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      After Lebanon’s Collapse, Can an Election Fix the Country?

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      On Sunday, Lebanese voters get their first chance to pass judgment on lawmakers since the economy fell apart. Few expect things to improve.BEIRUT, Lebanon — Onstage, Lebanese politicians spoke of upholding national sovereignty, fighting corruption and fixing the state. Their leader said he would fight to disarm Hezbollah, the political party that is also Lebanon’s strongest military force.But those concerns were far from the mind of Mohammed Siblini, 57, who like many Lebanese had watched his life fall apart over the past two years as the country collapsed.The national currency’s free-fall meant that his monthly salary from a rental car company had fallen to $115 from $2,000, he said. The state’s failure to provide electricity meant that most of his earnings went to a generator to keep his lights on. What was left failed to cover the small pleasures that had been, until recently, a normal part of life.“I want meat!” Mr. Siblini yelled at the politicians. “Get us one kilogram of meat!”On Sunday, Lebanon votes for a new Parliament for the first time in four years. It is hard to overstate how much worse life has gotten for the average citizen in that period, and how little the country’s political elite have done to cushion the blow.The vote is the public’s first opportunity to formally respond to their leaders’ performance, so at stake is not just who wins which seats, but the larger question of whether Lebanon’s political system is capable of fixing its many dysfunctions.Few analysts think that it is, at least in the short term.Flags of the Lebanese Forces political party in Byblos, Lebanon, on Sunday. The election is the public’s first opportunity to pass judgment on their leaders since the economic collapse.Joseph Eid/Agence France-Presse — Getty ImagesThe country’s complex social makeup, with 18 officially recognized religious sects and a history of civil conflict, drives many voters to elect their coreligionists, even if they are corrupt.And in a country where citizens seek out a party boss to cut through bureaucracy or get their children government jobs, corruption actually helps established political parties serve their constituents.But the collapse has put new strain on that old system.The crisis began in late 2019, when protests against the political elite spilled into the streets of the capital, Beirut, and other cities.That exacerbated pressure on the banks, which had been engaging in creative accounting with the central bank to prop up the currency and earn unsustainable returns for depositors.Critics have called it a Ponzi scheme, and it suddenly failed. The value of the Lebanese pound began a decline that would erase 95 percent of its value, and commercial banks placed limits on withdrawals, refusing to give people their money because the banks had effectively lost it.The financial turmoil tore through the economy. Prices spiked, businesses failed, unemployment skyrocketed and doctors, nurses and other professionals fled the country for better salaries abroad.The state, which had never managed to provide 24-hour electricity, ran so low on cash that it now supplies barely any at all, even to power traffic lights.Making matters worse, a huge explosion in the port of Beirut in August 2020, also caused by gross mismanagement, killed more than 200 people and did billions of dollars in damage.A view of Beirut’s port on Friday. Official negligence led to the explosion there in August 2020, which killed hundreds.Mohamed Azakir/ReutersDespite losses that the government says total $72 billion, none of the banks have gone out of business, the central bank chief remains in his job, and none of the politicians who backed the policies that led to the collapse have been held accountable. Some of them are running in Sunday’s election — and are likely to win.Many of the candidates are familiar faces who would struggle to bill themselves as agents of change.They include Nabih Berri, the 84-year-old speaker of Parliament, who has held that job, uninterrupted, for nearly three decades; Ali Hassan Khalil, a former finance minister who worked to hobble the investigation into the cause of the Beirut explosion; and Gebran Bassil, the president’s son-in-law, whom the United States accuses of corruption and placed sanctions on last year. Mr. Bassil denies the accusation.Hezbollah, which has a substantial bloc in Parliament and is considered a terrorist organization by the United States and other countries, is fielding a range of candidates. Others are warlords from the Lebanese civil war, which ended in 1990, or, in some cases, their sons.Many voters are just fed up, and have little faith that their votes will make a difference.“A candidate comes now and says ‘I will do this and that,’ and I tell them, ‘Many came before you and couldn’t change anything,’” said Claudette Mhanna, a seamstress.She said she would like to vote for a new figure who came out of the 2019 protests, but because of the way the election is run, she has to vote for lists that include candidates she hates.“We are suffocating,” she said. “If I get myself to think about going and voting, I can’t think of who I would vote for.”Supporters of Hezbollah at a rally in Baalbek, Lebanon, on Friday.Francesca Volpi/Getty ImagesMany of those running have ties to the financial system, which Olivier De Schutter, a United Nations expert on poverty, said shared responsibility for the “man-made crisis” in Lebanon that had resulted in human rights violations.“Lifetime savings have been wiped out by a reckless banking sector lured by a monetary policy favorable to their interests,” he wrote in a report published last week. “An entire generation has been condemned to destitution.”On Friday, the Organized Crime and Corruption Reporting Project reported that a son of Lebanon’s central bank governor had transferred more than $6.5 million out of the country at a time when most depositors were locked out of their savings.Those transactions were carried out by AM Bank, whose chairman, Marwan Kheireddine, bought a Manhattan penthouse for $9.9 million from the actress Jennifer Lawrence in August 2020, when Lebanon’s economy was plummeting.Mr. Kheireddine has said the purchase was for a company he managed, not for him personally.Now he is running for Parliament, and he told The New York Times in an interview that he wants to use his experience to help fix the economy.