What Counts As a Bailout?

Things moved very fast early Sunday evening. As you likely now know, the troika of the Fed, the FDIC and the Treasury axed a second bank — Signature Bank of New York — and decided to guarantee all deposits at Signature and Silicon Valley Bank because of “systemic risk” to the whole banking system. As noted yesterday, the issue at least with Silicon Valley Bank (SVB) seemed to a significant degree to be one of liquidity. It appears to have assets to cover the great majority of its deposits. So the costs to the FDIC should be limited, and perhaps there’s no cost at all. I’m less clear on the exact situation at Signature Bank, which had more exposure to the imploding crypto sector. But I assume it’s broadly similar.

To me the most interesting and noteworthy issue to emerge over the last 48 hours is the debate or really the unclarity about what counts as a “bailout.” The dictionary definition is simple enough. There is no specific or technical meaning. It just means action to relieve someone or some entity in financial distress. But what became clear this weekend is that quite a few people have decided post-Global Financial Crisis that a bailout is relief for shareholders. Making depositors whole is not. That’s just making depositors whole. As long as the bank’s owners get wiped out or take a severe hit, it’s not a bailout.

But there’s little basis for that distinction.

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Ohio Groups Overcome Another Hurdle In Push To Enshrine Abortion Protections In State Constitution

Ohio groups working in concert to codify abortion protections in the state’s constitution overcame one of the final administrative hurdles Monday when the Ohio Ballot Board cleared them to start collecting signatures. 

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DOJ Says Jan. 6 Footage Aired By Fox News Creates Misleading Narrative

Justice Department attorneys shut down the notion that the seditious conspiracy trial against the five Proud Boys leaders should be dismissed based on the footage Fox News host Tucker Carlson aired on his show last week, arguing that Carlson painted a misleading picture of a rioter’s activities that day.

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Trump-Appointed Judge Tries To Keep Hearing In Major Abortion Pill Case Secret 

Judge Matthew Kacsmaryk hasn’t shied from the spotlight in the few years since he was confirmed — after a few false starts — to the federal bench under then-President Donald Trump.

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Michigan Man Arrested After Alleged YouTube Threats Against Whitmer, Biden, And Others

A Michigan man with a history of mental illness was arrested by the FBI on Thursday after he allegedly made threatening comments against federal agents, the LGBT community, and Democratic politicians including President Joe Biden and Michigan Gov. Gretchen Whitmer.

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A Christian Chatbot Has Some Bad News For Republicans

The chatbot craze has gone biblical. A new bot “responds with a scripture based on how you feel.” It uses the King James version of the Bible, the translation preferred by many literalists and Christian nationalists, who claim it is the most reliably true to God’s word. But there’s some bad news for Republicans who think the wave of draconian new laws cracking down on reproductive and transgender rights are rooted in biblical principles. ChatKJV says they’re wrong.

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Michael Cohen To Testify To Stormy Daniels Grand Jury

A lot of things happened. Here are some of the things. This is TPM’s Morning Memo.

Final Stages Before Trump Indictment

Former Trump lawyer Michael Cohen, the central witness in the Stormy Daniel hush money scandal, is expected to testify Monday afternoon to a Manhattan grand jury investigating the scheme to keep the porn actress quiet in the closing days of Donald Trump’s 2016 campaign.

Cohen’s testimony, coupled with prosecutor’s invitation for Trump himself to testify, suggest not only that Manhattan District Attorney Alvin Bragg is closing in on a charging decision but that he is likely to seek an indictment of Trump.

  • AP: “Cohen has been meeting regularly with Manhattan prosecutors in recent weeks, including a daylong session Friday to prepare for his grand jury appearance.”
  • WSJ: “Once Mr. Cohen testifies, the grand jury will have heard from every person who played a key role in the hush-money deal and its aftermath.”
  • NYT: “It would be highly unusual for a prosecutor in a high-profile white-collar case to go through a weekslong presentation of evidence — and question nearly every relevant witness — without intending to seek an indictment.”

Jean Carroll Can Use Access Hollywood Tape

The judge ruled Friday that the Access Hollywood tape in which Donald Trump brags about grabbing women by the “pussy” is admissible in the upcoming trial of E. Jean Carroll’s defamation claim against him. Also admissible: the testimony of two other women who have accused Trump of sexual assault.

Judge Shoots Down Media Access To Secret MAL Proceedings

Politico: “A federal judge has rejected a bid by media organizations to gain access to records related to a dispute over compliance with a grand jury subpoena for classified documents stored at former President Donald Trump’s Florida estate.”

