current on his payments.

Ultimately, though, the loan from Best Egg didn’t provide a path to financial security. Instead, it dragged him even deeper into distress as his business and health took a turn for the worse.

Marlette Funding and Cross River Bank did not respond to questions about Gibson’s loan.

Gibson is in good company. Even before the pandemic, as much as $1 in every $10 borrowed from Best Egg could ultimately go unpaid, analysts at Kroll Bond Rating Agency estimated. And Best Egg performed better than peers like Avant, which as of early this year was projected to see as much as $1 in every $5 in certain pools go south.

In mid-July, KBRA, the leading ratings agency for the online personal loan industry, announced ratings watches with the potential for future downgrading on $5.6 billion in securities, noting that “uncertainties remain as to how borrowers will perform after the extra $600 weekly unemployment benefit expires at the end of July, other consumer debt products exit their deferral periods, and if the unemployment rate will remain elevated or increase due to continued economic pressure caused by efforts to contain the spread of COVID-19.”

In mid-June, KBRA found that about 10 percent of Best Egg borrowers had asked for payment extensions and another 6 percent in some loan pools were at least a month behind on their payments despite government coronavirus financial aid programs.

And in their August 2020 report on a Best Egg loan pool, KBRA’s analysts acknowledged that high-interest, high-risk loans in the mix could be perceived as “predatory lending” and lead to a backlash.

“These customers may have low income, limited financial means and a negative or limited credit history,” says a section headed “Perception of the Subprime Lending Market.” “Based on one’s view of this sector, it may be interpreted that these lenders are providing credit to an underserved demographic or conversely that they are engaging in predatory lending. This perception could cause lenders and capital providers to exit this market in an economic downturn or if social acceptance is negative.”

A decade after the financial crisis, overleveraged Americans once again stand to lose all that they have.

“Like a fool, I borrowed all that money and just couldn’t catch up,” Gibson said.

Billionaire George Soros attends a discussion with Commerce Secretary Penny Pritzker and Tunisian President Beji Caid Essebsi and a group of American business leaders, at the Blair House May 20, 2015 in Washington, DC.

Billionaire George Soros attends a discussion with Commerce Secretary Penny Pritzker, Tunisian President Beji Caid Essebsi, and a group of American business leaders at the Blair House on May 20, 2015 in Washington, D.C.

Photo: Mark Wilson/Getty Images

The Hamster Wheel

For most lending institutions, having so many borrowers default on their loans would be unsustainable. Indeed, in 2017, investors including George Soros supplied a financial lifeline of up to $5 billion to Prosper Marketplace, after a surge of borrower defaults and balking investors had the fintech firm facing a threat to its survival. Still, Prosper continues to operate in the red: It lost $39.9 million in 2018, despite issuing $2.8 billion in loans that year, and another $13.7 million in 2019.

But, at least before the pandemic struck, investors continued to buy the securities packed with fintech loans, based on analyst projections that the high interest paid will more than offset the hefty share of risky loans that borrowers will be unable to pay off.

Early this year, KBRA reported that privately held Marlette, owner of Best Egg, is profitable.

The need to turn a profit puts pressure on fintech companies to issue even more loans, in order to generate more revenue from interest and fees for issuing the debt. (Borrowers often pay 5 percent or more on top of the principal and interest just to close the deal.) Last year, Best Egg lowered the minimum credit score that it required borrowers to have — from 640 to 620 — deeper into subprime territory, widening its potential customer pool but also opening itself to borrowers who may have an even harder time repaying their loans.

Todd H. Baker, a former banker and now senior fellow at the Richard Paul Richman Center for Business, Law, and Public Policy at Columbia Business and Law Schools, calls the online lending business dynamic “the hamster wheel.”

“They don’t make any money unless they sell the next loan,” he said. “That leads to enormous incentives to do things that you shouldn’t.”

To keep the cash flowing in once borrowers stop paying, fintech investors sell off bad loans to other investors who specialize in collecting whatever they can. And so it was that a Minnesota company called Absolute Resolutions Investments purchased Kenneth Gibson’s loan in June 2017, along with a heap of other rotten Best Egg debts.

IRS, SEC, and New York State records show a fund affiliated with George Soros’s investment management firm has been an investor in Best Egg loans as well as Prosper Marketplace. One of the 11 investment funds that offloaded the pool of Best Egg loans to Absolute Resolutions was QPB Holdings LTD, which is tied to Soros Fund Management and the Fund for Policy Reform, a financial engine behind Soros’s global projects advocating for human rights, democracy, and progressive politics.

Having purchased the rights to the loans from the Soros funds and other investors, Absolute Resolutions sued Gibson in Cuyahoga County court in early 2018, seeking more than $20,000 once interest and penalties were piled on — more than Gibson had borrowed in the first place.

Soros Fund Management has since established a policy precluding investments in products that do not provide a path to financial resilience.

Gibson had no way to pay that money back. The Cleveland Heights City Council declared his nightclub a nuisance in 2016, after police were repeatedly called to the parking lot to respond to disturbances. That was the end for the business.

Unable to repay the loan, and with their finances hurting even more following a medical crisis, Gibson and his wife declared bankruptcy in October 2018.

Yet Best Egg keeps on rolling. As platforms that simply serve as intermediaries between borrowers, banks, and investors, fintechs aren’t set back by borrowers’ failure to pay — as long as someone keeps buying blocks of the securities. Last year, Marlette packaged $1.3 billion worth of consumer loans for sale.

“They may be able to make the loan work for the company, even if [borrowers] ultimately default,” said Lauren Saunders, associate director at the National Consumer Law Center.

Thomas "Tom" Curry, comptroller of the U.S. currency, testifies before the Senate Committee on Banking, Housing, and Urban Affairs in Washington, D.C., on Sept. 20, 2016.

