Council Members Call For More Openness in San Jose's Permit Process

Two San Jose council members say their city makes it too tough on small business owners who want to open shop or expand.

CPUC to File Revised PG&E Penalty

The California Public Utilities Commission is set to file a revised penalty proposal Monday for PG&E’s part in the fatal San Bruno gas line explosion.

Protests Over Michael Brown Verdict Continue in Oakland

The City of Oakland saw a second night of protests and vandalism Tuesday night following a Missouri grand jury's decision not to indict police officer Darren Wilson for shooting and killing unarmed teenager Michael Brown.

San Jose Mayor-elect Sam Liccardo

San Jose Mayor-elect Sam Liccardo joins us to talk about his vision for the city.

PBS NewsHour

Is the 2015 spending bill a gift to big banks?


Watch Video | Listen to the Audio

HARI SREENIVASAN: Next, let’s turn to a story about Wall Street and banks that’s angered many.

As one of its final acts last week, Congress passed a spending bill for 2015. Tucked into it was a provision to loosen banking regulations on hedges or bets known as derivatives or swaps. These are financial instruments that essentially allow banks to hedge bets on things that rise and fall in value, such as mortgages, currencies and interest rates.

After the financial crisis, the Dodd-Frank Act required big banks like J.P. Morgan to move some of those derivatives, or bets, to other banking units that don’t have a federal backstop or guarantee from the government.

The idea: No federal guarantee means no bailout. But the provision passed last week essentially cancels it and says banks don’t have to move those swaps around anymore.

Liberals were outraged. The most outspoken voice ahead of the Senate vote, Democrat Elizabeth Warren of Massachusetts.

SEN. ELIZABETH WARREN, (D) Massachusetts: Who do you work for, Wall Street or the American people? This fight isn’t about conservatives or liberals; it’s not about Democrats or Republicans. It’s about money, and it’s about power right here in Washington.

This legal change could trigger more taxpayer bailouts and could ultimately threaten our entire economy. But it will also make a lot of money for Wall Street banks.

HARI SREENIVASAN: But others, including Republicans and some Democrats, said that fear was overstated.

Senator Barbara Mikulski is a Democrat from Maryland.

SEN. BARBARA MIKULSKI, (D) Maryland: So, what did we do? We actually worked on a bipartisan basis. It took a little shove from some of us Democrats, but there both sides of the aisle want to look out for the little guy.

So, guess what? This legislation that has been so scrutinized needs to also take a look at the fact that it includes $1.5 billion so that the Security Exchange Commission can actually do its job.

HARI SREENIVASAN: For a closer look at the rollback and what it might mean for banks going forward, we get two views.

Dennis Kelleher is the president and CEO of Better Markets, a nonpartisan, nonprofit organization that promotes the public interest in financial markets. And Mark Calabria is director of financial regulation studies at the Cato Institute, a libertarian think tank. He’s a former Republican staff member from the Senate.

So, Dennis Kelleher, let me start with you.

What does this allow the banks to do that they can’t do now?

DENNIS KELLEHER, Better Markets: Well, basically, what the banks do within their federally insured subsidiaries, which are backed not just by the government, by taxpayers, is they conduct their derivatives within that banking, that protected organization.

And what this law did is, it said, look it, if you want to gamble in the highest-risk type of derivatives, you have got to push them out of the banking-backed subsidiary and put them in a different subsidiary. You can gamble all you want, but you’re going to gamble with your own money and you’re going to get downside if you’re going to get the upside.

You’re not going to be able to stick the taxpayers with the bill. What happened in the budget bill is, it was a provision in an otherwise pretty good budget deal that said, no, no, no, the banks don’t have to do that anymore.

And keep in mind there are almost 7,000 banks in the United States. This provision benefits about five, the biggest banks on Wall Street. Four of those banks do 93 percent of all the derivatives trading in the United States. So this wasn’t a bank-friendly provision and it wasn’t a provision that was friendly to taxpayers.

This was a gift to the biggest banks on Wall Street.


MARK CALABRIA, Cato Institute: So, let me first say why I very deeply share Dennis’ concern about bailouts, and I don’t think we have ended too big to fail.

