TD Bank reaches $1.2 billion settlement in Ponzi scheme lawsuit


New York
CNN
 — 

TD Bank will pay $1.2 billion to settle a lawsuit alleging its involvement in an infamous $7 billion Ponzi scheme orchestrated by disgraced financier Allen Stanford more than a decade ago.

Toronto-Dominion Bank agreed to pay $1.205 billion to a court-appointed receiver who will in turn pay back victims of the scheme but denied any wrongdoing, the bank said in a statement Monday

Stanford was sentenced to 110 years in prison in 2012 after being found guilty on 13 counts of fraud-related charges in Houston. Prosecutors charged that Stanford sold billions of dollars in fraudulent certificates of deposit administered by Stanford International Bank Ltd., an offshore bank in Antigua, ensnaring thousands of victims.

The lawsuit claimed TD Bank collected these deposits in US and Canadian dollar values and continuously ignored red flags about the Antigua-based bank over the years.

“As has been the case throughout these proceedings, TD expressly denies any liability or wrongdoing with respect to the multi-year Ponzi scheme operated by Stanford and makes no admission in connection to any Stanford matter as part of the settlement,” the Canada-based bank said in a statement.

“TD provided primarily correspondent banking services to Stanford International Bank Limited and maintains that it acted properly at all times,” the bank said.

The settlement announcement comes the same day the banks were scheduled for trial in Houston federal court, averting the trial. Additionally, HSBC will pay $40 million and Independent Bank, formerly Bank of Houston, will pay $100 million, the receivership’s counsel confirmed.

“HSBC is pleased to have resolved this claim, which relates to matters over a decade old, with no admission of any liability or wrongdoing,” the bank said in a statement.

Independent Bank did not immediately respond to a request for comment. In a securities filing, the firm denied liability or wrongdoing.

Investors alleged five banks – Trustmark

(TRMK)
, TD, Bank of Houston (now Independent Bank Group

(IBTX)
), HSBC

(HBCYF)
and Societe Generale Private Banking, or Suisse – knew or should have known about the alleged fraud perpetrated by Stanford, and that they aided and abetted the disgraced financier in the 20-year scheme.

The latest settlement brings the total recoveries amount to more than $1.6 billion.

“Given all the challenges faced by the receivership since 2009, this is nothing short of a monumental recovery,” said Kevin Sadler, lead counsel for the receiver, in a statement.

TD said it agreed to settle to “avoid the distraction and uncertainty of continuing a long legal proceeding.”

Clients of Stanford, were told that the certificates of deposit they purchased averaged a rate of return 3-4% higher than US CD’s, and that the bank made safe investments in products like stocks and bonds. But the money was actually used to fund the Texas tycoon’s lavish lifestyle, including multiple homes in the Caribbean and US.

Societe Generale reached a settlement of $157 million and Trustmark agreed to pay $100 million earlier this year.

– James O’Toole contributed to this report.

source

Howard University men's swimming and diving team wins first championship in 34 years



CNN
 — 

The men’s swimming and diving team at Howard University won the 2023 Northeast Conference Championship on Saturday, the team’s first title in more than 30 years, the school’s athletic department tweeted.

The all-Black swim team earned 928 points during five days of competition in Geneva, Ohio, surpassing four other teams by a margin of 169 points, according to the results posted on the Northeast Conference Championship’s website. Howard, one of the oldest historically Black universities in the US, defeated teams from Long Island University, St. Francis College in Brooklyn, and Wagner College.

The Bison team also saw additional awards at the competition, including Miles Simon being named outstanding swimmer and Jordan Walker named outstanding diver.

Howard’s win was described as historic and significant in a sport that is predominantly White.

Simon, a senior at Howard, told CNN that African American athletes represent a very small percent of competitive swimmers in America.

“So, I guess seeing an all-Black swim team win the conference championship shows that, that number could be higher,” Simon told CNN.

The team was a runner-up in the competition last year, but “weren’t satisfied” with that, according to Nicholas Askew, director of swimming & diving at Howard – the only swim program offered at an HBCU.

“Howard can’t be the only place, the only option because we only have so many roster spots. There are so many people we unfortunately can’t have at Howard to be able to swim,” Askew told CNN. “We are so glad to be able to see the success and so prayerful that it will be taken note of by the other HBCU’s to restart their program so we can no longer be the only HBCU.”

source

What you missed if you didn't watch the SAG Awards on YouTube



CNN
 — 

Without commercial interruptions or rushed acceptance speeches, Sunday’s Screen Actors Guild Awards, which streamed on Netflix’s YouTube channel, was one of the more relaxed award events in recent memory.

