PoliticsThe Canadian PressSenate works through night with virus aid on path to passage
WASHINGTON — The Senate worked through the night and past sunrise Saturday on Democrats' showpiece $1.9 trillion COVID-19 relief bill after a deal between leaders and moderate Sen. Joe Manchin on emergency jobless benefits broke a logjam that had stalled the package. The compromise, announced by Manchin, D-W.Va., and a Democratic aide late Friday and backed by President Joe Biden, cleared the way for the Senate to begin a marathon series of votes on amendments before eventual approval of the sweeping legislation. The bill then would return to the House, which was expected to give it final congressional approval and send it to Biden to sign. Biden’s foremost legislative priority is aimed at battling the killer pandemic and nursing the economy back to health. It would provide direct payments of up to $1,400 to most Americans and money for COVID-19 vaccines and testing, aid to state and local governments, help for schools and the airline industry and subsidies for health insurance. Shortly before midnight, the Senate began to take up a variety of amendments in rapid-fire fashion. The votes were mostly on Republican proposals virtually certain to fail but designed to force Democrats into politically awkward votes. It was unclear how long into the weekend the “vote-a-rama” would last. By daybreak Saturday, senators had worked through more than a dozen amendments without substantially changing the overall package. The lengthy standoff underscored the headaches confronting party leaders over the next two years — and the tensions between progressives and centrists — as they try moving their agenda through the Congress with their slender majorities. Manchin is probably the chamber’s most conservative Democrat, and a kingmaker in the 50-50 Senate. But Democrats cannot tilt too far centre to win Manchin’s vote without endangering progressive support in the House, where they have a mere 10-vote edge. Aiding unemployed Americans is a Democratic priority. But it’s also an issue that drives a wedge between progressives seeking to help jobless constituents cope with the bleak economy and Manchin and other moderates who have wanted to trim some of the bill’s costs. Biden noted Friday's jobs report showing that employers added 379,000 workers — an unexpectedly strong showing. That's still small compared with the 10 million fewer jobs since the pandemic struck a year ago. “Without a rescue plan, these gains are going to slow," Biden said. “We can’t afford one step forward and two steps backwards. We need to beat the virus, provide essential relief, and build an inclusive recovery." The overall bill faced a solid wall of GOP opposition, and Republicans used the unemployment impasse to accuse Biden of refusing to seek compromise with them. “You could pick up the phone and end this right now,” Sen. Lindsey Graham, R-S.C., said of Biden. But in an encouraging sign for Biden, a poll by The Associated Press-NORC Center for Public Affairs Research found that 70% of Americans support his handling of the pandemic, including a noteworthy 44% of Republicans. The all-night amendment process did little to change the outcome. Sen. Susan Collins, R-Maine, sought to swap in Republican centrists’ $650 billion alternative proposal, which Biden had panned as inadequate. That and other amendments failed, including one from Sen. Jon Tester, D-Mont., on the Keystone XL pipeline. One proposal that did pass, from Sen. Maggie Hassan, D-N.H., would require schools, within 30 days of receiving money from the bill, to develop publicly available plans for in-person instruction. It appeared designed to fend of Republican criticisms that Biden’s package does not do enough to swiftly reopen schools. The House approved a relief bill last weekend that included $400 weekly jobless benefits — on top of regular state payments — through August. Manchin was hoping to reduce those costs, asserting that level of payment would discourage people from returning to work, a rationale most Democrats and many economists reject. As Friday began, Democrats asserted they'd reached a compromise between party moderates and progressives extending emergency jobless benefits at $300 weekly into early October. That plan, sponsored by Sen. Tom Carper, D-Del., also included tax reductions on some unemployment benefits. Without that, many Americans abruptly tossed out of jobs would face unexpected tax bills. But by midday, lawmakers said Manchin was ready to support a less generous Republican version. That led to hours of talks involving White House aides, top Senate Democrats and Manchin. The compromise would provide $300 weekly, with the final check paid on Sept. 6, and includes the tax break on benefits. Before the unemployment benefits drama began, senators voted 58-42 to kill a top progressive priority, a gradual increase in the current $7.25 hourly minimum wage to $15 over five years. Eight Democrats voted against that proposal, suggesting that Sen. Bernie Sanders, I-Vt., and other progressives vowing to continue the effort in coming months will face a difficult fight. That vote began shortly after 11 a.m. EST and was not formally gaveled to a close until nearly 12 hours later as Senate work ground to a halt amid the unemployment benefit negotiations. It was among the longest votes in modern Senate history. Senate Minority Leader Mitch McConnell, R-Ky., chided Democrats, calling their daylong effort to work out the unemployment amendment a “spectacle." “What this proves is there are benefits to bipartisanship when you're dealing with an issue of this magnitude," McConnell said. Republicans criticized the overall relief bill as a liberal spend-fest that ignores that growing numbers of vaccinations and signs of a stirring economy suggest that the twin crises are easing. “Democrats inherited a tide that was already turning.” McConnell said. Democrats reject that, citing the job losses and numerous people still struggling to buy food and pay rent. “If you just look at a big number you say, ‘Oh, everything's getting a little better,'" said Senate Majority Leader Chuck Schumer, D-N.Y. “It's not for the lower half of America. It's not." Friday's gridlock over unemployment benefits gridlock wasn't the first delay on the relief package. On Thursday Sen. Ron Johnson, R-Wis., forced the chamber's clerks to read aloud the entire 628-page relief bill, an exhausting task that took staffers 10 hours and 44 minutes and ended shortly after 2 a.m. EST. ___ Associated Press writers Lisa Mascaro and Kevin Freking contributed to this report. Alan Fram, The Associated Press
BusinessYahoo FinanceSuze Orman: Something's ‘radically wrong’ if you’re getting a tax refund
Personal finance guru Suze Orman said the receipt of a tax refund indicates "something's radically wrong," since the money returned to filers could otherwise have accrued value over the period it stood in the government's possession.
