CPD IN THE NEWS

TRADING NOTES: President Obama met with Federal Reserve Board Chairwoman Janet Yellen, but interest rates were apparently not on the agenda.

Obama did not plan to discuss interest rates with Yellen, according to White House press secretary Josh Earnest. He argued such a conversation could undercut the chair's independence in setting monetary policy.

"I would not anticipate that, even in the confidential setting, that the president would have a conversation with the chair of the Fed that would undermine her ability to make these kinds of critical monetary policy decisions independently," Earnest told reporters ahead of the meeting.

The closed-door discussion is instead an opportunity to "trade notes" on broader economic trends in the U.S. and abroad, as well as on a new set of regulations on Wall Street financial firms.

Obama and Yellen talked about the growth outlook, "the state of the labor market, inequality and potential risks to the economy," the White House said after the meeting. The Hill's Jordan Fabian has more: http://bit.ly/25VuzIZ.

HOUSE TO MARKUP PUERTO RICO DEBT BILL: The House Natural Resources Committee will begin on Wednesday to mark up legislation aimed at saving Puerto Rico from a massive debt crisis.

Lawmakers have been working to make significant changes to the measure, which is expected to unveiled as early as Monday night, since the panel released a discussion draft on March 29.

The Puerto Rico measure, which put the island's finances under federal oversight and authorize a restructuring of some of its debt, will need to strike a balance and attract bipartisan support and the backing of the White House to move forward.

LEW MAKES CASE FOR GLOBAL ECONOMIC LEADERSHIP: Treasury Secretary Jack Lew on Monday made the case for the United States to continue its global economic leadership as the administration faces criticism from Donald Trump and other presidential candidates.

"We know that the global landscape of the next century will be very different than that of the post-war era," Lew said in a speech at the Council on Foreign Relations. "And if we want it to work for the American people, we need to embrace new players on the global economic stage and make sure they meet the standards of the system we created, and that we have a strong say in any new standards."

"The worst possible outcome would be to step away from our leadership role and let others fill in behind us," he added. The Hill's Naomi Jagoda fills us in: http://bit.ly/1qjTIwe.

GOLDMAN SACHS SETTLES MORTGAGE PROBE FOR $5 BILLION: Goldman Sachs will pay more than $5 billion to settle charges that it engaged in "serious misconduct" when selling risky mortgages leading up to the 2008 financial collapse.

The $5.06 billion civil settlement also saw the Wall Street giant admit it failed to properly inform investors of the risks in the subprime mortgage securities the bank was selling.

"This resolution holds Goldman Sachs accountable for its serious misconduct in falsely assuring investors that securities it sold were backed by sound mortgages, when it knew that they were full of mortgages that were likely to fail," acting associate attorney general Stuart Delery said in a statement.

One of the government charges, which Goldman has now acknowledged, was that the bank kept internal concerns about the strength of the mortgage market hidden from potential investors. Here's more from The Hill's Peter Schroeder: http://bit.ly/1qjTJQQ.

SANDERS SAYS GOLDMAN'S BUSINESS 'RIGGED': Bernie Sanders charged Monday that the settlement proves Goldman Sachs's business is "based on fraud."

The Justice Department announced Monday that the Wall Street giant would pay over $5 billion to settle charges it sold risky mortgage investments in the lead up to the financial crisis, and didn't tell investors enough about it.

Sanders, who has built his presidential campaign in large part on big bank bashing, said the settlement proves his point.

"What they have just acknowledged to the whole world is that their system ... is based on fraud," he told supporters in New York.

Sanders also complained that the civil settlement did not include any criminal charges, proving the "corruption of our criminal justice system." http://bit.ly/1TNk2Lm

HAPPY MONDAY and welcome to Overnight Finance, where we're wondering why Herbert Hoover gets to join the racing presidents. I'm Sylvan Lane, and here's your nightly guide to everything affecting your bills, bank account and bottom line.

Tonight's highlights include securities fraud charges for Texas's attorney general, a trillion-dollar national pension gap and a Tax Day delay.

See something I missed? Let me know at slane@thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://www.thehill.com/signup/48.

ON TAP TOMORROW:

Senate Finance Committee: Hearing on examining cybersecurity and protecting taxpayer information, 10 a.m

Senate Appropriations Subcommittee on Financial Services: Hearings to examine proposed budget estimates and justification for fiscal year 2017 for the Securities and Exchange Commission and Commodity Futures Trading Commission., 10:30 a.m.

