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NYC's Biggest Police Union Has Made a Huge Mess of the 2020 Protest Settlement - Hell Gate
by Gunnar Larson 29 Jan '24

29 Jan '24

https://hellgatenyc.com/the-pba-makes-a-mess-of-the-2020-protest-settlement… It's been almost five months since New York City agreed to overhaul the way the NYPD polices protests as part of the settlement <https://hellgatenyc.com/nypd-protest-settlement-underwhelming> of a raft of class-action lawsuits brought in the wake of the George Floyd protests of 2020. But the settlement still hasn't been finalized because the city's largest police union doesn't like it. On Monday, Federal Judge Colleen McMahon will hear oral arguments on whether the Police Benevolent Association should be allowed to scuttle the settlement, even though it's neither the party being sued (that's the City of New York) nor one of the parties doing the suing (protesters subjected to the NYPD's heavy-handed response, as well as the New York Attorney General). Under the settlement, the NYPD committed to a number of reforms of how it reacts to people exercising their right to protest. Where in the past the NYPD has often responded even to small, nonviolent demonstrations with disproportionately large and menacing numbers of police equipped in riot gear, under the settlement the department agreed to a tiered and proportional response, in which police present a light footprint at protests, escalating if necessary as specified conditions are met. Where the NYPD had a history of arresting protesters en masse <https://www.nytimes.com/2012/10/02/nyregion/protesters-arrests-during-2004-…>, often on rinky-dink charges like "walking in the roadway <https://hrp.law.harvard.edu/wp-content/uploads/2013/06/suppressing-protest-…>," the department now agreed that officers would need permission from higher-ups before making such low-level arrests. While the settlement is far from perfect—it does little to change how the NYPD uses violent force against protesters, and after a four-year implementation period, there's no legal mechanism to prevent the NYPD from backsliding—it represents significant progress from the violent abuses <https://hellgatenyc.com/nypd-mott-haven-protest-settlement> on display during the 2020 protests. Or it will, if it's ever actually adopted. Most immediately, Monday's hearing could determine whether the historic settlement, and the reforms it imposes on the NYPD's treatment of people exercising their constitutional right to protest, goes into effect. More generally, the current legal battle raises a host of messy questions about how lawsuits get settled and who can stop them from getting settled. When the police unions sought to intervene in the class action suits back in 2021, McMahon denied their request. If the NYPD was engaged in unconstitutional police practices, she wrote, the union doesn't have a legal right to preserve those unconstitutional practices. But the unions appealed, and McMahon was overruled <https://storage.courtlistener.com/recap/gov.uscourts.nysd.552671/gov.uscour…> by a panel of the Second Circuit Court of Appeals, which accepted the unions' argument that because changes to NYPD policy that might arise from the lawsuits could affect the personal safety of the police officers in the unions, they should be allowed to participate in the lawsuit and have a say. This was, to put it mildly, a somewhat wild precedent to set. Police unions in this country are singularly revanchist political formations that consistently resist even the most common-sense police reforms. If they are entitled to have a say in every lawsuit about unconstitutional police abuses, it would significantly complicate the way civil rights litigation has historically nudged police departments to respect civil rights. Nevertheless, the unions were allowed to intervene in the lawsuits. Once admitted to the litigation, they did very little. They didn't file any claims against anybody or depose any witnesses, but they sat in on many of the negotiations between the plaintiff's lawyers and the City's lawyers. When the settlement was announced, two of the police unions who intervened—the Sergeants Benevolent Association and the Detectives Endowment Association—signed on to it. But the Police Benevolent Association, which represents rank-and-file cops, did not. When Judge McMahon approved the settlement, the PBA, represented by her longtime friend, colleague, and Super Bowl party co-host (and journalist Ben Smith's dad) Robert Smith, objected because it hadn't signed off on the deal, and McMahon reversed herself <https://hellgatenyc.com/police-union-doesnt-like-2020-protest-settlement-so…>, revoking her approval. In the intervening months, the plaintiffs and the City, erstwhile adversaries, filed papers arguing that since they are the real parties to the lawsuit, and they want to settle, it would be absurd to make them go to trial because the union, an intervener, isn't completely satisfied with the agreement they've reached. The PBA, for its part, argued that since the Second Circuit had allowed it to intervene in the suit in order to protect its interest in officer safety, it's allowed to tank the settlement if it thinks it will hurt officer safety. The plaintiffs and the City countered that even if the PBA's safety concerns give it standing, it's wrong on the facts: By implementing reforms calculated to minimize and de-escalate protesters' conflicts with the police, they argued, the settlement will make police safer, not less safe. Both sides produced expert witnesses. The PBA tapped Louis Anemone, who retired from the NYPD as Chief of Patrol in the last century, who argued <https://storage.courtlistener.com/recap/gov.uscourts.nysd.546923/gov.uscour…> that safety is achieved by letting police make unfettered decisions about how much force to show and when to arrest people. "Restraints on the personnel allowed or when and who can effect arrests will create confusion and chaos at the scene," he wrote. The plaintiffs produced expert testimony from Hasan Aden, a federal police monitor and former Virginia police chief, who argued <https://storage.courtlistener.com/recap/gov.uscourts.nysd.546923/gov.uscour…> that police standards and best practices have evolved since Anemone's day, and that it's now widely recognized that confronting non-violent crowds with overwhelming force, far from settling situations and assuring officer safety, actually tends to provoke greater levels of conflict. Meanwhile, Mayor Eric Adams added to the confusion, telling a press conference <https://www.nyc.gov/office-of-the-mayor/news/990-23/transcript-mayor-adams-…> in December that even though the City had signed the settlement and was fighting in court to implement it, he actually agreed with the PBA, which was seeking to nullify it. "As soon as I read the settlement, I said, this is a problem," Adams said. "You have to go by the advice of your attorneys, but as soon as I read it… Anyone who polices this city should be concerned about what's in the settlement." The papers filed, more months went by, with no indication from Judge McMahon on how she intended to resolve the dispute. Then, on Tuesday, she abruptly scheduled oral arguments, giving the parties less than a week to prepare. Just what shape the hearing will take, and when and how McMahon will rule, remains unclear. Regardless, it seems likely that whoever prevails, her decision will be appealed to the Second Circuit. And given the appeals panel's surprising ruling granting the unions intervenor status—the ruling that created this mess in the first place—it's anyone's guess what will happen there. In the meantime, rolling protests over the bombing of civilians in Gaza continue into their fourth month, and the NYPD is responding to them <https://hellgatenyc.com/nypd-still-policing-protests-like-its-2020>, unbound by any of the reforms it committed to in the still pending settlement. If you want to call in and listen to this court hearing of significant public interest, too bad, you can't. Judge McMahon rejected a request to make a dial-in line available for the hearing. Already a user?Log in <https://hellgatenyc.com/login> Thanks for reading!Give us your email address to keep reading two more articles for free

