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Here’s Why Bank of America’s $17 Billion Settlement Probably Won’t Cost It That Much

| Thu Aug. 21, 2014 11:59 AM EDT

On Thursday, the Justice Department announced a record $17 billion settlement with Bank of America over accusations that the bank—as well as companies it later bought—intentionally misled investors who purchased financial products backed by toxic subprime mortgages. It's the largest settlement the US government has reached with any company in history, and it is roughly equal to the bank's total profits over the past three years. But as is the case with similar settlements involving Citigroup and JPMorgan Chase, Bank of America probably won't end up paying that much.

Potential tax deductions and tricky accounting techniques in deals like this often hide the real cost to banks. The Associated Press explains:

Bank of America will pay $9.65 billion in cash and provide consumer relief valued at $7 billion…Whether cash payments are structured as penalties or legal settlements can determine whether targeted companies can declare them as tax-deductible business expenses. Also, consumer relief is an amorphous cost category: If Bank of America's deal resembles the department's previous settlements with JPMorgan and Citigroup, that part could be less costly to the company than the huge figures suggest.

...[M]uch of the relief will come from modifying loans that the banks have already concluded could not be recovered in full. Reducing the principal on troubled loans often just brings the amount that borrowers owe in line with what the banks already know the loan to be worth.

Settlement math also affects the actual cost of the deals, allowing banks to earn a multiple for each dollar spent on certain forms of relief. Under Citi's deal, for example, each dollar spent on legal aid counselors is worth $2 in credits, and paper losses on some affordable housing project loans can be credited at as much as four times their actual value.

Banks generally regard the consumer relief portion of settlements as "stuff they're doing anyway," banking analyst Moshe Orenbuch told the AP.

The Bank of America settlement resolves more than two dozen investigations by prosecutors around the country.

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Russian Sanctions Mostly Hitting Russian Consumers

| Thu Aug. 21, 2014 11:52 AM EDT

The BBC reports on how those Russian sanctions against Western food have put the squeeze on European and American suppliers:

Moscow officials say frozen fish prices in the capital's major supermarkets have risen by 6%, milk by 5.3% and an average cheese costs 4.4% more than it did before the 7 August ban took effect. Russia has banned imports of those basic foods, as well as meat and many other products, from Western countries, Australia and Japan. It is retaliation for the West's sanctions on Russia over the revolt by pro-Russian separatists in Ukraine.

And it is not just Moscow. On the island of Sakhalin, in Russia's far east, officials say the price of chicken thighs has soared 60%. Before the sanctions these were among the cheapest and most popular meat products in Russia.

Oops. Sorry about that. It's actually Russian consumers who are paying the price. And for now, that seems to be OK:

Polls show that the vast majority of Russians approve of the sanctions against Western food. They have been told by government officials and state-controlled TV that the embargo will not affect prices, and that it will actually allow Russia's own agriculture to flourish. And that message is being believed.

At a guess, Russian consumers aren't very different from American consumers. Nationalistic pride will work for a while, as people accept higher prices as the cost of victory against whoever they're fighting at the moment. But that won't last any longer in Russia than it does in America. Give it a few months and public opinion is likely to turn decidedly surly. Who really cares about those damn Ukrainians anyway? They're just a bunch of malcontents and always have been, amirite?

This is why Vladimir Putin needs a quick victory. The fact that he's not getting it will eventually prompt him to either (a) quietly give up, or (b) go all in. Unfortunately, there's really no telling which it will be.

In Ferguson, Cops Hand Out 3 Warrants Per Household Every Year

| Thu Aug. 21, 2014 11:13 AM EDT

Alex Tabarrok comments on the rather remarkable caseload of Ferguson's municipal court:

You don’t get $321 in fines and fees and 3 warrants per household from an about-average crime rate. You get numbers like this from bullshit arrests for jaywalking and constant “low level harassment involving traffic stops, court appearances, high fines, and the threat of jail for failure to pay.”

If you have money, for example, you can easily get a speeding ticket converted to a non-moving violation. But if you don’t have money it’s often the start of a downward spiral that is hard to pull out of....If you are arrested and jailed you will probably lose your job and perhaps also your apartment—all because of a speeding ticket.

We've all seen a number of stories like this recently, and it prompts a question: why are police departments allowed to fund themselves with ticket revenue in the first place? Or red light camera revenue. Or civil asset forfeiture revenue. Or any other kind of revenue that provides them with an incentive to be as hardass as possible. Am I missing something when I think that this makes no sense at all?

This is sort of a genuine question. I know these policies are common, but where did they come from? Are they deliberate, created by politicians who like the idea of giving their local cops an incentive to get tough? Were they mostly the idea of police departments themselves, who figured the revenue from fines would provide a net boost in their annual funding? Or did they just accrete over time, popping up whenever there was a budget crisis and then never going away?

Does anyone know?

We're Still at War: Photo of the Day for August 21, 2014

Thu Aug. 21, 2014 9:56 AM EDT

The US Marines practice weapon proficiency during a crew-served weapons familiarization shoot to serve in the Asia-Pacific Region. (US Marine Corps photo by Cpl. Henry Antenor)

Motown's First No. 1 Hit, "Please Mr. Postman," Released 53 Years Ago

| Thu Aug. 21, 2014 6:01 AM EDT

The knockout girl group song "Please Mr. Postman," by the Marvelettes was released on August 21, 1961. Later in the year it went on to become the first Motown single to hit #1 on Billboard's Hot 100 chart.