House Rules Committee: Business Meeting: H.R. 2666: No Rate Regulation of Broadband Internet Access Act; H.R. 3340: Financial Stability Oversight Council Reform Act; H.R. 3791: To raise the consolidated assets threshold under the small bank holding company policy statement and for other purposes.

Puerto Rico Oversight, Management, and Economic Stability Act expected to be released.

"Getting Her Money's Worth: What Will It Take to Achieve Equal Pay?" discussion featuring Sens. Kirsten Gillibrand (D-NY) and Heidi Heitkamp (D-ND), 11:45 am.

BERNIE FANS LEFT'S FLAMES AGAINST FED: Liberal activists are putting a target on the Federal Reserve for the 2016 elections, much to the delight of the Bernie Sanders campaign.

Denouncing an agenda that they say tilts toward Wall Street, members of the "Fed Up" coalition on Monday unveiled a set of reforms that would alter how the central bank does business.

"No longer are we focused only on fixing the Fed's monetary policy and internal governance positions," said Ady Barkan, the group's campaign director. "We are now beginning an effort to reform the Federal Reserve itself. Peter Schroeder breaks down the fight: http://bit.ly/23yMSBH.

YOU HAVE THREE MORE DAYS TO PROCRASTINATE: For most people, tax returns are due one week from today.

This year's due date for filing federal individual income tax returns is April 18, not April 15. This is because the District of Columbia is observing Emancipation Day on April 15, which falls on a Friday, according to the Internal Revenue Service (IRS).

People living in Massachusetts and Maine have until April 19 to file their tax returns because those states observe Patriots' Day on April 18.

Those who are serving in combat zones or contingency operations or become hospitalized due to injuries from their service can have additional time to pay their taxes. Those affected by federally declared disasters might also have more time, the IRS said: http://bit.ly/1Q3tzHk.

AG GROUPS PUSH FOR PACIFIC TRADE DEAL: The nation's farmers and ranchers are putting their weight behind efforts urging Congress to pass a sweeping Asia-Pacific deal this year.

In a letter to congressional leaders on Monday, 225 food and agricultural groups called on lawmakers to move forward on the 12-nation Trans-Pacific Partnership before President Obama leaves office.

"The TPP presents a valuable opportunity for U.S. agriculture; one that we cannot afford to miss," the groups wrote. The Hill's Vicki Needham explains why: http://bit.ly/1S5QCFD.

SEC CHARGES TEXAS ATTORNEY GENERAL: The Securities and Exchange Commission on Monday charged Texas's top law enforcement official with civil securities fraud for allegedly deceiving investors in a computer company.

Texas Attorney General Ken Paxton (R) received 100,000 shares of Servergy, a Nevada-based technology company, to pitch investors on a server it was selling between 2011 and 2013, according to the SEC complaint. Servergy officials allegedly marketed the server with incorrect information, and Paxton allegedly did not disclose to investors that he would be paid a commission: http://bit.ly/1RPHyG0.

US PUBLIC PENSIONS FACE $3 TRILLION HOLE: The nation's public pension system is facing a $3.4 trillion funding hole that may force cities and states to either cut spending or raise taxes to cover future shortfalls.

The deficit in pension funds is three times more than official figures and is growing, and without an overhaul could weigh on state and local budgets and lead to Detroit-like bankruptcies, according to research reported by the Financial Times.

Joshua Rauh, a senior fellow at the Hoover Institution who put together the report, told the FT that "the pension problems are threatening to consume state and local budgets in the absence of some major changes."

"It is quite likely that over a 5- to 10-year horizon we are going to see more bankruptcies of cities where the unfunded pension liabilities will play a large role." Here's more from Vicki Needham: http://bit.ly/1Su85op.

CONSERVATIVES FIGHT ENERGY TAX BREAKS IN FAA BILL: Conservative groups that oppose a proposal to include energy tax breaks in the long-term reauthorization of the Federal Aviation Administration are vowing to take their fight to the House if the Senate moves ahead.

Americans for Prosperity and Freedom Partners said Monday that if the Senate ends up attaching energy tax provisions to the FAA bill, the organizations will ratchet up pressure on lawmakers across the Capitol to oppose the language or pass a clean-extension of FAA.

"If the Senate isn't going to do anything to stop this, we're going to put pressure on the House," Andy Koenig, senior policy advisor at Freedom Partners, said on a press call. "The House is under no obligation to take up a bunch of energy subsidies if they don't want to." The Hill's Melanie Zanona walks us through the battle: http://bit.ly/1RPHrKH.