If you were among the million or so viewers who watched the show, you might have felt a little more like you were in the room than at home. Without a network or linear broadcast partner, the show felt unfiltered, with glimpses of stars mingling between presentations and plenty of speeches sprinkled with curse words that went uncensored.

Seated at a center table near the stage was Netflix CEO Ted Sarandos. The streaming giant will become the new home of the SAG Awards next year, and Sarandos, who appeared beaming at times on Sunday, may have given ratings-challenged award shows a formula for future success: keep it candid.

Award events get pared-down in the public discourse to a few moments of genuine emotion and humor that lend themselves to social media feeds and morning talk shows. The pacing of Sunday’s SAG Awards seemed to allow for more of them.

Here are some of the event’s highlights you may have missed:

Jamie Lee Curtis, from left, James Hong, and Michelle Yeoh.

The cast of “Everything Everywhere All at Once” took turns celebrating and dancing over their best ensemble win, before ceding the stage to James Hong, one of the film’s stars. The 94-year-old actor spoke with humor and heart about his long career in an industry where he faced much discrimination.

“My first movie was with Clark Gable, but back in those days, the leading role was played by these guys with their eyes taped up, and they talked like this,” said Hong, mimicking the offensive accent that was written for Asian characters at the time. “The producer said the Asians were not good enough and they (were) not box office, but look at us now.”

“I hope I will come back when I’m 100 years old,” Hong said.

Austin Butler escorts Sally Field to the stage at the SAG Awards.

“Elvis” star Austin Butler was captured by cameras offering his arm to help escort several honorees like Sally Field and Jennifer Coolidge to the stage.

His “sweetheart” chivalry did not go unnoticed on Twitter.

Jenna Ortega, left, and Aubrey Plaza present the award for outstanding performance by a male actor in a television movie or limited series.

Deadpan duo Aubrey Plaza and Jenna Ortega had one of the evening’s funnier presentations. The two wondered rhetorically why they were paired together to present the award for best male actor in a TV movie or miniseries.

“We should find the people who did this,” Plaza said, before Ortega joined in and the two said in unison, “and curse their families, and watch as misfortune follows their bloodline for the next seven generations.”

Dark comedy gold.

Lisa Ann Walter, Quinta Brunson and Sheryl Lee Ralph accept the award for outstanding performance by an ensemble in a comedy series.

“Abbott Elementary” creator and star Quinta Brunson was among several actors to include a few, appropriately timed curse words on stage.

“They are the best, and they are so f—ing funny all the time, y’all,” Brunson said of her sitcom cast.

“I’m in awe of all of them at every single turn and we just want to say thank you and [we’re] honored to be in the category with such amazing shows with amazing actors, peers of ours,” Brunson continued. “The peer award hits different though, don’t it? I feel good…So, thank you!”

We didn’t miss the beeps.

Brendan Fraser accepts the award for outstanding performance by a male actor in a leading role for "The Whale."

Brendan Fraser, who won for best performance by a lead actor for his role in “The Whale,” was one of several winners who had a poignant acceptance speech that had the audience in tears along with him.

“He’s someone who is on a raft of regrets, but he’s in a sea of hope, and I’ve been at that sea and I’ve rode that wave,” Fraser said of his character in the film. “All the actors out there who have gone through that or who are going through that, I know how you feel. But believe me, if you just stay in there and you put one foot in front of the other, you’ll get to where you need to go.”

Ke Huy Quan and Michelle Yeoh’s historic wins as the first Asian actors to win their respective categories charged the room with excitement and brought the crowd to their feet.

Their castmate Jamie Lee Curtis acknowledged her “nepo-baby” privilege as the daughter of two actors during her acceptance speech for best supporting actress, yet it’s hard to fault success when it is so sincerely received.

“I know that so many people in our industry who are actors don’t get to do this job, and you look at nights like this and think, ‘Is that ever going to be possible for me?’ And I know you look at me and think ‘nepo baby,’ that’s why she’s there, and I totally get it,” Curtis said. “But the truth of the matter is I’m 64 years old, and this is just amazing.”


source

New assessment on the origins of Covid-19 adds to the confusion

A version of this story appeared in CNN’s What Matters newsletter. To get it in your inbox, sign up for free here.