BusinessBloombergCredit Suisse Missed Many Warnings Before Greensill’s Collapse
(Bloomberg) -- Long before Credit Suisse Group AG was forced to wind down a $10 billion group of funds it ran with financier Lex Greensill, there were plenty of red flags.Executives at the bank knew early on that a large portion of the assets in the funds were tied to Sanjeev Gupta, a Greensill client whose borrowings were at the center of a 2018 scandal at rival asset manager GAM Holding AG. They were also aware that a lot of the insurance coverage the funds relied on depended on a single insurer, according to a report. Credit Suisse even conducted a probe last year of its funds that detected potential conflicts of interest, yet failed to prevent their collapse months later.On Friday, the bank finally pulled the plug and said it would liquidate the strategy, a group of supply chain finance funds for which Greensill had provided the assets and which had been held up as a success story. The funds, which have about $3.7 billion in cash and equivalents, will start returning most of that next week, leaving about two-thirds of investor money tied up in securities whose value may be uncertain.The decision caps a dramatic week that started when Credit Suisse froze the funds after a major insurer for its securities refused to provide coverage on new notes. The move sent shock waves across the globe, prompted Greensill Capital to seek a buyer for its operations, and forced rival GAM Holding AG to shutter a similar strategy. For Credit Suisse and its new Chief Executive Officer Thomas Gottstein, it’s arguably the most damaging reputational hit after an already difficult first year in charge.While the financial toll on the bank may be limited, fund investors are left with about $7 billion locked up in a product that was presented as a relatively safe but higher-yielding alternative to money markets.The Greensill-linked funds were one of the fastest-growing strategies at Credit Suisse’s asset management unit, attracting money from yield-starved investors in a region that had for years had to contend with negative interest rates. The bank started the first of the funds in 2017, but they really took off in 2019, the year rival asset manager GAM finished winding down a group of bond funds that had invested a large chunk of their money in securities tied to Greensill and one of his early clients, Gupta’s GFG Alliance.The Credit Suisse funds, too, were heavily exposed to Gupta early on. As the bank ramped up the strategy, the flagship supply-chain finance fund had about a third of its $1.1 billion in assets in notes linked to Gupta’s GFG Alliance companies or his customers as of April 2018, according to a filing.Credit Suisse executives were aware but denied at the time that it was an outsized risk, according to people familiar with the matter. They argued that most of the loans were to customers of Gupta and not directly to GFG companies, the people said, asking not to be identified because the information is private.Over time, the proportion of loans linked to GFG and customers appeared to decrease, while new counterparties popped up in fund disclosures that packaged loans to multiple borrowers -- making it harder to determine who the ultimate counterparty is. Many of the vehicles were named after roads and landmarks around Lex Greensill’s hometown in Australia.The executives in charge of the fund also knew that much of the insurance coverage they relied on to make the funds look safe was dependent on just a single insurer, according to the Wall Street Journal. They considered requiring the funds to secure coverage from a broader set of insurers, with no single firm providing more than 20% of the coverage, but never put the policy in place, the newspaper said.A spokesman for Credit Suisse declined to comment.Greensill, meanwhile, was looking for new ways to fuel the growth of his trade finance empires after the collapse of the GAM funds removed a major buyer of his assets. In 2019, SoftBank Group Corp. stepped in, injecting almost $1.5 billion through its Vision Fund to become Greensill’s largest backer. It also made a big investment in the Credit Suisse supply chain finance funds, putting in hundreds of millions of dollars, though the exact timing isn’t clear.Over the course of 2019, the flagship fund more than doubled in size, but soon questions arose about the intricate relationship between Greensill and SoftBank that fueled the growth. The funds had an unusual structure in that they used a warehousing agreement to buy the assets from Greensill Capital, with no Credit Suisse fund manager doing extensive due diligence on them. Within the broad framework set by the funds, the seller of the assets -- Greensill -- basically decided what the funds would buy.Credit Suisse started an internal probe that found, among other things, that the funds had extended large amounts of financings to other companies backed by SoftBank’s Vision Fund, creating the impression that SoftBank was