Thomas Curry, then comptroller of the U.S. currency, testifies before the Senate Committee on Banking, Housing, and Urban Affairs in Washington, D.C., on Sept. 20, 2016.

Photo: Pete Marovich/Bloomberg via Getty Images

A Recipe for Consumer Suffering

In Washington, fintech fanaticism has been a bipartisan affair. It was a banking regulator appointed by Barack Obama, Thomas Curry, who in the final weeks of that administration moved to allow the Office of the Comptroller of the Currency to charter fintech institutions, authorizing them to issue loans without partnering with traditional state-based banks. A federal fintech charter — a license for banks to do business under the oversight of federal regulators — would allow the companies to sidestep state regulators and state interest rate caps.

If fintechs have assurances they can charge higher interest rates, without concern that state regulators or courts might clamp down, the industry and its supporters contend, many consumers who previously couldn’t qualify for a loan would be able to get one.

In a speech at Georgetown University in December 2016, Curry raved about how fintechs had “great potential to expand financial inclusion, reach unbanked and underserved populations, make products and services safer and more efficient, and accelerate their delivery.”

A fintech charter also could help address a problem that has dogged online lenders since 2015: a federal appeals court decision that found that only the bank originating a loan could use its home state’s higher permitted interest rate in a state with lower caps, and could not transfer that rate to another company, such as a debt collection agency. That not only deterred lenders from making high-interest loans in New York, Connecticut, and Vermont but raised the possibility of the products getting blocked in other states too. A federal charter would allow fintechs to charge essentially whatever interest rates they wanted, anywhere in the country.

Donald Trump’s appointee as comptroller, Joseph Otting, took up the crusade to create a federal fintech charter and put out a call for applications in the summer of 2018. Otting had served as CEO of OneWest Bank while Treasury Secretary Steve Mnuchin was the bank’s chair, and there presided over aggressive foreclosures of mortgages relying on robosigned documents.

U.S. Comptroller of the Currency Joseph Otting addresses a conference on financial technology, or fintech, at the Federal Deposit Insurance Corporation April 24, 2019 in Arlington, Virginia.

U.S. Comptroller of the Currency Joseph Otting addresses a conference on financial technology, or fintech, at the Federal Deposit Insurance Corporation April 24, 2019 in Arlington, Va.

Photo: Chip Somodevilla/Getty Images

Otting resigned from the post in May 2020, handing the reins to another OneWest colleague, Brian Brooks, who in a statement upon taking office as acting comptroller made clear his intentions to carry on Otting’s work to deregulate fintech.

Dozens of firms expressed interest in a federal fintech charter. Speaking at the Antonin Scalia Law School at George Mason University in March 2019, Otting said his office was in talks with “25 to 50 entities” that “feel because they operate across multiple states that having a national banking charter is critical to their business plan.”

Earlier that day, his calendar shows, he made an appearance at the annual meeting of the Marketplace Lending Association, a trade group that represents fintech companies. He had already met with the Online Lenders Alliance, an association representing fintech firms specializing in high-interest loans — just as the Consumer Financial Protection Bureau was readying to roll back regulations requiring payday lenders to ensure that their borrowers have the ability to repay their loans. That change took effect in July.

Otting’s quest for a fintech charter suffered a setback in October, however, when a Manhattan federal court ruled against the Trump administration in a lawsuit filed by a state banking regulator. Judge Victor Marrero had found that the comptroller has the power only to license financial institutions that take customer deposits — a definition Congress set long ago with the National Bank Act. Because fintechs lend money that does not come from customer deposits, they don’t fall under the comptroller’s purview, Marrero ruled. In December, the Trump administration appealed the decision to the Second Circuit.

The lawsuit that led to Marrero’s ruling was filed by Maria Vullo, who until last year was superintendent of the New York State Department of Financial Services, which oversees hundreds of state-chartered financial institutions.

In an interview in her office a short stroll from Wall Street during her last weeks on the job, Vullo said she didn’t see an alternative to challenging the fintech industry’s push for a national charter.

“Combined with that attack really on the state regulatory system was the great concern of consumer groups with respect to payday lending and predatory practices,” she said. “Knowing what happened during the financial crisis.”

While serving as deputy attorney general of economic justice in 2010, when Andrew Cuomo served as New York state attorney general, Vullo had seen firsthand the wreckage left by Wall Street banks. A federal fintech charter, she had warned Curry in a January 2017 letter, would “imperil crucially important state-based consumer protection laws,” “create institutions that are too big to fail,” and “increase the risks presented by nonbank entities.”

Vullo remained concerned, even though Congress took steps to prevent a recurrence of the crisis driven by consumer debt and speculative investment. One provision of the 2010 Dodd-Frank Act requires banks that partner with investors on securitizations, including those associated with fintechs, to hold at least 5 percent of the product on their own books, aiming to discourage excessive risk-taking.

However, given the fintech industry’s complex web of online lending platforms, banks, securities pools, and investors, Vullo still sees no substitute for direct oversight by regulators.

“A lot of these nondepository institutions just have investors that are backing them, and I don’t know whether their credit decisions and their underwriting decisions and everything else are valid,” Vullo said. “They’re often selling these things in buckets and securitizing them — and, well, we’ve seen that before.”

And, as was the case during the financial crisis, if these lending institutions run into trouble, it’s consumers who stand to suffer most.

“These companies could be fly-by-night companies that then don’t survive, go away, and they’ve already sold the loans to people who are left holding them,” Vullo said. “And they are going after consumers for repayment of the loan, and there’s nobody to go to.”

Maria Vullo, superintendent of the New York Department of Finance, speaks during a Bloomberg Television interview in New York, U.S., on Nov. 30, 2017.