“I’m experienced in finance,” he said. “I’m not going to make promises, but I will do my best to work hard to get the depositors’ money back.”For many Lebanese, party loyalty remains strong.“There’s no list more deserving of my vote than Hezbollah,” said Ahmad Zaiter, 22, a university student from Baalbek in eastern Lebanon.He said Hezbollah’s weapons were necessary to defend the country, and that the party had helped its supporters weather the crisis by providing cheap medication from Syria and Iran.“If there’s a party besides Hezbollah that is offering weapons to the government to strengthen it so we can defend ourselves or offering services, then where is it?” he said.Soldiers were deployed in Beirut on Saturday, the eve of the election.Mohamed Azakir/ReutersMany first-timers are running, too, marketing themselves as being cleaner and closer to the people. Most projections have them winning only a limited number of seats in the 128-member Parliament, and analysts expect them to struggle without the infrastructure of a political party.“I will be the people’s voice inside the Parliament, but I cannot promise that I will fix the electricity or the infrastructure,” said Asma-Maria Andraos, who is running in Beirut. “I cannot say that I will stop the corruption, which is deeply rooted in our system.”Many Lebanese who have the means have already left the country, and many more are seeking ways out. A recent poll by the research group Arab Barometer found that 48 percent of Lebanese citizens were seeking to emigrate. For those between ages 18 and 29, the percentage rose to 63 percent, the poll found.Fares Zouein, who owns a Beirut sandwich shop, said he intended to vote for his local political boss, whom he refused to name, because the man uses his position to help the neighborhood.“That’s our problem in Lebanon: If you don’t have someone to help you, you’re stuck,” said Mr. Zouein, 50.He, too, had little faith that the election would make life better.“This is why everyone in Lebanon has three goals in life: to get a second passport, to open a bank account abroad, and to send their children abroad for school,” he said. More

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      As Marine Le Pen Moves Closer to French Presidency, Putin Ties Persist

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      As elections approach Sunday, the far-right candidate is linked to the Russian president by a web of financial ties and a history of support that has hardly dimmed despite the war in Ukraine.PARIS — When Europe’s far-right leaders gathered in Madrid in January, they had no problem finding unity on the issues they hold dear, whether cracking down on immigrants or upholding “European Christian ideals.” But as Russian troops massed on the Ukrainian border, they were divided on one issue: the threat posed by President Vladimir V. Putin.Marine Le Pen, the extreme-right challenger for the French presidency, objected to a paragraph in the final statement calling for European solidarity to confront “Russian military actions on the eastern border of Europe.” Even in a gathering of illiberal nationalists, she was an outlier in her fealty to Mr. Putin.Now, on her campaign website, the leaders’ statement appears with that paragraph cut in an unacknowledged change to the text. This little subterfuge is consistent with an embrace of Mr. Putin so complete that even his ravaging of Ukraine has hardly diminished it.Over the past decade, Ms. Le Pen’s party, the National Rally, formerly the National Front, has borrowed millions from a Russian bank, and Ms. Le Pen has supported Mr. Putin’s annexation of Crimea in 2014, as well as his incendiary meddling that year in the Donbas region of eastern Ukraine, where just this week Russia redoubled its offensive.Her support for Mr. Putin is one thing in a time of peace and another in a time of war. Russia, a nuclear power, has invaded a European state, and Ms. Le Pen is closer than ever to her cherished goal of becoming president of France, having narrowed the gap with President Emmanuel Macron before the decisive round of the election on Sunday.Supporters of Ms. Le Pen at a campaign rally in Stiring-Wendel, France, on April 1. She has come closer to Mr. Macron in polls as a decisive election round nears.Andrea Mantovani for The New York TimesWith polls showing Ms. Le Pen gaining about 44.5 percent of the vote to Mr. Macron’s 55.5 percent, she is within range of the shocks that produced Brexit and Donald J. Trump’s victory in 2016. As in Britain and the United States, alienation and economic hardship have fed a French readiness to gamble on nationalist dreams.If Ms. Le Pen wins, which is not likely but possible, her victory will almost certainly fracture the allied unity engineered by President Biden in an attempt to defeat Mr. Putin. It would hand Mr. Putin by far his most important ally in Europe, one he could leverage in his aims to divide Europe from the United States and fracture Europe’s decades-old project of unity.France, a core member of the European Union and NATO, is suddenly the possible soft underbelly of the West.Julien Nocetti, a Russia expert at the French Institute of International Relations, said there was “a complete ideological alignment between Putin and Le Pen” — one that would be deeply worrying to France’s American and European allies.The Ukraine war has caused Ms. Le Pen to pivot a little by saying Mr. Putin crossed “a red line” with the invasion, but she still says her foreign-policy priority is a rapprochement with Russia once the fighting stops.Bodies being loaded onto a truck in Bucha, Ukraine, where evidence of Russian atrocities mounted. Ms. Le Pen said that Mr. Putin crossed “a red line” with the invasion but also that she will seek a rapprochement with Russia.Daniel Berehulak for The New York TimesSince Ms. Le Pen, 53, took over the leadership of her party in 2011, she has only deepened its Putin predilection, making four trips to Moscow and one to Crimea. She would support sanctions against Russia, she says, but not cutting off imports of Russian oil and gas, which she has equated with economic death for France.