using them and its sway over Greensill to prop up its other investments. SoftBank pulled its fund investment -- some $700 million -- and Credit Suisse overhauled the fund guidelines to limit exposure to a single borrower.Neither Gottstein nor Eric Varvel, the head of the asset management unit, or Lara Warner, the head of risk and compliance, appeared to see a need for deeper changes. The bank reiterated it had confidence in the control structure at the asset management unit.Credit Suisse’s review didn’t mention at the time that Greensill had also extended financing to another of his backers, General Atlantic. The private equity firm had invested $250 million in Greensill Capital in 2018. The following year, Greensill made a $350 million loan to General Atlantic, using money from the Credit Suisse funds, according to the Wall Street Journal. The loan is currently being refinanced, said a person familiar with the matter.A spokeswoman for General Atlantic declined to comment.Shortly after the Credit Suisse probe concluded, more red flags popped up. In Germany, regulator BaFin was looking into a small Bremen-based lender that Greensill had bought and propped up with money from the SoftBank injection. Greensill was using the bank effectively to warehouse assets he sourced, but BaFin was worried that too many of the those assets were linked to Gupta’s GFG -- a risk that the Credit Suisse’s managers, for their part, had brushed off earlier.SoftBank, meanwhile, was quietly starting to write off its investment in a stunning reversal from a bet it had made only a year earlier. By the end of last year, it had substantially written down the stake, and it’s considering dropping the valuation close to zero, people familiar with the matter said earlier this month.Credit Suisse, however, was highlighting the success of the funds to investors. Varvel, the head of asset management, listed them in a Dec. 15 presentation as an example of the “innovative” and “higher-margin” fixed-income offerings that the bank was planning to focus on.By that time, Greensill already knew that a little-known Australian insurer called Bond and Credit Company had decided not to renew policies covering $4.6 billion in corporate loans his firm had sourced. The policies were due to lapse on March 1, prompting a last-ditch effort from the supply-chain firm to take the insurer to court in Australia. That day, a judge in Sydney struck down Greensill’s injunction, triggering the series of events that have since reverberated around the world.Credit Suisse didn’t know until very recently that the insurance was about to lapse, according to a person with knowledge of the matter.In an update to investors Tuesday, Credit Suisse said that several factors “cumulatively” led to the decision to freeze the funds, and that it was looking for ways to return cash holdings. But in a twist that may complicate the liquidation of the remainder, it also said that Greensill’s German Bank was one of the insured parties and plays a role in the claims process, and that bank was just shuttered by BaFin.Many of the assets in the funds have protection to make them more appealing to investors seeking an alternative to money market funds. Yet the second-biggest of them, the High Income Fund, doesn’t use insurance. It’s also the fund with the least liquidity, with less than 20% of the net assets in cash.Credit Suisse has said it wasn’t aware of any evidence suggesting financial irregularities with the papers issued by Greensill or by the underlying companies. The bank still hasn’t commented on how many of the assets in the funds are tied to Gupta’s GFG Alliance.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
PoliticsThe Canadian PressManchin, key Senate swing vote, boosts West Virginia's hopes
CHARLESTON, W.Va. — West Virginia has long proclaimed itself “Almost Heaven,” a nod to a song and soaring mountaintop vistas. Now some joke the state name-checked in “Take Me Home, Country Roads” could take things up a notch as Democratic U.S. Sen Joe Manchin bargains his way through Congress. “Maybe we’ll get to heaven status,” said longtime Democratic Party official Nick Casey. Reviving West Virginia’s economically battered coal towns and reversing a persistent population decline is a tall order. But Manchin, who grew up in the mountain town of Farmington, has emerged as a key swing vote in a divided Senate. Now he has his best shot in years to steer federal dollars back home. Manchin put himself in the middle of things again this week over the COVID relief bill making its way through Congress, singlehandedly halting work on the measure Friday as Democrats sought to placate his concerns about the size and duration of an expanded unemployment benefit. As for his own agenda, Manchin has dropped hints publicly about “common sense” infrastructure investments sorely needed back home: expanding rural broadband and fixing roads among them. He declared that West Virginia could supply the manufacturing firepower to “innovate our