I think we do need to parse out some of the details. And, again, so let’s think about — banks have an insured subsidiary, an insured part of the bank. And there’s a bank that’s uninsured explicitly.

It’s important to keep in mind that what Dodd-Frank does say, however, is this uninsured part still has access to Federal Reserve support through its so-called 13(3) authorities. So, even if were these other part of the bank to get into trouble, they could still potentially be on the line for the taxpayer.

But, more importantly, let’s keep in mind, Dodd-Frank already exempted the vast majority; 90-plus percent of derivatives are already allowed within the deposit part of the bank to begin with. So, with this change was said, we’re going to treat all derivatives basically the same. You know, the credit default swaps, which are a credit event, are going to be treated like interest rates, will all be within the bank.

So, to me, I think the extent of this, both before the proponents and the opponents, have been a bit exaggerated, because the — again, I said 90-plus percent of derivatives were already exempted from this to begin with. And even those outside would have been potentially backed by the taxpayer.

And so let me close that with using the example the way AIG was set up, and AIG had a bank subsidiary. AIG had all of its credit default swap business outside of its insured depository. Yet we still bailed out AIG.

So, I’m left wondering what this change would have stopped in that case.

DENNIS KELLEHER: Well, sometimes facts obscure, rather than clarify.

So, Mark’s right that this provision applied to less than 10 percent of the derivatives tradings of these four biggest banks. But what that doesn’t address is, what is the most high-risk? So the 90 percent are interest rates, currency-type swaps, which are relatively low risk.

And, therefore, the likelihood of those types of derivatives causing the bank to fail and causing another crisis is pretty low. So the provision that was in the law was actually pretty narrowly targeted, focused on the highest-risk type of derivatives. That’s what we wanted to push out of the banks, so taxpayers didn’t get stuck with it.

And let’s remember for a quite minute, Hari, in 2008, that was the worst financial crash since 1929. It caused the worst economy since the Great Depression. It’s going to cost the United States alone between $15 trillion and $30 trillion, with a T., for the economic wreckage and the bailouts.

And what this provision, along with the rest of financial reform, is trying to do is to reduce the high-risk activities of this handful of too-big-to-fail banks on Wall Street, reduce those activities, or push them away, push them out, so that the taxpayer doesn’t get the bill after the bankers get the bonuses.

HARI SREENIVASAN: So, why did some Democrats, as the one we heard, along with the president, go along with it?

DENNIS KELLEHER: Well, look, this was a $1.1 trillion-plus funding bill for the entire government.

And I think Senator Mikulski, the president, and many others on the Hill did a very good job of putting together a very good funding package. The problem, is like all bills — and I worked in the Senate for a long time — all bills are compromises. There are some things in there that you don’t want and some things that you do.

And the president made the decision at the end of the day that there was more good than bad. As he said, and as Secretary Lew, the secretary of the Treasury, at an FSOC meeting today said, they didn’t want the push-out provision in there, but they were stuck with it.

The important lesson there is, Wall — it’s a light on how Wall Street gets its way in Washington. It doesn’t have a bill that comes out with Democrats — Republicans and Democrats in the House and Senate have to raise their hand in the light of day to vote for Wall Street. They put them in these big bills, so that nobody has to vote for them, and they can get their special provisions. And the public’s deceived and there’s no accountability.

HARI SREENIVASAN: Mark, what about the central argument that he’s making, is that we’re essentially walking back down that road of banks that are too big to fail, that we’re essentially going to protect these big four or five banks?

MARK CALABRIA: We are. And Dodd-Frank didn’t end that. So, I mean, I’m not actually for piecemeal reform of Dodd-Frank. I would repeal the whole thing and start from the beginning, because I do think it didn’t address the problems in the crisis.

Now, where — Dennis was quite correct in saying it’s got to be the risk you’re looking at. Where I would disagree is, to me, what happened is, we had a huge housing boom and bust that caused a recession. We lost two million jobs before September 2008.