Maria Vullo, superintendent of the New York Department of Finance, speaks during a Bloomberg Television interview in New York on Nov. 30, 2017.

Photo: Victor J. Blue/Bloomberg via Getty Images

Evading Usury Laws

The fintech industry has worked hard to stymie regulation at both the state and federal level. In 2017, Vullo and Governor Cuomo asked the state legislature for the power to license and supervise fintech companies doing business in the state, and to place companies issuing consumer loans under $25,000 under the oversight of the Department of Financial Services.

In response, the fintech industry mobilized. State Assemblymember Phillip Goldfeder, a Democrat from Queens and former operative for New York Sen. Chuck Schumer, declined to seek reelection in 2016. Instead, he returned to a job he’d performed even while serving as a New York state lawmaker, according to his financial disclosures: heading government affairs for Cross River Bank, a major player in issuing online loans.

Though Goldfeder waited out the 2017 legislative session before officially signing on with the company as a lobbyist, his 26-year-old chief of staff joined Cross River in late 2016 while the assemblymember was still serving in Albany and is listed on early 2017 lobbying filings as a Cross River contact.

In 2017, Cross River also spent $65,769 on a lobbyist from Mercury Public Affairs who previously worked for Cuomo when he was U.S. secretary of Housing and Urban Development, and the Marketplace Lending Association paid another lobbying firm $30,000, according to records from New York’s Joint Commission on Public Ethics.

Cross River Bank did not respond to a request for comment.

Vullo’s measure ended up going nowhere. The bill that Cuomo eventually signed at the end of 2017 merely called for the creation of a task force to examine the issue of online lending. That task force never formed. And despite a sea-change election in 2018 that put Democrats fully in charge in Albany, no online consumer lending bill has emerged from the state legislature.

Vullo is now a consultant advising firms on financial regulation and is “regulator in residence” at a financial innovation think tank affiliated with the Partnership for New York City business group.

Lobbyists for the fintech industry also went to work at the federal level, pushing a bill that, despite the 2015 federal court opinion, would free fintech companies to lend in any state, at whatever interest rate borrowers will accept, and pass on bad loans to debt scavengers for collection.

That was also a reaction to efforts like those in New York and other states to place limits on the activities of fintech companies. In 2017, Colorado’s administrator of the state credit code sued Marlette and another fintech lender, Avant, arguing that these companies — not their respective partners Cross River and WebBank — were the actual lenders of record. That determination would make Best Egg and Avant loans subject to Colorado’s restrictions on the interest rates, finance charges, and late fees that can be charged to borrowers. Colorado law limits interest to as low as 15 percent, depending on the size of the loan.

In June, a state court judge sided with Colorado and against Marlette, finding that banks can’t hand other states’ interest rates to their business partners. Under a settlement reached in August, Marlette and Cross River agreed to terms increasing consumer protections, including a process for fielding complaints.

Cross River Bank spent more than $450,000 lobbying Congress and federal regulators between 2016 and 2018, while the deregulation bill was brewing in the House, according to federal lobbying disclosures. In addition, the Marketplace Lending Association spent more than $250,000 on lobbyists, including former congressional staffers from both sides of the aisle.

That action had bipartisan support. Democratic Rep. Gregory Meeks of New York, a longtime friend of the banking industry, co-sponsored the original bill with Republican Rep. Patrick McHenry of North Carolina. And progressive Democratic Rep. Maxine Waters, now chair of the House Financial Services Committee, introduced an amendment in committee that would allow the fintech state interest rate shell game to continue so long as rates go no higher than 36 percent — an interest rate that would violate the law in New York, Connecticut, Minnesota, and other states.

After Democrats regained control of the House in 2019, Trump’s banking regulators again jumped into action. In November, the OCC and FDIC proposed rules that together would allow debt agencies to collect on fintech loans even when the original bank’s interest rate is higher than that permitted in the borrower’s state. Two dozen state attorneys general declared their opposition to the FDIC version of the rule, including the three who in July sued the Office of the Comptroller.

“The FDIC simply lacks authority to undertake the Proposed Rule,” wrote Georgetown University law professor Adam Levitin, an expert on the regulation of consumer credit — calling it bad policy as well as illegal, “contrary to the FDIC’s duties to ensure the safety and soundness of State Banks and consumer protection from predatory lending.”

Levitin added in his comment on the proposed rule: “[B]anks’ involvement in the loans is just window dressing for the purpose of evading usury laws.”

The National Consumer Law Center, Americans for Financial Reform Education Fund, the NAACP, Public Citizen, and other groups concurred regarding the OCC version of the rule, warning of a door opening to wider predatory lending. “The OCC’s proposal plays right into the hands of high-cost lenders and their unceasing efforts to evade interest rate and other consumer protection laws,” the groups said in a joint comment.

Noting that the median state interest rate cap on a five-year, $10,000 loan is 25 percent APR, they added: “Efforts to evade state usury caps are inappropriate even if the rates do not reach the triple digits.”

No Protection

Even now, though, Americans who take out loans through fintech companies have few legal protections. Loan terms generally prohibit borrowers from taking court action against a fintech lender directly. Where there’s a dispute, loan agreements typically require borrowers to turn to arbitration proceedings.

Consumer attorneys have begun to sue the debt collectors that pick up the shards failed online loans leave behind.

In California, for example, lawyers are suing Velocity Investments in federal court on behalf of multiple clients, all Prosper Marketplace borrowers. They allege that Prosper violated California law, which requires two witnesses or a notary to grant power of attorney, when it issued the loan, and that Velocity’s attempts to collect those debts were therefore invalid. (The law firm working on behalf of Velocity Investments claims that Utah law applies; before May 2016, Utah did not have any witness or notary requirements for signing over power of attorney.)

