Category: regulation

Cyber Currencies’ Fatal flaw

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You can never be sure that someone won’t come after your assets via the blockchain.

When you realize that almost every square inch of the earth (Antarctica excepted) was stolen at some point, and the same applies to most assets in the modern world.

With Bitcoin and its ilk, there is no statute of limitations:

An interesting little observation by Izzy Kaminska over in the FT about a problem that Bitcoin faces. It’s a legal problem that leads to an economic one. And the problem Bitcoin faces is one that is based upon the very existence of the blockchain itself. There’s a good reason that all functioning economic systems have something akin to a market ouvert rule, or something like squatters’ rights. Note that I say something like, not exactly either of those rules. For example, if you find money in the street then you can’t and shouldn’t just keep it. But if you hand it in to the police, no one then claims if for some period of time, then it does become yours. No, you can’t just move into someone elses’ house and insist that it belongs to you. But move in for long enough (the time period varies) and no one complains or does anything and it becomes yours. You don’t get title when you buy stolen goods. But something you bought in good faith, in an open marketplace, does become yours eventually. Even if it had been stolen some point further down the ownership chain.

 The reason for these rules, and yes they vary across places and concerning different specific items, is that at some point we’ve got to give up on historic unfairnesses and or illegalities and just get on with the current allocation of scarce resources. We just don’t want to wall off something that may or may not have been stolen in, say, 1820, from being put to use today. We almost certainly would want to make sure that something stolen yesterday was returned to its rightful owner. But at some point between those two dates we’ve got to have a cut off point.

………

And that’s where Bitcoin has the problem, in that very existence of the blockchain:

The first relates to the ongoing legal recourse rights of Bitfinex victims. Even though they may have lost their right to pursue Bitfinex for compensation, they are still going to be entitled to track the funds across the blockchain to seek recourse from whomsoever receives the bitcoins in their accounts. That’s good news for victims, but mostly likely very bad news for bitcoin’s fungible state and thus its status as a medium of exchange.

Just one successful claim by a victim who tracks his funds to an identifiable third party, and the precedent is set. Any exchanges dealing with bitcoin in a legitimate capacity would from then on be inclined to do much stronger due diligence on whether the bitcoins being deposited in their system were connected to ill-gotten gains. This in turn would open the door to the black-listing of funds that can not prove they were originated honestly via legitimate earnings.

Of course, people should not steal things. And yet for a currency to work it has to be possible to take the currency at its face value. Thus it may well be that the bank robber paid you for his beer with stolen money but you got it fair and square and thus the bank doesn’t get it back as and when they find out. Another way to put this is that the crime dies with the criminal. And yet the blockchain upends all of that. Because every transaction which any one bitcoin has been involved in is traceable.

The problem with cyber currencies and the rest of the internet enabled Libertarian-Utopian is that they believe that computer code developed over a few months can somehow trump contract law and record keeping that has been developed over the past 1000+ years.

Ask yourself, what happens if you have a fruit tree with branches that cross a property line.  Who owns the fruit on those branches?

It is very complicated.

In some places, the branches, and fruit, belong to the property owner over whose property it extends.

In others, it belongs to the property owner of the location of the trunk, but  the owner of the property can prune branches over their yard and dig up roots under the yard.

In some places, it belongs to one person when it on the branch, and another when the fruit falls.

In some places, a landowner can sue for trespass for branches over their yard.

This is just a fruit tree.

Recording property transactions are far more significant, and potentially far more complex, and we saw what happened when the banks decided to create MERS to “streamline” fraud real estate transactions.

I’m an engineer, not a lawyer, dammit, * but is clear to me that the people behind these efforts have only the vaguest idea of how society works, and how long it took to get society works.

*I love it when I get to go all Dr. McCoy!

David Sirota Collects Another Scalp

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Last month David Sirota’s reporting revealed conflicts of interest in the review of the merger between Anthem and Cigna, resulting in regulatory and political push-back against the deal.

This month, his reporting of Chris Christie’s sweet heart deals with political contributor hedge funds has led to the New Jersey pensions backing away from the deals:

Governor Chris Christie’s pension officials on Wednesday signed off on a major divestment of hedge funds — a move that is expected to save taxpayers and retirees tens of millions of dollars in fees that had been flowing to Wall Street. The decision caps an intensifying campaign against the hedge fund investments by groups representing retirees.