DEMS CALL FOR GREATER NONBANK MORTGAGE OVERSIGHT: Two Democratic lawmakers are calling on the nation's top consumer protection agency to ramp up its oversight of nonbank mortgage servicers.

Sen. Elizabeth Warren (Mass.) and Rep. Elijah Cummings (Md.) asked the Consumer Financial Protection Bureau (CFPB) on Monday to identify all of and collect more data on the growing number of financial institutions other than banks that service mortgages.

Warren and Cummings pointed to recommendations from a non-partisan government watchdog report published Monday. Warren, a long-time financial industry watchdog, and Cummings, the top Democrat on the House Oversight Committee, requested the Government Accountability Office (GAO) study. I'll fill you in on the rest here: http://bit.ly/1Sc3ldc.

Did you know 67% of all job growth comes from small businesses? Read More

NIGHTCAP: Five Starbucks locations in DC will start serving alcohol and "small plates," which is millennial for paying more money for less food: https://www.washingtonian.com/2016/04/08/5-dc-starbucks-will-sell-beer-wine-small-plates-next-week/.

By Sylvan Lane

Source

Tuesday’s Dropout Nation analysis of American Federation of Teachers’ 2014-2015 financial disclosure to the U.S. Department of Labor certainly offered plenty of insight on how it is buying influence on the national level. But the nation’s second-largest teachers’ union’s applies its influence-buying most-fervently on behalf of its locals, especially in big cities that are the battlegrounds in the battle over the reform of American public education. This is especially clear in Louisiana, where the union has spent $2.6 million to oppose the reforms in New Orleans and the rest of the state that run counter to the union’s very mission.

Since the damage from Hurricane Katrina (and the longstanding failures of the U.S. Army Corps of Engineers to ensure that levies surrounding the city could stand up to potential disaster) a decade ago, the Crescent City has become the epicenter of one of the nation’s most-important systemic reform efforts. Thanks to the Louisiana state government’s takeover of failing schools run by the Orleans Parish district, and the move to transform them into charter schools (as well as open new ones), New Orleans has now become the model of sorts for expanding school choice. Charter schools serve 79 percent of the city’s children (as of 2012-2013), according to the National Alliance for Public Charter Schools.

The transformation hasn’t been perfect by any means. There is still lingering anger among residents over how the state essentially implemented the reforms without their input. The quality of public education, though improved, is still nowhere near it should be, especially in Orleans Parish-run schools. As the Center for Reinventing Public Education also points out, the need for building out the infrastructure for families to exercise choice in informed ways also remains; this includes addressing transportation issues that result in kids traveling for as long as two hours from one part of town to another just to go to school.

All that said, the results for kids have been amazing. As Tulane University Professor Doug Harris determined in his assessment of public school performance in New Orleans, the improvements in student achievement were greater than those made by traditional districts in other cities and even better than those that could be achieved by tactics traditionalists tend to tout such as class-size reduction schemes. This is good for kids in the Crescent City and for their families, who have been subjected to the abuse of both the educational and criminal justice systems of the Bayou State for far too long.

None of this is good news to the ears of AFT, its Crescent City local, United Teachers New Orleans, or the Louisiana Federation of Teachers, the union’s state affiliate. After all, if children in New Orleans are getting higher-quality education through a Hollywood Model style of delivering teaching and curricula, than there is no need to keep the obsolete traditional district model upon which AFT (along with National Education Association) derive its influence and ideology. As it is, charters have become the dominant players in cities such as Detroit, and Washington, D.C., in which AFT operates. Given that unlike NEA, AFT has little penetration in suburbia, propagandizing against growth of charters in New Orleans — along with stopping the expansion of choice — is critical to the union’s long-term survival.

It also about the cold hard cash and power of its local. Before Katrina, UTNO had a stranglehold over education policies and practices within Orleans Parish, and had the ability to forcibly collect dues from 7,500 teachers and other employees working for the district. But with all but a smattering of schools still operated by Orleans Parish — and charter schools having the ability to not bargain with the union if they so choose — UTNO no longer has the bodies or the money necessary to oppose systemic reform. Some 1,000 teachers and others now likely make up the union’s rank-and-file, 87 percent less than the numbers on the rolls a year before Katrina reached landfall. This, in turn, isn’t helpful to AFT, whose own revenue is derived from the per-capita tax collected from every teacher and school employee compelled to pay into its units.