“We have to think of our people,” she said in a recent TV interview, a position consistent with the strong focus on pocketbook issues that has propelled her campaign. The majority of French people are more focused on getting to the end of the month than getting Russia out of Ukraine.Certainly, Ms. Le Pen vaunted her connection with Mr. Putin until he went to war on Feb. 24. She included a photo of herself shaking hands with him in her election brochure as evidence of her “international stature.” This handout disappeared abruptly from view after the Russian invasion.The photo was taken at the Kremlin on March 24, 2017. That was less than five weeks before the first round of the last presidential election, in which Mr. Macron defeated Ms. Le Pen by 66.1 percent to 33.9 percent. The National Rally leader said then that she would immediately review lifting “unjust” sanctions against Russia if elected.As for Mr. Putin, he said with a knowing smirk that Russia did “not want to influence events in any way.”Shopping at a supermarket in Livry-Gargan, Paris, in December. Most French voters are more concerned about the economy than the Ukraine war.Andrea Mantovani for The New York TimesJean-Maurice Ripert, the French ambassador in Moscow from 2013 to 2017, said in an interview that a fellow European ambassador, a close friend, had asked the Russian leader after the French election why he had backed Ms. Le Pen.“Because I had been told she was going to win,” Mr. Putin said.Certainly that is what he wanted. Ms. Le Pen, committed to “equidistance” between great powers and hostile to “America’s protectorate on European soil,” sees in Mr. Putin the defender of the nation-state, family and Christianity against border-eroding multilateralism and irreligious cultural decay.“It’s all about sovereignty,” said Marlène Laruelle, the French director of the Institute for European, Russian and Eurasian studies at George Washington University. “The sovereign state against international organizations; the sovereign traditional family against L.G.B.T.Q. rights.”Then there is the money. Unable to get a loan from French banks, Ms. Le Pen and several of her top aides scrambled for cash in Russia, accepting a 9.4 million euro loan, then $12.2 million, at a 6 percent interest rate, from the First Czech-Russian Bank in September 2014. It was supposed to be repaid by 2019.A branch of the First Czech-Russian Bank in Moscow, before it collapsed in 2016. Ms. Le Pen received millions in loans from the bank.Dmitry Serebryakov/TASS/Alamy Live NewsWallerand de Saint-Just, who was long the National Rally’s treasurer before leaving the position last year, negotiated the deal in Moscow. In a written answer to a question as to why French banks had refused any loan to the National Rally, he said “My experience with the six big French banking groups is that they obey orders from the political executive.”But given the lack of transparency and accountability in Russia’s financial sector — and Mr. Putin’s sway over it in his pay-to-play system — the sum has long raised hard questions of just how beholden Ms. Le Pen actually is to the Russian president, and whether some of her outspoken backing for him has been a consequence.I asked Ms. Le Pen this month at a news conference whether the outstanding loan did not create at least the impression of dependence on Russia, a liability for any future president?“Absolutely not,” she said. “I am totally independent of any link to any power.”In her current campaign, again unable to get a loan from a French bank, Ms. Le Pen turned to Hungary, where Viktor Orban, the anti-immigrant Hungarian prime minister, has been in power for 12 years. A Hungarian bank has now lent the National Rally another $11.4 million, so if she were to win she would be indebted to both Mr. Putin and Mr. Orban.Hungary’s prime minister, Viktor Orban, center, attending a meeting of far-right and conservative leaders in Madrid, in January.Oscar Del Pozo/Agence France-Presse — Getty ImagesAlready her backing of Mr. Putin has been borderline fawning. Ms. Le Pen visited Moscow and Crimea in June 2013; Moscow in April 2014; and Moscow again in May 2015. She was received by the president of the Duma, the lower chamber of Russia’s Parliament, during the first of these visits, and sprinkled her Russian sojourns with pro-Putin remarks.In 2013, she blamed the European Union for a new “Cold War on Russia.” In 2015, also while in Moscow, she criticized France’s pro-American stance and suggested this would change “in 2017 with Marine Le Pen as president.” In 2021, she recommended Russia’s uncertain Sputnik vaccine for the coronavirus, saying “our anti-Russian ideology should not ruin our capacity to vaccinate our fellow citizens.”The 2014 visit came at a particularly delicate moment, given the Crimea annexation. It was one of several demonstrations of support for Mr. Putin from prominent members of Ms. Le Pen’s party who visited Crimea that year, and the Donbas, the Ukrainian region where clashes kindled by Moscow had begun.Among them was Aymeric Chauprade, her former top diplomatic adviser, who went to Crimea to observe the dubious March 2014 referendum that massively backed the Russian annexation. A United Nations General Assembly resolution declared the vote invalid.“It was the West that began changing European borders with Kosovo’s independence in 2008,” Mr. Chauprade, who has since left the National Rally, said in an interview. “There was an openness to accepting invitations from Russia, a good atmosphere.”Russian troops guarded a Ukrainian marine base in Crimea as Mr. Putin moved to annex the peninsula in March 2014. Le Pen has visited Moscow and Crimea and made remarks that were supportive of Russia.Sergey Ponomarev for The New York TimesMediapart, a French investigative news website, was the first to expose the Russian loan to the National Rally in September 2014. In an earlier interview with Mediapart, Mr. Chauprade said visits to the Donbas that year and in 2015 by Jean-Luc Schaffhauser, a former National Rally member of the European Parliament, had been a “quid pro quo” for the loan.What to Know About France’s Presidential ElectionCard 1 of 4Heading to a runoff. More