 The campaign was prompted by an International Business Times investigative series that first spotlighted the skyrocketing fees.

 At a meeting of the Christie-controlled State Investment Council, pension officials cut in half the amount of state pension money that will be allocated to hedge funds, according to a press release from the New Jersey state AFL-CIO. That $3 billion reduction was part of an overall reduction of pension investments in higher-risk “alternative investments” that generate big fees, but whose returns have in many cases failed to keep pace with low-fee stock index funds. In all, the reduction in hedge fund investments is expected to save more than $120 million in fees next year, according to the labor federation, whose retiree members rely on the pension system.

 ………

 After a decade of public pensions pumping more retiree money into alternative investments, new questions have recently been raised about the fees and returns generated by the strategy. Major pension funds in California and New York have reduced their investments in hedge funds.

Back in 2014, before the national debate over pension fees had intensified, IBT first began reporting on how Christie’s administration had significantly increased the amount of pension money flowing to high-fee alternative investment firms. The two-pronged year-long series explored the politics of pension investments as well as the revenue implications of the investment shift.

 Under Christie, pension investments flowed to politically connected firms whose employees had delivered campaign donations to Christie-linked political groups. IBT also documented how Christie’s political team was in contact with the governor’s top pension adviser. That adviser’s private firm concurrently invested in a fund he had directed public pension money into. The adviser subsequently resigned after the state’s largest labor federation filed an ethics complaint against him.

So, these Gaultian supermen on Wall Street have once again been proved to be, “parasites”, “looters”, and “moochers.”

We need to shut down this sort of unproductive rent seeking.

It’s Called Paper

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The Department of Homeland Security is looking at ways to safeguard electronic voting machines from hackers.

It’s really pretty simple, you eliminate the purely electronic machines, and go with optically scanned machines, which will give you a count in roughly the same time, and then you do a manual recount of a small portion of the precincts.

If you want to retain purely electronic machines, I’d suggest that you require that the software be open source, so that it can be audited.

Instead, they will probably shovel money at Diebold and their ilk:

The Obama administration is weighing new steps to bolster the security of the United States’ voting process against cyberthreats, including whether to designate the electronic ballot-casting system for November’s elections as “critical infrastructure,” Jeh Johnson, the secretary of Homeland Security, said on Wednesday.

In the wake of hacks that infiltrated Democratic campaign computer systems, Mr. Johnson said he was conducting high-level discussions about “election cybersecurity,” a vastly complex effort given that there are 9,000 jurisdictions in the United States that have a hand in carrying out the balloting, many of them with different ways of collecting, tallying and reporting votes.


………

Mr. Johnson said he was considering communicating with state and local election officials across the country to inform them about “best practices” to guard against cyberintrusions, and that longer-term investments would probably have to be made to secure the voting process.

“There are various different points in the process that we have to be concerned about, so this is something that we are very focused on right at the moment,” Mr. Johnson said.

His comments were the latest evidence that recent cyberintrusions have caused alarm in the administration about the potential for hacking to disrupt the election, and how to respond.

Seriously, this sh%$ ain’t rocket science.

Use paper ballots, and make selected public hand recounts of a small randomly selected group of sites.

It’s really that simple.

NLRB Rules That Temps Can Unionize by Workplace

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The National Labor Relations Board (NLRB) has permatemps employed by outside employee leasing firms can organize by workplace, which means that business will no longer be able to sabotage unionization efforts by splitting their worker among outside firms:

The National Labor Relations Board is reaffirming its view that labor law must now address the brave new world of the fissured workplace—where workers are often separated from their actual employer by layers of subcontractors and staffing agencies. On Monday, the board announced a decision on the case Miller & Anderson, ruling that unions that want to represent bargaining units including direct employees as well as “permatemps,” contract workers, and other indirect workers that share a “community of interest” are no longer required to get permission from the parent company.

The old standard, established by George W. Bush’s NLRB in 2004, which required unions to gain such parent-employer consent, allowed companies to use staffing agencies and subcontractors as a barrier to organizing drives. Under the new ruling, a nurses union, for example, can now more readily expand bargaining units at a hospital to include registered nurses who are directly employed by the hospital, as well as nurses who work for staffing agencies hired by the hospital.

In an increasingly fractured world of labor relations, it’s hard to understate how big of a deal this is for easing union organizing efforts. And coming less than a year after its Browning Ferris ruling that established a bold new standard for defining when parent companies are joint employers of subcontracted workers, the Miller & Anderson decision is yet another important step that increases employer accountability to their workers by expanding the responsibilities of joint employers.