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The Fed Has a Dirty Little Secret: It’s Been Allowing the Wall Street Mega Banks to Calculate their Own Capital Requirements
by Gunnar Larson 29 Jan '24

29 Jan '24

https://wallstreetonparade.com/2024/01/the-fed-has-a-dirty-little-secret-it… By Pam Martens and Russ Martens: January 29, 2024 ~ Michael Barr Michael Barr, Vice Chair for Supervision, Federal Reserve On July 27 of last year, the Vice Chair for Supervision at the Federal Reserve Board of Governors, Michael Barr, made the following statement as part of the proposed new capital requirements for mega banks in the U.S. – revealing the stunning news that the serially-charged mega banks on Wall Street have been allowed to use their own internal risk models to tell the Fed how much risk-weighted assets they have and, thus, how much capital they need to hold. Barr stated: “For a firm’s lending activities, the proposed rules would end the practice of relying on a bank’s own individual estimates of their own risk and instead use a standardized, but risk-based measure of credit risk. Standardized credit risk approaches do a reasonably good job of approximating risks, while internal models are prone to underestimate such risks. “Second, for a firm’s trading activities, the proposed rules would adjust the way that the firm is required to measure market risk, which is the risk of loss from movements in market prices. These changes are intended to correct for gaps in the current rules.” Relying on the mega banks that have been regularly charged with criminal acts and manipulating markets and who brought the U.S. economy to its knees with their financial crash of 2008, because their risk models were as helpful as a row boat in a tsunami, is yet one more clear indication that federal banking regulators have been completely captured by the Wall Street mega banks. According to the Fed, the newly proposed capital rules will not stop federal regulators from relying on the mega banks to provide the information that sets their capital requirements, it will just change the models. The Fed and its fellow bank regulators wrote as follows about their so-called Basel III reforms: “Under the proposed expanded risk-based approach, banking organizations would calculate total risk-weighted assets using (1) a new standardized approach for credit risk; (2) the revised approach for credit valuation adjustment (CVA) risk; (3) a new standardized approach for operational risk; and (4) the revised approach to market risk.” Two economists are now calling out this insanity in a new academic paper. Anat Admati is the Professor of Finance and Economics at Stanford Graduate School of Business. Martin Hellwig is a German economist. The two are co-authors of the newly released and expanded book The Bankers’ New Clothes: What’s Wrong with Banking and What to Do about It. To call attention to the lies that bankers and their lobbyists perpetuate to get watered-down or gutted rules from their regulators, Admati and Hellwig have released a paper debunking the 44 flawed claims that bankers have been getting away with. One of those flawed claims goes to the heart of this debate on required capital. The pair write: “Flawed Claim 29: Assigning risk weights to assets when determining required equity [equity capital] is a way of bringing serious quantitative analysis to bear on bank regulation… “Proper measurement of the risks to which a bank is exposed would have to consider the counterparty credit risks and their correlations with the underlying risks of the banks. The scope for doing so is limited by a lack of data and by the never-ending changes in risks and correlations that occur when counterparties change their own positions. In practice, the use of risk weights in bank regulation allows banks to be extremely highly indebted, masks important risks, and adds to the interconnectedness of the system. Whereas proponents of the system argue that it is important to require banks to have more equity funding when their assets are riskier, in fact the system allows banks to get away with much less equity funding when they say that their assets are less risky. A uniform ratio of required equity [equity capital] to total assets would provide a lower bound on the banks’ leverage and would enable supervisors to intervene when the ratio is breached before it may be too late. By contrast, because some risk weights are (near) zero, the risk-weighting system allows very high leverage. “The ability of banks to ‘economize on equity’ is enhanced by their ability to use their own models to assess risks. The scope for manipulation they have is largest for assets in the trading book, which is why they were keen to put mortgage-backed securities and the like into the trading book, subject to mark-to-market accounting rules. Most of the losses in 2007-2009 were incurred on assets in the trading book, where equity often was as low as 1 percent of investments…” What the Fed and its fellow federal regulators have been effectively doing is turning capital requirements over to the casino. Consider what happened when the 158-year old Lehman Brothers