Suddenly Everyone Is A Banking Expert

A lot has transpired very quickly since I flagged the Silicon Valley Bank mess to you in Friday’s Morning Memo. I’m no banking regulatory expert, so I’m not going to devote a lot of space here to it, but it is a truly important story. The key developments:

  • Friday: California shut down Silicon Valley Bank and the FDIC immediately stepped in.
  • Sunday: The Treasury Department announced that the FDIC would backstop all depositors in SVB, not just depositors insured by the FDIC.
  • At the same time, Treasury announced it was taking similar steps with New York’s Signature Bank, which was heavy into crypto: It was shut down and all depositors were covered, not just insured ones.
  • Monday: San Francisco’s First Republic Bank is looking wobbly this morning.

A few cautions: Don’t be quick to point fingers or buy instant analyses or easy conclusions. A complex interlocking set of factors are contributing to the current crisis, and there’s no one culprit or villain.

That said, there’s a lot of good reporting and smart analysis out there. You might consider Matt Levine’s Money Stuff as a primer. We’ve long relied on Dennis Kelleher, who’s been fighting the fight on regulating the financial system for more than a decade.

Biden To Make Remarks On Bank Failures This Morning

The President is scheduled to make remarks about the banking crisis at the White House this morning sometime after 8 a.m. ET before flying to San Diego to meet with the prime ministers of the UK and Australia.

Greg Abbott’s Big Border Wall Scheme

TPM’s Josh Kovensky has been all over Texas Gov. Greg Abbott’s gambit to declare himself the true heir of Donald “Build The Wall” Trump:

Feb. 28: Abbott Tries To Resurrect Trump Border Wall Project Through Bizarre Use Of State Resources

March 7: Abbott Has Spent Nearly $1 Billion To Complete Trump’s Wall. He’s Just Getting Started.

March 11: Texas Has Massive Wall-Building Contracts. But It Doesn’t Have Anywhere To Put A Wall.

Michigan Man Arrested After YouTube Threats Against Whitmer And Biden

Randall Robert Berka II was arrested and charged with federal firearms violations after Google tipped off the feds that he was making threatening remarks on YouTube, according to news reports and court filings.

There’s a lot going on here (emphasis mine):

Investigators went to Berka’s house, in Huron County, and spoke with his mother, who said she had purchased a handgun and three long guns for her son in the past year. She said he keeps the guns, as well as ammunition and body armor, in his room at their house.

Berka was involuntarily committed for mental health treatment in 2012, court documents say, and his mental health history is what prohibits him from having a gun. His mother told investigators she didn’t think his treatments are working and that he should be arrested and imprisoned.

The YouTube rants also included threats against FBI agents and the LGBT community.

Deeply Troubling

Credit to MSNBC’s Lisa Rubin, who flagged some weirdness on the docket in the Texas abortion-pill case. It turned out to be quite an unusual move from the already-controversial U.S. District Judge Matthew J. Kacsmaryk:

WaPo: In an unusual move, judge delays public notice of abortion-pill hearing

NYT: Judge in Abortion Pill Case Set Hearing but Sought to Delay Telling the Public

Law Dork: Texas judge ignores his own rules to keep mifepristone case moves hidden from public

What The Post-Dobbs World Looks Like

A Texas man is suing three friends of his ex-wife under the state’s wrongful death statute for helping her to obtain abortion medication.

BBC Playing Catch Up To TPM

The BBC decided to profile Aleksandar Savic, the Serbian man who inspired Jan. 6 rioters then emigrated to Texas. But more than a year after the TPM profile of Savic, the BBC came up short:

Although the couple refused to answer our questions, last year Mr Savic answered questions from left-wing website Talking Points Memo in which he denied inciting violence, saying that “angry people” can be inspired by anything from “books” to “rap songs.”

LOL Pence

The former vice president took the opportunity of being in front of a bunch of political journalists in DC over the weekend to lambaste Donald Trump for Jan. 6. Surely political reporters aren’t THAT gullible? Wrong!

Politico did one of its patented “Inside the …” stories: “Inside Pence world’s decision to go hard at Trump at the Gridiron.” It didn’t mention until the 16th paragraph in an 18-paragraph story that Pence is actively fighting a subpoena from the grand jury investigating Jan. 6.

Was Fox News Good Or Just Lucky?

Dominion Voting System’s massive defamation lawsuit against Fox News has revived the debate among campaign and election types over whether the network got it right when it called Arizona for Biden so early in 2020.

What Price Should Fox News Pay?

Grid News: Should Fox News hosts who pushed 2020 election lies be allowed to keep journalistic accolades?

Good Read

A ProPublica review of local officials who refused to certify 2022 election results found that most did not face formal consequences. Experts explain what that means for the future of American elections.

The Nord Stream Sabotage Mystery

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Pence—Once Again—Critiques Trump In Public While Helping Him In Private

Former Vice President Mike Pence criticized Donald Trump’s role in the Jan. 6 attack and recent attempts to rewrite what happened that day during a Saturday night speech. 

