Bank CEO Charged With Approving Risky Manafort Loans In Hopes of Landing Army Job

Stephen Calk, the one-time CEO of the Federal Savings Bank of Chicago, has been charged by the Justice Department of approving risky loans in exchange for a position in the Trump administration. Prosecutors on Thursday unsealed the indictment, saying Calk approved $16 million in high-risk loans, reportedly to former Trump campaign manager Paul Manafort, with the expectation of being named Secretary of the Army or another high ranking position. He did not get the position, but was part of Trump’s economic advisory team.

“Calk went to great lengths to avoid banking violations in an attempt to secure a senior position in a presidential administration,” said FBI Assistant Director William F. Sweeney Jr. in a statement. “He curried favor with an influential borrower, exploited his position as CEO of the Bank and the Holding Company, and exercised control over the Bank and the Borrower’s loans, intentionally turning his back on the many red flags posted along the way. His attempt at petitioning for political favors was unsuccessful in more ways than one – he didn’t get the job he wanted, and he compromised the one he had.” Calk is charged with one count of financial institution bribery, which carries a maximum sentence of 30 years in prison.

Manafort, identified only as “the borrower” in the release announcing the indictment) stopped making loan payments to the bank after he was charged in October 2017. The bank foreclosed on what it could, but ended up writing off over $12 million as a loss.

https://compliancex.com/bank-ceo-charged-with-approving-risky-manafort-loans-in-hopes-of-landing-army-job/

Bank CEO Stephen M. Calk Charged With Corruptly Soliciting A Presidential Administration Position In Exchange For Approving $16 Million In Loans

https://www.justice.gov/usao-sdny/pr/bank-ceo-stephen-m-calk-charged-corruptly-soliciting-presidential-administration

The SEC Never Collects On Nearly Half Of The Fines It Levies

It used to be bad enough that the SEC wouldn’t show up to “regulate” until schemes like Madoff and Enron had already collapsed on their own. Now, the inefficiency at the agency looks to have gone one step further, as we are finding out the SEC “never collects” much of the money that it seeks in fines from wrongdoers, according to the Wall Street Journal. The SEC took in just 55% of the $20 billion in fines it sought through settlements or judgments in the five years that ended September 2018, according to agency statistics. In the five years prior to that, the SEC collected on just 60% of the $14.6 billion in fines it issued. And 2018 has been far worse. The commission took in just 28% of the almost $4 billion that it fined, marking the lowest rate in a decade, resulting from a $1.7 billion settlement with Petrobras that “may never require payment to the SEC”.

Instead, the settlement allows the company to give the money to Brazilian authorities and other regulators. Those who were behind ponzi schemes or those who went to prison on criminal charges are the unlikeliest to pay fines. And the main challenge for the SEC is that they don’t have the right to seize property or assets to get payment. Instead, they have to rely on filing liens against defendants or going to court to get contempt orders. Brad Bennett, a former enforcement director at the Financial Industry Regulatory Authority said: “It’s difficult, and they have to be especially persistent to get the numbers up.”

The Government Accountability Office criticized the SEC in 2014 for lapses in its record keeping that understated the amounts owed by defendants by "at least $42 million". But don't worry, according to the report, the commission has been "building a new computer system to track unpaid fines" since then. Ignoring that this was more than a half decade ago, perhaps someone could have informed the SEC that electronic spreadsheets have been around for nearly 4 decades.

Instead, the agency has written off more than $10 billion in fines since 2019, including monetary penalties and disgorgement. At the end of 2018, the agency was owed about $1.5 billion but only expected to collect $228 million, according to its financial statements. John Nester, an SEC spokesman, said: “We have a committed group of attorneys and paralegals in the dedicated office of collections who work hard to collect these funds, many of which will be distributed to harmed investors.”

The SEC often measures its success by how much it can levy in fines and how much it can collect. In the case of the Petrobras settlement, the SEC is taking credit for a fine that it will likely never collect. Excluding the case from 2018 data, the SEC's collection rate would’ve been closer to about 51%.