failed in 2008 and filed for bankruptcy. Just five days before Lehman failed, it was sporting a capital ratio of 11 percent, suggesting that it was adequately capitalized. But four weeks after its bankruptcy on September 15, 2008, its debt was valued at only 9 cents on the dollar, suggesting its unsecured creditors were going to lose 91 percent of their money. While the recovery rate improved over time as market values stabilized, there is no question that Lehman’s regulators were in the dark – or chose to be in the dark – about just how highly leveraged this financial institution was in 2008. Unknown to most Americans, the reckless Lehman Brothers was allowed by its regulators to own two federally-insured banks: Lehman Brothers Bank, FSB and Lehman Brothers Commercial Bank. Together, they held $17.2 billion in assets as of June 30, 2008, 75 days before Lehman went belly up. Today, four of the largest trading houses on Wall Street own federally-insured banks that rank among the largest seven federally-insured banks in the U.S.: JPMorgan Chase, Bank of America, Citigroup, and Goldman Sachs. Another key problem with allowing the criminally-inclined mega banks to calculate their own risk-weighted capital needs is that only a handful of people inside the bank understand the risks that are hiding in the shadows in the bank’s off-balance-sheet exposures. On its way to becoming a 99-cent stock in March of 2009 and needing a secret $2.5 trillion bailout in cumulative loans from the Fed between December 2007 and June 2010, Citigroup was using off-balance-sheet SIVs (Structured Investment Vehicles) to boost its profits and hide its risks. When the bank was forced to move these vehicles back onto its balance sheet, its debt was downgraded and its stock tanked further. Any suggestion that the mega banks on Wall Street have cleaned up their reckless risk-taking is undermined by the number of times they have needed to be bailed out since the crash of 2008 – the worst economic crisis since the Great Depression. (The New York Fed has become the official money funnel for Wall Street bailouts while being, literally, owned by some of the biggest banks on Wall Street.) The first banking crisis since that of 2008 began on September 17, 2019 – for reasons the Fed has yet to explain with any credibility. In the last quarter of 2019, the New York Fed had to shovel emergency repo loans cumulatively totaling (on a term-adjusted basis) $19.87 trillion into Wall Street banks. As the chart below indicates, just six trading units of the mega banks on Wall Street received 62 percent of that amount. (Unadjusted for the term of the loan, the cumulative total was $4.5 trillion.) Fed's Repo Loans to Largest Borrowers, Q4 2019, Adjusted for Term of Loan Under the Dodd-Frank financial reform legislation of 2010, the Fed had to release the names of the banks that received these bailouts, and the dollar amounts of each loan, two years after the program began. While mainstream media went to court to get this information in 2008, there was a total mainstream media blackout when the Fed released the data for the 2019 bailouts. (See There’s a News Blackout on the Fed’s Naming of the Banks that Got Its Emergency Repo Loans; Some Journalists Appear to Be Under Gag Orders.) The next banking crisis occurred in March 2020 and was blamed on the pandemic. The share prices of the four largest banks (by deposits) collapsed by as much as 40 to 60 percent between January 2, 2020 and March 18, 2020. The Fed rolled out the same alphabet soup of emergency lending programs that it had rolled out in 2008 – with the New York Fed once again in charge of the bulk of those programs. Three years later, in the spring of 2023, the second, third and fourth largest bank failures in U.S. history occurred: Silicon Valley Bank and Signature Bank in March and First Republic Bank on May 1. To deal with last year’s failures, the Fed did something that it has never done before in its 110-year history. It began accepting underwater bonds as collateral for emergency loans to teetering banks while paying 100-cents on the dollar on that collateral for loans of up to one year in duration. (Historically, the Fed has imposed a haircut on collateral and made overnight loans through its Discount Window.) The Fed called this bailout program the Bank Term Funding Program (BTFP). In recent weeks, the amounts being borrowed under the Bank Term Funding Program have spiked. The bailout facility had a balance of $121.7 billion as of December 7, 2023. As of its last report date on January 24, 2024, it had soared to $167.8 billion. Last Wednesday, after weeks of watching banks increasingly tap the Bank Term Funding Program almost a year after the banking crisis was supposed to have subsided, the Fed announced it would cut off any more loans from the BTFP on March 11. Taming the Megabanks, Book JacketAs we have repeatedly stated, and the brilliant Law Professor Art Wilmarth has documented, the only meaningful way to genuinely reform the mega banks is to restore the Glass-Steagall Act, which will separate casino banking from the federally-insured deposits of U.S. commercial banks.