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How to Think about the Silicon Valley Bank Collapse

Reading through the often frenzied commentary about the collapse of Silicon Valley Bank (SVB), it’s important to note how much that chatter conflates or confuses what are distinct if complex issues. The most high octane issue is watching the dyed-in-the-wool libertarians and anti-regulation voices who run Silicon Valley suddenly demanding a bailout. Specifically, many are demanding that the FDIC backstop all the bank’s deposits rather than simply those up to $250,000 because of the number of startups which could quickly go under without money to make payroll and cover other ongoing costs of doing business. (SVB’s deposits, roughly 95% of which are uninsured, are heavily concentrated in the tech start-up ecosystem.) It’s a hypocrisy that merits all sorts of guffaws and mockery. But hypocrisy isn’t new or terribly surprising.

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Some Election Officials Refused to Certify Results. Few Were Held Accountable.

This article first appeared at ProPublica. ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.

A week and a half after last November’s vote, members of the Board of Elections in Surry County, North Carolina, gathered in a windowless room to certify the results. It was supposed to be a routine task, marking the end of a controversial season during which election deniers harassed and retaliated against the county’s elections director. Not long into the meeting, however, a staffer distributed a letter from two board members stating that they were refusing to certify.

According to the letter, the two members had decided — “with regard for the sacred blood shed of both my Redeemer and His servants” and “past Patriots who made the ultimate sacrifice”— that they “must not call these election results credible and bow to the perversion of truth.”

In their view, a federal judge who’d struck down a North Carolina voter ID law for discriminating against minorities had transformed the state’s election laws into “a grotesque and perverse sham.” Tim DeHaan, one of the two board members who signed the letter, explained at the meeting, “We feel the election was held according to the law that we have, but that the law is not right.”

This argument failed to win over the three Democratic board members, according to a recording of the meeting. DeHaan eventually agreed to join the three on a technicality, and the board certified the election with a 4-1 vote. Jerry Forestieri, the Republican board secretary who also signed the letter, held out.

DeHaan and Forestieri declined to comment and did not respond to written questions.

Before 2020, local election officials seldom voted against certifying results. But in 2022, conservative officials in North Carolina, Arizona, Nevada, Pennsylvania and New Mexico refused to do so. Some admitted to refusing to certify for political reasons. In all the 2022 cases, the election results eventually were certified, sometimes under a court order.

Election law experts say that these disruptions reveal a weakness in the American electoral system, which relies on thousands of local officials to certify the totals in their counties and municipalities before their results can be aggregated and tallied for state and federal elections.

Local elections officials “could create chaos” all the way up the chain by refusing to certify, said Alice Clapman, a senior counsel in election law at the Brennan Center for Justice. “And in that chaos you have more room for political interference.” Five legal experts described to ProPublica scenarios in which legislatures, courts, secretaries of state or governors could use a failure to certify at the local level to exert partisan influence.

Clapman said that even if refusals to certify don’t affect election outcomes, they can violate state laws and can amplify and validate harmful misinformation that feeds election denialism because of the imprimatur of the officials’ offices.

A ProPublica review of 10 instances of local officials refusing to certify 2022 results in four states found that, for the majority of them, the state election authority did not ultimately pursue official consequences. Two of them have been referred for criminal prosecution, but the attorney general in that state would not comment on whether there is an open investigation. And two — the ones in Surry County — are facing potential removal from their posts by the State Board of Elections.

“There needs to be some sanction when there is lawlessness,” said Richard L. Hasen, an election law professor at the University of California, Los Angeles, and director of the Safeguarding Democracy Project. “If you allow these things to take place without any sanction, then you invite more serious rule-breaking in the future.”

After the DeHaan and Forestieri letter, Bob Hall, the former executive director of the watchdog group Democracy North Carolina, submitted a complaint to the State Board of Elections to start a disciplinary process, as permitted by North Carolina law if board members commit an alleged breach of duty. An attorney for Hall argued in a subsequent document that “if left unchecked, Forestieri and DeHaan may be the first of many board members throughout the state and across the political spectrum who cannot be trusted to faithfully certify election results.”

That led the state board to summon Forestieri and DeHaan to its headquarters in the capital, a roughly three-hour drive from their rural home, for a hearing last month.

At the beginning of the proceeding, DeHaan argued that the hearing itself was “illegal” because it was supposed to be held in the county the board members are from. The Democratic board chairman agreed and voted with a Republican colleague to move the hearing to Surry County. A date has not yet been set. “The relocation to Surry County shows that this isn’t normal,” said Christopher A. Cooper, a professor specializing in North Carolina politics at Western Carolina University. “There isn’t a long history of examples of this sort of thing to lean on.”

