Blackstone finds a way to outsource 'skin in the game'
The Blackstone Group has devised a novel definition of "skin in the game" — other people's money. To improve its returns, the buyout and debt management firm is taking advantage of newly relaxed rules on how much risk needs to be retained in securitizations. Its structure looks acceptable, but regulators and investors should still watch for sharp practice from future copycats. European skin-in-the-game rules were introduced to prevent a repetition of the 2008 mortgage crisis, which saw lenders make dud loans and flip them to bond markets. Creators of assets that are securitized now have to keep 5 percent of the risk. That hampered the issuance in Europe of collateralized loan obligations, a kind of investment vehicle funded through securitized debt. Few of the asset managers who oversee the vehicles can finance one euro for every 20 they manage. The European Banking Authority tweaked the rules last December so that asset managers could avoid retaining the risk in the C.L.O. – so long as another entity does, and that entity originates half the C.L.O.'s loans. Blackstone is among the first to notice. It has set up an originator to make loans and repackage them as C.L.O.s – managed by Blackstone, naturally. The twist is that the skin in the game will mostly come from public equity markets. It looks like a robust model: the company is a long-term lender; investors benefit from an independent and experienced board, and the shareholders themselves don't look like yield-hungry hotheads. One of them is the Church of England. Moreover, it is debatable how appropriate the skin-in-the-game guidelines are for C.L.O.s anyway, where managers are incentivized through long-dated fees and do not get paid upfront for making bad loans. The bigger question is whether the purpose-built origination vehicles that look set to spring up will all meet the spirit as well as the letter of the retention rules. The danger is a return to pre-2008 structures where investors do not properly understand the risks, or where the funds no longer qualify for risk retention. If the regulators get an inkling this is happening, they may tighten the rules again.
DOJ ordered to turn over list of fast and furious documents
A federal judge has ordered the Justice Department to provide Congress with a log of documents that are at the center of a long-running battle over a failed law enforcement program called Operation Fast and Furious. In a court proceeding Wednesday, U.S. District Judge Amy Berman Jackson set an Oct. 1 deadline for producing the list to the House Oversight and Government Reform Committee. The Justice Department says the documents should remain confidential and Obama has invoked executive privilege in an effort to protect them from public disclosure. The House panel says the Justice Department documents might explain why the department took nearly a year to admit that federal agents had engaged in a controversial law enforcement tactic known as gun-walking. The Justice Department has long prohibited the risky practice. But the Bureau of Alcohol, Tobacco, Firearms and Explosives used it with disastrous results in a federal law enforcement probe in Arizona, Operation Fast and Furious. In the operation, federal agents permitted illicitly purchased weapons to be transported unimpeded in an effort to track them to high-level arms traffickers. Federal agents lost control of some 2,000 weapons and many of them wound up at crime scenes in Mexico and the U.S. Two of the guns were found at the scene of the December 2010 slaying of border agent Brian Terry near the Arizona border city of Nogales.
Argentina debt plan ruled 'illegal' in US court
Argentina's plan to exit its debt default by asking investors holding defaulted bonds to swap them for new locally issued debt has been ruled "illegal" by a US court. New York Judge Thomas Griesa said the plan was "lawless". However, he stopped short of finding the country in contempt of court. Argentina was trying to get around an earlier court ruling banning it from paying interest to investors who had accepted restructured bonds. Griesa ruled in July that the country must first pay the hedge funds holding out for full payment on the bonds on which it defaulted in 2001. Meanwhile, the Argentina's peso sank 1.3 percent this week to 8.3932 per dollar, the biggest drop since the government devalued the currency 15 percent in the week ended Jan. 24. In the black market, where Argentines go to avoid government limits on purchases of U.S. currency, the peso weakened to a record 13.95 per dollar.