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White House Calls Explicit AI Photos Of Taylor Swift 'Alarming'
by Gunnar Larson 29 Jan '24

29 Jan '24

White House Calls Explicit AI Photos Of Taylor Swift 'Alarming' <https://www.law360.com/cybersecurity-privacy/articles/1790815?nl_pk=3dfd2fd…> By Lauren Berg The White House on Friday called the recent circulation of sexually explicit artificial intelligence-generated images of Taylor Swift "alarming," saying social media companies have a duty to prevent the spread of "nonconsensual intimate imagery of real people," while others said the fake images amount to criminal sexual abuse. Read full article » <https://www.law360.com/cybersecurity-privacy/articles/1790815?nl_pk=3dfd2fd…> | Save to favorites » <https://www.law360.com/cybersecurity-privacy/articles/1790815?nl_pk=3dfd2fd…>

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Meta Beats Claims Facebook Enabled Rohingya Genocide
by Gunnar Larson 29 Jan '24

29 Jan '24

Meta Beats Claims Facebook Enabled Rohingya Genocide <https://www.law360.com/cybersecurity-privacy/articles/1790796?nl_pk=3dfd2fd…> By Henrik Nilsson A California federal judge tossed without leave to amend a proposed class action alleging Meta Platforms Inc. enabled the genocide of the Rohingya people in Myanmar by helping spread disinformation on Facebook, saying the two refugees filed the complaint too late. Order attached | Read full article » <https://www.law360.com/cybersecurity-privacy/articles/1790796?nl_pk=3dfd2fd…> | Save to favorites » <https://www.law360.com/cybersecurity-privacy/articles/1790796?nl_pk=3dfd2fd…>

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Illinois Judges Face Partisan Complaint Over Diversity Orders
by Gunnar Larson 29 Jan '24

29 Jan '24

Illinois Judges Face Partisan Complaint Over Diversity Orders <https://www.law360.com/legalethics/articles/1790729?nl_pk=153d4a8a-6fb9-4a5…> By Celeste Bott A group founded by former Trump adviser Stephen Miller has filed a discrimination complaint against three Illinois federal judges over their efforts to encourage younger, female and minority attorneys to handle oral arguments in their courtrooms, saying the policies amount to "oral-argument affirmative action for lawyers." 4 documents attached | Read full article » <https://www.law360.com/legalethics/articles/1790729?nl_pk=153d4a8a-6fb9-4a5…> | Save to favorites » <https://www.law360.com/legalethics/articles/1790729?nl_pk=153d4a8a-6fb9-4a5…>