Experts point out that efforts to hold local officials accountable for not certifying their elections have been of a patchwork nature across the nation. “I think states are trying to figure out what to do and are approaching it differently, like a prosecutor making a judgment on a case-by-case basis whether to bring a case or not,” said Derek T. Muller, a professor at the University of Iowa College of Law who has researched legal options for ensuring that local officials certify elections. “States need to figure out how to bring these cases in a fair, consistent and lawful way.”

In Cochise County, a rural part of Arizona on the Mexican border, a pair of county supervisors refused to certify their November 2022 results despite state officials warning them multiple times that doing so would be illegal under state law. In early December, a court ordered them to certify, but one supervisor, Tom Crosby, still skipped the vote.

The next day, the state elections director, at the urging of a former Republican Arizona attorney general, sent a letter to the state attorney general referring the supervisors for criminal investigation, arguing that they had committed “potential violations of Arizona law.” The letter concluded, “This blatant act of defying Arizona’s election laws risks establishing a dangerous precedent that we must discourage” by taking “all necessary action to hold these public officers accountable.” A spokesperson for the Arizona Attorney General’s Office wrote that they “cannot confirm or deny any potential investigation” that may have resulted from the letter.

In January, a group of Cochise County voters launched a petition to recall Crosby. As of late February, it had approximately a quarter of the 6,000 signatures it would need by early May to result in a new election, according to Eric Suchodolski, the chairperson of a committee leading the effort. “It’s our best recourse as citizens,” he said. “I didn’t think the authorities would ultimately do something, and even if they did, it can take awhile.”

In response to a request for comment, Crosby said: “If I get into defending myself it will never end. I’ve already answered all this stuff.” In the past, he has disputed the validity of the certification of the county’s voting machines, despite assurances from the state.

While in North Carolina and Arizona there are ongoing efforts to hold accountable local officials who didn’t certify their elections, Nevada and New Mexico decided not to pursue such efforts.

In Nevada, one Republican commissioner in Washoe County and another in Nye County refused to certify, though in both cases the other four commissioners outvoted them. A spokesperson for the Nevada Secretary of State’s Office said that “our office is not aware of any legal consequences for that action” by the commissioners.

In Otero County, New Mexico, the county’s three commissioners initially voted unanimously against certifying the June 2022 primary elections. This followed months of disputes about election security driven by conservative activists who also fueled protests in Surry County.

New Mexico law requires commissioners to approve election results unless they can point to specific problems. The Otero commissioners only raised debunked concerns about hacked voting machines, with one of the officials, Couy Griffin, referencing his “gut feeling.” The New Mexico secretary of state subsequently asked the state’s Supreme Court to step in, and it ordered the commissioners to certify. The secretary of state also sent a letter to the state’s attorney general notifying him of “multiple unlawful actions by the Otero County Commission” and asked for “a prompt investigation.” Faced with this, two of the commissioners switched their votes, certifying the election. Griffin did not. (In Sandoval County, on the other side of the state, one commissioner voted against certification, though the four others on the panel outvoted him.)

Griffin did not respond to a request for comment.

The New Mexico Secretary of State’s Office decided not to further pursue “punitive action” against the officials who did not certify, according to Alex Curtas, its communications director, because “our concern was getting the election certified, so that’s where that ended.”

“Once it became clear that we had that state Supreme Court precedent and this wasn’t really a widespread thing, just two hard-right commissioners, we felt comfortable that this wouldn’t be a major problem in the general election,” he said, “and in our perspective it became a bit of a moot point.”

Griffin eventually was subsequently removed from public office and banned from holding it by a judge’s order as part of sentencing for participating in the Jan. 6 insurrection.

Part of the challenge for states seeking to crack down on officials who refuse to certify elections is that many of the laws that provide recourse were written more than a century ago. “We’re dealing with modern issues with very old statutes,” said Quinn Yeargain, a professor at the Widener University Commonwealth Law School in Pennsylvania.

Some states recently enacted new regulations. Last year, Colorado legislators passed the Election Security Act, which mandates that the secretary of state certify a county’s results if it misses the deadline to do so. In Michigan, voters passed a wide-ranging voter-protection ballot proposal in November that made certification a “ministerial, clerical, nondiscretionary duty.” This clause was in response to conservative members of a county canvassing board for Detroit refusing to certify the 2020 presidential election for a few hours, momentarily threatening to throw its certification into chaos.

Election legal experts note that holding local election officials accountable for voting against certifying elections will continue to be complicated. Muller, the Iowa law professor, favors what he calls the “least invasive process,” one that would allow courts to replace local officials who refuse to certify elections with other officials who would do their duty.

But he said any process that results in an official being forcibly replaced is likely to carry political risks, including the potential to abuse the system to disempower political opponents.

“We haven’t seen fallout from local election officials being removed yet, because these processes are just beginning,” Muller said. “But we could see that soon.”