We have more than just a campus rape problem. There is invisible rape all over
The scourge of sexual assault infecting our every institution and town can only be solved if we use our empathy and effort at the margins. As the school year starts up again this month, so will university orientations with ramped-up trainings on sexual assault prevention – followed by a semester of underreported attacks, inevitable administrative mishandlings and student-led lawsuits. As we shake our heads in shame and frustration over student assaults, we don't forget the scourge of rape that has infiltrated every corner of our country – not just the places that house college campuses. Some stories we know about – cases where victims have come forward and the local media is paying attention. But such cases represent just a small percentage of the attacks that happen every day – every two minutes, in fact – across the United States. These largely invisible sexual assaults – the ones we never hear about – are the ones where the most vulnerable are victims: homeless women, prisoners, the mentally ill, the disabled, children, sex workers and those addicted to drugs and alcohol. This is true not just in the US, but globally – where the most disadvantaged are not only the most likely to be attacked, but the least likely to be helped. Do we care less about these victims? Where are their profiles? Where is their White House task force? The national conversation about rape is so focused on campus assaults. And it's certainly not as if the campus rape problem is going away – college administrations are still failing survivors, and victim-blaming still abounds. But part of the reason the issue of student sexual assault has captured our attention – in addition to the tireless work by young activists – is that we see these victims as more deserving of sympathy, and because they more closely resemble the people in the media who are making editorial decisions, and their friends and family. When vice president Joe Biden speaks about campus rape, for example, he often talks about protecting "our daughters". But not everybody's daughter goes to college – and our empathy too often doesn't extend to those on the margins. Maybe that's because we think of women in college as "good", middle-class girls deserving of attention, though research has shown that it's often lower-income women on campuses who get attacked and later blamed for their own attacks. Maybe it's because we just don't want to think too much about how some victims' marginalization – in which we are all in some way complicit – contributed to them being victimized again: if you want to stop the rape of homeless women, for example, you need to talk about economic injustice. Maybe we think that, if we just take on college rape, we'll only have to deal with administrations and (maybe) the attackers themselves. But that's thinking too small – we have a whole world of misogyny to grapple with before we can end rape on campus or anywhere.
IS militants 'biggest threat' to US
Islamic State militants are the most dangerous threat the US has faced in recent years, Washington has warned. Defense Secretary Chuck Hagel said US air strikes had helped to break the Islamist advance in Iraq, but the militants could be expected to regroup. America's top general Martin Dempsey stressed that IS could not be defeated without attacking their base in Syria. "They are beyond just a terrorist group. They marry ideology, a sophistication of strategic and tactical military prowess, they are tremendously well-funded... this is beyond anything that we have seen, " Hagel said.
Diaspora social network cannot stop IS posts
The team behind a social network being used by Islamic State (IS) militants has admitted it cannot prevent the spread of extremist material. Diaspora is a decentralized network with data stored on many private servers which cannot be controlled by any single administrator. IS is believed to have switched to Diaspora after Twitter upped its efforts to block accounts. Diaspora's creators said they were "concerned" about the activities. In a blog post, they wrote: "Various newspapers have reported that members of the Islamic State (IS) have set up accounts on Diaspora to promote the group's activities. "In the past, they have used Twitter and other platforms, and are now migrating to free and open source software." "There is therefore no way for the project's core team to manipulate or remove contents from a particular node in the network (which we call a "pod")," the blog post explained. "This may be one of the reasons which attracted IS activists to our network."
Venezuela plans to introduce supermarket fingerprinting
President Nicolas Maduro of Venezuela has announced a mandatory fingerprinting system in supermarkets to combat food shortages and smuggling. He said the system would stop people from buying too much of a single item. But the opposition in Venezuela rejected the plan, saying the policy treated all Venezuelans as thieves. Critics said fingerprinting consumers of staple products was tantamount to rationing and constituted a breach of privacy. Up to 40% of the goods which Venezuela subsidises for its domestic market are smuggled to Colombia, where they are sold at much higher prices, the authorities say.
LSE rights issue to raise almost £1bn for US purchase
The London Stock Exchange is raising £938m ($1.55bn) from shareholders in a rights issue to help fund a £1.6bn acquisition. The LSE said in late June it was buying index compiler and asset manager Frank Russell Company, from Northwestern Mutual. The fully underwritten rights issue will be priced at £12.95 a share. That is a 30.1% discount to Thursday's closing price of £20.05, which valued the LSE at £5.46bn. News of the rights issue sent LSE shares down 1% to £19.86 in Friday morning trading. Shareholders must approve the deal at a general meeting on September 10.
Bank Of America reaches record settlement over mortgage meltdown
Bank of America Corp. has agreed to pay nearly $17 billion in a settlement with federal regulators over allegations that it misled investors into buying risky, mortgage-backed securities in the run-up to the 2008 financial meltdown. The Department of Justice, which announced the $16.65 billion deal today, describes it as "the largest civil settlement with a single entity in history."