CNN
 — 

“We want to know what led to this, so we can hopefully try and prevent something similar from happening in the future.”

Those words, from Dr. David Relman, an infectious disease expert and microbiologist at Stanford University, reflected the national conversation around the origins of Covid-19 in 2021.

Did it come from a lab? Was it a zoonotic transfer? Something else? Surely, with time, an answer would become clear.

But now, three years removed from the start of a pandemic that is still disrupting daily life, an assessment from the US Energy Department is only adding to the confusion about what really happened in Wuhan, China, in late 2019.

The department has assessed that the Covid-19 pandemic most likely emerged from a laboratory leak in China, according to a newly updated classified intelligence report first reported by The Wall Street Journal on Sunday.

Yet two sources said that the department assessed in the intelligence report that it had “low confidence” that the coronavirus accidentally escaped from a lab in Wuhan, CNN’s Jeremy Herb and Natasha Bertrand reported.

Intelligence agencies can make assessments with either low, medium or high confidence; and a low confidence assessment generally means that the information obtained is not reliable enough or is too fragmented to make a more definitive analytic judgment or that there is not enough information available to draw a more robust conclusion.

National security adviser Jake Sullivan acknowledged on CNN’s “State of the Union” on Sunday that the intelligence community is divided on the matter, while noting that President Joe Biden has put resources into getting to the bottom of the origin question.

The intelligence community has been split on the matter for years.

  • In 2021, the intelligence community declassified a report that showed four agencies in the intelligence community had assessed with low confidence that the virus likely jumped from animals to humans naturally in the wild.
  • One assessed with moderate confidence that the pandemic was the result of a laboratory accident.
  • Three other intelligence community elements were unable to coalesce around either explanation without additional information, the community’s report said.

For the better part of 2020, advocates of the lab leak theory had to fight against claims they were being xenophobic or racist — in part thanks to anti-Chinese rhetoric from then-President Donald Trump, who embraced the theory.

An inquiry launched by Trump’s State Department, which sought to investigate whether China’s biological weapons program could have had a greater role in the pandemic’s origin in Wuhan, was shut down early on in the Biden administration.

A letter from public health experts published in February 2020 in The Lancet, an influential scientific journal, also set the tone early by declaring the virus to have a natural origin.

But the lab leak theory has gained more traction with time, especially following reports that the intelligence community found evidence that researchers at the Wuhan Institute of Virology fell seriously ill with a mysterious virus in November 2019 – although it’s not clear whether they contracted Covid-19 and no further evidence has emerged to corroborate that report.

By July 2021, senior Biden administration officials overseeing an intelligence review into the origins believed that the lab leak theory was at least as credible as the possibility that the virus emerged naturally in the wild – a dramatic shift from a year earlier, when Democrats publicly downplayed such an idea.

The latest intelligence assessment was provided to Congress as Republicans on Capitol Hill have been pushing for further investigation into the theory, while accusing the Biden administration of playing down its possibility.

House Foreign Affairs Chairman Michael McCaul said Sunday he was “pleased” the Energy Department “has finally reached the same conclusion that I had already come to.” (The Texas Republican had released a 2021 report that concluded that “the preponderance of the evidence” showed the pandemic originated with a leak from the Wuhan lab.)

“Now is the time for the entire Biden administration to join the Department of Energy, the Federal Bureau of Investigation, and the majority of Americans by publicly concluding what common sense told us at the start – the COVID-19 pandemic originated from a lab leak in Wuhan, China,” McCaul said in a statement.

Sullivan said Sunday that Biden had directed the national laboratories, which are part of the Department of Energy, to be brought into the assessment.

“Right now, there is not a definitive answer that has emerged from the intelligence community on this question,” Sullivan told CNN’s Dana Bash.

“Some elements of the intelligence community have reached conclusions on one side, some on the other. A number of them have said they just don’t have enough information to be sure.”

So where does that leave us? Not far from where we started.

Past pandemics have emerged from natural transmission through animals, and it often takes months or years to discover the host that the virus passed through as it adapted to infect humans.

In some cases, as in Ebola, the original natural source has never been identified. And it’s been more than 40 years since the first cases of Ebola.