way to a cleaner climate.” And more than once, he's said coal miners can build the best solar panels if given a chance. Some wonder if his newfound clout might help him do something former President Donald Trump promised but couldn’t deliver — reignite a state economy long overly dependent on a coal industry in freefall. Manchin's Senate colleagues have good reason to study the needs of small towns beyond the Blue Ridge Mountains. Manchin, 73, was already a recognized dealmaker on Capitol Hill, but deference to the most conservative Democrat in a 50-50 Senate has ratcheted up since November. A senator from Hawaii recently teased him as “your highness.” The guessing game of which way he'll vote has become fodder for late night television. In recent days, Manchin's opposition helped sink Neera Tanden as President Joe Biden's nominee to lead the federal Office of Management and Budget. Not since Robert Byrd’s death in 2010 has a senator from West Virginia wielded this much influence. Over half a century, Byrd brought home billions of dollars in federal buildings, landmarks and roads, many bearing his name. “This is hardscrabble country, man — our population is dropping, the demise of coal,” said Casey, an attorney and former chair of the state Democratic Party. “We got a guy now who can maybe do something legacy-wise. And I think there’s a lot of hope and some expectation that Joe’s going to do things that are significant, exceptional.” Pam Garrison, a retired cashier, said she told Manchin at a meeting seeking a $15 federal minimum wage that Byrd has universities and hospitals named after him because “when he got into power, he used that power for the good of the people.” “If you do what’s good for the people, even after you’re gone, you’re going to be remembered.” Manchin, though, sees himself not as a seeker of pork-barrel projects but as a champion for policies that aid Appalachia and the Rust Belt. “What we have to do now, and I think it’s appropriate — we show the need, and that the base has been left behind,” he said. He started down that road by joining Michigan Democratic Sen. Debbie Stabenow in co-sponsoring a proposal for $8 billion in tax credits to boost clean energy manufacturing for coal communities and the auto industry. Robert Rupp, a political history professor at West Virginia Wesleyan College, says Manchin can use his position in a 50-50 Senate to put his small state in the forefront of everyone’s mind. “He’s at the centre of attention, and he could assert power,” Rupp said. A former governor, Manchin has deep roots in West Virginia politics. That helps explain why he is the last Democrat to hold statewide office in a state Trump carried twice by large margins. Manchin maintains an air of unpredictability. He opposed a $15 minimum wage provision in the $1.9 billion pandemic stimulus package, even after activists rallied outside his state office in Charleston, leaving some to question his future legacy. “We’re either going to smell like a rose in West Virginia, or we’re going to smell like crap, and it’s going to be attributed to Joseph Manchin,” said Jean Evansmore, 80, an organizer with the Poor People’s Campaign in West Virginia. Days later, the Senate parliamentarian ruled an increase couldn’t be included in the COVID-19 relief bill. That was a win for Manchin and his reverence for Senate customs, including the filibuster, which helps sustain a 60-vote hurdle to advancing most legislation. Manchin has vowed never to support ending the filibuster. On a recent morning in Charleston outside the golden-domed state capitol, saving it was a rallying cry for anti-abortion advocates, who held signs stating, “Thank you Senator Manchin.” “We need to encourage him to stand strong,” said Marilyn Musgrave, who works for the Susan B. Anthony List, an anti-abortion non-profit. Musgrave's group looks to Manchin now after campaigning against his 2018 bid for a second full term, which he won with just under 50% of the vote. Manchin opposes public funding for abortions but stops short of supporting an outright ban. Still, he typically scores a low rating from abortion-rights groups, which puts him more in line with West Virginians who collectively have sent mixed signals on abortion. With his centrist instincts in such a red state, Manchin has occasionally been the subject of rumours he'll switch parties. “Republicans kind of have this day-dream that just because he’s conservative on some issues that would mean he would jump parties,” Rupp said. That's unlikely, especially given Manchin's newfound clout, he said. And that's fine with Matt Kerner, a 54-year-old West Virginian who wants Manchin to never forget that 16% of the people in his state live below the poverty line, the sixth-highest rate in the nation, according to the U.S. Census. “We're hoping Senator Manchin remembers that he represents some of the poorest people in this country,” Kerner said. Cuneyt Dil, The Associated Press
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