Mexico environmental agency sues copper mining company over spill
The Mexican Attorney General for Environmental Protection (PROFEPA) [official website] on Monday filed a criminal complaint [text, press release, in Spanish] against copper mining companies Buena Vista del Cobre, SA de CV and Minera Mexico following a massive acid spill on August 6 near the US border with Mexico. The spill has affected drinking water for thousands of people in the region, forcing schools to shut down. The complaint alleges that the companies violated Article 414 of the Federal Penal Code [text, PDF]. Authorities believe the spill was caused by defects in newly constructed leaching ponds, which hold the overflow of acids used to separate metal from crushed rock.
California passes law banning sterilization of inmates
California Governor Jerry Brown was a presented with a bill [SB 1135, text] on Tuesday to ban sterilization of female inmates in California after the California Senate [official websites] unanimously voted to pass the law. The bill bans any form of sterilization in a correctional facility for the purposes of birth control unless there is a medical necessity and there is no other alternate procedure available. Specifically, the bill protects inmates against tubal ligation following a June audit [text, PDF] of jail records indicating that errors were made in obtaining consent for 39 of 144 inmates who received tubal ligation between 2005 and 2011. The bill also contains a provision protecting whistleblowers from retaliation for reporting violations.
Macy's settles racial profiling allegations from shoppers
Macy's is to pay $650,000 to settle claims it racially profiled and detained ethnic minority shoppers at its flagship Manhattan shop. Under a deal with New York's attorney-general Macy's agreed to a series of changes at its 42 stores across the state. Staff at Macy's, one of US retailing's big names, were said to have targeted shoppers because of their color. Some complaints against Macy's were from customers who, despite not concealing goods, were detained after moving between floors at the Manhattan store and were suspected of theft or fraud. Other customers who spoke poor English, and were suspected of shoplifting or credit card fraud, were not allowed to make phone calls or have an interpreter, and were required to sign documents that they could not understand. Employees at Macy's detained 1,947 people at the Manhattan store, while a further 6,000 people were held at other stores in New York state, the investigation found.
Bergdahl prisoner swap 'illegal'
The exchange of five senior Taliban commanders held at Guantanamo Bay for a US soldier held captive by the Taliban violated the law, an independent US government watchdog agency has said. The defense department did not give Congress the required 30-days notice before releasing the men, the Government Accountability Office said. Sgt Bowe Bergdahl was freed in May after five years in captivity. Many opposition Republicans objected to the Taliban fighters' release.
Ten days left to vacuum up a powerful cleaner
Anyone wanting to buy a powerful vacuum cleaner has only 10 days left to be certain of getting one - following new EU rules that come in next month. From 1 September, companies in the EU will be banned from making or importing vacuum cleaners above 1600 watts. Elements of the directive are being challenged by manufacturers. The consumer organization Which? says many of the models involved were rated as "best buys" by its researchers. The new European rules are part of the EU's energy efficiency directive, designed to help tackle climate change.
Russia watchdog shuts four McDonald's in Moscow
Russia's main consumer watchdog has temporarily shut four McDonald's restaurants in Moscow as part of an investigation into food standards. Watchdog Rospotrebnadzor claimed the restaurants had breached "numerous" sanitary laws. McDonald's said it was looking at the complaints, adding its "top priority is to provide safe and quality products". The watchdog also announced checks at McDonald's in the Urals, in central Russia. The Moscow closures and the unscheduled Urals checks come amid rising tensions between Russia and the West over the crisis in the Ukraine.
U.S. diplomatic cable puts chill on ALS ice bucket challenge
In an unclassified cable issued earlier this week, the department lauded the unique effort to raise money and awareness for amyotrophic lateral sclerosis, also known as Lou Gehrig's disease, but said it violates internal policy. "There are firmly established rules preventing the use of public office, such as our Ambassadors, for private gain, no matter how worthy the cause. Thus, high-ranking State Department officials are unfortunately unable to participate in the ice bucket challenge," the cable sent to all U.S. diplomatic missions reads. "We sincerely wish the ALS Association continued success in its ice bucket campaign, and in its fight against Lou Gehrig's disease." The ice bucket challenge raised nearly $42 million has and attracted such notable participants as George W. Bush, Steven Spielberg, Lady Gaga and Bill Gates.