So why does it matter where Covid-19 came from? As Relman, the Stanford microbiologist, previously noted to CNN, finding the answer can help prevent the next pandemic.

source

EU sanctions Wagner subsidiary in Sudan after CNN investigation into gold exploitation


London
CNN
 — 

The European Union has sanctioned a Russian national and the subsidiary of Russia’s Wagner Group in Sudan, Meroe Gold, for facilitating the exploitation of Sudan’s gold wealth, after a CNN investigation into the group’s activities last July.

The EU named a Russian national – Mikhail Potepkin – and Yevgeny Prigozhin’s Wagner Group subsidiary in Sudan, Meroe Gold, listing them “for serious human rights abuses, including torture and extrajudicial, summary or arbitrary executions and killings, in several countries, including Sudan,” according a statement published Saturday on the EC’s legal platform EUR-LEX.

“Mikhail Potepkin is the director of Meroe Gold, a front company for the Wagner Group’s operations in Sudan, and is involved in the activities of M-Invest, Meroe’s parent company. He has a leadership role in the Wagner Group in Sudan and has close ties to Yevgeny Prigozhin,” according to a statement from the European Council.

A CNN investigation last July was the first to expose the mechanism by which Wagner and Meroe Gold were operating in Sudan, circumventing US sanctions on the group.

Multiple interviews with high-level Sudanese and US officials and troves of documents reviewed by CNN last summer painted a picture of an elaborate Russian scheme to plunder Sudan’s riches in a bid to fortify Russia against increasingly robust Western sanctions and to buttress Moscow’s war effort in Ukraine.

The evidence also suggested that Russia colluded with Sudan’s beleaguered military leadership, enabling billions of dollars in gold to bypass the Sudanese state and to deprive the poverty-stricken country of hundreds of millions in state revenue.

In exchange, CNN’s investigation found, Russia lent powerful political and military backing to Sudan’s increasingly unpopular military leadership as it violently quashes the country’s pro-democracy movement

Despite Yevgeny Prigozhin’s denials, the European Council has now confirmed CNN’s findings, stating that Meroe Gold continued to operate in Sudan as a “hedge for the Wagner Group’s operations” via a Sudanese shell company.

“Through its affiliation with the Sudanese army, the Wagner Group has secured the right to mine Sudanese gold and export it to Russia,” the Saturday statement by the European Council said.

source

Why the Fed is increasingly flying blind on the economy

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


New York
CNN
 — 

Analysts have long expected a slowdown in the US labor market, but for the past 10 months, the data has come in better than expected.

That may sound like a good thing for the economy, but as the Federal Reserve attempts to fight inflation, the still-hot jobs market is signaling that more painful interest rate hikes could be ahead.

But lately, some economists have begun to worry that the data on which Fed officials rely is becoming increasingly inaccurate. The number of people responding to labor market and inflation surveys has been declining for years, and the pandemic accelerated that slowdown. That causes more volatility in the incoming data and hence more volatility in markets, economists say.

The Job Openings and Labor Turnover Survey, or JOLTS, a monthly data set that’s closely watched by the Fed and markets, has seen its response rate fall sharply since the pandemic — it is now just under 31%.

Julia Coronado, founder of MacroPolicy Perspectives and president of the National Association for Business Economics, said earlier this month that the decline in responses made the survey “basura,” the Spanish term for trash.

It’s not just JOLTS — the response rate for the Employment Cost Index, a pay measure also watched by the Fed, has dropped from about 75% in 2012 to under 50% today, according to Bureau of Labor Statistics data. The response rate to the Current Employment Statistics survey, which reports on payroll and wages each month, has fallen from 60% in 2019 to under 45% at the end of 2022.

CNN spoke with Torsten Slok, chief economist at Apollo Global Management about the declining rates. The interview has been edited for length and clarity.

This seems like a long-term problem … Is there an easy fix?

With the growth of spam and a decline in the number of telephone landlines there has been a structural decline in response rates and there is no easy solution to this problem, which is getting gradually worse and worse.

To what extent are declining response rates to surveys actually impacting the data we use? Are we talking about major gaps in our reading of the economy?

It is absolutely critical for the Fed and markets that the incoming data is as reliable as possible. For example, is the strong data we have seen in January for employment and retail sales a true description of what is going on? Is it driven by problems with seasonal adjustments, or problems measuring employment and consumer spending in the economic surveys?