And it is an arduous process. For example, in April the SEC asked a federal judge in Georgia to enforce a five-year-old judgment against an advisor who is required to pay more than $360,000. The defendant, Ernie Montford, has been paying the SEC monthly from his Social Security income, but that has only yielded about $21,000 so far. Montford, 71 years old, said: “The SEC stomps on little firms like mine. If I could have paid more, I would have paid them.” The CFTC, for comparison, boosted its recovery rate in 2018 after years of volatile performance. It collected $857 million in 2018, topping 90% of the fines that it issued. That amount collected may include cash tied to cases that were concluded in prior years, according to the way the CFTC reports its numbers. In 2016, the agency reported collecting about 479 million, or 37% of the fines that it ordered. Michael Shaub, a professor of accounting and accounting ethics at Texas A&M University, concluded: “From a public-policy perspective, people would rather see bad guys fund the SEC than good guys.”

https://www.zerohedge.com/news/2019-05-21/sec-never-collects-nearly-half-fines-it-levies

Criticisms of new SAT adversity score continue to mount

The recent decision by the Scholastic Aptitude Test to add a so-called adversity score to test takers’ results for college admissions’ officials to weigh has been almost universally panned. Few think it’s a good idea to give students an “overall disadvantage level” ranking.

First, conservative scholar Heather Mac Donald laid out several big problems with the new index, noting it’s basically affirmative action and reinforces the soft bigotry of low expectations. The College Fix’s senior reporter Christian Schneider also weighed in, calling it “just another invitation for fraud.”

“Clearly, lying about one’s racial identity is wrong – but in a country where racial makeup is growing more complex and college admittance is as competitive as ever, students can hardly be blamed for trying to give themselves a leg up,” he opined. “Colleges are basically begging to be duped – this is akin to publishing your HBO NOW login credentials online and politely asking people not to use your password to watch ‘Game of Thrones.'”

Over at The Daily Signal, Kenny Xu, a math major at Davidson College, pointed out that “the SAT’s new ‘adversity score’ isn’t just unfair. It’s self-destructive.” Xu wrote: Only a few of the 15 factors used to determine a student’s adversity score have been revealed. But it’s unlikely that any of them will include irregular hardships, such as “My father died when I was little” or “I was bullied in middle school.” The College Board’s overreaching attempt to determine what constitutes “adversity” for millions upon millions of high school students in America will inevitably capture only certain visible, easily researchable fractions of a student’s experience—a small portion of who they really are. After all, the aspects that usually affect students’ lives the most are not easily researchable and are not stored in the public databases the College Board plans to mine. The sweeping, collective generalizations this adversity score will make about a person will hinder a student’s ability to craft his own story and advocate for himself.

The Wall Street Journal also came out against the plan. Its editorial board argued that the score “looks like a way to undermine one of the last objective measures of academic merit.” Also weighing in, deputy editor of The Journal’s editorial page Daniel Henninger linked the new adversity index to the recent college admissions scandal to paint a grim picture: The admissions scandal and the uproar over the new index literally have nothing to do with each other but in fact are about the same question: Are colleges, in pursuit of poor, mostly black students, putting a thumb on the admissions scales in a way that dilutes if not eviscerates the idea of achievement based on individual merit? The grim reality of what no doubt were liberal, socially aware parents resorting to bribes says, yes, higher education has a credibility problem. … Accurately identifying and rescuing diamonds in the rough isn’t the worst way to level life’s playing field. But higher ed’s hyperactive race-consciousness has damaged the public’s faith in the admissions process. And will Asian students get shafted no matter what because they live on the wrong end of the bell curve?

Even a writer for Slate isn’t a fan: “Though these metrics appear to be a well-intentioned effort to guide schools toward more holistic admissions standards, it’s unsettling that a student’s fate could be determined by an opaque algorithm.”