Bankruptcy lawyers who try to pin down lenders to work out a settlement often find themselves flummoxed as well. “It’s almost impossible to find a mailing address for these people, because their business is all online,” said Mona Rubinstein, an Ohio attorney who represents clients fending off creditors.

One of her clients filed for bankruptcy in 2018 after taking out loans from five fintech lenders in succession, beginning in 2013: LendingClub, Best Egg, SoFi, Avant, and SunUp Financial, leaving substantial balances unpaid to all of them. In her bankruptcy papers, she reported possessing $50 in cash and $30 in her bank accounts.

This is familiar territory for the woman, who reported earning about $58,000 a year working in human resources and has declared bankruptcy twice before. When she last filed for Chapter 13 in 2005, she had $3,831 in debts outstanding to eight payday lenders and check cashers; another $11,300 to consumer finance companies, the analog predecessors to the fintech lenders; and another $17,672 to various credit card, retail, and medical creditors — owing $32,803 in all, not counting money she owed on her home.

That credit history didn’t stop fintech lenders from approving her loan requests, however. All told, she’d piled up $82,140 in debts to the fintechs — nearly triple the amount she’d previously owed more traditional lending firms.

Austin-based BorrowersFirst is yet another fintech lender this woman is indebted to, for $14,272. But her lawyer Rubinstein can forget about working out a deal with the lender, whose former chair, New York City-based investor Neil Wolfson, once promised it would rival Prosper and LendingClub in size. BorrowersFirst, despite $400 million in investment capital and a partnership with Cross River Bank, is in bankruptcy too.

By pushing consumers to the brink, in pursuit of market share and returns for investors, fintechs are also pushing the limits of sustainable lending. It’s a business model that’s profitable — so long as more Americans dig deeper into the debt hole and enough have money remaining in their bank accounts to fulfill automatic payments. But it courts calamity when the well runs dry.

This article was reported in partnership with Type Investigations.

The post Online lenders are preying on desperate borrowers and could trigger a new consumer financial crisis appeared first on The Intercept.

Real life Tories want tax increases

Published by Anonymous (not verified) on Sun, 30/08/2020 - 7:27pm in

In the light of this morning's debate on tax increases I will quote this thread from my friend and Tax Justice UK colleague Robert Palmer (I on the advisory board of TJUK):

Note Robert's PS: we are on the same hymn sheet. Let's have tax increases for sure, but they must not be overall increases but any money raised now must be used to give cuts to those least well off in our society. That's what tax justice is about, and it makes complete economic sense right now.

The message from Downing Street this morning is ‘bring back austerity’

Published by Anonymous (not verified) on Sun, 30/08/2020 - 7:22pm in

I have already discussed the Treasury's callous proposal to increase taxes on the wealthy without compensating tax cuts for those on lower incomes that features in some, right-wing, newspap[er this morning, obviously as a result of carefully placed leaks. The net effect will be to increase unemployment when we are going to face record levels of unemployment, very soon.

But there is another dimension to this. As the Telegraph notes:

[T]he proposals [from the Treasury] have been met with fierce opposition in No 10, with senior figures said to be instinctively opposed, and expressing frustration that officials are failing to present other options, such as cutbacks to Whitehall departments’ current spending budgets.

While Downing Street has indicated it could live with a few billion pounds worth of tax rises, especially the elimination of perceived loopholes for the wealthiest in the areas of capital gains and pensions, Boris Johnson’s aides fear conducting a major tax raid on Middle England in the midst of the pandemic risks derailing the economic recovery.

Instead, they favour introducing cuts to current spending, but are said to be highly frustrated at the failure of officials across government to identify unnecessary spending.

The message from Downing Street this morning is, in that case, 'bring back austerity'.

It is as if the lessons of George Osborne's failure have not been learned.

And it is as if we are living in a country with such bounteous government services that of course they are sitting there waiting to be cut.

The reality was that Osborne's austerity failed. It imposed untold harm. It hit the weakest in society by far the hardest. It left countless at risk. Many children were made vulnerable. People died as a result of health care cuts. We were unable to face a pandemic and the consequence has been obvious. And the reason why officials cannot find anything to cut is that they know that to cut will simply create harm. That should be obvious to No. 10 too.

But it's also economically illiterate to think of cuts now. We are going to face massive unemployment in the UK. Official forecasts are only 3 million, or so. I think they are wildly optimistic. But whoever is right, and we do not know as yet, the number looking for work will be as big as any I have known in my lifetime. Most will never have seen anything like this. And every single government spending cut will make this worse. Every cut will cost another job. And there will be no private sector ones to replace them as that part of the economy is weighed down by the shackles of government-backed debt imposed on it to survive 2020.

So, what No. 10 really want is mass unemployment. And I fear that they will not be happy until they get it.

Labour isn’t just failing Scotland with its denial on the likelihood of Scottish independence: it’s failing the rest of the UK as well

Published by Anonymous (not verified) on Sun, 30/08/2020 - 5:57pm in

I am an instinctive nationalist. I strongly suspect that my Irish roots have much to do with this. I have known where my instincts on that issue have lain since I was a teenager, albeit (and I stress this) always on the side of peace as well.

I am convinced that if there are clear cultural reasons why a majority of people within a domain self-identify as a nation then it is appropriate that they be recognised as such. Hence my support for Scottish nationalism, and some other causes as well, come to that.

The same instinct also very strongly supports my belief that those in a minority in any domain who share a culture must also have their rights respected, and be allowed to live in peace and without harassment within that community, with respect being given for the value that their differences in perspective add to that community.