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      Bank Executive Convicted of Loaning Manafort Money for Job With White House

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      A former Chicago bank executive was convicted on Tuesday of financial crimes related to his facilitation of millions of dollars in high-risk loans to Paul Manafort, all in an effort to obtain a coveted position in the Trump administration.A jury in New York unanimously found the banker, Stephen M. Calk, 54, guilty of one count each of financial institution bribery and conspiracy to commit financial institution bribery.The charges stemmed from Mr. Calk’s use of his position as chairman and chief executive of the Federal Savings Bank to push the bank to give $16 million in loans in 2016 to Mr. Manafort, who served as chairman of Donald J. Trump’s presidential campaign during a key stretch.Just after the election, Mr. Calk sent Mr. Manafort a list of 10 positions ranked in order of preference, including Treasury secretary, commerce secretary and defense secretary, as well as 19 ambassadorships, which he also ranked, starting with Britain, France, Germany and Italy.In a statement after the conviction, Audrey Strauss, the U.S. attorney in Manhattan, said Mr. Calk “used the federally-insured bank he ran as his personal piggy bank to try and buy himself prestige and power.”At the time of the loans, Mr. Manafort was trying to stave off foreclosure on several properties and was pressed for cash to support an opulent lifestyle after a stream of payments from Ukrainian consulting clients ran dry.Mr. Manafort made two calls on Mr. Calk’s behalf in late 2016 to officials on Mr. Trump’s transition team, urging them to appoint Mr. Calk secretary of the Army, prosecutors said. Mr. Calk was interviewed at Trump Tower in 2017 for a job as under secretary of the Army, but was not hired.Mr. Manafort, 72, was identified as a co-conspirator in the case against Mr. Calk, but he was not charged. He was, however, convicted of 10 felonies in 2018, including bank fraud related to the loans, in two cases brought by the special counsel, Robert S. Mueller III.Mr. Manafort’s seven-year prison sentence disappeared in December when Mr. Trump pardoned him.Mr. Calk, who is scheduled to be sentenced in January, faces a maximum of 35 years in prison for the two charges. More

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      Money Market Funds Melted in Pandemic Panic. Now They’re Under Scrutiny.

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      In March 2020, the Federal Reserve had to step in to save the mutual funds, which seem safe until there’s a crisis. Regulation may be coming.The Federal Reserve swooped in to save money market mutual funds for the second time in 12 years in March 2020, exposing regulatory shortfalls that persisted even after the 2008 financial crisis. Now, the savings vehicles could be headed for a more serious overhaul.The Securities and Exchange Commission in February requested comment on a government report that singled out money market funds as a financial vulnerability — an important first step toward revamping the investment vehicles, which households and corporations alike use to eke out higher returns on their cashlike savings.Treasury Secretary Janet L. Yellen has repeatedly suggested that the funds need to be fixed, and authorities in the United States and around the world have agreed that they were an important part of what went wrong when markets melted down a year ago.The reason: The funds, which contain a wide variety of holdings like short-term corporate debt and municipal debt, are deeply interlinked with the broader financial system. Consumers expect to get their cash back rapidly in times of trouble. In March last year, the funds helped push the financial system closer to a collapse as they dumped their holdings in an effort to return cash to nervous investors.“Last March, we saw evidence of how these vulnerabilities” in financial players that aren’t traditional banks “can take the existing stress in the financial system and amplify it,” Ms. Yellen said last month at her first Financial Stability Oversight Council meeting as Treasury secretary. “It is encouraging that regulators are considering substantive reform options for money market mutual funds, and I support the S.E.C.’s efforts to strengthen short-term funding markets.”But there are questions about whether the political will to overhaul the fragile investments will be up to the complicated task. Regulators were aware that efforts to fix vulnerabilities in money funds had fallen short after the 2008 financial crisis, but industry lobbying prevented more aggressive action. And this time, the push will not be riding on a wave of popular anger toward Wall Street. Much of the public may be unaware that the financial system tiptoed on the brink of disaster in 2020, because swift Fed actions averted protracted pain.Division lines are already forming, based on comments provided to the S.E.C. The industry used its submissions to dispute the depth of problems and warn against hasty action. At least one firm argued that the money market funds in question didn’t actually experience runs in March 2020. Those in favor of changes argued that something must be done to prevent an inevitable and costly repeat.