I’m stoked.

My Heart Bleeds Borscht for These Rat F%$#S

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What a surprise, since the US Treasury has started to require more disclosure in cash only real estate purchases in the United States, this market has imploded.

Seriously, there is no way that everyone involved in the process didn’t know that it wasn’t money laundering, and as the saying goes, “You f%$# with the bull, you get the horns.”

More of this:

Cash sales of homes – mostly the domain of foreign and affluent buyers – fell to 32% of total home sales in April, down 2.8 percentage points from a year ago, according to a new report from CoreLogic. For the first four months, cash sales dropped to 34%, the lowest since 2008.

In Florida, the number one destination for foreign homebuyers, cash sales accounted for 46% of sales, and in New York, for 44%, both decreasing as well. The “strong dollar” and “global uncertainty” were blamed.

In Manhattan and Miami, the luxury condo markets are already getting mauled. For example, we reported that in Manhattan, condo prices plunged 14% in just three months.

We also reported that foreign investors were pulling back, particularly Chinese investors, the most prolific of all foreign buyers. The number of homes they purchased over the 12-month period had plunged 15%.

So is it just the “strong dollar” and “global uncertainty?” Or could there be more to the story?

Today, the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) announced that it would expand a program it had kicked off in January to identify and track secret homebuyers who hide behind shell companies.

The expanded program will “temporarily require US title insurance companies to identify the natural persons behind shell companies used to pay ‘all cash’ for high-end residential real estate in six major metropolitan areas,” up from the two areas designated in January, Manhattan and Miami, among the biggest destinations of global wealth:

FinCEN remains concerned that all-cash purchases (i.e., those without bank financing) may be conducted by individuals attempting to hide their assets and identity by purchasing residential properties through limited liability companies or other opaque structures.

Real estate purchases in the US have been a perfectly good way to launder large amounts of money, no questions asked. Brokers and banks and other industry professionals have played along. Everyone in the world knew it. And they came to launder their cash.

These folks don’t mind paying a little extra. So as an industry-pleasing side effect of this influx of opaque money, luxury home prices soared, from where they trickled down to the rest of the market.

The criminal activity in the real estate market is increasingly pricing ordinary people out of homes, so it’s nice that the T-men are doing this.

Microflaccid Screws the Pooch

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A court in France has ruled that Windows 10 illegally invades user privacy, as well as being too insecure:

A French regulator has issued Microsoft a formal warning over Windows 10, saying the operating system collects excessive amounts of personal data, ships that information illegally out of the EU, and has lousy security.

The warning comes from the Commission Nationale de l’Informatique et des Libertés (CNIL), an independent data privacy watchdog with the power to levy fines against companies. The CNIL has been investigating Windows 10 since its launch and has now drawn up a damning list of criticisms.

“The CNIL has decided to issue a formal notice to Microsoft Corporation to comply with the Act within three months,” said the group on Wednesday.

………

Chief among the regulator’s concerns is the amount of information Windows 10 slurps up about its users and sends back to Microsoft’s servers. While all recent flavors of Windows send some information back to Redmond, Windows 10 harvests much more and the CNIL considers this intrusive and also not needed to run the OS.

It could also be breaking the law. The collapse of the Safe Harbor agreement last year didn’t stop this flow of data from French users back to the US, and the CNIL is concerned that Microsoft made no attempt to comply with the law. The watchdog estimates that there are at least 10 million Windows users in the Euro nation.

This in addition to buying Nokia’s cell phone business, where they wrote down over 7 billion dollars , and then they sold off the Nokia brand.

And then there is the whole ribbon thing in the more recent versions of Office.

Why is this company still a going concern?

Your Daily Schadenfreude

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Almost two years ago, I mocked hedge fund manager Bill Ackman’s jihad against Herbalife.

The nickel tour was that he went heavily short on Herbalife, and then he aggressively lobbied regulators to shut the company’s business model down.

Ackman’s actions were a primer on how Wall Street types used the political and regulatory processes in an attempt to enrich themselves.

He asserted that Herbalife’s business model was essentially a pyramid scheme, and now the FTC has ruled against some of the supplement manufacturer’s business practices, but the ruling was limited, and Ackman’s short bets will not pay off:

For nearly four years, Herbalife has been locked in a fierce Wall Street battle with billionaire hedge fund manager Bill Ackman. But on Friday the dietary supplements seller scored an enormous victory in this fight.