Is the Fed aware of this and how do they factor that in as they determine policy?

When the macro data becomes unreliable there is a higher tendency to put weight on anecdotal evidence, which for example can be seen at the moment where the announced tech layoffs seem like a big deal — but they are basically irrelevant when compared with the recent data in the latest employment report for January, where the economy created 517,000 jobs.

The leisure and hospitality sector alone added 128,000 jobs in January, more than all tech layoff announcements combined. Is this a true description of what is going on or is the source of this discrepancy some measurement problems with the data we are looking at?

What kind of volatility does this cause in markets? Why?

With the Fed’s dual mandate of full employment and stable prices it is absolutely critical that the Fed and markets have a true description of what is going on with inflation and unemployment.

▸ Last year was tough for most investors, Warren Buffett included.

Berkshire Hathaway, Buffett’s conglomerate, reported big losses on Saturday. In total, it lost about $22.8 billion in 2022 — with around $53.6 billion in unrealized losses on its investments.

Still, Buffett pointed to the company’s operating earnings in his annual letter to investors — those are the profits that come from businesses and not stock holdings, and are Buffett’s preferred measure of profitability. Those earnings reached what Buffett called a “record” — $30.8 billion in 2022, topping the $27.5 billion in the prior year.

Buffett, meanwhile, sang the praises of share buybacks in his letter.

The 92-year-old “Oracle of Omaha” wrote that “when you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive).”

▸ Goldman Sachs will host its investor day on Tuesday (February 28). This will be a big one for the company’s leaders as they hope to reset after a 2022 that saw the bank’s profits slump by nearly half.

It’s only the second annual investor meeting in 154 years, and comes just weeks after the company said its consumer lending arm has lost almost $3 billion since 2020. The bank has recently undergone a series of layoffs and CEO David Solomon has faced criticism, and a pay cut, from shareholders.

▸ There are fewer US restaurants today than in 2019. It’s not clear when — if ever — they’re coming back, reports CNN’s Danielle Wiener-Bronner.

Last year, there were about 631,000 restaurants in the United States, according to data from Technomic, a restaurant research firm. That’s roughly 72,000 fewer than in 2019, when there were 703,000 restaurants.

That number could fall even further this year, to about 630,000 locations, according to Technomic, which doesn’t foresee the number of restaurants in the United States returning to pre-Covid levels even by 2026.

Chipotle, Starbucks, Chick-fil-A, McDonald’s and KFC-owner Yum Brands, meanwhile, have each donated $1 million to Save Local Restaurants, a coalition opposing a California law that could set the minimum wage at up to $22 an hour and codify working conditions for fast-food employees in the state.

In a time when the economic data has delivered mixed messages or flat out busted expectations, economists’ predictions for the year ahead are growing increasingly opaque, reports CNN’s Alicia Wallace.

The National Association for Business Economics’ latest survey, released Monday, shows a “significant divergence” among respondents about where they think the US economy is heading in 2023, the organization’s president said.

“Estimates of inflation-adjusted gross domestic product or real GDP, inflation, labor market indicators, and interest rates are all widely diffused, likely reflecting a variety of opinions on the fate of the economy — ranging from recession to soft landing to robust growth,” Julia Coronado, NABE’s president, said in a statement.

Nearly 60% of survey respondents said they believe the United States had a more than 50% shot of entering a recession in the next 12 months.

When such a recession would start was another matter: 28% said first quarter, 33% said second quarter, and 21% said third quarter.


source

New York Times: Twitter lays off another 10% of staff


New York
CNN
 — 

Twitter’s massive job cuts continued this weekend, as the company cut about 10% of its remaining staff, according to a report in the New York Times.

The latest axing of about 200 jobs takes the company’s headcount down to under 2,000 staffers, according to the Times. That’s down from the 7,500 who worked for the social media platform before Elon Musk bought the company last fall for $44 billion.

The paper reported that the cuts hit product managers, data scientists and engineers who worked on machine learning and site reliability, which, it said, helps keep Twitter’s various features online. The “monetization infrastructure team,” which maintains the services through which Twitter makes money, was reduced to fewer than eight people from 30, according to the report.

Twitter did not respond to a request for comment from CNN on the Times report.

