Judge in Abortion Pill Case Set Hearing but Sought to Delay Telling the Public
Katie Benner and Pam Belluck – March 13, 2023
A photo provided by the U.S. Senate Judiciary Committee shows Trump nominee Matthew Kacsmaryk during the nomination hearing to the federal judiciary at the U.S. Capitol in Washington, on Dec. 13, 2017. (U.S. Senate Committee on the Judiciary via The New Yo
The federal judge in a closely watched lawsuit that seeks to overturn federal approval of a widely used abortion pill has scheduled the first hearing in the case for this week, but he planned to delay making the public aware of it, according to people familiar with the case.
Judge Matthew J. Kacsmaryk, of the Northern District in Texas, told lawyers in the case Friday that he was scheduling the hearing for Wednesday morning. However, he asked them not to disclose that information and said he would not enter it into the public court record until late Tuesday evening.
One person familiar with the case, which is being heard in federal court in Amarillo, Texas, said such steps were “very irregular,” especially for a case of intense public interest.
Kacsmaryk, a Trump appointee who has written critically about Roe v. Wade and previously worked for a Christian conservative legal organization, told lawyers in a conference call Friday that he did not want the March 15 hearing to be “disrupted,” and that he wanted all parties involved to share their points in an orderly fashion, according to people familiar with the discussion.
The judge also said that court staff had faced security issues, including death threats, and that the measure was intended to keep the court proceedings safe.
The lawsuit, filed in November against the Food and Drug Administration by a coalition of anti-abortion groups and doctors, seeks to end more than 20 years of legal use of medications for abortion. The plaintiffs, led by the Alliance for Hippocratic Medicine, an organization that lists five anti-abortion groups as its members, have asked the judge to issue a preliminary injunction ordering the FDA to withdraw its long-standing approval of mifepristone, the first pill in the two-drug medication abortion regimen.
At the hearing, lawyers representing the plaintiffs, the FDA and a manufacturer of mifepristone will present arguments for and against an injunction. It is unclear if the judge will decide whether to issue an order that day or sometime later.
Such an order would be unprecedented, legal experts say, and — if higher courts were to allow an injunction to stand — would make it harder for patients to get abortions in states where abortion is legal, not just in those trying to restrict it.
Medication abortion is used in more than half of abortions in the United States. That proportion has been increasing as conservative states impose abortion bans or sweeping restrictions in the wake of the Supreme Court’s decision to overturn the national right to abortion last June.
The Washington Post earlier reported on the Friday call and upcoming hearing.
In asking the lawyers to keep quiet about the hearing, the judge did not issue a gag order, which would bar the participants on the call from sharing the information. Rather, he asked them to keep the information secret “as a courtesy.”
He said that the court would provide seating for the public and the press, but his plan to provide little advance notice seemed likely to have the practical effect of minimizing the number of people who would attend, according to people familiar with the discussion. Amarillo, in the Texas Panhandle, is several hours drive from other major Texas cities, and only a couple of those cities provide direct flights.
On Friday, the public court record showed subtle signs that something unusual had occurred. That morning, the first new entry in 10 days was added to the case’s docket: a notice of appearance for a Justice Department lawyer, a standard document usually added to a case in advance of an upcoming proceeding, but the docket did not show any proceeding.
In addition, there was a gap in the numerical listing of documents in the docket — document 124 was missing — suggesting that a recent entry had been sealed. People familiar with the case said the sealed document referred to the Friday meeting between the judge and the lawyers.
After the meeting, participants shared Kacsmaryk’s request with their team members, who noted that it was unusual to hold the status conference under seal and to keep the public from knowing about the hearing. The federal government generally objects to closed hearings unless there they are necessary to protect national security interests.
The lawsuit claims that the FDA did not adequately review the scientific evidence or follow proper protocols when it approved mifepristone in 2000 and that it has since ignored safety risks of the medication. The lead plaintiff, the Alliance for Hippocratic Medicine, was incorporated in August in Amarillo, shortly after the Supreme Court overturned Roe v. Wade. Kacsmaryk is the only federal judge covering the Amarillo division in the court’s Northern District.
The FDA and the Department of Justice have strongly disputed the lawsuit’s claims and said the FDA’s rigorous reviews of mifepristone over the years had repeatedly reaffirmed its decision to approve mifepristone, which blocks a hormone that allows a pregnancy to develop. In a court filing, the FDA said that overturning its approval of mifepristone would “cause significant harm, depriving patients of a safe and effective drug that has been on the market for more than two decades.”
If the judge issues a preliminary order to bar access to mifepristone, the federal government is expected to immediately appeal and to seek a stay of the injunction while the trial proceeds. Legal experts said that even if the preliminary injunction remained in place, there were several legal options that could allow the manufacturers of mifepristone to continue supplying the drug and providers to continue prescribing it to patients.
If legal access to mifepristone is blocked, some abortion providers plan to provide only the second abortion medication, misoprostol, which is used safely on its own in many countries. Misoprostol, which is approved for other medical uses, causes contractions similar to a miscarriage and is considered slightly less effective on its own than in combination with mifepristone and more prone to cause side effects such as nausea.
In the lawsuit, the plaintiffs also seek to ban the use of misoprostol for abortion, but their request for a preliminary injunction focused on mifepristone.
Many patients would also likely still be able to order both mifepristone and misoprostol from telemedicine abortion services based in other countries.
Still, such a ruling would create confusion and difficulty for patients and providers nationwide. Legal experts said that it would also be the first time that a court had acted to order that a drug be removed from the market over the objection of the FDA and that if such a ruling stood, it could have repercussions for federal authority to regulate other types of drugs.
With demands for a bank bailout, Silicon Valley shows its ‘small government’ mantra was just a pose
Michael Hiltzik, Los Angeles Times– March 13, 2023
For decades, the dominant mantra of Silicon Valley’s powerful has been that government is just a drag on their innovative spirit. Get regulators off our backs, they’ve argued, and we’ll improve people’s lives to an indescribable degree.
Not at the moment. The same investors and entrepreneurs who argued for less government and less regulation in the past successfully lobbied for a government bailout of Silicon Valley Bank, which failed Friday as a result of astoundingly imprudent business practices.
Driving their demands were the financing issues facing thousands of SVB corporate and individual customers who collectively had more than $150 billion of their cash on deposit at the bank under conditions that left it largely uninsured against the bank’s collapse.
This specific industry could exceed$30 billion by 2025 The Federal Deposit Insurance Corp. insures individual and business deposits up to $250,000 per depositor. Many of the bank’s depositors had cash balances at SVB of hundreds of millions of dollars each.
Dispensing with that limit, the Federal Reserve, Treasury Department and FDIC announced Sunday that all SVB depositors would have access to all their money on Monday. Previously, the FDIC said it would make only the insured balances available Monday, with the balances to be repaid later and possibly not entirely.
The three agencies said no taxpayer funds would be spent on the rescue. The repayments will come from the sale of SVB’s assets, which include treasury securities, with any shortfall covered by an FDIC assessment on its member banks. The agencies may have concluded that there were enough assets on the bank’s balance sheet to cover all deposits, once the assets are sold.
This isn’t a “bailout” by the government, since SVB’s shareholders may yet be the losers; they’re not covered by the regulators’ relief program.
As it happens, the government has turned out to be the savior of Silicon Valley’s small-government libertarians in this crisis. The FDIC is one of many programs launched during Franklin Roosevelt’s New Deal that preserve Americans’ livelihoods and way of life during a crisis, and that conservatives have been trying to undermine since the 1930s.
As we reported last week, the sudden collapse of SVB resembled almost all bank runs of the past — the accumulation of huge sums of deposits that could be withdrawn on demand, backed by long-term investments that could retain their value only if held to maturity.
On Thursday, the bank announced that it needed to raise more than $2 billion in new capital, largely because long-term securities it had put up for sale had lost billions in value as interest rates rose over the last year or more.
The announcement spooked venture investor Peter Thiel and venture firms, which advised their portfolio companies to pull their cash out of the bank.
The result was an incredible $42 billion in withdrawals initiated that day, a torrent that rendered the bank almost instantly insolvent.
California regulators and the FDIC shuttered the bank Friday morning. When that happened, the shaky foundations of the bank’s business model were exposed to daylight, and the cries for a government bailout of its customers swiftly followed.
The context of these events was a fundamental change in the economics of the high-tech and biotech companies the bank served. As interest rates moved higher, its clients had more difficulty raising funds from private investors and therefore relied more on their cash balances at the bank. Their markets shrank, intensifying the rate at which they were burning cash.
It’s not unusual for a crisis to turn people’s most cherished beliefs on their head. The old joke says a conservative is a liberal who’s been mugged, and a liberal is a conservative who’s been sent to jail. An old military saw has it that “there are no atheists in foxholes,” an insight that investment commentator Barry Ritholtz expands to read, “there are also no Libertarians during a financial crisis.”
One other immutable principle of American capitalism is at play: The goal in business to privatize profits and socialize losses. In other words, when things are good, companies will keep their profits for distribution to shareholders. When things turn sour, the cry is heard for government to step in with bailouts and subsidies.
What’s overlooked in this case is that Silicon Valley Bank’s problems were in part the consequence of a Trump-era deregulation movement in banking that was fully backed by the banking industry and the management of — yes — Silicon Valley Bank itself. More on that in a moment. But first, let’s call the roll of small-government advocates who got their wish for a big-government bailout.
Start with billionaire hedge-fund operator Bill Ackman, who has advocated for self-regulation by the crypto-currency sector and has pushed back against efforts by the Securities and Exchange Commission to regulate one of his investment funds. Ackman went all-in for Donald Trump after Trump’s election in 2016, gushing that the U.S. has been “undermanaged for a very long period of time. We now have a businessman as president.”
In a lengthy tweet Saturday, Ackman flayed banking regulators for “allowing [SVB] to fail without protecting all depositors,” which he called “a-soon-to-be-irreversible mistake.”
He added, “Already thousands of the fastest growing, most innovative venture-backed companies in the U.S. will begin to fail to make payroll next week. Had the gov’t stepped in on Friday to guarantee SVB’s deposits … this could have been avoided and SVB’s 40-year franchise value could have been preserved.”
Then there’s David Sacks, an intimate of Thiel and Elon Musk, who were his partners in establishing and growing PayPal. Sacks and his friends have promoted a worldview that opposes progressive laws and regulations, including those aimed at reining in economic inequality.
Appearing on Megyn Kelly’s Sirius XM satellite show June 7, the day of the successful recall vote against San Francisco’s progressive district attorney, Chesa Boudin — a recall movement Sacks helped to finance — he called Democrats “useful idiots for the Chinese Communist Party.
“By this weekend Sacks was squealing: “Where is Powell? Where is Yellen? Stop this crisis NOW. Announce that all depositors will be safe.” (His references are to Federal Reserve Chair Jerome H. Powell and Treasury Secretary Janet L. Yellen.)