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Ga. State Rep Moves To Impeach DA Fani Willis
by Gunnar Larson 29 Jan '24

29 Jan '24

There are two RICOs happening in New York right now. ---- Ga. State Rep Moves To Impeach DA Fani Willis <https://www.law360.com/banking/articles/1790476?nl_pk=feb6bbba-7878-4d39-be…> By Andrea Keckley Republican Georgia State Rep. Charlice Byrd introduced a resolution to impeach Fani T. Willis on Friday, one day after Donald Trump joined a motion to disqualify the Fulton County district attorney from the sweeping racketeering case she is pursuing against the former president and more than a dozen others in connection with the 2020 presidential election in Georgia. Read full article » <https://www.law360.com/banking/articles/1790476?nl_pk=feb6bbba-7878-4d39-be…> | Save to favorites » <https://www.law360.com/banking/articles/1790476?nl_pk=feb6bbba-7878-4d39-be…>

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TIAA Sues Ex-SVB Execs Over Losses From Bank's Failure
by Gunnar Larson 29 Jan '24

29 Jan '24

The teachers have to sue sometimes.... ---- TIAA Sues Ex-SVB Execs Over Losses From Bank's Failure <https://www.law360.com/banking/articles/1790732?nl_pk=feb6bbba-7878-4d39-be…> By Katryna Perera Former directors and executives of Silicon Valley Bank have been hit with a suit in California federal court by financial services giant TIAA over losses it allegedly suffered when the bank imploded under the weight of a bulging portfolio of interest rate-sensitive assets. Complaint attached | Read full article » <https://www.law360.com/banking/articles/1790732?nl_pk=feb6bbba-7878-4d39-be…> | Save to favorites » <https://www.law360.com/banking/articles/1790732?nl_pk=feb6bbba-7878-4d39-be…>

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FDIC Must Clean House Amid Deep 'Rot,' GOP Sen. Says
by Gunnar Larson 29 Jan '24

29 Jan '24

FDIC Must Clean House Amid Deep 'Rot,' GOP Sen. Says <https://www.law360.com/banking/articles/1790821?nl_pk=feb6bbba-7878-4d39-be…> By Jon Hill The Federal Deposit Insurance Corp. is facing fresh Republican scrutiny of its workplace policies following an agency attorney's guilty plea to child sexual exploitation charges, a case that U.S. Sen. Joni Ernst of Iowa slammed Friday as epitomizing deep "rot" inside the agency that must be rooted out. 2 documents attached | Read full article » <https://www.law360.com/banking/articles/1790821?nl_pk=feb6bbba-7878-4d39-be…> | Save to favorites » <https://www.law360.com/banking/articles/1790821?nl_pk=feb6bbba-7878-4d39-be…>

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JPMorgan, Zelle Parent Co. Can Arbitrate Customer Fraud Suit
by Gunnar Larson 29 Jan '24

29 Jan '24

JPMorgan, Zelle Parent Co. Can Arbitrate Customer Fraud Suit <https://www.law360.com/newyork/articles/1790360?nl_pk=ac5a3855-e47c-4403-be…> By Emilie Ruscoe JPMorgan Chase Bank NA and Early Warning Services LLC, Zelle's parent company, will see account holder fraud allegations sent to arbitration after they argued the customers who brought a proposed class action had agreed to arbitration "multiple times," a Manhattan federal judge determined. Order attached | Read full article » <https://www.law360.com/newyork/articles/1790360?nl_pk=ac5a3855-e47c-4403-be…> | Save to favorites » <https://www.law360.com/newyork/articles/1790360?nl_pk=ac5a3855-e47c-4403-be…>

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NRA Paid For Luxury Expenses, LaPierre Confirms
by Gunnar Larson 29 Jan '24

29 Jan '24

NRA Paid For Luxury Expenses, LaPierre Confirms <https://www.law360.com/newyork/articles/1790737?nl_pk=ac5a3855-e47c-4403-be…> By Stewart Bishop National Rifle Association CEO Wayne LaPierre on Friday took the witness stand in the trial over the New York attorney general's claims of widespread corruption at the nonprofit gun rights group, confirming details about his opulent lifestyle that was bankrolled in part by the NRA itself. Read full article » <https://www.law360.com/newyork/articles/1790737?nl_pk=ac5a3855-e47c-4403-be…> | Save to favorites » <https://www.law360.com/newyork/articles/1790737?nl_pk=ac5a3855-e47c-4403-be…>

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