“Short-term financing markets have been driven by a widespread perception that money funds are safe, making it almost inevitable the federal government provides rescue facilities when trouble hits,” said Paul Tucker, chair of the Systemic Risk Council, a group focused on global financial stability, in a statement accompanying the council’s comment letter this month. “Something has to change.”Ian Katz, an analyst at Capital Alpha, predicted that an S.E.C. rule proposal might be out by the end of the year but said, “There’s a real chance that this gets bogged down in debate.”While the potential scope for a regulatory overhaul is uncertain, there is bipartisan agreement that something needs to change. As the coronavirus pandemic began to cause panic, investors in money market funds that hold private-sector debt started trying to pull their cash out, even as funds that hold short-term government debt saw historic inflows of money.That March, $125 billion was taken out of U.S. prime money market funds — which invest in short-term company debt, called commercial paper, among other things — or 11 percent of their assets under management, according to the Financial Stability Board, which is led by the Fed’s vice chair for supervision, Randal K. Quarles.One type of fund in particular drove the retreat. Redemptions from publicly offered prime funds aimed at institutional investors (think hedge funds, insurance companies and pension funds) were huge, totaling 30 percent of managed assets.The reason seems to have its roots, paradoxically, in rules that were imposed after the 2008 financial crisis with the aim of preventing investors from withdrawing money from a struggling fund en masse. Regulators let funds impose restrictions, known as gates, which can temporarily prohibit redemptions once a fund’s easy-to-sell assets fall below a certain threshold.Investors, possibly hoping to get their money out before the gates clamped down, rushed to redeem shares.The fallout was immense, according to several regulatory body reviews. As money funds tried to free up cash to return to investors, they stopped lending the money that companies needed to keep up with payroll and pay their utility bills. According to a working group report completed under former Treasury Secretary Steven Mnuchin, money funds cut their commercial paper holdings by enough to account for 74 percent of the $48 billion decline in paper outstanding between March 10 and March 24, 2020.As the funds pulled back from various markets, short-term borrowing costs jumped across the board, both in America and abroad.“The disruptions reverberated globally, given that non-U.S. firms and banks rely heavily on these markets, contributing to a global shortage of U.S. dollar liquidity,” according to an assessment by the Bank for International Settlements.The Fed jumped in to fix things before they turned disastrous.It rolled out huge infusions of short-term funding for financial institutions, set up a program to buy up commercial paper and re-established a program to backstop money market funds. It tried out new backstops for municipal debt, and set up programs to funnel dollars to foreign central banks. Conditions calmed.A primary concern is that investors will expect the Federal Reserve to save money market funds in the future, as it has in the past.Stefani Reynolds for The New York TimesBut Ms. Yellen is among the many officials to voice dismay over money market funds’ role in the risky financial drama.“That was top of F.S.O.C.’s to-do list when it was formed in 2010,” Ms. Yellen said on a panel in June, referring to the Financial Stability Oversight Council, a cross-agency body that was set up to try to fill in regulatory cracks. But, she noted, “it was incredibly difficult” for the council to persuade the Securities and Exchange Commission “to address systemic risks in these funds.”Ms. Yellen, who is chair of the council as Treasury secretary, said the problem was that it did not have activity regulation powers of its own. She noted that many economists thought the gates would cause problems — just as they seem to have done.Of particular concern is whether investors and fund sponsors may become convinced that, since the government has saved floundering money market funds twice, it will do so again in the future.The Trump-era working group suggested a variety of fixes. Some would revise when gates and fees kicked in, while another would create a private-sector backstop. That would essentially admit that the funds might encounter problems, but try to ensure that government money wasn’t at stake.If history is any guide, pushing through changes is not likely to be an easy task.Back in 2012, the effort included a President’s Working Group report, a comment process, a round table and S.E.C. staff proposals. But those plans were scrapped after three of five S.E.C. commissioners signaled that they would not support them.“The issue is too important to investors, to our economy and to taxpayers to put our head in the sand and wish it away,” Mary Schapiro, then the chair of the S.E.C., said in August 2012, after her fellow commissioners made their opposition known.In 2014, rules that instituted fees, gates and floating values for institutional funds invested in corporate paper were approved in a narrow vote under a new S.E.C. head, Mary Jo White.Kara M. Stein, a commissioner who took issue with the final version, argued in 2014 that sophisticated investors would be able to sense trouble brewing and move to withdraw their money before the delays were imposed — exactly what seems to have happened in March 2020.“Those reforms were known to be insufficient,” Ben S. Bernanke, a former Fed chair, said at an event on Jan. 3.The question now is whether better changes are possible, or whether the industry will fight back again. While asking a question at a hearing this year, Senator Patrick J. Toomey, Republican from Pennsylvania and chair of the Banking Committee, volunteered a statement minimizing the funds’ role.“I would point out that money market funds have been remarkably stable and successful,” Mr. Toomey said.Alan Rappeport More

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      How Trump Steered Supporters Into Unwitting Donations