Venture investor Brad Gerstner called in a tweet for the Federal Reserve to “act now to make sure depositors are 100% protected.” In a second tweet, he asserted that the savings of thousands of small investors are at risk “just [because] the system failed.”
That drew a horselaugh from veteran investor Jim Chanos, whose experience as a short-seller has given him a uniquely percipient feel for Wall Street foibles. “The chutzpah here beggars belief,” Chanos replied on Twitter.
Chanos observed, accurately, that it was venture investment firms that actually launched the run on SVB on Thursday, when they suddenly urged their companies to pull their deposits from the bank, triggering the $42-billion outflow. “And they now want the Taxpayer to bailout their investments…?! Capitalism, Silicon Valley-style.”
It’s not only the entrepreneurial brotherhood demonstrating that, to quote what has become known as Miles’ Law, “Where you stand depends on where you sit.”
Consider former Treasury Secretary Lawrence H. Summers, who last year was heard disdaining President Biden’s student loan relief as inflationary. His argument was that the $10,000 to $20,000 in proposed relief “consumes resources” better used to help those who don’t attend college, and invites colleges to raise tuitions.
By Friday, however, Summers was saying that it’s “absolutely imperative” that “all depositors be paid back and paid back in full.” Interestingly, the same cadres who argue that student loan borrowers should have known what they were getting into when they took out their loans were able to overlook that Silicon Valley Bank depositors should have known that deposits beyond $250,000 are uninsured and therefore not guaranteed to be paid back.
(Miles’ law was coined by then-federal budget official Rufus E. Miles Jr. in the 1940s, after he noticed that after his most hard-nosed budget examiner took a job at one of the agencies he had criticized, the examiner became that agency’s most devoted defender against the unwarranted critiques from the budget office.)
Libertarian-minded Silicon Valley types have been trying to blame the bank’s collapse on the Fed. Cryptocurrency promoter Balaji Srinivasan, for example, complained that “Powell said that he wouldn’t raise rates in April, June, July, and Oct 2021 … People trusted him … And that’s how the Fed caused the crisis.”
That’s absurd, of course. The Fed began its sequence of interest rate increases in March 2022 and brought them higher by 4.75 percentage points from then through January this year. At every step the central bank made its intentions crystal clear. By early 2022, people “trusted” that the Fed was on a long-term rate tightening campaign. Absolutely no one had a right to be surprised.
Two key factors in the SVB disaster can’t be overlooked: The incompetence of the bank’s management and the improvidence of its customers.
The value destruction taking place in the bank’s holdings of long-term securities was written in bright red on its ledger books. With the prospect of interest rate increases continuing through 2022 and into this year, its management had no excuse for failing to unwind its holdings well before now instead of waiting.
Under regulations implemented in accordance with the Dodd-Frank banking reform law of 2010 safety-and-soundness standards were tightened for banks with more than $50 billion in assets.
Those larger banks were required to submit annual disclosures to the Fed, meet stricter liquidity and risk management requirements, and undergo “stress testing” that would reveal how they would fare under extreme financial scenarios.
Mid-sized banks launched a vigorous lobbying campaign to raise that threshold. In testimony submitted to the Senate Banking Committee in 2015, Greg Becker, the chief executive of Silicon Valley Bank, called for raising the threshold as high as $250 billion.
Becker’s statement bristled with the buzzwords and catchphrases beloved of Silicon Valley entrepreneurs. He asserted that without the change, the regulations would be so burdensome that “SVB will likely need to divert significant resources from providing financing to job-creating companies in the innovation economy.”
Becker referred to “SVB’s deep understanding of the markets it serves, our strong risk management practices, and the fundamental strength of the innovation economy.”
As it happens, SVB plainly didn’t understand how the markets it serves were vulnerable to lock-step flight from its deposit accounts, had weak or paltry risk-management practices, and failed to recognize that the innovation economy has its ups and downs.
The industry’s lobbying yielded fruit. President Trump raised the Dodd-Frank threshold in 2018. At the signing ceremony, Trump labeled the regulations “crushing.” He said, “Those rules just don’t work.”
Actually, they would have worked well for Silicon Valley Bank, which exceeded the $50-billion asset threshold in 2017 and never reached the $250-billion level, having topped out last year at $211.7 billion in assets. Had the old rules remained in place, it would have become subject to stricter oversight no later than 2018. Regulators might have noticed its rapid growth and the shortcomings of its risk profile. But they never had the chance.
Finally, the customers. SVB evidently required some of its Silicon Valley borrowers to do all their banking through the bank as a condition of their loans. According to its annual disclosures, the bank paid an average of 2.2% on savings and checking accounts last year; that’s higher than most commercial banks, but not high enough to compensate for the risk of uninsured cash deposits.
Some companies have reported uninsured balances of hundreds of millions of dollars sitting at SVB. It’s not unusual for businesses to have sizable balances in bank accounts exceeding the insurance cap. But prudent companies spread their deposits around, so they’re not mortally exposed to the failure of any one depository institution.
Multiple options exist for parking cash, such as investing in short-term government securities, money market instruments and corporate commercial paper. None of these is government-insured, but they offer diversification and a cushion against a single bank’s implosion.
With the debacle apparently resolved, the bank’s clients and their employees can enjoy the peace of mind that comes with a well-regulated banking system. Even at the businesses whose leaders lobbied to make banking less safe for everyone.
Michael Hiltzik is a columnist for the Los Angeles Times.
Opinion: Beyond saving Silicon Valley Bank’s depositors, here’s what needs to happen next
Simon Johnson – March 13, 2023
Before Thursday, Silicon Valley Bank was regarded as being in “sound financial condition.” But on that day it experienced attempted withdrawals of $42 billion, about a third of its U.S. deposits. By close of business, the run on the bank made it incapable of paying its obligations as they came due. On Friday, the California Commissioner of Financial Protection and Innovation took possession of the bank’s property and business.
The Federal Deposit Insurance Corp., which insures deposits up to a limit of $250,000 per individual account or for a corporation at a single bank, was immediately appointed as the receiver. In some ways, SVB was unusual. Around 97% of its deposits (by value) were uninsured. This is because the bank catered primarily to the tech community, with many of these companies and nonprofits (perhaps up to 37,000 of them) parking their operating cash there.
Its collapse raised critical questions: What protection should be provided to depositors at SVB with uninsured amounts? Will there be problems for similarly situated banks? And what official action would be appropriate to head-off any potential cascade of bank failures?
Some preliminary answers were provided Sunday night by Treasury Secretary Janet L. Yellen, Federal Reserve Chair Jerome H. Powell and FDIC Chairman Martin J. Gruenberg: All bank depositors with SVB and with Signature Bank, which was closed by New York authorities on Sunday, will be fully protected. The Federal Reserve will also make available additional funding to ensure banks have enough liquidity to meet the needs of all depositors trying to make withdrawals.
The hope is that this rapid response will stop any further panic that could drive more bank runs. It appeared to be working on Monday, when all depositors’ funds in SVB became available. The stocks of midsized regional banks, however, plummeted as equity investors worried about the sudden collapses of SVB and Signature Bank.
Going forward, the FDIC will also manage SVB’s remaining assets, which are of high quality, including government securities and mortgage-backed securities guaranteed by government sponsored enterprises. The recovery value of these assets will be high, and they can be sold immediately.
Preventing bank runs is the immediate fire to put out, but the underlying problem that weakened Silicon Valley Bank — and may also leave other banks susceptible — has yet to be addressed.
In this case, a significant factor was how SVB was affected by the Federal Reserve and its macroeconomic priority to bring down inflation. Somehow this message did not filter down to corporate leaders at the bank.
SVB was brought down because it and its Fed supervisors did not pay attention to what Powell said would happen — that the Fed would raise interest rates if inflation stayed stubbornly high, as it has. Instead, SVB’s assumption that interest rates would remain low appeared to drive its investment strategies.
For many years, SVB was well regarded, apparently successful and had the best possible connections to banking regulators. The chief executive, Greg Becker, has been on the board of the San Francisco Fed since 2019 (he was removed from that board on Friday). Mary Miller, former undersecretary for domestic finance at the U.S. Treasury Department, was on the board of SVB.
For a while, nothing seemed amiss. And when startups received a flood of funding during the pandemic and immediately after, deposits at SVB rose by about $100 billion, more than doubling its balance sheet. SVB leadership used these funds to buy long-term U.S. government-backed bonds that are free of credit risk (they never default).
Unfortunately, as the bank’s management and its Fed supervisors should have known, such assets are not free of interest rate risk — meaning that as the Fed raised interest rates over the last nine months, the market value of SVB’s portfolio declined. Eventually, the value of its assets fell so much that concern about solvency arose, and SVB was unable to find enough cash to match the attempted $42-billion withdrawal on Thursday.
The bank’s miscalculation of risks, based on over-optimism of future interest rates, was a central problem, creating a vulnerability that helped trigger the bank run. But Fed supervisors also apparently failed to see the interest rate risk inherent in SVB’s big bond buying spree or to do anything about it (e.g., to require the bank to hedge that risk).
As a result, the Federal Reserve and other officials feel pressed to provide additional support to the banking system. There has been widespread concern since Friday about a run on other midsized banks, leading to other insolvencies — hence the move to guarantee all deposits at SVB and Signature.
In 2008, the regulation and supervision of big Wall Street traders broke down, resulting in a major financial panic, millions of jobs lost and the Fed loosening monetary policy as much as possible to prevent even worse outcomes.
In 2023, it is the supervision of regular commercial banks that has broken down. The failure of a $200-billion bank should not bring down the financial system. But a breakdown in supervision is another matter.
Fearing a major financial panic, the Fed and other authorities seem willing to provide a de facto blanket guarantee for all bank deposits. (Total bank deposits in the U.S. are around $18 trillion, of which about $10 trillion are FDIC insured.)
To be fully effective, this extension of deposit insurance has to be permanent, and all such insurance should be paid for through appropriate contributions from banks.
Going forward, federal authorities and the taxpayer will ultimately be responsible for more of the downside risk associated with poor risk management at banks. Consequently, regulation and supervision will need to be strengthened in an appropriate manner. Many people said this after 2008, but not enough was done.
A well-regulated system is still the right goal. This time around, the Federal Reserve needs to overhaul and improve its bank supervision — and to make that consistent with its macroeconomic policy for interest rates.
Simon Johnson is co-chair of the CFA Institute Systemic Risk Council, former chief economist of the International Monetary Fund and a professor at MIT Sloan.
Fifteen Years After 2008, Why Do Banks Keep Failing?
Peter Coy – March 13, 2023
Credit…Illustration by The New York Times; images by CSA Images/Getty Images
The weekend rescue of uninsured depositors in Silicon Valley Bank and Signature Bank was absolutely essential and absolutely frustrating. We have to stop getting ourselves into these messes, people.