 

Motown wouldn't hit the #1 position again until 1963, when Little Stevie Wonder's "Fingertips, Pt. 2" reached the top. From that point on, Motown was a non-stop hit machine with at least one #1 hit on the charts each year through 1974. 1970 proved to be Motown's best year–they dominated Billboard with seven top hits.

The Marvelettes followed "Please Mr. Postman" with "Twistin' Postman," in an effort to cash in on their own song and the popularity of "The Twist." That song hit #34 on the pop charts, and was followed by their bigger hits "Playboy" and the current oldies radio staple "Beechwood 4-5789." Like a lot of groups of the era, the Marvelettes had a hard time cracking the charts once the British Invasion hit States.

 

Should Pregnant Women Eat Zero Tuna?

| Thu Aug. 21, 2014 6:00 AM EDT

Food-safety experts at Consumer Reports crunched the numbers on mercury levels in seafood—and they have a new recommendation for pregnant women: Don't eat tuna at all.

The FDA recommends that pregnant and nursing women consume between 8 and 12 ounces of fish per week to provide proper nutrition for a baby's brain development and overall health. But some fish are very high in mercury, a neurotoxin that can lead to serious cognitive problems and birth defects in children and babies. And the mercury levels in oceans are rising—humans have tripled the mercury content in oceans since the Industrial Revolution—leading to further mercury absorption by predators like tuna.

Consumer Reports provides charts to help curb mercury levels during fish consumption. Courtesy of Consumer Reports

A team at the Consumer Reports National Research Center analyzed data from the Food and Drug Administration's chart on mercury levels in seafood and determined that consuming 6 ounces of albacore tuna in a week—the level recommended as safe by the FDA for pregnant women—would put a 125-pound woman over the Environmental Protection Agency's "safe" mercury threshold by more than two ounces.

Canned light tuna is thought to offer a lower mercury tuna option, but 20 percent of the FDA's samples of it contained almost double the average level of mercury that it's supposed to. Some samples had more mercury than the king mackerel—one of the FDA's top four high-in-mercury fish—which the agency advises pregnant women and children to avoid. Canned tuna constitutes the second most frequently consumed seafood product in the United States.

Some experts like Deborah Rice, a former senior risk assessor for the EPA, think that research since 2001 suggests that there is "no question" that the FDA and EPA's current limit for mercury consumption is "too high," she told Consumer Reports. The magazine is urging the FDA and EPA to recommend that pregnant women avoid eating any tuna—and to provide more safety information concerning tuna for pregnant women, children and people who eat a lot of fish (24 ounces of fish, around seven servings, or more per week).

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Gun-Pointing Cop Who Threatened to Kill Ferguson Protesters Is Suspended

| Wed Aug. 20, 2014 7:13 PM EDT
Police point guns at protesters in Ferguson, Missouri, early Wednesday morning.

The protests in Ferguson, Missouri, were relatively calm yesterday, especially compared to previous nights where heavily armed police have responded to protests with tear gas and arrests. But there was at least one police officer who took things a little too far. In this video, an unidentified officer points a rifle at journalists and others walking in the street and warns, "I'll fucking kill you." (NSFW language in the clip.)


Somebody off-camera asks for his name and the officer replies, "Go fuck yourself." Soon afterward, a county police sergeant comes and ushers the officer away. Earlier today the ACLU asked for the officer to be removed from Ferguson. The St. Louis County Police Department has announced that the officer has been suspended, according to the Washington Post:

Housekeeping Note

| Wed Aug. 20, 2014 3:28 PM EDT

That's it for the day. I'm off to the hospital for yet another test that will undoubtedly show nothing wrong with me. But you don't know until you look, do you? See you tomorrow.

Do Liberals Rely Too Much on Guilt?

| Wed Aug. 20, 2014 2:05 PM EDT

Tim F. makes an observation:

Spend some time following internet conversations about your liberal cause of the day (global warming, racial injustice, etc) and eventually someone will get to the nut of why the issue pisses many people off: they think activists want them to feel guilty and they don’t want to feel guilty. That’s pretty much it. A huge part of our failure to do anything about the climate disaster or racist asshole cops comes from people protecting their delicate ego.

Yep. But I'd take this a little more seriously, because it's probably something that genuinely hurts lefty causes. It's human nature to get defensive when you feel guilty, and it's hard to recruit defensive folks to your cause. If this were only an occasional problem, that would be one thing. But let's be honest: We really do rely on guilt a lot. You should feel guilty about using plastic bags. About liking college football. About driving an SUV. About eating factory-farmed beef. About using the wrong word to refer to a transgender person. About sending your kids to a private school. And on and on and on.

We all contribute to this, even when we don't mean to. And maybe guilt is inevitable when you're trying to change people's behavior. But it adds up, and over time lefties can get to seem a little unbearable. You have to be so damn careful around us!

I don't really have any useful advice about this. Maybe there's nothing much to be done about it. But egos, delicate or otherwise, are just a part of the human condition. We ignore them at our peril.

We're Still at War: Photo of the Day for August 20, 2014

Wed Aug. 20, 2014 1:40 PM EDT

After a training mission, F-15 Eagles of the US Air Force fly over wildland fires in Southern Oregon. (High-G Productions photo by Jim "Hazy" Hazeltine.)