The Federal Trade Commission said on Friday that it had charged Herbalife with deceiving consumers into believing they could earn substantial money selling diet nutritional supplements, but it did not determine that Herbalife is a pyramid scheme or fraud like Ackman had alleged for years. Herbalife said on Friday it will pay $200 million in a settlement with the FTC. The settlement will force Herbalife to change some of its key business practices, but the regulatory investigation of Herbalife will not end with the type of knock-out blow that Ackman clearly had hoped.

The FTC did make strong accusations against Herbalife, claiming that Herbalife’s compensation structure was unfair because it “rewards distributors for recruiting others to join and purchase products in order to advance in the marketing program, rather than in response to actual retail demand for the product, causing substantial economic injury to many of its distributors.”

………

Still, the FTC settlement looks to be another big setback for Ackman, whose Pershing Square hedge fund is under pressure after suffering large losses over the last 12 months, mostly from a disastrous big bet on Valeant Pharmaceuticals, a company with a stock that has crashed. Pershing Square has a long-running and very large short position in Herbalife.

………

Ackman’s Pershing Square Holdings has already plunged by 19.1% this year after falling by 20.5% in 2015, and Ackman’s assets under management have fallen sharply. Ackman has suggested that he would continue to pursue his crusade against Herbalife even if his effort to get U.S. regulators to shut the company down was unsuccessful. He once said he would go “to the end of the earth” in his battle against the company and became teary eyed on a stage when describing the damage he believed it had done.

………

Michael Johnson, Herbalife’s longtime CEO who has been at the forefront of the company’s battle against Ackman, argued the settlement was a big win. The company also announced that it had reached a $3 million settlement of an investigation conducted by the Attorney General of Illinois that had also hung over the company. “The settlements are an acknowledgment that our business model is sound and underscore our confidence in our ability to move forward successfully, otherwise we would not have agreed to the terms,” Johnson said in a statement.

It’s nice to see a self styled hedgie “geniuses” taken down a few notches.

And the Former Walmart Board Member Goes Back to F%$#ing the American Worker

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Hillary just promised to preserve the H1B Visa in all its corrupt wage depressing glory:

Presumptive Democratic presidential nominee Hillary Clinton vowed on Thursday to uphold the high-skill visas prized by the tech industry as part of comprehensive immigration reform, clarifying media reports that suggested her position on immigration policy would make it harder for Silicon Valley companies to hire talented workers.

“Part of what we have to be strong in standing for is a credible path forward for reform that is truly comprehensive, addressing all aspects of the system. Including immigrants living here today, those who wish to come in the days ahead. From highly skilled workers to family members. To those seeking refuge from violence wherever that might occur,” Clinton said, speaking to a room full of Latino activists during a speech at the League of United Latin American Citizens (LULAC) conference luncheon.

“To families this is an issue that matters more than we can measure. There’s nothing I take more seriously.”

The tech industry has been a major supporter of immigration reform in general, but particularly favors the high-skill or H-1B visa program, which allows companies to hire immigrants to fill technical positions.

The H-1B system is supposed to allow companies to employ foreigners who have unique skills not available in the us.

In truth, it allows the importation of cheap slave labor.

H/t ECop at the Stellar Parthenon BBS.

And He Would Have Gotten Away with It Too, If It Weren’t for That Meddling Journalist

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David Sirota has been all over the conflicts of interest and corruption at the heart of the proposed merger between the health insurers Anthem and Cigna:

Late last week, there was some notable news in the arcane world of insurance regulation: Connecticut’s state comptroller, Kevin Lembo, called on Insurance Department Commissioner Katharine Wade to recuse herself from a review of the proposed merger of the nation’s second- and fourth-largest insurers, Anthem and Cigna, in which the state has a lead role. “The revelations and repeated reports about your financial, personal and professional ties to Cigna,” Lembo wrote to Wade, “will make it challenging for the Connecticut public to view the review process of the Anthem-Cigna merger as fair and transparent.”