We were in a recession by the time of the financial crisis. And so whenever I hear somebody say, oh, well, we don’t want banks gambling with derivatives, I don’t want banks gambling with shoddy mortgages, and we’re going down that road again, low down payment, subprime mortgages. That’s riskier than a derivative.

Banks lost billions on their Fannie-Freddie holdings of preferred shares. We didn’t make them push that out. So, again, to me, I’m concerned that rather than say let’s shrink the safety net, we get in these political arguments over, well, this constituency, that’s bad because Wall Street likes it, but because the realtors and home builders like this, then that’s OK.

And that’s the debate we’re in today, whereas, to me, we need to end all the bailouts.

HARI SREENIVASAN: All right. All right.

Mark Calabria, Dennis Kelleher, thanks so much.


The post Is the 2015 spending bill a gift to big banks? appeared first on PBS NewsHour.

Despite pushback from lawmakers, there’s little chance Congress can stop Cuba policy

Lazaro Iglesias, L, who is against the Cuban policy change debates with Peter Bell who supports the new policy laid out
         by President Barack Obama as people gathered outside a Little Havana restaurant in Miami. The president announced he wants
         to normalize relations with Cuba. Photo by Joe Raedle/Getty Images

Lazaro Iglesias, L, who is against the Cuban policy change debates with Peter Bell who supports the new policy laid out by President Barack Obama as people gathered outside a Little Havana restaurant in Miami. The president announced he wants to normalize relations with Cuba. Photo by Joe Raedle/Getty Images

WASHINGTON — A lack of unanimity in both political parties toward President Barack Obama’s sudden move to re-establish ties with Cuba complicates any congressional effort to scuttle the most significant change in U.S. policy toward the communist island in 50-plus years.

His initiative faces some strong resistance among lawmakers, with criticism coming mostly from Republicans, who say the new policy rewards Cuba’s decades-long policies of repression, human rights abuses and aggression. Some prominent Democrats voiced opposition, too.

Opponents spoke of holding up money to set up a full-service U.S. embassy in Havana, blocking Obama’s nominee as ambassador to Cuba or other such steps. But even if they were to pass sweeping legislation to stop what Obama wants to do, he could veto it and they are unlikely to muster the two-thirds majority to override a veto.

The GOP will control both the Senate and House come Jan. 6, but Republicans will face pressure from businesses and the farm industry — eyeing opportunities for commerce in Cuba — not to stand in the way of expanded ties.

The Chamber of Commerce spent heavily in the midterm elections, investing $35 million to elect business-minded, predominantly Republican lawmakers. Its president, Thomas J. Donohue, said Wednesday that Obama’s actions “will go a long way in allowing opportunities for free enterprise to flourish.”

The U.S. declared an embargo on most exports to Cuba in October 1960 and severed diplomatic relations in January 1961. Three months later Fidel Castro declared Cuba a socialist state — just a day before the doomed, U.S.-sponsored Bay of Pigs invasion meant to topple him. After the hard-line Castro became ill in 2006, his brother, Raul, took charge of the nation, fewer than 100 miles off the southern coast of Florida.

Now Obama says he will ease economic and travel restrictions on Cuba and work with Congress to end the trade embargo. This came after Cuba released American Alan Gross, who had been imprisoned for five years, and a Cuban who had spied for the U.S. In exchange, the U.S. freed three Cubans jailed in Florida.

Even if opponents were to pass sweeping legislation to stop what Obama wants to do, he could veto it and they are unlikely to muster the two-thirds majority to override a veto. Sen. Patrick Leahy, D-Vt., one of three lawmakers who flew to Cuba before dawn to escort Gross home, praised Obama’s move.

Leahy, the top Democrat on the committee that oversees foreign aid, said that over the years he’s heard members of Congress tell presidents, “Hang tough on Cuba and those Castros will be out of there any day now.”

“That was said to President Kennedy, President Johnson, President Nixon, President Ford, President Carter — you see what I’m driving at,” Leahy said. “The fact is they are there. The fact is, Cuba is still there.

“Let’s start finding out ways to at least work through our differences, embrace areas where we are alike.”