Twitter has been losing advertisers since Musk took over. Ad revenue had been responsible for more than 90% of company revenue. Musk’s plans to raise revenue directly from Twitter users by selling verification of accounts has thus far not worked as planned.

source

House GOP committees plot investigations into East Palestine derailment



CNN
 — 

A series of House Republican committees are plotting to launch investigations into the toxic train disaster in East Palestine, Ohio, multiple committee aides told CNN.

GOP lawmakers are vowing to use their oversight power to dig into what they describe as the Biden administration’s flawed response to the train wreck, which has left East Palestine’s residents afraid to use the city’s air and municipal water after a train carrying toxic chemicals derailed on February 3.

They have also left the door open to holding hearings on the subject, including potentially bringing in Environmental Protection Agency Administrator Michael Regan and Transportation Secretary Pete Buttigieg to testify publicly, the aides said, though such decisions have not yet been made.

The GOP’s increased urgency for oversight comes as several lawmakers have criticized President Joe Biden for not visiting East Palestine. Biden told reporters on Friday he has no plans to travel to the site of the derailment and defended his administration’s response to the wreck.

The House committees on Transportation and Infrastructure, Energy and Commerce and Oversight are among the panels vowing to find answers to what happened, as well as hold the Biden administration and rail industry accountable for the fallout.

Some GOP members of the committees are also discussing a potential field hearing in East Palestine, though no official plans have been made yet, sources familiar with the talks tell CNN.

Axios first reported on the committees’ plans.

The Energy and Commerce Committee has asked the EPA to appear before the panel’s Environment, Manufacturing & Critical Materials subcommittee chaired by GOP Rep. Bill Johnson, who represents East Palestine, a committee aide told CNN.

Johnson and Energy and Commerce Chair Cathy McMorris Rodgers, a Washington state Republican, formally kicked off their probe on February 17, when they sent a letter to Regan demanding answers on a timeline of events relating to the train wreck, a list of the chemicals on board, materials relating to the EPA’s and local agencies’ response, as well as other information regarding the derailment.

Johnson and McMorris Rodgers gave the EPA until March 3 to respond to their request.

The Energy and Commerce Committee has asked for an all-members briefing, a committee briefing, as well as a hearing date from EPA officials. A source familiar told CNN they are still awaiting a response.

The Transportation and Infrastructure Committee plans to “keep Members informed as facts come out,” committee spokesman Justin Harclerode told CNN. The committee is also closely watching the National Transportation Safety Board’s investigation into the incident.

“The important thing is to learn exactly what happened, what factors played a role in the accident, and what factors did not. The Committee is staying engaged on this issue, but no one should jump to any conclusions or act without all the facts. Which is exactly what the NTSB is working to provide through their investigation,” Harclerode said.

House Oversight Chairman James Comer, meanwhile, sent a letter to Buttigieg on Friday, in which he called the incident “an environmental and public health emergency that now threatens Americans across state lines.” The Kentucky Republican requested that Buttigieg turn over a series of documents relating to the derailment, including when the administration first learned of the incident and communications regarding the Pipeline and Hazardous Materials Safety Administration’s handling of materials in the derailment.

“At this time, Chairman Comer is focused on acquiring the documents and information requested in his February 24 letter to Secretary Buttigieg,” Comer spokesman Austin Hacker told CNN.

On Monday, Senate Majority Leader Chuck Schumer will call on the CEO of Norfolk Southern Alan Shaw to testify before the Senate’s Environment and Public Works Committee, a source familiar with the matter tells CNN. That committee will hold an oversight hearing on the toxic train derailment in March.

While it’s still not clear when or if Shaw would agree to testify as part of that first hearing, Schumer’s request comes as Democrats now have subpoena power in the Senate. There are still several steps to go before this would rise to that level, but unlike last Congress, when there had to be bipartisan support for subpoenas in the Senate under the power sharing agreement, that is no longer the case.

source

Biden's student loan forgiveness plan goes before the Supreme Court Tuesday. Here's what borrowers need to know


Washington
CNN
 — 

Millions of student loan borrowers could see up to $20,000 of their debt canceled depending on the outcome of Tuesday’s US Supreme Court hearing on President Joe Biden’s student loan forgiveness program.

How and when the justices rule will also determine when payments on federal student loans will resume after a pandemic-related pause that has been in place for nearly three years.

The Biden administration has said that payments will resume 60 days after litigation over the forgiveness program is resolved or at the end of August, whichever comes first.