Lembo’s letter marked the latest turn in a controversy that, while building for more than a year, has come to a head over the past month—driven in substantial part by the ongoing reporting of David Sirota, the Denver-based senior investigations editor for the International Business Times. On June 1, Sirota published a lengthy piece weaving together previously-known and new concerns over conflicts of interest surrounding the merger review: Wade, appointed to her role in 2015 by Connecticut Gov. Dannel Malloy, is a former longtime Cigna lobbyist, her husband is a top Cigna lawyer, her father-in-law works for a law firm that lobbies for Cigna, and her mother worked for Cigna as recently as 2013. Wade’s brother, Sirota reported, also “previously worked as a counsel” for Cigna. Further, after reviewing more than a decade’s worth of campaign finance data, Sirota showed that Anthem, Cigna, and Cigna’s lobbying firm gave more than $2 million to groups linked to Gov. Malloy, with much of that money coming since 2015.

Since then, Sirota has produced more than a dozen follow-ups on the topic—tracking, for example, grassroots groups and state legislators calling on Malloy to remove Wade from the merger review—as what he initially envisioned as a “good little blog item” turned into an investigative series.

 Unfortunately, IBT is suffering financial difficulties, so go to their Political Capital page, and clock on their ads.

Seriously though, this coverage is kicking some major ass.

Human Beings: 1 — Cable Companies: 0

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The DC Court of Appeals just affirmed the FCC’s net neutrality rulings:

High-speed internet service can be defined as a utility, a federal court has ruled in a sweeping decision clearing the way for more rigorous policing of broadband providers and greater protections for web users.

The decision affirmed the government’s view that broadband is as essential as the phone and power and should be available to all Americans, rather than a luxury that does not need close government supervision.

The 2-to-1 decision from a three-judge panel at the United States Court of Appeals for the District of Columbia Circuit on Tuesday came in a case about rules applying to a doctrine known as net neutrality, which prohibit broadband companies from blocking or slowing the delivery of internet content to consumers.

………

The court’s decision upheld the F.C.C. on the declaration of broadband as a utility, which was the most significant aspect of the rules. That has broad-reaching implications for web and telecommunications companies that have battled for nearly a decade over the need for regulation to ensure web users get full and equal access to all content online.

The cable companies and Evil Minions™ promise to appeal to the Supreme Court, but thankfully, Scalia is dead, and I as such, I cannot see this being reversed.

Ruck Falph

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What a surprise, Ralph Nader’s PIRGs, which have been abusing and burning out idealistic college students for more than 40 years, hates the new overtime requirements, because it would force them to treat their employees fairly:

Scott referred to this in his post yesterday, but PIRG’s statement opposing the new overtime rule is outrageous and entirely appropriate given its founding, history, and mode of operation. The argument itself is pure Lochner* (public interest indeed!)

Doubling the minimum salary to $47,476 is especially unrealistic for non-profit, cause-oriented organizations. Organizations like ours rely on small donations from individuals to pay the bills. We can’t expect those individuals to double the amount they donate. Rather, to cover higher staffing costs forced upon us under the rule, we will be forced to hire fewer staff and limit the hours those staff can work – all while the well-funded special interests that we’re up against will simply spend more.

 The logic of the rule, as applied to non-profit, cause-oriented organizations, makes no sense. A person of means – in service of a cause to which they feel deeply committed – can volunteer to work for our organization for free for as many hours as they wish, but a person of lesser means – who is no less committed to the work we do – cannot agree to work for our organization for less than $47,476 without having their work hours strictly limited in order to keep our costs affordable. This raises First Amendment concerns.

Yes, paying people overtime is a violation of their First Amendment rights! If this theoretical and entirely non-existent individual who wants to work for low wages specifically for PIRG and finds themselves limited to a mere 40 hours a week of this work, there are clearly no other outlets for their speech! Of course, this is complete garbage. Said individual could always donate the extra pay she made back to the organization, for instance.

 PIRG is an utter disaster of an organization. It identifies an always available source of labor–young people, usually college or immediate post-college students, who don’t have a good job lined up and want to do some good. That’s actually a good thing–I wish other left-leaning organizations could find a way to take idealistic people and put them to work doing some good. But all PIRG uses them for is door-to-door fundraising. PIRG has no interest in building organizing skills in these people, no interest in long-term movement building, no interest in helping these people advance to long-term investment in either the organization or larger progressive causes. You can work there for years and advance no further than supervising other fundraisers. All it does it burn out those idealistic people.

………

None of this should be surprising because Ralph Nader, founder of PIRG, has always hated unions in his own shop.

Ralph Nader, and his orgs, have been a horror show for a very long time before his campaign in 2000.