Another Democrat, New Jersey Sen. Bob Menendez, the outgoing chairman of the Senate Foreign Relations Committee, voiced opposition to the new Cuban policy.

Menendez, whose parents are Cuban immigrants, said Cuba is not going to reform just because Obama believes that if he extends his hand in peace, the Castro brothers suddenly will “unclench their fists.”

The No. 2 Democrat in the Senate, Dick Durbin of Illinois, said he understands the feelings of Cuban lawmakers who oppose Obama’s decision because of the pain associated with their families’ experiences in Cuba.

“But I think we have to step back as a nation and say if we’re ever going to move the Cuban people in the right direction of freedom, where they’re going to have democratic elections, then we’ve got to have a new relationship with Cuba,” Durbin said in Chicago.

Splits were evident on the Republican side, too.

Republican leaders in the House and Senate condemned Obama’s action, as did Sen. Marco Rubio, R-Fla., a Cuban-American and potential presidential candidate. Rubio said the new U.S. policy would give Cuba a needed economic lift — something “the Castro regime needs to become permanent fixtures in Cuba for generations to come.”

More telling for the outlook in the new Congress was the response of Sen. Bob Corker, R-Tenn., the incoming chairman of the Foreign Relations Committee, who was cautious but not critical of Obama’s action.

However, Sen. Jeff Flake, R-Ariz., who also went to Cuba to accompany Gross home, said Obama’s move should not be seen as a concession. “My sense is that most of my colleagues feel that we’re long past due” in moderating the U.S. stance on Cuba.

“Certainly the policy is right and good politics usually follow good policy,” Flake said.

As well as restoring diplomatic relations, Obama plans to ease travel restrictions to Cuba for family visits, government business and educational activities, while tourist travel remains banned. Only lawmakers can revoke the trade embargo, though, and that appears unlikely to happen soon.

Associated Press writers Donna Cassata and Tammy Webber in Chicago contributed to this report.

The post Despite pushback from lawmakers, there’s little chance Congress can stop Cuba policy appeared first on PBS NewsHour.

Obama’s ‘transformative’ Cuba moment

         American vintage car drives in front of the Capitolio in Havana, Cuba, shortly after a live broadcast a speech by Cuban President
         Raul Castro about the re-establishment of official diplomatic relations with the U.S. on December 17, 2014. Photo by Sven
         Creutzmann/Getty Images

An American vintage car drives in front of the Capitolio in Havana, Cuba, shortly after a live broadcast a speech by Cuban President Raul Castro on reestablishing official diplomatic relations with the U.S. on December 17. Photo by Sven Creutzmann/Getty Images

The Morning Line

Today in the Morning Line:

  • Explaining Obama’s move on Cuba
  • The generational shift — even among Cuban Americans — on Cuba policy
  • The Obamas talk about their personal experiences dealing with race

Obama goes big on Cuba: Whether you agree or disagree with President Obama’s move to try and “normalize” relations with Cuba, it is an historic, big move. Anyone who thought this president was going to shrink from power after this latest midterm election drubbing would be wrong. Remember, this is a president who believed he could be “transformative,” and where he has an opportunity to move toward that, he will. Just in the last month, on issues ranging from immigration (executive action limiting deportations) to the prison at Guantanamo (transferring of some inmates to Uruguay) to Cuba policy, what we’ve seen is a president seemingly determined to go down a checklist of items that he promised as a candidate or wanted to accomplish and is now moving toward that, however he can. David Axelrod, a former top Obama campaign strategist and then senior adviser in the White House backs that up. “He’s going down a checklist of thorny, longstanding problems, and he’s doing whatever he can to tackle them,” he told the New York Times. “These are things that have been tearing at us for decades and generations. My sense is his feeling is, ‘I’m not going to leave office without doing everything I can to stop them.’”