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      Online donors were guided into weekly recurring contributions. Demands for refunds spiked. Complaints to banks and credit card companies soared. But the money helped keep Donald Trump’s struggling campaign afloat.Stacy Blatt was in hospice care last September listening to Rush Limbaugh’s dire warnings about how badly Donald J. Trump’s campaign needed money when he went online and chipped in everything he could: $500.It was a big sum for a 63-year-old battling cancer and living in Kansas City on less than $1,000 per month. But that single contribution — federal records show it was his first ever — quickly multiplied. Another $500 was withdrawn the next day, then $500 the next week and every week through mid-October, without his knowledge — until Mr. Blatt’s bank account had been depleted and frozen. When his utility and rent payments bounced, he called his brother, Russell, for help.What the Blatts soon discovered was $3,000 in withdrawals by the Trump campaign in less than 30 days. They called their bank and said they thought they were victims of fraud.“It felt,” Russell said, “like it was a scam.”But what the Blatts believed was duplicity was actually an intentional scheme to boost revenues by the Trump campaign and the for-profit company that processed its online donations, WinRed. Facing a cash crunch and getting badly outspent by the Democrats, the campaign had begun last September to set up recurring donations by default for online donors, for every week until the election.Contributors had to wade through a fine-print disclaimer and manually uncheck a box to opt out.As the election neared, the Trump team made that disclaimer increasingly opaque, an investigation by The New York Times showed. It introduced a second prechecked box, known internally as a “money bomb,” that doubled a person’s contribution. Eventually its solicitations featured lines of text in bold and capital letters that overwhelmed the opt-out language.The tactic ensnared scores of unsuspecting Trump loyalists — retirees, military veterans, nurses and even experienced political operatives. Soon, banks and credit card companies were inundated with fraud complaints from the president’s own supporters about donations they had not intended to make, sometimes for thousands of dollars.“Bandits!” said Victor Amelino, a 78-year-old Californian, who made a $990 online donation to Mr. Trump in early September via WinRed. It recurred seven more times — adding up to almost $8,000. “I’m retired. I can’t afford to pay all that damn money.”The sheer magnitude of the money involved is staggering for politics. In the final two and a half months of 2020, the Trump campaign, the Republican National Committee and their shared accounts issued more than 530,000 refunds worth $64.3 million to online donors. All campaigns make refunds for various reasons, including to people who give more than the legal limit. But the sum the Trump operation refunded dwarfed that of Joseph R. Biden Jr.’s campaign and his equivalent Democratic committees, which made 37,000 online refunds totaling $5.6 million in that time.The recurring donations swelled Mr. Trump’s treasury in September and October, just as his finances were deteriorating. He was then able to use tens of millions of dollars he raised after the election, under the guise of fighting his unfounded fraud claims, to help cover the refunds he owed.In effect, the money that Mr. Trump eventually had to refund amounted to an interest-free loan from unwitting supporters at the most important juncture of the 2020 race.Russell Blatt’s brother, Stacy, who was a supporter of Mr. Trump, died of cancer in February. Katie Currid for The New York TimesMarketers have long used ruses like prechecked boxes to steer American consumers into unwanted purchases, like magazine subscriptions. But consumer advocates said deploying the practice on voters in the heat of a presidential campaign — at such volume and with withdrawals every week — had much more serious ramifications.“It’s unfair, it’s unethical and it’s inappropriate,” said Ira Rheingold, the executive director of the National Association of Consumer Advocates.Harry Brignull, a user-experience designer in London who coined the term “dark patterns” for manipulative digital marketing practices, said the Trump team’s techniques were a classic of the “deceptive design” genre.“It should be in textbooks of what you shouldn’t do,” he said.Political strategists, digital operatives and campaign finance experts said they could not recall ever seeing refunds at such a scale. Mr. Trump, the R.N.C. and their shared accounts refunded far more money to online donors in the last election cycle than every federal Democratic candidate and committee in the country combined.Over all, the Trump operation refunded 10.7 percent of the money it raised on WinRed in 2020; the Biden operation’s refund rate on ActBlue, the parallel Democratic online donation-processing platform, was 2.2 percent, federal records show.How Refunds to Trump Donors Soared in 2020Refunds are shown as the percentage of money received by each operation to date via WinRed and ActBlue. More

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      The Business Rules the Trump Administration Is Racing to Finish

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      #masthead-section-label, #masthead-bar-one { display: none }The Jobs CrisisCurrent Unemployment RateThe First Six MonthsPermanent LayoffsWhen a $600 Lifeline EndedAdvertisementContinue reading the main storySupported byContinue reading the main storyThe Business Rules the Trump Administration Is Racing to FinishFrom tariffs and trade to the status of Uber drivers, regulators are trying to install new rules or reduce regulations before President-elect Joe Biden takes over.President Trump is rushing to put into effect new economic regulations and executive orders before his term comes to a close.Credit…Erin Schaff/The New York TimesJan. 