I do not, then, see nationalism as being exclusive, jingoistic or in any sense racist, although there are undoubtedly some nationalists who do. If, as I think, nationalism is about collective determination within very clear environments of mutually respected difference, it is about everything but the oppressiveness of racism. It is instead about mutual self-determination. That would be my hope for Scotland as it moves towards independence, as it is surely doing.

But if that is what I now see to be Scotland’s near certain, and imminent, future, that leaves the most almighty questions hanging over what I will appropriately call English politics. I do so because I know Wales and Northern Ireland to be very different places from England that might also seek their own independence in due course. For those who have bothered to visit them (and the vast majority of the English have, I suspect, never visited any one of the three other countries within the Union) the differences in culture will be readily apparent. I can then, rightly, talk about the issue for English politics.

The existential crisis that the seemingly inevitable departure of Scotland from the Union will create is, it would seem, something that all the major English parties (I refer to Conservatives, Labour and LibDems, but not the Greens who already have a quite separate Scottish party) have failed to address, having said which I will henceforth ignore the LibDems as a seemingly spent force, and focus solely on the other two.

The Tories are a Unionist party, albeit one that only really emerged under its own name as a Scottish political party from the 1950s onwards. But, as was the case in Ireland, the forfeiture of territory within the domain that they think their own is deeply personal in the case of the Conservatives. That is because I have no doubt that the Tory view of the Union is legal, almost entirely about the ownership of assets, which is an issue that can be very largely related to the title to land, and is almost feudal in outlook, based on a respect for ancient regimes of hierarchy that have no place at all in modern society. Political nuance, in the form of self-determination does not, in that case, feature in their view on this issue. This is, quite literally, about the maintenance of the fiefdom by a power elite. And that is a view that has transferred into some English thinking in which Scotland is simply seen as one of the old enemies that must be continually reminded of its place in the world. Political dialogues, like GERS, simply reinforce this view, suggesting that the down-beaten populace of the territory should be eternally grateful for the support that they receive, and not be troublesome in response. This was, after all, a Tory creation with the entire purpose of delivering that message.

There is no point spending a great deal of time engaging with this view: it is embedded; profoundly patronising; illogical; disrespectful of people and their opinions and never likely to change. It is the Conservative view, north and put of the border, and most especially it seems in the Border region.

But there is a twist to this. We do not actually have a Conservative government at present. The last Conservatives were expelled by Johnson from his party in the summer of 2019. What remains is a party with a quite different political philosophy that is far removed from that of the Conservatives. Indeed, it can be best summarised by the single word ‘destruction’. Its logic is that old edifices must be destroyed in pursuit of a new rentier capitalism, which also alienates old money. It is very likely that neither Johnson or Cummings will last long. It is also entirely possible that their philosophy will fail, and in the not too distant future as the debacle of Brexit becomes all too apparent. But that will not prevent their philosophy from having a legacy. And that legacy may well be best seen in Scotland becoming independent as a people unite in rejecting the entire ethos of English exceptionalism that will reach its apotheosis in the arrogance of Johnson and Cummings, and deliver the nadir of English influence all at the same time.

It is doubtful that the Tories can avoid this outcome. It is also doubtful that Scotland will now re-embrace a Union now so very clearly contrary to its ethos and best interests. The game of separation just needs to be played out. With it the end of an era of Tory rule might follow, its influence having been subject to a policy of self-destruction, which is all that Cummings and Johnson can now deliver. The Tories might, just, get away with Brexit, but letting the country be torn apart? I doubt their supporters will forgive that.

But where does that leave Labour?

First, and it must be said, between a rock and a hard place in Scotland. Labour’s day was over in Scotland before the Tories reached that point. For more than 50 years Labour dominated the Scottish political landscape, but that ended in 2015, and only the wildest optimist thinks that there is any chance of that changing any time soon in Scotland, most especially with the hopelessly incompetent Richard Leonard in charge. And, almost half of the remaining Labour supporters in Scotland support independence anyway: Labour cannot convince its own supporters in Scotland of the merit of its Unionist cause. Why the party in England remains so wedded to the Union is, in that case, hard to explain, barring all the usual old tribalist instincts that still dominate so much Labour politics.

The consequence is, however, dire for it. If any issue is likely to give Labour a majority in 2024 it is not Brexit, or Covid-19, but the end of the Union. And yet Labour has never given any hint, as far as I can recall, as to how it might deal with the now entirely foreseeable situation of having to manage the remainder of the UK when it will literally be a country without a name, an identity, a flag, its nuclear submarine bases, its hope of being net-zero carbon compliant and so much more besides.

Even more important, whilst Scotland securing independence will release the most massive energy within Scotland that will drive it forward in the necessary process of transition, almost every element of English pride will be crushed by Scotland’s departure and it can be expected that the usual, and in this case likely to be prolonged, stages of grieving will be gone through as a result. The hurt to national pride - and there is no point pretending that the sense of rejection will not be real, and give rise to a real sense of questioning of purpose - will be intense.

This might, of course, be a good thing. England, most especially, needs to realise just where it is on the world right now. That the answer will be that it is an isolated island off north-west Europe of little remaining strategic or economic consequence might be hard to accept for a country that still thinks itself a world power, long after anyone else really does. But that does not mean that adjustment without prior preparation will be easy, and of all the parties likely to have to manage that transition Labour is at present the most likely.

That need might arise soon: Labour will be in all senses a victim of circumstances on this issue. And yet it shows no signs of any form of preparedness for the biggest existential crisis in English politics for maybe 400 years. I find that quite shocking, and even deeply irresponsible, most especially as it is now apparent that this is an issue that will not be going away.