The pushback and the rationale: As to the Cuba policy itself, there was expected vociferous opposition from Cuban Americans in Little Havana, Miami, who escaped the Castro regime, as well as from more hawkish Republicans, who have long supported the policy. Sen. Marco Rubio, R-Fla., said the move “will tighten this regime’s grip on power for decades to come” and called it a “setback for freedom” for Cubans. Former Florida Gov. Jeb Bush, R, who took a significant step toward getting in the 2016 race this week called the move a “misstep” and an “overreach of executive power.” He added, “Cuba is a dictatorship with a disastrous human rights record, and now President Obama has rewarded those dictators.” The line from the president that perhaps best summed up his rationale for the move Wednesday was: “I don’t think we can keep doing the same thing we’ve done for over five decades and expect a different result.” By the way, for those thinking about 2016, Hillary Clinton said in a statement that she supports the policy change.

Generational shift: How can it be that Democrats feel they can so easily lean into this move? Florida, after all, continues to be a critical swing state. Well, times are changing. The policy is no longer the kind of Florida Third Rail that it had been in the past. Case in point: Despite President Obama having advocated in the past for a thaw in relations — including saying he was open to meeting with Cuban leader Raul Castro and his easing of some embargo restrictions — he won Cubans in Florida in the 2012 presidential election, 49 to 47 percent, according to the exit polls. How can that be? Polling show there has been a generational shift among Cubans. It’s notable that the U.S. trade embargo with Cuba has been in place since 1961 — instituted seven months before this president was born. In 1991, a Florida International University survey of Cuban-Americans in Miami-Dade County, Fla., found 87 percent were in favor of continuing the embargo. But by 2014, support for the embargo had evaporated. Now, a majority of Cuban Americans — 52 percent — say they support ending it. And there’s a huge generational gap. The only group in which a majority supported continuing the policy are those 65 and older (60 to 40 percent). On the other hand, among those age 18 to 29, 62 percent were in favor of lifting it; among those 30 to 44 and 45 to 64, 55 percent also supported doing away with it.

Obamas on race in People: While the news world’s focus is on Cuba, also keep People magazine on your radar. The widely-distributed publication interviewed the president and first lady and the initial write-up focuses on the first couple’s own experiences with racism. “There’s no black male my age, who’s a professional, who hasn’t come out of a restaurant and is waiting for their car and somebody didn’t hand them their car keys,” President Obama told the magazine, confirming the situation has happened to him. First Lady Michelle Obama noted that before they lived in the White House, “Barack Obama was a black man that lived on the South Side of Chicago, who had his share of troubles catching cabs.” The interview continues the White House media push outside of traditional hard news outlets.

Daily Presidential Trivia:
On this day in 1915, President Woodrow Wilson, who was widowed the year before, married Edith Bolling Galt. How many presidents got married while in office? Be the first to tweet us the correct answer using #PoliticsTrivia and you’ll get a Morning Line shout-out. Congratulations to Anthony R. ‏(@AntBenjiMan) for guessing Wednesday’s trivia: Which president negotiated the Canada–United States Free Trade Agreement, which NAFTA replaced? The answer was: Ronald Reagan.








For more political coverage, visit our politics page.

Sign up here to receive the Morning Line in your inbox every morning.

Questions or comments? Email Domenico Montanaro at dmontanaro-at-newshour-dot-org or Rachel Wellford at rwellford-at-newshour-dot-org.

Follow the politics team on Twitter:


Editor’s note: This post has been updated to reflect the correct percentage of those age 30 to 64 who support easing restrictions toward Cuba. It is 55 percent.

The post Obama’s ‘transformative’ Cuba moment appeared first on PBS NewsHour.

What a lapse in terrorism insurance by Congress means for businesses


Watch Video | Listen to the Audio

JUDY WOODRUFF: Since 9/11, American businesses have been able to buy insurance policies covering a terrorist attack through a public/private partnership known as the Terrorism Risk Insurance Act.

But, for the first time, Congress left this week without funding it because of objections by one senator. It could have an effect on businesses coast to coast, as they wonder what happens in case of the worst.

Joining us now is Leigh Ann Pusey. She’s president and CEO of the American Insurance Association.

And we welcome you to the program.

LEIGH ANN PUSEY, American Insurance Association: Thanks for having me.

JUDY WOODRUFF: So, why is this terrorism risk insurance so important? Why do businesses need it?

LEIGH ANN PUSEY: Well, terrorism is a very unique risk for insurance.