If the federal government hadn’t given a blanket of protection to all deposits, companies that had deposits in either of the banks above $250,000, the maximum that’s insured by the Federal Deposit Insurance Corp., would not have been able to pay their workers. Start-ups that bank with Silicon Valley Bank would have been imperiled. “It could have destroyed early-stage biomedical research in this country for a decade,” said Karen Petrou, the managing partner of the consulting firm Federal Financial Analytics, who sits on the board of a biomedical research foundation.
The damage could have been far greater. Depositors at other banks were beginning to panic, worrying that their banks would be next to fail and looking for safer places to stash their cash. We were looking at the early stages of a generalized bank run that would have done serious damage to the U.S. economy. Even a healthy bank can be destroyed overnight if all its depositors demand all their money at once. The only way to arrest the panic was for the government to assure all depositors that there was no need to yank from the bank.
Even after the emergency intervention, markets remained unsettled on Monday. Bank stocks were down. Economists at Capital Economics reported “worrying signs of incipient strains in core money markets.” Interest rates fell as investors speculated that the Federal Reserve might curb its rate-raising campaign to relieve pressure on banks (a concern I wrote about on Friday). A scare such as this one has lasting consequences.
True, the government didn’t bail out everyone involved. Shareholders in the banks are wiped out and members of senior management were fired. That’s fair — and contrasts with what happened during the 2008 global financial crisis, when the government propped up shaky banks while leaving management and shareholders in place.
Whether taxpayers helped pay for the rescue is a matter of semantics. On Monday, President Biden told reporters, “No losses, and this is an important point, no losses will be borne by the taxpayers.” Still, the government — and by extension, taxpayers — is providing a valuable guarantee to the banking system. The fact that any government expenditures will eventually be recouped through higher insurance premiums doesn’t take away from that. Also, the Federal Reserve is promising to support troubled banks by buying bonds from them at face value rather than their current depressed market price. Not a bailout, exactly, but certainly a good deal.
The real question is why this keeps happening. After the global financial crisis, Congress passed and President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Federal Reserve raised safety standards for banks, especially ones that are deemed “systemically important.” There’s a Financial Stability Oversight Council that’s supposed to take a broad view of risks in the system.
It clearly wasn’t enough. It didn’t help matters that bank lobbyists got Congress and regulators to roll back some measures that they regarded as onerous. For example, a 2018 law signed by President Trump — which was passed by Congress with bipartisan support — spared banks with $100 billion to $250 billion in assets from the highest level of scrutiny. Hard to say, but Silicon Valley Bank — which lobbied for the law — might still be with us if it weren’t for that law.
There are lots of things that could be done to improve banking supervision, require thicker capital cushions and so on, but for now I’d like to focus on the question of the day, which is what to do about uninsured deposits.
The theory in banking is that big depositors have the financial sophistication and the incentive to make sure that the banks where they keep their money are safe. Keeping deposits uninsured above a certain threshold is thus supposed to be a kind of market discipline, supplementing the supervision by state and federal regulators. But that was never a realistic expectation for most depositors, who have other things on their minds. Plus, because big depositors know that they’ll be protected when push comes to shove, they have no incentive to seek out safe banks.
This is hardly a new problem. In 1991, Jerome Powell, now the chair of the Federal Reserve, was a senior official in the Treasury Department who was assigned to deal with the collapse of the Bank of New England Corp. As he recounted in a 2013 speech: “We came to understand that either the F.D.I.C. would protect all of the bank’s depositors, without regard to deposit insurance limits, or there would likely be a run on all the money center banks the next morning — the first such run since 1933. We chose the first option, without dissent.”
Under the Federal Deposit Insurance Corporation Improvement Act of 1991, the F.D.I.C. is required to resolve bank failures in the way that incurs the least cost to the deposit insurance fund, even if that means wiping out uninsured depositors. But in practice, uninsured depositors almost never get wiped out because the F.D.I.C. arranges for a stronger bank to acquire the failed one, assuming all of its deposits. The Dodd-Frank Act of 2010 made an explicit exception to the least-cost test for cases of “systemic risk” — that is, if complying with the least-cost test “would have serious adverse effects on economic conditions or financial stability.” That’s the exception that the government invoked for Silicon Valley Bank and Signature Bank.
If market discipline works in theory but not in practice, one alternative is to bow to reality and explicitly insure all bank deposits. It would certainly lessen the number of panics such as the one that killed Silicon Valley Bank and Signature Bank, without giving banks carte blanche to behave irresponsibly. One person who favors that solution is Robert Hockett, a professor at Cornell Law School, who has written twopieces about the idea for Forbes recently. The F.D.I.C. premiums are higher for riskier banks, which makes sense. Given that the F.D.I.C. already takes risk into account, Hockett told me, the $250,000 limit is “vestigial, like the human tailbone.”
Insuring all bank deposits would make banks look more like public utilities, Petrou told me. She said she’d prefer relying more on market discipline, as originally intended. But that ship may already have sailed.
Elizabeth Warren: Silicon Valley Bank Is Gone. We Know Who Is Responsible.
By Elizabeth Warren– March 13, 2023
Credit…Justin Sullivan/Getty Images
Senator Warren is a Democrat from Massachusetts.Sign up for the Opinion Today newsletter Get expert analysis of the news and a guide to the big ideas shaping the world every weekday morning. Get it sent to your inbox.
No one should be mistaken about what unfolded over the past few days in the U.S. banking system: These recent bank failures are the direct result of leaders in Washington weakening the financial rules.
In the aftermath of the 2008 financial crisis, Congress passed the Dodd-Frank Act to protect consumers and ensure that big banks could never again take down the economy and destroy millions of lives. Wall Street chief executives and their armies of lawyers and lobbyists hated this law. They spent millions trying to defeat it, and, when they lost, spent millions more trying to weaken it.
Greg Becker, the chief executive of Silicon Valley Bank, was one of the many high-powered executives who lobbied Congress to weaken the law. In 2018, the big banks won. With support from both parties, President Donald Trump signed a law to roll back critical parts of Dodd-Frank. Regulators, including the Federal Reserve chair Jerome Powell, then made a bad situation worse, letting financial institutions load up on risk.
Banks like S.V.B. — which had become the 16th largest bank in the country before regulators shut it down on Friday — got relief from stringent requirements, basing their claim on the laughable assertion that banks like them weren’t actually “big” and therefore didn’t need strong oversight.
I fought against these changes. On the eve of the Senate vote in 2018, I warned, “Washington is about to make it easier for the banks to run up risk, make it easier to put our constituents at risk, make it easier to put American families in danger, just so the C.E.O.s of these banks can get a new corporate jet and add another floor to their new corporate headquarters.”
I wish I’d been wrong. But on Friday, S.V.B. executives were busy paying out congratulatory bonuses hours before the Federal Deposit Insurance Corporation rushed in to take over their failing institution — leaving countless businesses and non-profits with accounts at the bank alarmed that they wouldn’t be able to pay their bills and employees.
S.V.B. suffered from a toxic mix of risky management and weak supervision. For one, the bank relied on a concentrated group of tech companies with big deposits, driving an abnormally large ratio of uninsured deposits. This meant that weakness in a single sector of the economy could threaten the bank’s stability.
Instead of managing that risk, S.V.B. funneled these deposits into long-term bonds, making it hard for the bank to respond to a drawdown. S.V.B. apparently failed to hedge against the obvious risk of rising interest rates. This business model was great for S.V.B.’s short-term profits, which shot up by nearly 40 percent over the last three years — but now we know its cost.
S.V.B.’s collapse set off looming contagion that regulators felt forced to stanch, leading to their decision to dissolve Signature Bank. Signature had touted its F.D.I.C. insurance as it whipped up a customer base tilted toward risky crypto-currency firms.
Had Congress and the Federal Reserve not rolled back the stricter oversight, S.V.B. and Signature would have been subject to stronger liquidity and capital requirements to withstand financial shocks. They would have been required to conduct regular stress tests to expose their vulnerabilities and shore up their businesses. But because those requirements were repealed, when an old-fashioned bank run hit S.V.B., the bank couldn’t withstand the pressure — and Signature’s collapse was close behind.
On Sunday night, regulators announced they would ensure that all deposits at S.V.B. and Signature would be repaid 100 cents on the dollar. Not just small businesses and nonprofits, but also billion-dollar companies, crypto investors and the very venture capital firms that triggered the bank run on S.V.B. in the first place — all in the name of preventing further contagion.
Regulators have said that banks, rather than taxpayers, will bear the cost of the federal backstop required to protect deposits. We’ll see if that’s true. But it’s no wonder the American people are skeptical of a system that holds millions of struggling student loan borrowers in limbo but steps in overnight to ensure that billion-dollar crypto firms won’t lose a dime in deposits.
These threats never should have been allowed to materialize. We must act to prevent them from occurring again.
First, Congress, the White House and banking regulators should reverse the dangerous bank deregulation of the Trump era. Repealing the 2018 legislation that weakened the rules for banks like S.V.B. must be an immediate priority for Congress. Similarly, Mr. Powell’s disastrous “tailoring” of these rules has put our economy at risk, and it needs to end — now.
Bank regulators must also take a careful look under the hood at our financial institutions to see where other dangers may be lurking. Elected officials, including the Senate Republicans who, just days before S.V.B.’s collapse, pressed Mr. Powell to stave off higher capital standards, must now demand stronger — not weaker — oversight.
Second, regulators should reform deposit insurance so that both during this crisis and in the future, businesses that are trying to make payroll and otherwise conduct ordinary financial transactions are fully covered — while ensuring the cost of protecting outsized depositors is borne by those financial institutions that pose the greatest risk. Never again should large companies with billions in unsecured deposits expect, or receive, free support from the government.
Finally, if we are to deter this kind of risky behavior from happening again, it’s critical that those responsible not be rewarded. S.V.B. and Signature shareholders will be wiped out, but their executives must also be held accountable. Mr. Becker of S.V.B. took home $9.9 million in compensation last year, including a $1.5 million bonus for boosting bank profitability — and its riskiness. Joseph DePaolo of Signature got $8.6 million. We should claw all of that back, along with bonuses for other executives at these banks. Where needed, Congress should empower regulators to recover pay and bonuses. Prosecutors and regulators should investigate whether any executives engaged in insider trading or broke other civil or criminal laws.
These bank failures were entirely avoidable if Congress and the Fed had done their jobs and kept strong banking regulations in place since 2018. S.V.B. and Signature are gone, and now Washington must act quickly to prevent the next crisis.
Elizabeth Warren is a United States senator for Massachusetts.
They bought their dream homes from the ‘King of Coconut Grove.’ They still can’t move in
Linda Robertson – March 12, 2023
Twelve new townhouses line a block of Coconut Avenue. Lushly landscaped, outfitted with high-end appliances and spacious closets, they’re in move-in condition. Yet the Coconut City Villas are empty, as empty as their backyard swimming pools and unsullied trash bins sitting in unoccupied driveways.