There is much that Labour needs to do if it is to have a chance of governing. Knowing how it will manage this situation is very high on that list. It had better begin to get its act together. If it's fair to say that the English Liberals under Lloyd George were never forgiven for signing the Treaty with Ireland in 1921, and never governed again, it’s also possible to think that the same fate might befall the Tories if, as I think likely, Scotland will resolve to leave before late 2024. But Labour without any real plan for government thereafter might not fill the vacuum left in UK politics at that point unless its thinking begins now. I just hope someone is doing it in that case. Or else we really do need to be thinking about alternatives, rather urgently.

They learn Orwell newspeak in the Cabinet Office

Published by Anonymous (not verified) on Sun, 30/08/2020 - 5:00pm in

So what was sold as getting rid of red tape is now actually “growing the customs sector”. The Tory Cabinet Office is crowing about increasing bureaucracy and about increasing the number of bureaucrats. What we were told was a cost has now, miraculously, been transformed into a benefit… In the phrase of the disconsulate civil... Read more

Workers’ Mail: Climate Change, COVID-19 and Wage Theft.

Published by Anonymous (not verified) on Sun, 30/08/2020 - 8:30am in

“As we reconstruct our economy after the pandemic we have an opportunity to build a stronger, fairer economic framework that includes a credible and coherent plan on climate change and energy. In rebuilding our economy from the COVID crisis it is critical that job creation efforts also reduce emissions and keep Australians safe from the devastating impacts of bushfires and climate change.” - Michele O'Neil, President, Australian Council of Trade Unions

The ACTU, as part of the Australian Climate Roundtable, has issued the statement “Far-Reaching Climate Change Risks to Australia Must be Reduced and Managed”, among other things, calling the Morrison Government to adopt a net-zero emissions target for 2050.

Comrades O'Neil and McManus, keep up the good work!

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For the workers

Workers have carried Australia through the pandemic.

We need politicians to realise that workers are the hidden heroes of this crisis.

(Sign the petition and/or join your union)

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“Employers from culturally and linguistically diverse backgrounds who exploit workers (including, or especially, from within their own ethnic communities) and then come before the Court and seek to rely on their own alleged ignorance of workplace laws or foreign cultural norms to mitigate any penalties that need to be applied when they are finally caught out”. - Judge John O’Sullivan, Federal Circuit Court.

The Fair Work Ombudsman secured a payment of $38,458 to 27 employees who had been underpaid by their employer. In addition, the employer was imposed penalties for $276,929, for deliberately breaching the law.

FWO took the case to court. That quote was part of Judge O’Sullivan’s decision. Two groups should read that quote carefully: (1) pro-business spokespeople (including apologists for mum-and-dad capitalists) and (2) identitarian Leftists.

To contact the Fair Work Ombudsman:

  • Website
  • Twitter
  • Facebook
  • Fair Work Infoline on 13 13 94 for free advice and assistance (free interpreter service is available on 13 14 50).

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Identity politics makes for strange bedfellows, yes?

How William Barr Is Weaponizing the Justice Department to Help Trump Win

Published by Anonymous (not verified) on Sat, 29/08/2020 - 8:00pm in

Tags 

Politics

On August 13, a day after President Donald Trump again charged that Democrats’ efforts to expand mail-in voting due to the pandemic will create “the greatest rigged election in history,” U.S. Attorney General William Barr too made unfounded and conspiratorial-sounding claims. Barr told Sean Hannity on Fox News that Democrats’ drive seeking to expand mail-in voting could raise “serious questions about the integrity of the election,” were “grossly irresponsible,” and “reckless.”

That was hardly the first time they seemed to agree. In a July House Judiciary hearing and in a June interview with Fox News, Barr joined Trump in his monthslong and spurious attacks on voting by mail. He told Fox that voting by mail “absolutely opens the floodgates to fraud,” adding, without evidence, that “right now a foreign country could print tens of thousands of counterfeit ballots.”

Citing Barr’s words in one tweet, Trump then upped the ante: “MILLIONS OF MAIL-IN BALLOTS WILL BE PRINTED BY FOREIGN COUNTRIES,AND OTHERS. IT WILL BE THE SCANDAL OF OUR TIMES!”

“Barr has admitted he has no evidence of widespread mail-voting fraud,” former federal prosecutor and former senior official at Homeland Security Paul Rosenzweig told me. “All he is doing is trying, unsuccessfully, to give Trump a basis for challenging the election. This is not the job of the Attorney General.”

Barr has violated numerous fundamental norms as attorney general, using his sweeping powers to carry out actions and judgments that are politically beneficial to the president’s reelection campaign. Many former Justice Department officials say Barr’s actions and public statements are increasingly aimed at helping Trump’s political interests and friends, leading to an unprecedented politicization of the department by the nation’s top law enforcement officer. A DOJ spokesperson did not respond to a request for comment on Barr’s actions and views for this story.

Now, with under 70 days to the presidential election, the actions that pose the most consequential harm are those that threaten a free and fair election — especially Barr’s work to undermine, rather than uphold, voting rights and to publicly accuse Trump’s enemies.

“Barr has utterly and completely trashed the norm of DOJ separation from politics,” Donald Ayer, a former deputy attorney general who served in the George H.W. Bush administration just prior to Barr’s first stint as AG, told me. “For the last several months, Barr has been fully engaged in using the tools of the Justice Department primarily for the purpose of advancing the president’s election prospects.”

Voter Suppression

Barr’s attacks on mail-in voting seem to be well-choreographed with the president. “It has been repeatedly shown that voter fraud is rare, yet Barr has continued to spew Trump’s false claim that mail-in voting is riddled with fraud,” Gerry Hebert, who spent 21 years working in the DOJ on voting rights issues, told me.

Hebert also stressed that Barr’s Justice Department has failed to protect voting rights. “There have been literally dozens of lawsuits all over the country to protect voting rights during the pandemic, so that voters don’t have to choose between voting and putting their health at risk. The Barr DOJ hasn’t yet weighed in on any of those cases.”