It’s very hard to conceive of the kinds of losses that can be associated with a terrorist attack. They’re well beyond the capacity of the insurance market right now to provide that. So, what we learned after 9/11 was that insurance had been basically a natural part of coverage, but, after 9/11, the market retreated because, all of a sudden, it realized that this was a huge potential risk.

And it took a TRIA-like partnership to really entice the private market back into providing this coverage, which is, in essence, an economic security matched up with the government’s national security efforts, because it really helps us have an orderly recover after an innocent.

JUDY WOODRUFF: So, what would trigger insurance like this? What would have to happen for this trigger — for this to happen, where the U.S. government would have to come in and, frankly, back up what the insurance companies are saying?

LEIGH ANN PUSEY: Well, right now, the TRIA program anticipates a fairly substantial participation by the private market. So, you would have to see an event probably the size of 9/11 before the government would have to be tabbed to backstop insurers.

Insurers are sitting on 20 percent deductibles of their premiums. What that really translates to is, for some companies, as much as $1 billion, $2 billion of insured losses they would pay before they tapped that backstop. And they’re paying a percentage of that backstop even after they have met the deductible.

They are going to pay 15, 20 percent as envisioned under the new law going up. There’s a lot of skin in the game by the industry. It’s grown over the years since 9/11. So, it would have to be a catastrophic-level event for the private — for the government to have to step in.

JUDY WOODRUFF: Let me read you what one — one comment that Senator Tom Coburn, the senator from Oklahoma, the one who is responsible for holding this up, this week said.

He said, “This program has made the insurance industry $40 billion in the last 12 years.”  He said, “American taxpayers take all the risk, except for 35 percent, and the insurance industry takes the money.”

LEIGH ANN PUSEY: Well, what the insurance industry is doing is stepping in and providing for an orderly economic recovery that otherwise the taxpayer would be on the hook for the first dollar of.

So, have we charged a premium for that risk? Sure. That’s a market force I would think Senator Coburn and other Republicans and pro-market voices would like to see happen. And the more we get can comfortable with this risk over time, the more we can learn about it, we can take on more of it. It will never be a risk that can be totally borne by the private market. And it shouldn’t be.

JUDY WOODRUFF: Why not? Why can’t it be borne by the private…

LEIGH ANN PUSEY: Well, because it associated — it’s national security. Terrorism is a national security issue. It’s the responsibility of the federal government, who has the data, the knowledge, the know-how.

You just ran a piece about them confirming what they may or may not know about these threats related to Sony. Well, that — they have that knowledge. Nobody insuring Sony has that knowledge. They have that knowledge. We don’t want that knowledge, by the way, but what it means is that insurers are limited in how much they can try to underwrite this and how much exposure they can take on.

This current TRIA program covers — provides $100 billion. There’s not $100 billion of private market capacity. If you want to provide economic stability and economic growth, then you need a partnership.

JUDY WOODRUFF: What does it mean, Leigh Ann Pusey, that this insurance was not extended, that this doesn’t exist right now?

LEIGH ANN PUSEY: Well, it means that, after December 31, there is no TRIA backstop, and insurance companies and CEOs — I spoke to one as I was driving over here this evening — are employing their contingency events.

They’re having to put their contingency plans into place. They’re going to look at their exposures. And I believe over the coming weeks we are going to see more and more market reaction to this. What that might mean is capacity will shrink over time, and the price of this might go up in certain markets. This isn’t just about tall buildings in New York. It’s about properties and businesses all around the country.

JUDY WOODRUFF: You’re saying they won’t get built?

LEIGH ANN PUSEY: They won’t get — some projects could be delayed. Loans require this sort of financing to be backstopped by insurance coverage and protection on this.

Think about the small business dry cleaner who is in the shadow of a trophy property in New York. They’re going to have a hard time finding capacity just by sheer virtue of where they’re located.

JUDY WOODRUFF: Leigh Ann Pusey, who is the president and CEO of the American Insurance Association, we thank you.


The post What a lapse in terrorism insurance by Congress means for businesses appeared first on PBS NewsHour.