But AFT isn’t just concerned about New Orleans alone. After all, the Bayou State has been among the foremost states in expanding school choice and advancing systemic reform. This includes outgoing Gov. Bobby Jindal’s successful expansion four years ago of the state’s school voucher program, which now serves 7,400 children attending 141 private and parochial schools. Eight seats on the Bayou State’s Board of Elementary and Secondary Education, which oversees the department run by Supt. John White, are also up for grabs. There’s also the possibility that the Recovery School District, which oversees systemic reform in New Orleans, could also end up taking over failure mills in Baton Rouge and other cities. Particularly in Louisiana’s capital city, just 50 percent of kids attending traditional  public schools there met proficiency targets in 2013-2014.

Another hotbed, until recently, was Jefferson Parish, whose board was under the control of a reform-minded majority. Back in 2012, the board decided to ditch its contract with AFT’s Jefferson Federation of Teachers and negotiate for a deal that would give the district more flexibility in operation. This didn’t sit too well with the unit, which then sought national’s help in putting the district back under its thumb.

So AFT has put a lot of energy and money into demonizing Crescent City reform efforts — and stopping reform in the rest of the state.

The union subsidized UTNO to the tune of $134,593 in 2014-2015, four times levels given to the unit during the previous year. At the same time, the union kicked another $59,294 into the organizing project it controls along with the local; the union also paid teachers’ union-oriented law firm Rittenberg, Samuel & Phillips $57,654 to handle a variety of lawsuits, including one filed against Orleans Parish over the layoff of black teachers working in the district before Katrina reached shore. Over the past two years alone, AFT poured $754,878 into propping up UTNO and helping it rebuild its membership.

AFT’s work in New Orleans goes beyond subsidizing UTNO. The union has spent big on events and meetings. This includes dropping $80,490 on meeting space and “reimbursable expenses” at the swanky Loews New Orleans Hotel, $9,840 at the more-humble Homewood Suites, and $7,700 at one of the several Marriott hotels in town. Expect AFT to have dropped even more money this fiscal year for this week’s “Advancing Racial Justice” gathering, which will feature several of the union’s prime vassals, including the Schott Foundation for Public Education, Center for Popular Democracy and the Alliance to Reclaim Our Schools, all of whom are making the trip as condition of being beneficiaries of the largesse the union gets forcibly out of the pockets of teachers. AFT also spent $10,843 on materials printed by Simmons Press, a local outfit, for print materials, paid $7,500 to Lamar Media for billboards, and dropped $17,921 on ads in the Times-Picayune.

But never forget that AFT will play all the political angles. This includes going so far as to attempt to unionize the very Crescent City charters it opposes. The union subsidized its New Orleans Charter Organizing Project to the tune of $244,070 in 2014-2015. As with a similar effort in Los Angeles, AFT hopes that it can get teachers working in charters to forget all the bad things the union says about them and let it collect dues out of their precious paychecks. Lovely.

Meanwhile AFT put plenty of dough into efforts in the rest of the Bayou State. It subsidized Louisiana Federation of Teachers and its various political action funds to the tune of $462,965. While 13 percent less than in 2013-2014, it still means that AFT has sunk $995,790 into the state affiliate over the past two years. The union also paid $20,000 to lobbyist Haynie & Associates for its work at the statehouse. AFT also backed the East Baton Rouge Federation of Teachers and its organizing project to the tune of $222,420, while spending another $10,501 on so-called “Member-related costs” at a Doubletree hotel in the city. In the state’s northeast sector, AFT subsidized an organizing project focused on helping an affiliate in Monroe at a cost of $104,363. In Caddo Parish, where the AFT got involved in stopping an effort to create a new school district, the union put $224,002 into an organizing project there.

AFT’s biggest spend –and best bang for the buck — came in Jefferson Parish, where its local had lined up a slate of candidates to take out the reform-minded majority. The union put down $669,135 to fund a so-called “Committee for School Board Accountability”, which ran adds backing the local’s favored candidates. It also subsidized an organizing project there (which, as you would expect, was partially tied to rallying members to vote on Election Day) to the tune of $186,837. The union also sent paid $23,911 for hotel and meeting space at a Sheraton Hotel in Metairie, where the district’s offices are located, as well as $5,553 for room-and-board at an Extended Stay hotel.

It was money well-spent. By last December, three of the four candidates AFT and Jefferson Federation of Teachers backed won seats, giving the union a five-to-six-seat majority on the nine-member board. AFT President Rhonda (Randi) Weingarten celebrated the victory with a press release as well as two tweets on Twitter. Eight months later, the district struck a new contract with the AFT local, albeit one that is a mere seven pages long (versus 100 pages for the previous deal), and requires teachers to resolve differences with school leaders before going to the union for help. At the end of the day, a contract with the district means dollars that continue to flow into AFT’s coffers. And for the union and its 229 staffers earning six-figure salaries, that’s always a good thing.