Specifically, the Justice Department has failed to pursue pending court cases that seek to stop discriminatory voting practices, including ones that happened in 2018, 2019, and 2020, and these or similar cases could come up before November, say former DOJ lawyers. It has abstained from taking legal action in cases of voter purges that occurred in Georgia and Ohio in both 2018 and 2019. Likewise, the DOJ has been missing in action in cases involving polling place reductions during this year’s primaries in Wisconsin, Kentucky, and Georgia. And it has failed to take action in cases stemming from too few — or error-prone — voting machines in minority neighborhoods.

In the past, attorneys general have used their powers to send personnel to monitor polling sites to ensure there are no voting irregularities involving civil rights abuses; the Department of Justice did this in 2016. Critics fear now that Barr may heed Trump’s suggestions last week — when he railed, without evidence, that he could only lose due to a “rigged” election by Democrats and called for deploying law enforcement personnel — and send monitors who would intimidate voters, suppressing the overall vote

“It has been repeatedly shown that voter fraud is rare, yet Barr has continued to spew Trump’s false claim that mail-in voting is riddled with fraud.”

“We will have to see whether Barr is prepared to implement what Trump wants, which appears to be harnessing law enforcement agencies to participate in an aggressive voter suppression effort,” former DOJ inspector general Michael Bromwich told me. “Neither Trump nor Barr has any legal authority over sheriffs, police departments, or state AGs, but Trump has now green-lighted rogue law enforcement elements around the country to undertake such efforts as voter suppression vigilantes. An attorney general who believed in the rule of law and democracy would come out four-square against such tactics.”

What’s more, Barr’s DOJ may wind up defending the U.S. Postal Service against lawsuits that were filed in mid-August by several state attorneys general challenging cutbacks in services that have been made in recent months that threaten to hurt the ability of the USPS to handle the greatly expanded volume of mail-in ballots expected this year. Barr’s DOJ could also back lawsuits by the Republican National Committee that have been filed in a few swing states, including Pennsylvania and Nevada, to curb mail-in voting plans by the states.

Barr’s commitment to ensuring election integrity became more suspect when the attorney general was asked at the House Judiciary hearing if the president could legally delay the election. Barr did not simply answer no but left the door open by replying evasively that “I’ve never been asked that question before” and “I’ve never looked into that.”

“Even a first-year law student would know the answer to that question,” Hebert quipped.

FILE - In this June 23, 2020, file photo voting stations are set up in the South Wing of the Kentucky Exposition Center for voters to cast their ballot in the Kentucky primary in Louisville, Ky. Just over four months before Election Day, President Donald Trump is escalating his efforts to delegitimize the upcoming presidential election. Last week he made a startling, and unfounded, claim that 2020 will be “the most corrupt election in the history of our country." (AP Photo/Timothy D. Easley, File)

Voting stations are set up in the South Wing of the Kentucky Exposition Center for voters to cast their ballot in the Kentucky primary in Louisville, Ky., on June 23, 2020.

Photo: Timothy D. Easley/AP

An October Surprise

Barr may be on the verge of deploying another unusual and norm-busting tactic. In May 2019, Barr launched an inquiry when he tapped Connecticut federal prosecutor John Durham to investigate the origins of how FBI and CIA officials in 2016 began “Operation Crossfire” looking at Kremlin meddling in the elections and possible collusion with Trump’s campaign.

The Durham inquiry was also spurred by Trump’s disdain for special counsel Robert Mueller’s two-year probe that had just concluded that Russia interfered in 2016 in “sweeping and systematic” ways to help Trump win — a verdict that Trump has used to create a dark picture of a “deep state” of foes seeking to destroy his presidency. Now, critics fear that Barr will try to release a report on Durham’s probe this fall that Barr can spin to placate Trump — as the AG did by downplaying key parts of the Mueller report — fueling a campaign attack against Democrats. In his recent judiciary testimony, Barr was pressed on if and when a report on Durham might be released: Barr flatly declined to rule out its release prior to the elections, despite a Justice Department tradition of not making public any information that could sway an election 60 to 90 days before. “Any report will be, in my judgment, not one that is covered by the policy,” he told the Judiciary Committee about his position.

“We’re not going to do anything for the purpose of affecting the election, but we’re trying to get some things done before the election.”

Barr has also made several public comments suggesting that the Durham probe has found some damaging and surprising new information. In his July House testimony, Barr called the FBI probe of possible Trump campaign collusion with Moscow “bogus” and in a Fox news interview, he charged the FBI with trying to “sabotage the presidency.” Barr’s stream of comments fit with his attempts to undercut the Mueller report and bolster Trump’s barrage of charges that the Russia investigations were a “hoax,” while touting what Durham in tandem with Barr is pursuing.

“Given his past misrepresentations of the Mueller report, the American people should look very carefully and very skeptically at absolutely anything Barr announces this year,” Justin Levitt, a former DOJ prosecutor who now is a law professor at Loyola Law School in Los Angeles, told me. Barr could take Durham’s findings and spin them as well, to make them seem more damning of the early Russia probes by the FBI and CIA, say former DOJ officials.

“Barr’s active promotion of Durham’s investigation has already discredited it in the eyes of many,” Bromwich told The Intercept. “Any criminal charges or public report released close in time to the election — generally defined as within 60 days — would be viewed with great skepticism.”

Other former DOJ officials went farther. “It seems inevitable that Barr will attempt to unleash an October surprise through the Durham investigation,” Rosenzweig, the former prosecutor, told me.