Instead of “For Sale” signs, house hunters see “No Trespassing” notices posted along the street and “Do Not Enter” decals stuck to the front doors, a curious contrast in Coconut Grove, one of the most hotly desired neighborhoods in the country, where housing prices have nearly doubled over the past three years.
The lack of residents can’t be explained by lack of demand. The 4,000-square-foot townhouses, originally priced from $1.2 million to $1.8 million, are under contract to buyers who put down as much as $500,000 starting as far back as 2018. They were told by developer Doug Cox their homes would be ready in 45 to 90 days, or at the latest six months.
They’ve been waiting ever since. Their plans have been perpetually postponed by Cox, owner of Drive Development, who has not closed a house sale in four years despite a booming market. His completion dates teased buyers as the houses beckoned. But their dreams of a dream home have gone bust.
They have been locked out and led into a dead end darkened by threats, lawsuits, non-disclosure agreements and unsavory lenders, buyers say.
The delays have turned buyers and their families into nomads — moving from one expensive rental to another, cramming in with relatives while living out of suitcases — draining their finances and testing their marriages. When they go past their houses they are tantalized by memories not made — cooking in the kitchen, playing in the pool, celebrating birthdays, hosting block parties.
“We’ve spent three Christmases in limbo,” said Alan Lombardi, who signed a contract three years ago with the assurance that he, his husband and their newborn twin daughters would move in by summer 2020. The twins are now age 3. “The developer has kept us hanging on his hook, ruining people’s lives by deceiving us with false promises, just like Bernie Madoff.”
Lombardi has asked the FBI to investigate Cox for running a Ponzi scheme.
The buyers can’t move in because Cox has failed to complete inspections and get certificates of occupancy from city of Miami building department officials, whose lack of oversight enabled Cox to ignore expired permits and a Stop Work order and avoid applying finishing touches on houses for years. The city, which has ceased responding to buyers’ calls and emails, says it can’t intervene in a private dispute.
The buyers got caught in the fallout from Miami’s COVID-driven housing gold rush. Some are transplants from New York, Chicago and California who were eager to sign purchase agreements for new homes that looked — outside and inside — like they were ready to sleep in, missing only a mirror, some paint, a fence. They want their plight to serve as a warning: Don’t make one-sided deals with developers.
A Coconut Avenue townhouse built by Drive Development. Buyers who have paid hundreds of thousands in deposits for these houses have been waiting to move in for two, three and more than four years. They’ve been stymied by the Coconut developer, Doug Cox, who has continually stalled the closings on the properties.
Cox is deliberately stalling to frustrate them into canceling their contracts so he can flip each house for an additional $1 million or more, buyers allege. They feel trapped: As time passed, the market skyrocketed, and in 2023 they will never find comparable homes in the neighborhood for the price they planned to pay and the mortgage rate they had secured.
On Wednesday, Drive Realty listed 2986 Coconut Ave. for $2.495 million. Original sales price in July 2020 was $1.385 million, a difference of $1.11 million. One catch: It doesn’t have a certificate of occupancy so anyone who buys it can’t move in.
“Seems like a shell game,” said Andy Parrish, a longtime Miami developer who lives in Coconut Grove. “He’s put these people through hell by stonewalling them with excuses.”
One weary buyer confided in Parrish, cried on his shoulder.
“She said, ‘I can’t believe people lie to other people like this,’ ” Parrish said. “I told her, ‘Welcome to Miami! A sunny place for shady people.’ ”
Cox, 52, initially agreed to an interview with the Miami Herald, then changed his mind and asked for emailed questions. He didn’t respond to questions sent twice or attempts to talk to him over the past two weeks.
Nicole Pearl, 37, who is Cox’s business partner and mother of their three children, declined to talk to the Herald. Her law firm, Pearl & Associates, is the registered agent of companies connected to the properties, Florida corporate records show. She is a licensed real estate agent who lists homes for Drive Realty.
The Herald spoke to 16 buyers — many did not want their names published, fearing retaliation by Cox — and examined lawsuits, mortgages, purchase agreements, property records and Miami building department reports, which substantiated buyers’ chorus of complaints.
Several of the 12 townhouses in the 2900 block of Coconut Avenue in Coconut Grove on Wednesday, Feb. 15, 2023. Buyers who have put down deposits as much as $500,000 dating back to 2018 say they haven’t been able to move into the homes due to perpetual delays by their developer, Doug Cox of Drive Development.
No sales closed since 2019
Cox calls himself the “King of Coconut Grove.” His clients call him less flattering nicknames. What his gambit is no one can say for certain because he has not sold a home since August 2019 when he and Pearl closed on a Bridgeport Avenue townhouse for $1.15 million. Closing on the new homes should be a mutual goal but there are no signs of progress. He offers clients refunds of their deposits and says he’s got a line of backup buyers.
“It’s a strange way to run a real estate development company,” Lombardi said. “It’s really an anti-development company. Why doesn’t he want to deliver? How can he afford to operate?”
Cox has told buyers he wants to get them into their special houses, but he’s been delayed by factors beyond his control: the pandemic, supply-chain problems, manpower shortages, rising construction costs, subcontractor snafus and now bureaucratic red tape in the building department tangling his efforts to finish inspections.
A padlock and chain link fence greet passersby at 3159 Virginia St. in Coconut Grove on Thursday, Feb. 9, 2023. The property is owned by Send Enterprises LLC, one of the limited liability companies connected to Doug Cox and Nicole Pearl.
Double contracts on homes
Is Cox playing musical chairs? At least three of the townhouses have double contracts on them. The legal descriptions correspond to 2955, 2960 and 2990 Coconut Ave.
Some buyers discovered through Miami-Dade Clerk of Court records that near the end of 2022 Cox signed a “memorandum of contract” on their houses with Chris Paciello, the former South Beach nightclub impresario, and his business partner, Mio Danilovic. Before he became famous for hosting parties at Liquid and dating Madonna, Sofia Vergara and Jennifer Lopez, Paciello was a Mafia henchman and thief in New York City.
Once Paciello’s past caught up with him in 2000, he became an FBI informant, pleaded guilty to racketeering and served six years in prison for robbing $300,000 from a New York bank and driving the getaway car in a home invasion during which a Staten Island housewife was shot in the face and killed.
Paciello, the owner of four Anatomy Fitness deluxe gyms in South Florida, has ventured into real estate investment since the pandemic and flipped houses for $9 million and $14 million in Miami Beach. It’s unclear how much of a deposit Paciello and Danilovic put down in their backup contract deal with Cox. Backup contracts are not illegal.
When contacted by the Herald, Paciello, 51, declined to comment.
Ingrid Casares and Chris Paciello at Liquid, the South Beach nightclub, on Nov. 16, 1995. Casares and Madonna were lovers; Casares and Paciello were partners in Liquid. Paciello and his business partner have backup contracts on three of the Coconut Avenue townhouses.
In another complication that has alarmed buyers, Cox took out a $350,000 loan in December from DC Fund based in Sunny Isles Beach, whose associates include men who were sued for racketeering in an alleged loansharking scheme that disguised “criminally usurious loans” as cash advances that had to be repaid with 430 percent interest, according to a lawsuit filed in Brooklyn. Cox put up eight properties as collateral. If he defaults on the loan, he could lose them.
Buyers have observed Cox showing their houses to prospective buyers on multiple occasions. He says he is merely displaying his handiwork, and not offering those particular houses for sale. But contract holders have heard from acquaintances whose names are on a list of backup buyers Cox has compiled. One is upset he’s only No. 3 on the list.
A finished kitchen in one of the Coconut Avenue townhouses built by Doug Cox of Drive Development.
If Cox is flipping the townhouses, for how much? Miami real estate agent Randi Connell, who identifies herself as a Drive Development sales associate, recently texted a prospective buyer about two off-market Coconut Avenue houses available for $2.7 million and $3 million, which is $1.5 million and $1.2 million more than the original sales prices.
Homebuyers who signed purchase agreements and put down deposits on townhouses along Coconut Avenue in Coconut Grove have been waiting for several years to move into their dream home. The developer, Doug Cox of Drive Development, keeps stalling, the buyers allege. Photo was taken in 2021 by a buyer.
Pearl listed 2986 Coconut Ave. for sale for $2.495 million on Wednesday morning. The house first went under contract for $1.385 million on July 8, 2020, to Jonathan Schonfeld and Aviva Auslander, with a completion date of Sept. 1, 2020, or at the latest, March 1, 2021. They waited two years. Disgusted, they gave up.
If Cox and Pearl land a buyer for 2986, they could collect at least a $500,000 deposit and “utilize” it as they please, according to two Send Enterprises contracts the Herald reviewed. Contrary to realty ethics rules, Pearl did not disclose in the listing that the house doesn’t have a certificate of occupancy, and its building permit expired Feb. 15.
“If the delays are indeed outside their control, how can they list a property if they don’t know when or if they can close?” Lombardi asked.
South Florida real estate lawyer Dennis Eisinger said home buyers can get “boxed in” by contracts that typically favor the developer and waive buyers’ rights.
“It appears this developer is bullying the buyers to get the financial advantage,” he said. “We saw this situation before the recession in 2003-2006 when defiant and unscrupulous developers tried to get buyers to rescind contracts so they could resell at higher prices.”
Lawsuits, ‘worst decision of my life’
At least three buyers, including Schonfeld and Auslander, sued Send Enterprises, alleging fraud and breach of contract. The cases were assigned to mediation, as required in the contracts; buyers cannot seek a jury trial. They had to sign non-disclosure agreements. At least four others have taken Cox up on his offer to refund their deposits and walk away; they also signed NDAs.
Catherine and Andrew Prescott of Miami Beach signed a $1.82 million purchase agreement on May 25, 2021, and paid a $455,000 deposit for 2960 Coconut Ave. The contract stipulated a completion date of Aug. 1, 2021, and an “outside” closing date within six months.
The Prescotts sued Send Enterprises in January 2022 for its alleged failure to achieve specific performance of its obligations, fraudulent inducement, unfair trade practices, negligent misrepresentation and unjust enrichment.
In their lawsuit, which also named Cox, Schonfeld and Auslander asserted that Cox “repeatedly lied” about “fabricated dates.” The Prescotts said the developer made promises “without any intention of performing, or with the positive intention to not perform” to entice them to sign and pay a deposit. The cases went to mediation and everyone signed NDAs.
Three months after the Prescotts sued, a real estate agent who works with Cox offered the house for $2.4 million, about $600,000 more than the original sales price.
Other buyers are determined to stick it out. They can’t afford to hire a lawyer. They’re not ready to abandon the houses they’ve invested in, emotionally and financially. And they don’t want to let Cox win.