The adversity index, or overall disadvantage level, or environmental context score — or whatever it’s being called now — is still a limited pilot program. But the initial responses and criticisms show most people thinks it’s a bad idea. If the SAT hopes to retain its relevancy, it should correct course.

https://www.thecollegefix.com/criticisms-of-new-sat-adversity-score-continue-to-mount/

Trump-Xi trade war summit at G20 in Japan still up in the air as ‘conditions not right’, China adviser says

A meeting between Chinese President Xi Jinping and US President Donald Trump at the G20 summit in Japan next month is still up in the air as the “current conditions” are not right, a Chinese state researcher said. “Given the current conditions, what can really come out of the G20?” said Zhang Yansheng, the chief research fellow at the state-backed China Centre for International Economic Exchanges think tank, at a government-arranged press briefing on Wednesday. “We in the East need to save our face whereas the Americans have complete disregard for that. I think we need to wait and see.” While Zhang’s agency is not directly involved in planning Xi’s overseas trips, his comments suggest that Beijing is not in a rush to arrange a formal sit-down summit between the two leaders as they did in Argentina in December, playing down expectations that Trump and Xi are likely to meet next month to break the impasse in the trade talks.

China’s foreign ministry spokesman Lu Kang said on Thursday that China is open to resuming the trade talks, but that the sanctions the US placed on Huawei and other Chinese firms last week are “not helping to create a conducive environment for negotiations”. China’s Ministry of Commerce spokesman Gao Feng did not answer a question at a briefing, also on Thursday, over whether Xi and Trump will meet in Osaka. The dispute between Washington and Beijing further escalated last week when Trump banned US companies from using foreign telecommunications equipment deemed to be a national security risk. He also added China’s Huawei, the world’s largest telecommunications equipment maker, to a trade blacklist. As a result, Huawei suppliers including Google, have suspended their shipments of certain hardware components, software and services.

Trump, though, said last week that he would meet Xi on the sidelines of the G20 summit, which will take place in Osaka on June 28 and 29. “Maybe something will happen,” Trump said. “We’re going to be meeting, as you know, at the G20 in Japan and that’ll be, I think, probably a very fruitful meeting.” A formal bilateral summit between Trump and Xi in Osaka would be seen as a sign of significant deceleration in tensions between the world’s largest economies. The summit in Buenos Aires in December, which was conducted in the form of a sit-down dinner, resulted in a three-month tariff truce which was then extended again when the original deadline was reached.

A meeting between Chinese President Xi Jinping and US President Donald Trump at the G20 summit in Japan next month is still up in the air as the “current conditions” are not right, a Chinese state researcher said.

“Given the current conditions, what can really come out of the G20?” said Zhang Yansheng, the chief research fellow at the state-backed China Centre for International Economic Exchanges think tank, at a government-arranged press briefing on Wednesday. “We in the East need to save our face whereas the Americans have complete disregard for that. I think we need to wait and see.”

While Zhang’s agency is not directly involved in planning Xi’s overseas trips, his comments suggest that Beijing is not in a rush to arrange a formal sit-down summit between the two leaders as they did in Argentina in December, playing down expectations that Trump and Xi are likely to meet next month to break the impasse in the trade talks.

China’s foreign ministry spokesman Lu Kang said on Thursday that China is open to resuming the trade talks, but that the sanctions the US placed on Huawei and other Chinese firms last week are “not helping to create a conducive environment for negotiations”. China’s Ministry of Commerce spokesman Gao Feng did not answer a question at a briefing, also on Thursday, over whether Xi and Trump will meet in Osaka.

The dispute between Washington and Beijing further escalated last week when Trump banned US companies from using foreign telecommunications equipment deemed to be a national security risk. He also added China’s Huawei, the world’s largest telecommunications equipment maker, to a trade blacklist. As a result, Huawei suppliers including Google, have suspended their shipments of certain hardware components, software and services.

Trump, though, said last week that he would meet Xi on the sidelines of the G20 summit, which will take place in Osaka on June 28 and 29.

https://www.scmp.com/economy/china-economy/article/3011531/trump-xi-trade-war-summit-g20-japan-still-air-conditions-not