You can check out the data yourself by checking out the HTML and PDF versions of the AFT’s latest financial report, or by visiting the Department of Labor’s Web site. Also check outDropout Nation‘s new collection, Teachers Union Money Report, as well as for the collection,How Teachers’ Unions Preserve Influence, for this and previous reports on AFT and NEA spending.

Source: Dropout Nation

The Federal Reserve has rolled out a series of announcements, online forums and meetings with Americans this year in response to outspoken civic groups and many Democrats, including Hillary Clinton, calling for a more transparent and inclusive U.S. central bank.

The latest critique came this week when Fed Up, a labor-affiliated coalition pushing for reforms, said it was "disappointing" that Nicole Taylor, a black woman and dean of community engagement and diversity at Stanford University whose term as director at the San Francisco Fed soon expires, would be succeeded on the board by Sanford Michelman, a white man who is co-founder of law firm Michelman & Robinson LLP.

"It's definitely a step back in terms of what I'd like to see on our board. We're working actively to build representation of women and minorities," John Williams, president of the San Francisco Fed, said on Wednesday in response to reporters' questions, noting the decision was made by private banks in his district.

After years of resisting more overt political efforts to curb its independence, the Fed this year has appeared willing to shine a light on its historically opaque process of choosing district Fed presidents, and also to show it is more sensitive to racial and gender diversity.

After the Philadelphia, Dallas and Minneapolis Fed banks last year all chose as presidents men with past ties to Goldman Sachs, the Atlanta Fed hosted a public webcast this month and said it seeks a "diverse set of candidates" for its new chief, raising hopes it would name the first black or Latino Fed president in the central bank's 103-year history.

"It's not just because we want to go and say we're diverse," Loretta Mester, Cleveland Fed president, said at a meeting with workers a day after her bank launched online applications for the public to recommend directors and advisers. "It's about getting different view points that are very helpful to us in ... thinking about the economy and understanding the trends."

The regional Fed presidents have rotating votes on policy, except for the head of the New York Fed who has a permanent voting role. Unlike Fed governors who are selected by the White House and approved by the Senate, the presidents are chosen by their district directors, half of whom are themselves picked by private local banks that technically own the Fed banks.

Critics say the dizzying structure leaves the Fed beholden to bankers who do not represent the public, and they point out that 11 of 12 district presidents are white while 10 are men.

By Jonathan Spicer and Dion Rabouin

Source

Crain's Chicago Business - May 27, 2014, by Greg Hinz - Ending months of preliminaries, a group of 10 or more Chicago aldermen tomorrow is expected to introduce legislation to bring a $15 minimum wage to Chicago.

But at least for now, the measure faces a very uphill road, with Mayor Rahm Emanuel believed to favor some increase but not one of that size.

News of tomorrow's development came from Ald. Roderick Sawyer, 6th, who in a conference call with reporters today said that the measure raising the rate from the current $8.25 statewide figure would be phased in over time.

Mr. Sawyer did not provide further details but suggested that small businesses might be given more time to adapt than large companies.

He said "about 10" aldermen will co-sponsor the ordinance, most of them members of the City Council's progressive caucus. Another member of that group, Rick Munoz, 22nd, said he believes that, once introduced, the measure eventually will get support "in the high teens."

"In the high teens" is not enough to pass a bill in the 50-member City Council, where 26 votes are needed for a majority.

Mr. Emanuel last week appointed eight other aldermen to a panel that will recommend within 45 days how much to hike the minimum wage.

In announcing that move, the mayor did not say how much the wage should go up, only that it should rise because "Chicagoans deserve a raise." But, given Mr. Emanuel's extensive backing from business as he nears re-election, my suspicion is that he will end up favoring a hike that's less than that pushed by the Sawyer group. That would allow Mr. Emanuel to present himself as a moderate of sorts — someone who's for the working person but not an extremist.

Mr. Sawyer's announcement came at an event at which Raise Chicago, an advocacy group, released a report suggesting that a $15 minimum wage would bring substantial benefits.

Specifically, it said, the hike would boost wages in the city by a collective $1.5 billion, stimulating economic activity that would create 5,300 new jobs and $43 million in new tax revenue, while slashing job turnover rates "as much as 80 percent."

The move for an increase in the Illinois minimum wage is stalled, at least for now, but the issue has become a very hot subject nationally.

Source