But Trump’s hopes of big charges before the election seem unlikely, say former DOJ officials, who note that a recent 1,000-page bipartisan report from the Senate Intelligence Committee went further than Mueller in providing significant new evidence of numerous contacts between Trump campaign officials and Russians; according to the report, Konstantin Kilimnik, an active Kremlin military intelligence officer had extensive contacts with Trump’s campaign chair Paul Manafort, who was convicted on eight counts of financial and tax crimes.

Nevertheless, there are mounting signs that Barr and Durham are moving forward on their inquiry — and that Barr may be under pressure from Trump.

Barr has said that Durham, with whom he has reportedly worked closely (including making a trip to Italy last year to do interviews), is making progress and seems intent on digging into other possible misconduct involving FBI and CIA officials; ex-CIA Director John Brennan was reportedly interviewed this month for eight hours but has been told he’s not a target.

On August 12, Barr coyly told conservative talk-radio commentator Buck Sexton that “we’re not going to do anything for the purpose of affecting the election, but we’re trying to get some things done before the election.”

The next day, Trump told Fox News that “Bill Barr has the chance to be the greatest of all time. But if he wants to be politically correct, he’ll be just another guy.” And then, on August 14, it was announced that an ex-FBI lawyer, Kevin Clinesmith, who was involved in one part of the 2016 inquiry would plead guilty to a charge of falsifying a document. Clinesmith formally entered his plea the following week.

Law and Order

Finally, as Trump’s law-and-order mantra has become a central campaign motif, Barr’s crackdown on largely peaceful protests in D.C., and authorizing federal agents to help fight violent crime in several cities run by Democrats look like ominous campaign ploys and possible harbingers of what’s ahead before November. Dubbed “Operation Legend,” the program began in Kansas City, Missouri, on July 8 and was soon after launched in eight other cities run by Democrats including Chicago; Albuquerque, New Mexico;  Cleveland; and Detroit, ostensibly to reduce violent crime with a key focus on gun violence.

Some former DOJ officials were taken aback last month when in an unorthodox move for an attorney general, Barr joined Trump at the White House for a campaign-style announcement about Operation Legend’s expansion to several cities run by Democrats, including Chicago. Chicago Mayor Lori Lightfoot dubbed the event a “political stunt.”

Barr’s leading role in Operation Legend at times overlaps — and seems to be inspired by — a conspiratorial, far-right, and dystopian vision of urban chaos he has linked to Black Lives Matter protests, which the attorney general alleged in a Fox interview this month with Mark Levin. Barr labeled some Black Lives Matter protesters “bolsheviks” engaged in “urban guerrilla warfare,” driven by a “lust for power.”

Ex-prosecutor Rosenzweig was stunned by Barr’s comments to Levin. “They’re flat-out racist, dogwhistle, white supremacist nonsense,” he told me.

As criticism of Operation Legend mounted, Barr held a press briefing on August 19 in Kansas City to trumpet some 1,500 arrests in nine cities to date, including about 217 facing federal charges, according to Barr. Barr’s explanation for why there’s been a recent uptick in violent crime provided new signs that the program has a distinctly political edge: At his briefing, Barr cited a few possible causes such as “pent-up aggression” due to local and state coronavirus quarantine orders, the “defund the police” movement, and “premature release of violent criminals by the courts” during the pandemic.

Just where the DOJ may opt to expand the program before the election isn’t clear, but some former Justice Department lawyers fret that it will be increasingly aimed at cities in swing states.

What’s more, former DOJ officials note that it’s highly unusual for the feds to impose their will in cities and states without being invited initially, which has been the case so far in most of the urban areas targeted by Operation Legend — a trend that suggests just how political the DOJ campaign has been.

DOJ Inspector General Michael Horowitz in late July announced an inquiry that will examine how federal law enforcement, under Barr’s general direction, forcefully removed protesters from the area near Lafayette Square in Washington, D.C., right before Trump’s photo-op holding a Bible upside down at a nearby church. But the results of that inquiry are likely to take months, if not years.

“Barr can’t achieve his mission of creating an unrestrained president if Trump isn’t reelected.”

“Barr has proven his loyalty to the president at any cost,” Rep. Eric Swalwell, who sits on the House Judiciary panel that grilled Barr in July, told The Intercept. “He’s shown a willingness to protect the president’s friends and to punish his enemies” — including dropping the DOJ’s case against former national security adviser Michael Flynn, despite his twice pleading guilty to lying to the FBI about sanction talks he had with Russia’s ambassador before Trump took office. Barr also intervened to suggest a lesser punishment for Trump’s long-time friend Roger Stone who was convicted on seven counts including lying to Congress and witness tampering; but Trump commuted his three-year prison sentence this summer to keep Stone out of jail.

Swalwell noted that among those Barr punished was Geoffrey Berman, the former U.S. attorney for the Southern District of New York, who Barr, in tandem with Trump, suddenly forced out in June on dubious grounds. Berman’s office has been investigating a few high-profile cases involving Trump allies, including Trump lawyer Rudy Giuliani. The Southern District has also been involved in a long-running probe into Trump’s inaugural funding, and it handled the successful prosecution of one-time Trump lawyer Michael Cohen who implicated Trump in campaign finance violations involving hush money payments to porn star Stormy Daniels to silence her in 2016 from discussing their affair years earlier.

Ayer, who has known Barr for almost four decades, stressed that Barr’s litany of actions to help Trump’s political agenda seem rooted in Barr’s long-standing advocacy of expanding presidential powers. “Barr has been committed for a very long time to a concept of the presidency that is virtually all-powerful,” Ayer told me last year. In many ways, Barr’s concept of an all-powerful presidency seems to fit well with Trump’s own oft-expressed absolutist view of his powers, Ayer added. “Barr can’t achieve his mission of creating an unrestrained president if Trump isn’t reelected.”

The post How William Barr Is Weaponizing the Justice Department to Help Trump Win appeared first on The Intercept.

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