11, 2021, 3:00 a.m. ETIn the remaining days of his administration, President Trump is rushing to put into effect a raft of new regulations and executive orders that are intended to put his stamp on business, trade and the economy.Previous presidents in their final term have used the period between the election and the inauguration to take last-minute actions to extend and seal their agendas. Some of the changes are clearly aimed at making it harder, at least for a time, for the next administration to pursue its goals.Of course, President-elect Joseph R. Biden Jr. could issue new executive orders to overturn Mr. Trump’s. And Democrats in Congress, who will control the House and the Senate, could use the Congressional Review Act to quickly reverse regulatory actions from as far back as late August.Here are some of the things that Mr. Trump and his appointees have done or are trying to do before Mr. Biden’s inauguration on Jan. 20. — Peter EavisProhibiting Chinese apps and other products. Mr. Trump signed an executive order on Tuesday banning transactions with eight Chinese software applications, including Alipay. It was the latest escalation of the president’s economic war with China. Details and the start of the ban will fall to Mr. Biden, who could decide not to follow through on the idea. Separately, the Trump administration has also banned the import of some cotton from the Xinjiang region, where China has detained vast numbers of people who are members of ethnic minorities and forced them to work in fields and factories. In another move, the administration prohibited several Chinese companies, including the chip maker SMIC and the drone maker DJI, from buying American products. The administration is weighing further restrictions on China in its final days, including adding Alibaba and Tencent to a list of companies with ties to the Chinese military, a designation that would prevent Americans from investing in those businesses. — Ana SwansonDefining gig workers as contractors. The Labor Department on Wednesday released the final version of a rule that could classify millions of workers in industries like construction, cleaning and the gig economy as contractors rather than employees, another step toward endorsing the business practices of companies like Uber and Lyft. — Noam ScheiberTrimming social media’s legal shield. The Trump administration recently filed a petition asking the Federal Communications Commission to narrow its interpretation of a powerful legal shield for social media platforms like Facebook and YouTube. If the commission doesn’t act before Inauguration Day, the matter will land in the desk of whomever Mr. Biden picks to lead the agency. — David McCabeTaking the tech giants to court. The Federal Trade Commission filed an antitrust suit against Facebook in December, two months after the Justice Department sued Google. Mr. Biden’s appointees will have to decide how best to move forward with the cases. — David McCabeAdding new cryptocurrency disclosure requirements. The Treasury Department late last month proposed new reporting requirements that it said were intended to prevent money laundering for certain cryptocurrency transactions. It gave only 15 days — over the holidays — for public comment. Lawmakers and digital currency enthusiasts wrote to the Treasury secretary, Steven Mnuchin, to protest and won a short extension. But opponents of the proposed rule say the process and substance are flawed, arguing that the requirement would hinder innovation, and are likely to challenge it in court. — Ephrat LivniLimiting banks on social and environmental issues. The Office of the Comptroller of the Currency is rushing a proposed rule that would ban banks from not lending to certain kinds of businesses, like those in the fossil fuel industry, on environmental or social grounds. The regulator unveiled the proposal on Nov. 20 and limited the time it would accept comments to six weeks despite the interruptions of the holidays. — Emily FlitterOverhauling rules on banks and underserved communities. The Office of the Comptroller of the Currency is also proposing new guidelines on how banks can measure their activities to get credit for fulfilling their obligations under the Community Reinvestment Act, an anti-redlining law that forces them to do business in poor and minority communities. The agency rewrote some of the rules in May, but other regulators — the Federal Reserve and the Federal Deposit Insurance Corporation — did not sign on. — Emily FlitterInsuring “hot money” deposits. On Dec. 15, the F.D.I.C. expanded the eligibility of brokered deposits for insurance coverage. These deposits are infusions of cash into a bank in exchange for a high interest rate, but are known as “hot money” because the clients can move the deposits from bank to bank for higher returns. Critics say the change could put the insurance fund at risk. F.D.I.C. officials said the new rule was needed to “modernize” the brokered deposits system. — Emily FlitterNarrowing regulatory authority over airlines. The Department of Transportation in December authorized a rule, sought by airlines and travel agents, that limits the department’s authority over the industry by defining what constitutes an unfair and deceptive practice. Consumer groups widely opposed the rule. Airlines argued that the rule would limit regulatory overreach. And the department said the definitions it used were in line with its past practice. — Niraj ChokshiRolling back a light bulb rule. The Department of Energy has moved to block a rule that would phase out incandescent light bulbs, which people and businesses have increasingly been replacing with much more efficient LED and compact fluorescent bulbs. The energy secretary, Dan Brouillette, a former auto industry lobbyist, said in December that the Trump administration did not want to limit consumer choice. The rule had been slated to go into effect on Jan. 1 and was required by a law passed in 2007. — Ivan PennAdvertisementContinue reading the main story More

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      What Is 13-3? Why a Debate Over the Fed Is Holding Up Stimulus Talks