*This refers to the Lochner Era, when the Supreme Court invalidated almost all forms of workplace and safety regulations, because of an imaginary “liberty of contract”.

Yes, I Know that it’s Boris Johnson………

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But when he says that, “The only continent with weaker economic growth than Europe is Antarctica,” he’s right.

Unfortunately, the Germans run the EU, and they are dead set on repeating the mistakes of the Reichsbank during the great depression, where mindless monetary tightening made the impact of the Depression unusually brutal, and led to the rise of the Nazis.

Now we have an EU dominated by the Germans and by their fetish for austerity continues, and the rise of the right wing throughout Europe.

If I were in Britain, I would vote to leave for two reasons:

  • It would cripple the UK’s financial industry, which is a good thing.
  • It would show the rest of the EU that there are alternatives to German hegemony.

Millions Benefiting, and Republican Heads Exploding.

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It’s a win-win.  Obama just doubled the minimum pay at which salaried employees can be denied overtime:

The Obama administration unveiled a new rule Wednesday that will make millions of middle-income workers eligible for overtime pay, a move that delivers a long-sought victory for labor groups.

 The regulations, which were last updated more than a decade ago, would let full-time salaried employees earn overtime if they make up to $47,476 a year, more than double the current threshold of $23,660 a year. The Labor Department estimates that the rule would boost the pay of 4.2 million additional workers.

 The change is scheduled to take effect Dec. 1.

 The move caps a long-running effort by the Obama administration to aid low- and middle-income workers whose paychecks have not budged much in the last few decades, even as the top earners in America have seen their compensation soar. The last update to the rules came in 2004, and Wednesday’s announcement is the third update to the salary threshold for overtime regulations in 40 years.

 ………

 About 35 percent of full-time salaried employees will be eligible for time and a half when they work extra hours under the new rule, up significantly from the 7 percent who qualify under the current threshold, according to the Labor Department.

 The shift was swiftly criticized by small business owners, nonprofit groups and universities that say they may have to switch some salaried workers to hourly positions to afford the new threshold. And instead of seeing bigger paychecks, some salaried workers may be assigned fewer hours, they said.

It means that you won’t be getting free labor out of people by pretending that they are management.

And then there is this bit from the halls of overpaid administrators in education:

Some colleges said they worried they might have to cut services or raise tuition to keep up with the guidelines. Linda Harig, vice president of human resources for the University of Tennessee, estimates that the university would need to spend an additional $18 million to afford overtime pay for employees who would become eligible under the new guidelines, such as admission staff, hall directors and people with post-doctoral positions. That is the equivalent of a 4.3 percent increase in tuition, Harig said.

Because working 60 hours a week for 40 hours worth of pay is such a good thing.  And post docs aren’t basically legalized slavery.

If there additional costs, I would suggest cutting the pay people of people like, “Linda Harig, vice president of human resources for the University of Tennessee.”

Why does the head of HR need to be a VP level position? Now there is some useless fat to trim.

Thanks, Liz

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The CFPB just moved to end arbitration on consumer loans and credit cards:

Richard Cordray, director of the Consumer Financial Protection Bureau, pointed out what a major change his agency was poised to bring about. “Many banks and financial companies avoid accountability by putting arbitration clauses in their contracts that block groups of their customers from suing them,” he said in a statement.

The rule would apply only to the consumer financial companies that the agency regulates. It would not apply to arbitration clauses tucked into contracts for cellphone service, car rentals, nursing homes or employment.

“It is a good start,” said Berle M. Schiller, a federal judge in Philadelphia who has been critical of arbitration clauses that dismantle class actions and tip the scales in favor of companies. “Class actions are the only way that companies can be brought to heel.”

The agency’s proposed rule would be the first significant check on arbitration since a pair of Supreme Court decisions in 2011 and 2013 blessed its widespread use. Those decisions signaled the culmination of an effort by a coalition of credit card companies to stop the tide of class-action lawsuits.

Elizabeth Warren’s vision for the CFPB, which she brought into existence despite opposition from many in the Obama administration is bearing some significant fruit.

H/t Naked Capitalism.

Not Enough Bullets

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The pay of hedge fund managers, who have underperformed the market forever, and lost money last year, is simply obscene:

The world’s top 25 hedge fund managers earned $13bn last year – more than the entire economies of Namibia, the Bahamas or Nicaragua.