Electronic enticement law challenged as unconstitutional, vague
A law that prohibits sexual predators from going after children online is being challenged as unconstitutional. The electronic enticement law makes it illegal for adults to communicate online with anyone under 18 years old and then meet with them with the "intent" of committing a felony, such as a sexual act. Defense attorney Victor Bakke argued in front of the Hawaii Supreme Court Thursday that the law is too vague, because how do you prove "intent"? According to a criminal law professor, the law as it is written is too vague. But is it's vague enough to make it unconstitutional? Probably not. The Electronic Enticement Statute took effect in 2002, and the Attorney General's office says there have been 42 cases prosecuted statewide. It has three elements: electronic communication, such as online chatting, with a minor; agreeing to meet with the minor with the intent to commit a felony; and then meeting at an agreed location with the minor. The penalty is a mandatory prison term with a maximum of 10 years.
Pentagon: IS 'beyond anything we've seen'
Al Jazeera, Doha, Qatar
What happens when you talk about Gaza (and heckle a senator) in Vermont
Haaretz, Liberal daily, Tel Aviv, Israel
Anti-Semitic expression in France no longer in hiding, says Jewish communal leader
JPost, Conservative, Jerusalem, Israel
IS militants 'biggest threat' to US
BBC News, Centrist newscaster, London, England
Jennifer Hudson snaps on media
CNN International, London, England
Celebrity Big Brother's Frenchy admits she fancies Lauren Goodger... after getting her toes sucked by Gogglebox's George Gilbey
Daily Mail, Conservative daily, London, England
Undercover police officers who slept with women they were spying on escape prosecution
Daily Mail, Conservative daily, London, England
Botox could fight gastric cancer
EuroNews, International news, Ecully Cedex, France
US says Islamic State threat 'beyond anything we've seen'
France 24, Issy-les-Moulineaux, France
The inevitable caliphate?
Hurriyet Daily News, (Liberal, English-language), Istanbul, Turkey
Michael Brown shooting: Ferguson officer Darren Wilson was 'doing his job' says growing band of supporters
Independent The, London, England
Major Ukrainian TV provider drops Russian channels
Moscow News The, Independent, Moscow, Russia
Swiss law change sparks UK ski chalet closures
Telegraph The, Conservative daily, London, England
Victoria Beckham's The Outnet charity auction
Telegraph The, Celebrity news, London, England
Japan landslide toll feared to more than double
China Post, English-language daily, Taipei, Taiwan
Another California City to Honor Sex Slavery Victims
Chosun Ilbo, Conservative daily, Seoul, South Korea
Kurds launch attack to retake Jalawla from IS
Hindustan Times, New Delhi, India
Four diamond thieves arrested in Surat
India Times, Conservative daily, New Delhi, India
Ukraine claims wins over rebels but progress slow
New Zealand Herald, Conservative daily, Auckland, New Zealand
Ukraine President cancels trip over protests in eastern Ukraine
Straits Times, Pro-government, Singapore
'We overdid the frolics'
Sydney Morning Herald, Centrist daily, Sydney, Australia
Coal gas boom in China holds climate change risks
Taiwan News, English-language daily, Taipei, Taiwan
Foresight wins Goldman big role in China's preferred shares deals
The Economic Times, Business, Mumbai, India
Russian aid convoy drives into Ukraine
Canadian Broadcasting Centre, Toronto, Ontario
Why free trade is the unfinished business of Confederation
Globe and Mail The, Centrist daily, Toronto, Canada
Liberty Reserve Brought Down By 'Joe Bogus': How The Feds Arrested Arthur Budovsky
International Business Times, Business news organization, New York, U.S
U.S., Brazil Nearing Approval of Genetically Engineered Trees
IPS Latin America, International cooperative of journalists, Rome, Italy
Co-Op Bank losses narrow on branch closures, staff cuts
Reuters, Business News, New York, U.S
Russia says aid convoy starting moving towards Luhansk
Reuters, World News, New York, U.S
Native teen's slaying a ‘crime,' not a ‘sociological phenomenon,' Stephen Harper says
Toronto Star, Toronto, Ontario
Boko Haram 'control police academy'
BBC News, Centrist newscaster, London, England
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