“If I could rewind time — this was the worst decision of my life,” said Kevin Ware, who owns an insurance brokerage firm. He moved his family from Chicago in March of 2021, walked through a Coconut Avenue townhouse that was weeks from completion and fell in love with it. They’ve lived in three rentals since. “We cannot let Doug keep scamming more people. We don’t want anyone else to get caught in this predicament. Buyer beware.”
Strung along by Cox, buyers acquired mortgages with 2 percent rates that have since tripled.
“It must be exhausting to be Doug Cox. He lives in 15-minute increments. Think of all the lies he has to keep track of,” Ware said. “We have paid a high price for dealing with him. From the sheer expense of living in short-term housing to the financial damage of losing our mortgage rate locks to the strain on our relationships and mental health, Doug has constantly and cruelly put his greed above our well-being.”
Kevin Ware moved his family from Chicago in March of 2021, walked through a Coconut Avenue townhouse that was weeks from completion and fell in love with it. They’ve lived in three rentals since, unable to move into their home.
‘Cautionary tale for other home buyers’
For Lombardi and his family, it’s been a three-year ordeal, first sharing his mother’s small Hollywood condo with his partner and infant twins, now in a $5,000-per-month Midtown apartment.
“We thought it would be a three-month wait because the house was 80 percent done, so we sold our Brickell condo, put everything, including baby equipment, in a sealed storage pod, packed four suitcases and moved in with my mom — for two years,” said Lombardi, a real estate agent.
The twins never had the nursery Lombardi envisioned.
One buyer described himself and his wife as “40-year-old couch surfers.” They’ve lived in seven different places.
New York transplants Michael Coyne and his wife, Oksana, have 1-year-old twin daughters and a 3-year-old son, and expected to share 2978 Coconut Ave. with her parents, who fled Ukraine after Russia attacked. Among the six places they have lived since their closing date evaporated was a one-bedroom apartment.
Coyne said they moved to a rental in Rhode Island to wait it out because they couldn’t afford “insane” rents in Miami. Fueled by inflation that’s made housing unaffordable for many and the influx of remote workers and newcomers moving to a no-income tax state, Miami has become the most competitive rental market in the country with prices 76 percent higher than the national median, a Zillow study showed.
Coyne, an investment banker, wanted to open an office with two of his business associates in Miami but he’s told them not to come. Oksana, a registered nurse, was scheduled to do her clinical work to become a nurse practitioner; she’s postponed her career plans. The chaos has been difficult for the children and Oksana’s Ukrainian parents, who speak limited English.
“Doug and Nicole either lie to you or ignore you,” Coyne said. “You work really hard for your family to buy the most important asset of your life and you get caught in a calculated, malicious, exploitative scheme by a flimflam developer.
“I’m not letting him get away with it. Let this be a cautionary tale for other homebuyers.”
New York transplants Michael Coyne and his wife, Oksana, have 1-year-old twin daughters and a 3-year-old son, and expected to share 2978 Coconut Ave. with her parents, who fled Ukraine after Russia attacked.
One family has suffered the longest. They chose a four-bedroom model four and a half years ago so their 12-year-old daughter would have her own room and so her grandmother, recovering from cancer, could live with them. Now, the daughter is a high school senior heading to college in the fall. The grandmother never got to move in with her family.
City of Miami should be ‘embarrassed’
Cox brags about his chummy connections to the city’s building department and Miami Mayor Francis Suarez.
Cox’s customers recount the exact same comments he’s made to all of them — that he can remove any obstacle by “having a cafecito” with officials. Drive Development contributed $50,000 to Suarez’s re-election campaign in 2020 and $100,000 to Suarez’s 2018 initiative to create a strong mayor position (voters rejected it), campaign finance records show.
Buyers who have sought relief from the city have gotten nowhere: Emails, phone calls and meetings have prompted no corrective action.
Buyers acknowledge they signed contracts that gave lots of leeway to the developer but decided to sign because they were shown nearly completed houses by a persuasive seller who had previously built fine houses. What could go wrong?
The Herald asked to speak to three City of Miami building department officials about inspection delays and an audit of Drive Development plans. The city’s reply: “The Building Department takes this matter seriously and is tasked with enforcement of the building code and other technical standards, as well as City ordinances. The Building Department has no authority over the pace of construction, nor any contractual matters between the buyers and the developer.”
The city does have authority over permitting and inspections, but wouldn’t explain why it has taken years for Cox to receive city approvals and certificates of occupancy. Nor would officials answer questions about penalties for permit violations or prolonging the inspection process.
“The city should be embarrassed,” Lombardi said.
A walk-in closet at one of the 12 luxury townhouses on Coconut Avenue in Coconut Grove that developer Doug Cox of Drive Development built. The photo was taken in 2021 by a buyer.
When the Coynes asked Pearl for an update three weeks ago, she told them inspectors can’t work during an audit. The city said that’s not true; inspectors are allowed to carry on.
Developers like Cox can hire “private providers” to conduct inspections and submit the results to the city. Cox hired MEP Consulting Engineers of Coral Gables. He’s told buyers he blames MEP for bungling reports. MEP blames Cox for not giving inspectors the information they need to finish the job.
MEP President Katrina Meneses said that the city’s audit is done and in the hands of Cox.
“What we’re waiting on is paperwork from the owner, our client,” she said. “We love to finish projects so we can move on to the next one. Anything that takes over a year, it’s difficult to continue and slows us down. Yes, if I was a customer, I’d feel upset.”
The city is notorious for its lack of transparency and accountability, said Parrish, the Miami developer who lives in the Grove.
“We’re in a pro-development city, county and state where everything is driven by developers and their money. Florida is a creation of developers,” he said. “Developers control elections, elections control politicians and politicians control building and zoning. The city of Miami is one of the worst examples of how the gravy train works. It’s an absolute mess.”
Buyers have asked for help from the city, ex-Miami commissioner Ken Russell, Mayor Suarez, the Miami-Dade State Attorney’s Office, the state’s Department of Business and Professional Regulation and the FBI. The response: If Cox isn’t doing anything illegal, we can’t get involved.
Ware’s experiences illustrate the relationship between Cox and the city.
Cox was allowed to work through a Stop Work order for more than a year. The city issued the order because Cox failed to submit plans for the five three-story townhouses he was building on Coconut Avenue; he only submitted plans for the two-story units. His reason: Plans were proprietary and he didn’t want his design stolen.
Ware discovered there was a Stop Work order and expired permit on his house when he checked the city website iBuild in summer 2021.
Kevin Ware moved his family from Chicago in 2021 and has been waiting to move into their Coconut Avenue home in Coconut Grove.
According to Ware, Cox told him not to worry, the order wasn’t being enforced and he’d have a cafecito with officials to smooth things over. Five months later, after repeated requests for an update, Cox told Ware he had submitted a substantial number of reports to the city after giving MEP engineers a $50,000 bonus each to expedite inspections, and promised Ware “we’re almost there.”
A month later, Ware met with city inspector Perla Mutter. She told him Cox had submitted nothing, and that because of the expired permit, nothing could be submitted until Cox and his contractor Eric Myers met with the building department.
A month after that, on April 26, 2022, Ware went to the meeting at city offices expecting to talk to Cox, Myers and Miami building department assistant director Luis Torres. But Cox met with Torres privately first. And there was no sign of Myers.
“Doug comes out of the office and admits he met with Torres early so that, ‘Everything would be taken care of,’ ” Ware said. ”The following week Doug paid a $100 fine and reopened his permit.
“The city can try to cleanse its hands but it is enabling this developer to abuse the system,’’ Ware said.
The permits for 2984 and 2986 Coconut Ave. expired last month. Cox must sign onto iBuild and pay $100 to re-activate the permits for six months. It’s part of a years-long pattern: His permits expire, he reactivates them months later, then doesn’t enter documentation in time for the city to complete reviews before they expire again, records show.
Permits for the other townhouses on Coconut Avenue are scheduled to expire March 12, April 30 and July 4. Buyers check iBuild and see a vicious cycle: Submit, Pending, Review, Deny, repeat.
To fix the slow and complicated permitting process that has stranded buyers, they advocate new laws with strict 120-day deadlines for the review and approval of applications and harsh penalties for breaking them.
There’s a cost to the city as well. Cox has been paying property taxes of $10,000 per lot, or $60,000 per year on the Coconut Avenue townhouses. Homeowners would pay about $20,000 per unit, or a total of $240,000 per year.
‘House of Rumors’
Then there’s the seven-year saga of 4010 Park Ave.
The two-story South Grove house still has plywood for a front door and a Porta Potty in the front yard.
On realtor.com, it’s listed as a 5-bedroom, 6-bathroom home “active with contract” for $2.95 million.
In 2019, Steven Salm bought the home for $2.55 million. He sued Send Enterprises in November 2020; the lawsuit went to mediation and NDAs were signed. The house was re-listed in February 2021 for $2.95 million.
Marcos Junges has lived next door for 27 years. He said the building of 4010 Park began back in 2016.
“Goes in fits and starts, with long hiatus periods,” he said.
A home under construction at 4010 Park Ave. in Coconut Grove on Feb 15, 2023. A neighbor who lives next door said the home has been under construction since 2016. Neighbors call it the ‘House of Rumors.’ The property is owned by Send Enterprises LLC.
He and his neighbors — who paused to chat during one of their evening walks — call it the “House of Rumors.” They’ve heard it’s been under contract for five years with a succession of buyers. Junges said Cox bought the modest house that used to be there from his elderly neighbor’s family when she died.
At 2050 Secoffee St., majestic oak trees shade a vacant lot. Secoffee is a quintessential Grove street in the rapidly transforming North Grove, where developers capitalize on the neighborhood’s expansive lots by tearing down old houses and the jungle that surrounds them and building new ones with much larger footprints. Price-per-square-foot in the Grove’s 33133 ZIP code rose to a record $874 last year.
Drive Development’s website shows a gorgeous rendering of a 5,302-square-foot house with atrium, listed for $4.85 million in July 2021, then removed in January 2022. A description currently on movoto.com includes three different wishful details: Under construction! Expected completion Q3 2022 and Year built 2021.
No ground has been broken.
The image on the real estate website movoto.com shows a rendering of a house at 2050 Secoffee St. in Coconut Grove, on Feb. 25, 2023. The description includes three different wishful details: Under construction! expected completion Q3 2022 and Year built 2021.Drive Development advertises a luxury designer home along a fence in front of a lot at 2050 Secoffee St. in Coconut Grove. The lot is vacant.
Cox tells buyers he’s finishing his own dream townhouse at 3167 Shipping Ave. in central Coconut Grove. The adjacent one is under contract with a buyer from New York City who is growing more impatient. Both look ready for move in. Around the corner on Gifford Lane, a buyer from southern California awaits a townhouse that was supposed to be done in November. Other than grass growing, nothing’s happening on the lot.
Newly constructed homes along the 3100 block of Shipping Avenue in Coconut Grove on Wednesday, Feb. 15, 2023. Cox tells buyers he’s finishing his own dream townhouse at 3167 Shipping Ave. in central Coconut Grove. The adjacent one is under contract with a buyer from New York City who is getting impatient.