Kenneth Griffin, founder and chief executive of Citadel, and James Simons, founder and chairman of Renaissance Technologies, shared the top spot, taking home $1.7bn each – equivalent to the annual salaries of 112,000 people taking home the US federal minimum wage of $15,080.

The earnings of the best-performing hedge fund managers, published by Institutional Investor’s Alpha magazine on Tuesday, dwarfs the pay of top Wall Street executives who have been under fire for their multimillion-dollar pay deals. The best paid banker last year was JPMorgan Chase CEO Jamie Dimon, who collected $27m.

The huge pay at the top comes despite a tumultuous year on Wall Street that has led many well-known hedge funds to lose billions of dollars and others to close down. Daniel Loeb, CEO of Third Point, a hedge fund that manages $17.5bn, has described market conditions as a “hedge fund killing field”.

The, “Heads I win, tails you lose,” system of remuneration in Wall Street is wrong, and creates a lot of evil in our society.

They Finally Lost One

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The City Council of Austin passed regulations on ride sharing services, and Uber and Lyft spent millions in an attempt to override the vote through a plebiscite, and lost:

Uber and Lyft spent nearly $9 million on a May 7 special election in Austin, Texas. They offered free rides to the polls, and texted users asking for their support. They pulled out all the stops in a political playbook that has worked in almost every other city in the US.

For once, it wasn’t enough.

Voters in the Texan capital came out against Proposition 1, upholding ride-hailing regulations that the city council passed in December. The rules are stricter than ones that Uber and Lyft face in other jurisdictions: They require drivers for the services to pass fingerprint-based background checks, to identify their cars with company emblems, and to avoid picking up and dropping off passengers in certain lanes.

That is to say, exactly the same requirements as exist for the taxis.

………

Uber, I think decided, they were going to make Austin an example to the nation,” said David Butts, a local political consultant who helped coordinate the campaign against Proposition 1, according to a report in the Austin American-Statesman. “And Austin made Uber an example to the nation.”

Ahead of the vote, both Uber and Lyft had threatened to leave Austin should the proposition fail. Austin mayor Steve Adler invited them to stay despite the election results.

………

The nay vote on Proposition 1 is all the more crushing for Uber and Lyft considering the lopsided amount of money they spent in favor of it. The companies invested a combined $8.7 million to support the proposition via their lobbying committee, Ridesharing Works for Austin, an unprecedented sum in Austin local politics. That dwarfed the $132,000 that Proposition 1’s opponents strung together from about 500 individual contributions, according to campaign finance filings.

………

Uber and Lyft have cultivated the impression that their services are indispensable to cities. But Uber in particular has also spun itself as politically unbeatable. It has the money; it has the policy talent; it has the app that makes reaching potential voters as simple as sending a text or push notification to their phones.

………

That’s a potent narrative. With the loss in Austin, it’s starting to come undone.

The myth of inevitability and invincibility is central to Uber’s and Lyft’ssuccess.

It is what allows them to move into new markets, break the law, cheat their employees, place their customers at risk, and create a multi-billion dollar stock valuation.

It may not be the beginning of the end for the lawless players in the “sharing economy”, but it might be the end of the beginning.

Not Enough Bullets

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It appears that the banks are asserting that they have a constitutional right to dividends from the Federal Reserve:

A trade group for the nation’s largest banks has asserted a constitutional right to risk-free profit from the Federal Reserve.

Rob Nichols, the chief lobbyist for the American Bankers Association, argued in a comment letter Thursday that a recent federal law reducing the dividend on the stock that banks purchase as part of membership in the Federal Reserve system, violates the Fifth Amendment clause banning the uncompensated seizure of property.

Congress reduced the dividend as part of a deal to pay for transportation projects. Dividends for the stock, which cannot be bought or sold, had been set at 6 percent since the Federal Reserve’s inception in 1913. Banks cannot ever lose money on the stock; they’re even paid out if their regional Fed bank disbands. So the dividend represented a risk-free profit, earning back its investment in full every 17 years.

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Given those facts, [American Bankers Association chief lobbyist Rob] Nichols’s argument amounts to saying that the 6 percent dividend rate itself is constitutionally protected, because it’s been around for a long time. Nichols effectively asserts that the risk-free dividend is bank property.

Seriously?

I cannot see how a government subsidy can be considered property, particularly not a dividend which, as anyone who knows anything about investments, knows is subject to change without warning.