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      AdvertisementContinue reading the main storySupported byContinue reading the main storyWhat Is 13-3? Why a Debate Over the Fed Is Holding Up Stimulus TalksThe Fed’s emergency lending authorities are a key part of its job. Republicans want to curb them. Democrats are pushing back.Senate Republicans are trying to make sure that emergency programs backed by the Federal Reserve cannot be restarted after they expire on December 31.Credit…Anna Moneymaker for The New York TimesDec. 18, 2020Updated 7:49 p.m. ETAs markets melted down in March, the Federal Reserve unveiled novel programs meant to keep credit flowing to states, medium-sized businesses and big companies — and Congress handed Treasury Secretary Steven Mnuchin $454 billion to back up the effort.Nine months later, Senate Republicans are trying to make sure that those same programs cannot be restarted after Mr. Mnuchin lets them end on Dec. 31. Beyond preventing their reincarnation under the Biden administration, Republicans are seeking to insert language into a pandemic stimulus package that would limit the Fed’s powers going forward, potentially keeping it from lending to businesses and municipalities in future crises.The last-minute move has drawn Democratic ire, and it has imperiled the fate of relief legislation that economists say is sorely needed as households and businesses stare down a dark pandemic winter. Here is a rundown of how the Fed’s lending powers work and how Republicans are seeking to change them.The Fed can keep credit flowing when conditions are really bad.The Fed’s main and best-known job is setting interest rates to guide the economy. But the central bank was set up in 1913 in large part to stave off bank problems and financial panics — when people become nervous about the future and rush to withdraw their money from bank accounts and sell off stocks, bonds and other investments. Congress dramatically expanded the Fed’s powers to fight panics during the Great Depression, adding Section 13-3 to the Federal Reserve Act.The section allows the Fed to act as a lender of last resort during “unusual and exigent” circumstances — in short, when markets are not working normally because investors are exceptionally worried. The central bank used those powers extensively during the 2008 crisis, including to support politically unpopular bailouts of financial firms. Congress subsequently amended the Fed’s powers so that it would need Treasury’s blessing to roll out new emergency loan programs or to materially change existing ones.The programs provide confidence as much as credit.During the 2008 crisis, the Fed served primarily as a true lender of last resort — it mostly backed up the various financial markets by offering to step in if conditions got really bad. The 2020 emergency loan programs have been way more expansive. Last time, the Fed concentrated on parts of Wall Street most Americans know little about like the commercial paper market and primary dealers. This time, it reintroduced those measures, but it also unveiled new programs that have kept credit available in virtually every part of the economy. It has offered to buy municipal bonds, supported bank lending to small and medium-sized businesses, and bought up corporate debt.The sweeping package was a response to a real problem: Many markets were crashing in March. And the new programs generally worked. While the terms weren’t super generous and relatively few companies and state and local borrowers have taken advantage of these new programs, their existence gave investors confidence that the central bank would prevent a financial collapse.But things started getting messy in mid-November.Most lawmakers agreed that the Fed and Treasury had done a good job reopening credit markets and protecting the economy. But Senator Patrick J. Toomey, a Pennsylvania Republican, started to ask questions this summer about when the programs would end. He said he was worried that the Fed might overstep its boundaries and replace private lenders.After the election, other Republicans joined Mr. Toomey’s push to end the programs. Mr. Mnuchin announced on Nov. 19 that he believed Congress had intended for the five programs backed by the $454 billion Congress authorized to stop lending and buying bonds on Dec. 31. He closed them — while leaving a handful of mostly older programs open — and asked the Fed to return the money he had lent to the central bank.Business & EconomyLatest UpdatesUpdated Dec. 18, 2020, 12:25 p.m. ETLee Raymond, a former Exxon chief, will step down from JPMorgan Chase’s board.U.S. adds chip maker S.M.I.C. and drone maker DJI to its entity list.Volkswagen says semiconductor shortages will cause production delays.The Fed issued a statement saying it was dissatisfied with his choice, but agreed to give the money back.Democrats criticized the move as designed to limit the incoming Biden administration’s options. They began to discuss whether they could reclaim the funds and restart the programs once Mr. Biden took office and his Treasury secretary was confirmed, since Mr. Mnuchin’s decision to close them and claw back the funds rested on dubious legal ground.The new Republican move would cut off that option. Legislative language circulating early Friday suggested that it would prevent “any program or facility that is similar to any program or facility established” using the 2020 appropriation. While that would still allow the Fed to provide liquidity to Wall Street during a crisis, it could seriously limit the central bank’s freedom to lend to businesses, states and localities well into the future.In a statement, Senator Elizabeth Warren, Democrat of Massachusetts, called it an attempt to “to sabotage President Biden and our nation’s economy.”Mr. Toomey has defended his proposal as an effort to protect the Fed from politicization. For example, he said Democrats might try to make the Fed’s programs much more generous to states and local governments.The Treasury secretary would need to have the Fed’s approval to improve the terms to help favored borrowers. But the central bank might not readily agree, as it has generally approached its powers cautiously to avoid attracting political scrutiny and to maintain its status as a nonpartisan institution.Fed officials have avoided weighing in on the congressional showdown underway.“I won’t have anything to say on that beyond what we have already said — that Secretary Mnuchin, as Treasury secretary, would like for the programs to end as of Dec. 31” and that the Fed will give back the money as asked, Richard H. Clarida, the vice chairman of the Fed, said Friday on CNBC.More generally, he added that “we do believe that the 13-3 facilities” have been “very valuable.”Emily Cochrane More