The loans
Cox’s companies have taken out at least $59 million in loans, for which he put up 20 properties as collateral, according to public records.
But it’s his most recent loan that has buyers concerned about the fate of their houses. Cox borrowed $350,000 from DC Fund on Dec. 30, 2022, soon after three buyers decided to cancel and get their deposits back. Around the same time, Pearl signed the double contracts with Paciello and Danilovic. And now Cox and Pearl have listed a house for which they could pocket $500,000 or more in deposit money.
Cox put up eight properties as collateral on the DC Fund loan. If he defaults, lenders get first dibs.
DC Fund’s registered agent is Ariel Peretz, principal of Diverse Capital, a lender that advertises “we say yes when others say no” and urges customers to get in touch “if you’re in search of desperately-needed money.”
Peretz and DC Fund members run firms in the merchant cash advance business, mostly based in Brooklyn, which attempt to skirt state usury laws by saying they are not lending quick money at exorbitant rates but are buying the future earnings of their borrowers.
Peretz and DC Fund associates Yoel Getter and Jonathan Allayev and their companies were sued in 2021 by a Texas businessman who accused them of collaborating in a “criminal enterprise that profits by making and collecting on illegal loans.”
The businessman took out a $150,000 loan for which he agreed to repay $224,850 at 215 percent interest via $3,748 daily debits from his bank account. Two weeks later, the businessman borrowed $350,000 — in part to repay the first one — at 430 percent interest, for which he owed $524,650 via $17,488 daily debits.
The businessman dropped the case.
Peretz didn’t return messages left by the Herald.
“We are very worried,” Coyne said. “If Doug gets in trouble with these high-risk loans and debts, we may be left with nothing.”
Cox boasts to buyers that he and Pearl are independently wealthy with $70 million in savings, but if his cash flow has dried up, they fear he can’t pay off mortgages, can’t obtain the clean title necessary to close and could declare bankruptcy.
“He may have thought, ‘I sold these too cheap and I can make more money if I resell,’ but that makes less sense every day because the market is cooling,” Parrish said. “Maybe he got in too deep and has problems paying lenders. He can’t close so he’s kicking the can down the road.”
The two sides of Doug Cox
Cox can be a charming salesman.
Or a belligerent bully.
Michael Coyne has seen both sides. But as a U.S. Army combat veteran, he is not intimidated.
“The last time I saw him he ran up to my car, leans in and says he’s hired a former CIA operative to tail me because my wife made disparaging comments on social media,” Coyne said. “Another time he told me, ‘Bring it!’ I deal with plenty of nasty lawyers on Wall Street and none of them have ever challenged me to a street fight.”
Lombardi has felt Cox’s wrath. Cox terminated Lombardi’s 3-year-old contract last month, accusing him of trespassing at his house at 2984 Coconut Ave. and making derogatory comments. Cox prohibits buyers from going on their properties and has installed surveillance cameras. But he allowed Lombardi to go inside last May with his family.
Eight months later, when Cox heard Lombardi called the FBI, Lombardi said, Cox canceled his contract. They are in mediation. Lombardi wants his deposit back, and believes Cox wants him out so he can list 2984 at a higher price and collect another $500,000 deposit.
Buyers are also wary of Cox because they’ve read a graphic police report from Sept. 6, 2020, when Cox and Pearl got into an argument.
Pearl, who describes Cox in the report as her “live-in boyfriend,” told police Cox began texting her with insulting names from the master bedroom where he was with their daughter as she put their 3-year-old son to bed in his room. Cox stormed in and hit her, choked her, pulled her hair and spit on her as their son watched, “terrified and screaming.” She wrote this description for police:
“He has a pattern of domestic violence and extreme childhood abuse and trauma which has left him with deep unresolved issues and anger problems. This has culminated into a cycle of violence with me since 2014. … He has repeatedly threatened that if I report it, it will destroy his life and in turn he will destroy mine and that of my family.”
Pearl also checked boxes asserting he has “threatened to conceal, kidnap or harm” their children and “intentionally injured or killed a family pet.”
Cox was charged with battery and domestic violence by strangulation and spent the night in jail, Miami-Dade Corrections records show. He was given a restraining order. Pearl dropped the charges.
Booking mug when Doug Cox was arrested and charged with battery and domestic violence by strangulation in 2020.
Cox has perfected the art of evasion.
“I call it the Doug Cox two-step,” Coyne said.
When buyers are able to chase him down on the phone — he avoids putting anything in writing — he swears he’s pushing against the forces obstructing him. He wants them living in their dream homes as ardently as they do.
A vacant lot on Woodridge, a sweet little street in the South Grove next to Merrie Christmas Park and its towering banyan trees, has been overtaken by vegetation. As people in Miami clamor for more housing, this spot where a cottage once stood has grown wild. Vines climb the trees instead of children. The scraping racket of a bulldozer echoes down the block.
On this patch, owned by the King of Coconut Grove, all is still. The ripe land, taking revenge, has reclaimed itself.
A ‘Do Not Enter’ sign is affixed to the front door of one of the 12 luxury townhouses on Coconut Avenue in Coconut Grove that have been built by Doug Cox of Drive Development. Buyers of the homes have been waiting years to move in.
Miami Herald Director of Research Monika Leal contributed to this report.
No one hates ordinary people like the Republicans and their media enablers do.
By Tom Nichols – March 9, 2023
A political display is posted on the outside of the Fox News headquarters in New York in July 2020. (Timothy A. Clary / AFP via Getty)
Fox News will likely never face any real consequences for the biggest scandal in the history of American media. But will Republican voters finally understand who really looks down on them?
Loathing and Indifference
It’s time to talk about elitism.
Last month, I wrote that the revelations about Fox News in the Dominion Voting Systems lawsuit showed that Fox personalities, for all their populist bloviation, are actually titanic elitists. This is not the elitism of those who think they are smarter or more capable than others—I’ll get to that in a moment—but a new and gruesome elitism of the American right, a kind of hatred and disgust on the part of right-wing media and political leaders for the people they claim to love and defend. Greed and cynicism and moral poverty can explain only so much of what we’ve learned about Fox; what the Dominion filings show is a staggering, dehumanizing version of elitism among people who have made a living by presenting themselves as the only truth-tellers who can be trusted by ordinary Americans.
I am, to say the least, no stranger to the charge of elitism. When I wrote a book in 2018 titled The Death of Expertise, a study of how people have become so narcissistic and so addled by cable and the internet that they believe themselves to be smarter than doctors and diplomats, I was regularly tagged as an “elitist.” And the truth is: I am an elitist, insofar as I believe that some people are better at things than others.
But even beyond talent and ability, I do in fact firmly believe that some opinions, political views, personal actions, and life choices are better than others. As I wrote in my book at the time:
Americans now believe that having equal rights in a political system also means that each person’s opinion about anything must be accepted as equal to anyone else’s. This is the credo of a fair number of people despite being obvious nonsense. It is a flat assertion of actual equality that is always illogical, sometimes funny, and often dangerous.
If that makes me an elitist, so be it.
In this, elitism is the opposite of populism, whose adherents believe that virtue and competence reside in the common wisdom of a nebulous coalition called “the people.” This pernicious and romantic myth is often a danger to liberal democracies and constitutional orders that are founded, first and foremost, on the inherent rights of individuals rather than whatever raw majorities think is right at any given time.
The American right, however, now uses elitist to mean “people who think they’re better than me because they live and work and play differently than I do.”They rage that people—myself included—look down upon them. And again, truth be told, I do look down on Trump voters, not because I am an elitist but because I am an American citizen and I believe that they, as my fellow citizens, have made political choices that have inflicted the greatest harm on our system of government since the Civil War. I refuse to treat their views as just part of the normal left-right axis of American politics.
(As an aside, note that the insecure whining about being “looked down upon” is wildly asymmetrical: Trump voters have no trouble looking down on their opponents as traitors, perverts, and, as Donald Trump himself once put it, “human scum.” But they react to criticism with a kind of deep hurt, as if others must accommodate their emotional well-being. Many of these same people gleefully adopted “Fuck your feelings” as a rallying cry but never expected that it was a slogan that worked both ways.)
In 2016, I believed that good people were making a mistake. In 2023, I cannot dismiss their choices as mere mistakes. Instead, I accept and respect the human agency that has led Trump supporters to their current choices. Indeed, I insist on recognizing that agency: I have never agreed with the people who dismiss Trump voters as robotic simpletons who were mesmerized by Russian memes. I believe that today’s Trump supporters are people who are making a conscious, knowing, and morally flawed choice to continue supporting a sociopath and a party chock-full of seditionists.
I have argued with some of these people. Sometimes, I have mocked them. Mostly, I have refused to engage them. But whatever my feelings are about the abominable choices of Trump supporters, here is the one thing I have never done that Fox’s hosts did for years: I have never patronized any of the people I disagree with.
Unlike people such as Tucker Carlson or Sean Hannity or Laura Ingraham, I have never told anyone—including you, readers of The Atlantic—anything I don’t believe. What we’re seeing at Fox, however, is lying on a grand scale, done with a snide loathing for the audience and a cool indifference to the damage being done to the nation. Fox, and the Republican Party it serves, for years has relentlessly patronized its audience, cooing to viewers about how right they are not to trust anyone else, banging the desk about the corruption of American institutions, and shouting into the camera about how the liars and betrayers must pay.
Fox’s stars did all of this while privately communicating with one another and rolling their eyes with contempt, admitting without a shred of shame that they were lying through their teeth. From Rupert Murdoch on down, top Fox personalities have admitted that they fed the rubes all of this red, rotting meat to keep them out of the way of the Fox limos headed to Long Island and Connecticut.
You can see this same kind of contemptuous elitism in Republicans such as Ted Cruz, Josh Hawley, and Elise Stefanik. They couldn’t care less about the voters—those hoopleheads back home who have to be placated with idiotic speeches against trans people and “critical race theory.” These politicians were bred to be leaders, you see, and having to gouge some votes out of the hayseeds back home requires a bit of performance art now and then, a small price to pay so that the sons and daughters of Harvard and Yale, Princeton and Stanford, can live in the imperial capital and rule as is their due and their right.
Some years ago, I was at a meeting of one of the committees of the National Academy of Sciences. The conferees asked me how scientists—there were Nobel Laureates in the room—could defend the cause of knowledge. Stand your ground, I told them. Never hesitate to tell people they’re wrong. One panel member shook his head: “Tom, people don’t like to be condescended to.” I said, “I agree, but what they hate even more is to be patronized.”
I believed it then, but we’re now testing that hypothesis on a national scale. I hope I wasn’t wrong.
In race to arm Ukraine, U.S. faces cracks in its manufacturing might
Missy Ryan, The Washington Post – March 9, 2023
Correction: A previous version of this article mischaracterized why Scranton, Pa., is known as “Steamtown.” The name is derived from the steam-powered locomotives that helped fuel the city’s industrial rise, not the early pioneering or electric power. The article has been updated.
SCRANTON, Pa. – A sharp hissing sound fills the factory as red-hot artillery shells are plunged into scalding oil.
Richard Hansen, a Navy veteran who oversees this government-owned munitions facility, explains how the 1,500-degree liquid locks in place chemical properties that ensure when the shells are fired – perhaps on a battlefield in Ukraine – they detonate in the deadly manner intended.
“That’s what we do,” Hansen said. “We build things to kill people.”
The Scranton Army Ammunition Plant, one of a network of facilities involved in producing the U.S. Army’s 155-mm artillery round, is ground zero for the Biden administration’s scramble to accelerate the supply of weapons that Ukraine needs if its military is to prevail in the war with Russia.
The Pentagon’s plan for scaling up production of the shells over the next two years marks a breakthrough in the effort to quench Ukraine’s thirst for weapons. But the conflict has laid bare deep-seated problems that the United States must surmount to effectively manufacture the arms required not just to aid its allies but also for America’s self-defense should conflict erupt with Russia, China or another major power.
Despite boasting the world’s largest military budget – more than $800 billion a year – and its most sophisticated defense industry, the United States has long struggled to efficiently develop and produce the weapons that have enabled U.S. forces to outpace their peers technologically. Those challenges take on new importance as conventional conflict returns to Europe and Washington contemplates the possibility of its own great-power fight.
Even as public support for the vast sums of aid being given to Ukraine grows softer and more divisive, the conflict has sparked a broader conversation about the need to shatter what military leaders describe as the “brittleness” of the U.S. defense industry and devise new means to quickly scale up output of weapons at moments of crisis. Some observers are worried the Pentagon is not doing enough to replenish the billions of dollars in armaments that have left American stocks.
Research conducted by the Center for Strategic and International Studies (CSIS) shows the current output of American factories may be insufficient to prevent the depletion of stockpiles of key items the United States is providing Ukraine. Even at accelerated production rates, it is likely to take at least five years to recover the inventory of Javelin antitank missiles, Stinger surface-to-air missiles and other in-demand items.
Earlier research done by the Washington think tank illustrates a more pervasive problem: The slow pace of U.S. production means it would take as long as 15 years at peacetime production levels, and more than eight years at a wartime tempo, to replace the stocks of major weapons systems such as guided missiles, piloted aircraft and armed drones if they were destroyed in battle or donated to allies.
“It is a wake-up call,” Sen. Jack Reed (D-R.I.), chairman of the Senate Armed Services Committee, said in an interview, referring to the production problems the war has exposed. “We have to have an industrial base that can respond very quickly.”
A year into the Ukraine fight, American military aid has reached a staggering $30 billion, funding everything from night-vision goggles to Abrams tanks. Much of the weaponry was drawn from Pentagon stocks. Other systems must be produced in U.S. factories.
U.S. and NATO officials have touted the powerful effect of foreign arms on the battlefield, where they have enabled Ukrainian troops to hold Kremlin forces at bay and, in places like the southern city of Kherson, reverse Russian gains. But the armament effort also has rattled officials in the United States and Europe, depleting the military stockpiles of donor nations and revealing the gaps in their productive power.
As the front lines have hardened during the frigid winter months, the ground war has become a bloody, artillery-heavy fight, with Ukrainian forces firing an average of 7,700 artillery shells a day, according to the Ukrainian military, greatly outpacing the U.S. prewar production rate of 14,000 155-mm rounds a month. In the first eight months after Russian President Vladimir Putin’s invasion, Ukrainian forces burned through 13 years worth of Stinger antiaircraft missiles and five years of Javelin missiles, according to Raytheon, which produces both weapons.
Gen. Mark A. Milley, chairman of the Joint Chiefs of Staff, has predicted the munitions squeeze may require a further boost in Pentagon spending, potentially ending the era in which ammunition functioned as a military “bill payer,” a part of the defense budget from which officials can trim to fund more expensive items like tanks or planes.
“What the Ukraine conflict showed is that, frankly, our defense industrial base was not at the level that we needed it to be to generate munitions,” Colin Kahl, undersecretary of defense for policy, told lawmakers last week, pointing to the effort to accelerate output of artillery shells, guided rockets and other items. “Those are going to matter a year from now, two years from now, three years from now, because even if the conflict in Ukraine dies down, and nobody can predict whether that will happen, Ukraine is going to need a military that can defend the territory it has clawed back,” he said.
The problem is not limited to ammunition, nor to items being provided to Ukraine. According to Mark Cancian, a retired Marine officer and defense expert with CSIS, the pace of production at U.S. factories means it would take over 10 years to replace the U.S. fleet of UH-60 Black Hawk helicopters, and almost 20 years to replace the stock of advanced medium-range air-to-air missiles. It would be a minimum of 44 years before the Pentagon could replace its fleet of aircraft carriers.
In Europe, the problems are equally grave. NATO Secretary General Jens Stoltenberg warned in February that the wait time for large-caliber weapons has more than tripled, meaning items ordered now will not be delivered for over two years. In Germany, amid plans for a dramatic military expansion, its ammunition supply is believed to be sufficient for two days of fighting. In one war game, British stocks lasted eight days.
To address those problems, European Union leaders are exploring ways to accelerate manufacturing, possibly by using advance-purchase agreements modeled on the race to develop a coronavirus vaccine. In Ukraine, the ammunition crunch is existential. In places like Bakhmut, where Ukrainian troops are locked in a grisly battle with Russian mercenary and military fighters, defending forces say they must ration artillery ammunition because they receive far less than they need.
Fortunately for Kyiv, Russia, with its defense industry under severe sanctions, has a similar problem. According to Kyrylo Budanov, the Ukrainian military intelligence chief, the Kremlin has been forced to reduce the pace of air attacks due to dwindling stocks of key munitions, including the Kalibr and Kh-101 cruise missiles. Producing enough missiles for one major strike, he said recently, now takes up to two months.
The Pentagon’s own analysis of the U.S. defense sector reveals an industry poorly equipped to match the productive prowess of World War II, when U.S. factories churned out planes and weapons that powered the Allied militaries to victory over the Axis powers. Its problems trace in part to the consolidation that occurred after the Cold War, as military spending fell and the number of uniformed personnel shrank by a third.
In a world where no major state-on-state conflict was expected, the federal government welcomed a wave of mergers and acquisitions that dramatically shrank the sector. At one point, 1,000 civilian defense jobs disappeared every day. In the 1990s, the United States had 51 major air and defense contractors. Today, there are five. The number of airplane manufacturers has fallen from eight to three. Meanwhile, 90 percent of missiles now come from three sources.
The Pentagon used to design weapons programs so there would be at least two manufacturing sources, but over time it began to view that excess capacity as wasteful. Officials sought ways to maintain the competition in part by piggybacking off the commercial sector, but it did not always work. “We quit buying more than we needed,” said David Berteau, a former Pentagon acquisition official who heads the Professional Services Council, an industry group. “We quit paying for more than we needed.”
It was easier to overlook production problems during the two decades of counterinsurgent war that followed the 9/11 attacks, when U.S. forces battled lightly armed militants in Iraq, Syria and Afghanistan. That is quickly changing with the demands posed by the large-scale conventional conflict underway now.
Industry experts say inconsistent, unpredictable military demand and short-term contracts dictated by appropriations cycles have further discouraged corporate investment in extra capacity. And because there is no commercial market for items like surface-to-air missiles or precision bombs, companies with specialized production cannot rely on civilian demand to keep them afloat.
Officials note that production lags also are due to the fact that military equipment today is inherently more complicated to build than it was during World War II, when Ford could produce a plane an hour. Now weaponry often requires microelectronics and parts from dozens or hundreds of facilities. Lockheed Martin’s F-35 stealth fighter, for one, contains 300,000 parts sourced from 1,700 suppliers.
Doug Bush, the Army’s chief weapons buyer, characterized the government’s decision to keep facilities like the one in Scranton in operation despite a decades-long absence of such sizable demand as a bet that paid off. “It was a public policy choice. An expensive one,” he said. “But they were kept as an insurance policy for this exact circumstance.”
The Army now plans to boost its monthly capacity for producing 155-mm shells from about 14,000 now to 30,000 this spring, and eventually to 90,000. The military also is spending $80 million to bring a second source online for the Javelin missile’s rocket motor, a key component, and plans to double production to around 4,000 a year.
The Army recently signed a $1.2 billion contract for Raytheon to build six more units of national advanced surface-to-air defense systems, which are being used in the war in Ukraine to defend against Russian missile and drone attacks, but they will not be ready for another two years.
Researchers note, however, that of the $45 billion Congress has appropriated for producing new weapons for Ukraine and replacing donated U.S. stocks, the Pentagon as of February had placed contracts for only around $7 billion, raising questions about whether it is moving fast enough.
Industry officials, lawmakers and Pentagon leaders agree that building a greater ability to quickly expand production of needed weapons will require both time and new investment. “You have to bring all of those different streams of increased production together at the right time,” Bush said. “And so that would be one challenge, and that is just, you know, sequencing a large scale industrial ramp up like this.”
While support for defense spending is typically strong on Capitol Hill, backing for arming Ukraine has slipped, especially among Republicans. One recent poll showed that 40 percent of Republicans now believe the United States is giving too much aid to Ukraine, up from 9 percent last spring.
And it is not clear how much more military spending, which already represents more than 3 percent of gross domestic product, Americans will countenance in an era of inflation and economic strain, no matter the rationale.
At a recent hearing, Rep. Lisa C. McClain (R-Mich.), told Pentagon officials that voters in her district were worried about getting mired in a “never-ending war” in Ukraine. “They believe that we are spending money and resources on a fight overseas, rather than getting our own fiscal house in order,” she said.
At the Scranton munitions plant, which is operated by General Dynamics, long steel billets undergo a multiday transformation from burning-hot shafts of metal to finished artillery shells ready to be trucked to a plant in Iowa, where they are filled with explosives and dispatched for training or battle. It can be two to three months from when shells leave Scranton until they are ready to be used.
The city surrounding the plant tells the story of broader industrial decline that is another important element in the production scramble today. As its coal and steel industries drew flocks of immigrant workers in the 19th century, Scranton became an important rail hub and was dubbed “Steamtown” for the steam-powered locomotives that helped fuel its rise.
But the city’s population declined along with the coal industry after World War II. Today, the previously booming city center shows the mixed results of economic revitalization efforts: shuttered store fronts, a handful of brewpubs, and an art house movie theater.
President Biden has identified Scranton, his hometown, as a symbol of the erosion of American manufacturing power, vowing to make a reversal of that trend a signature of his administration. “When jobs move overseas, factories at home close down. Once-thriving cities and towns became shadows of what they used to be, and they lost a sense of their self-worth along the way,” he said in late January.
Since its apex in 1979, more than 7 million jobs have disappeared from the American manufacturing sector, over a third of its workforce. The defense sector has also shed a third of its workforce.
While General Dynamics said the historic Scranton plant remains an attractive employer, in part because of its competitive wages, finding the right workers for its facilities is not easy in an economy with low unemployment and a dearth of traditional manufacturing skills like metalworking. “It’s still a challenge,” said Todd Smith, the company’s general manager for northeast Pennsylvania.
Biden has touted new investments in rail and other infrastructure that U.S. officials hope can anchor a new era of American productivity. “Where the hell is it written that . . . America can’t lead the world again in manufacturing?” he demanded.
Scranton Mayor Paige Cognetti said she hopes for added jobs at the Scranton plant, which now employs about 300 people, and other defense manufacturers in the area. “It’s union work. It’s stable work. It’s work that you can build a career and support a family on,” she said. “So any of those types of jobs are critical for us.”
It is not clear how much the Scranton facility, which already runs 24/7 during the week along with some weekend hours, can expand its manufacturing output. Plant officials said the pace of production has not accelerated since the Ukraine war began, and they are not aware of plans to ramp up operations.
While the hoped-for production transformation may not happen fast enough for Ukraine, as Kyiv braces for a massive springtime assault by Kremlin forces, the next conventional conflict could be far larger and more deadly.
The Ukraine scramble “has also given us some ideas of what we need to look at when it comes to Taiwan and China, because we have seen the need to surge,” said Kea Matory, director of legislative policy at the National Defense Industrial Association. “So this is a good learning opportunity for us.”
The Washington Post’s Ellen Nakashima and Dan Lamothe in Washington and Kamila Hrabchuk in Kyiv contributed to this report.
When Trump Passes the MAGA Hat, His Aides Clutch Their Wallets
Michael C. Bender – March 8, 2023
Steve Bannon speaks during AmericaFest in Phoenix, Ariz. on Dec. 20, 2022. (Rebecca Noble/The New York Times)
WASHINGTON — To pay for three presidential campaigns, Donald Trump has raised billions of dollars from corporate executives, online donors and, during his first race, even his own pocket.
One source of money Trump has never successfully tapped: the people closest to him.
While other recent presidents routinely drew financial support from key campaign aides and West Wing advisers, contributions to Trump from his team have been the exception rather than the norm.
The lack of contributions from the Trump team is surprising, given the former president’s penchant for testing his top staff members’ allegiances and his tendency to view loyalty through a starkly transactional lens. Trump is also known to harbor deep resentment over the manner in which aides — in real or perceived ways — have leveraged their connections to him for their own financial gain.
The contrast also offers a window into how Trump, whose temperamental management style led to record turnover in the West Wing, has treated the people he has worked with most closely.
Many of Trump’s advisers, who were often expected to work around the clock, said this time spent working for him was worth more to the campaign than any check they could afford to write. Others pointed to Trump’s personal wealth and his already brimming campaign coffers, suggesting that their contribution either would not matter or would not be missed.
Meanwhile, aides to Trump’s predecessors, Barack Obama and George W. Bush, and his successor, Joe Biden, explained their contributions as a reflection of the loyalty and enthusiasm inspired by their respective bosses.
A review of eight years of campaign finance records showed only a handful of contributions to Trump’s campaigns or political committees from more than 40 of his senior staff members who had a hand in his three presidential campaigns and during his four years in the White House.
The opposite was true for a similar list of key advisers for Biden, Obama and Bush. The list was also checked against Federal Election Commission records for the presidents’ campaigns and related committees.
Reince Priebus, Trump’s first White House chief of staff, spent roughly $130,000 on federal candidates and political committees during the past eight years. Those donations included $5,000 to the Republican National Committee in 2020 and $1,000 in 2018 to a leadership political action committee run by former Vice President Mike Pence. Priebus, who declined to comment, never directly contributed to Trump.
David Axelrod and Valerie Jarrett, the top strategists for Obama’s first campaign, and Karl Rove, who held a similar position for Bush, contributed to the campaigns that employed them. So did Mike Donilon, who was Biden’s chief strategist in 2020.
Steve Bannon, who was Trump’s top strategist in 2016 and in the White House, gave $25,000 in 2017 to a group called Black Americans for a Better Future and contributed $2,800 in 2019 to Kris Kobach’s campaign for Senate in Kansas. But Bannon never gave to Trump.
“I have never given to any politician except a buddy, Kris Kobach,” Bannon said.
Among the first four Trump campaign managers, the only one to give a maximum contribution was Brad Parscale, who was often the subject of unproven accusations from his colleagues — as well as Trump — that he was pocketing money from the campaign.
Bill Stepien, who offered to take a pay cut when he replaced Parscale as campaign manager, gave the Trump campaign a series of small contributions.
Corey Lewandowski, Trump’s first campaign manager, has not contributed to Trump, but he has spent about $17,000 on other federal campaigns. Similarly, Kellyanne Conway, another former campaign manager, has not contributed to Trump but has spent nearly $30,000 on other campaigns in the past eight years.
“I have donated thousands upon thousands of hours of my time to help President Trump without compensation,” Lewandowski said, adding that he had also paid for his own travel to support the former president since 2017.
Conway said she “gave at the office.”
“In 2016, I did better than stroke a check; I became Trump’s campaign manager, and he won,” she said, adding that she did not contribute to any federal candidates during the four years she worked in the Trump White House.
There are also no donations in the past eight years from Trump’s senior leadership team for his 2024 campaign, including Susie Wiles, who worked without a salary for two years before the campaign started in November, and Chris LaCivita. LaCivita’s only federal contribution during the past eight years was to a Virginia House candidate.
Jason Miller, who is working for Trump for the third consecutive campaign, has given nearly $40,000 to other federal campaigns since 2015. But he has never donated to Trump.
“President Trump represents and fights for the working men and women of America, and the people who work for him are a reflection of that,” said Steven Cheung, a spokesperson for Trump. “In contrast to how the swamp usually operates, people on the campaign have dedicated their lives to this honorable cause.”
One outlier inside Trump’s entourage was Anthony Scaramucci, who contributed more than $250,000 to the Trump campaign and political committees in 2016 before working as the Trump White House communications director. Scaramucci was fired after 11 days and has since contributed to numerous anti-Trump candidates and causes.
Major donors, like Scaramucci, are often selected for administration roles. Steven Mnuchin, who was the Trump campaign finance director in 2016, served as Treasury secretary. Penny Pritzker was the Obama campaign’s finance director in 2012 and later served as the administration’s commerce secretary.
Trump also has not received contributions from most of his children, who have been unusually active in his political career.
Donald Trump Jr., Trump’s eldest son, gave $5,000 in 2017 to America First Action, a political action committee that supported the president. But the only other gift from his siblings was a $376.20 in-kind contribution from Eric Trump to cover meals at a meeting during the 2016 race. Both of those Trump sons and their significant others, Kimberly Guilfoyle and Lara Trump, have helped raise tens of millions for Donald Trump’s political efforts, according to people familiar with the matter.
Biden’s children Ashley and Hunter gave their father small online donations during the 2020 campaign. Michelle Obama, Obama’s wife, gave her husband $399 during his first campaign in 2007.
Both of Barack Obama’s campaign managers, David Plouffe and Jim Messina, contributed to their boss, as did Bush’s two campaign managers, Joe Allbaugh and Ken Mehlman, and Biden’s general election manager, Jennifer O’Malley Dillon.
Some Obama and Bush aides described an unspoken expectation for campaign contributions, particularly among top aides, though they said this was not rooted in direct pressure from the candidate.
Put simply, aides wanted to give money to the boss.
“I wanted to be on that list” of contributors, said Jennifer Palmieri, an Obama White House communications director. “Especially as senior staff, I wanted to show I was doing my part. Because this was not just a job for me — it’s my calling; it’s what I’m about.”
Ari Fleischer, a White House press secretary for Bush, recalled writing a $500 check to the 2000 Bush campaign while he was working on it. Bush, then the governor of Texas, was on the ropes after losing three early primary contests to Sen. John McCain of Arizona, and his huge war chest had taken a significant hit.
“It was a lot of money for me at the time, but I was happy to part with it because I wanted him to win,” Fleischer said.
For Bush’s second campaign, Fleischer had left the White House and opened a consulting firm. He was eager to give Bush a maximum contribution.
Anita Dunn, who donated to both of the Obama and Biden campaigns she worked for, said she felt a “deep commitment to the success” of those candidacies.
“The best presidential campaigns feel like crusades, and you want to support that person in every way possible — with your efforts and financially, if you have the ability to do so,” Dunn said.
While none of Trump’s four White House chiefs of staff, including Priebus, donated to the president they served, both of Biden’s chiefs, Ron Klain and Jeffrey Zients, donated to the president’s 2020 campaign, on which they served as advisers.
Obama did not receive contributions from his first two chiefs of staff, Rahm Emanuel and Pete Rouse, but did from his third and fourth, William M. Daley and Jacob J. Lew. Bush’s first White House chief of staff, Andrew H. Card Jr., donated to his campaign, but his second, Joshua B. Bolten, did not.
But the Obama and Bush chiefs who did not contribute also had no record of giving to any other federal committee or candidate during the 10 years their bosses each were in office and running for office.
On the other hand, Mark Meadows, Trump’s final chief of staff, has given more than $8,000 to other candidates and committees during the past eight years.
Mick Mulvaney, Trump’s second-longest-serving chief of staff with 15 months in the job, gave about $20,000 to other candidates during that time.
Why did Mulvaney never contribute to Trump?
“I never got the impression that he needed the money,” he said.
The algae, which is known formally as the single-cell Karenia brevis, has concentrated near Tampa and neighboring communities.
Scientists have found the algae at rates ranging from 10,000 cells per liter to more than 1 million cells per liter – levels that result in fish kills and breathing difficulties in exposed humans, according to the Florida Fish and Wildlife Conservation Commission.
The agency said red tide becomes harmful to people at 10,000 cells per liter.
Red tides produce a toxin called brevetoxin that can make humans ill if they breathe the toxin in through sea spray or get wet with contaminated water.
The illness can cause a range of symptoms, according to the Centers for Disease Control and Prevention, including:
Coughing and sneezing
Shortness of breath
Eye, skin, and throat irritation
Asthma attacks
The FWC it had received multiple reports of dead fish respiratory irritation at communities through the Southwest Florida. One community, Indian Rocks Beach, decided to cancel a beach festival slated for next month amid red tide concerns.
Red tides are a naturally occurring phenomenon that have been observed in the Gulf of Mexico since the 1800s. Nascent studies have connected nutrient-laden runoff from farms and developments to increased levels of red tide along the coast.They begin to form on the coast beginning in the fall, and typically clear up by Spring.