Biden announced the targeted student loan forgiveness program last August, but the implementation was put on hold by lower courts before any debt forgiveness was granted.

The justices will hear arguments in two cases Tuesday concerning the program, which is estimated to cost $400 billion.

One case was brought by six Republican-led states that say they would be harmed financially if the forgiveness program goes into effect. The other case was brought by two borrowers in Texas who don’t fully qualify for debt forgiveness under the program.

Plaintiffs in both lawsuits argue that the administration does not have the authority to cancel the student loan debt under the proposed rules of the program. But the Biden administration argues that a 2003 law grants the executive branch the power to discharge federal student loan debt in the event of a national emergency, including the Covid-19 pandemic.

There are about 43 million borrowers with federal student loans. Here’s what they need to know.

It’s unclear exactly when the Supreme Court will issue its decision, but typically the justices release their rulings by the end of the current term, which is usually in late June or early July.

If the Supreme Court rules that the Biden administration’s student loan forgiveness program is legal and allows it to move forward – or if the court dismisses the challenges due to a lack of “standing,” or the legal right to bring the disputes in the first place – it’s possible the government will begin issuing some debt cancellations fairly quickly.

The White House has said that it received 26 million applications before a lower court in Texas put a nationwide block on the program in November, and that 16 million of those applications have been approved for relief.

There could be room for further legal challenges to be filed even after the Supreme Court has ruled.

If Biden’s program is allowed to move forward, individual borrowers who earned less than $125,000 in either 2020 or 2021 and married couples or heads of households who made less than $250,000 annually in those years could see up to $10,000 of their federal student loan debt forgiven.

If a qualifying borrower also received a federal Pell grant while enrolled in college, the individual is eligible for up to $20,000 of debt forgiveness. Pell grants are a key federal aid program that help students from the lowest-income families pay for college.

Federal Direct Loans, including subsidized loans, unsubsidized loans, parent PLUS loans and graduate PLUS loans, would be eligible for the program.

But federal student loans that are guaranteed by the government but held by private lenders, such as some Federal Family Education Loans, are not eligible unless the borrower applied to consolidate those loans into a Direct Loan before September 29, 2022.

If the Supreme Court strikes down Biden’s student loan forgiveness program, it could be possible for the administration to make some modifications to the policy and try again – though that process could take months.

“The ball goes back to the Biden administration,” said Luke Herrine, an assistant law professor at the University of Alabama who previously worked on a legal strategy for student debt cancellation.

“The administration could implement some other version of this installation under a different legal authority, but that may well generate its own litigation and we end up in the same place,” Herrine added.

The Biden administration is also working on changes to existing federal student loan repayment plans that aim to make it easier for borrowers to pay for college. These changes are not facing legal challenges.

The Department of Education is currently finalizing a new income-driven repayment plan to lower monthly payments as well as the total amount borrowers pay back over time. In contrast to the one-time student loan cancellation program, the new repayment plan could help both current and future borrowers.

Additionally, in July, changes will be made the Public Service Loan Forgiveness program, which allows certain government and nonprofit employees to seek federal student loan forgiveness after making 10 years of qualifying payments. The changes will make it easier for some borrowers to receive debt forgiveness.

The key legal question in the cases before the Supreme Court Tuesday is whether the Higher Education Relief Opportunities for Students Act of 2003, known as the HEROES Act, grants the executive branch an emergency power to implement Biden’s student loan forgiveness program.

The HEROES Act, which was passed in the wake of the September 11, 2001, terrorist attacks, grants the secretary of education the power to “waive or modify” a federal student loan program in order to ensure that individuals “are not placed in a worse position financially” because of “a war or other military operation or national emergency.”

Lawyers for the Biden administration argue that this provision gives the secretary of education the authority to cancel federal student loan debt so that borrowers are not made worse off with respect to their loans by the effects of the Covid-19 pandemic.

They cite data that shows borrowers who previously had their payments paused due to an emergency like a hurricane were at a higher risk of default after the pause expired.

But plaintiffs argue the Biden administration is abusing its power and using the pandemic as a pretext for fulfilling the president’s campaign pledge to cancel student debt.

Even before ruling on the merits of the cases, the justices must consider whether the suing parties have standing to bring the legal challenges. This means that the parties must show that they have the legal injury necessary to be able to bring the challenge.

Last year, a district court found that the states did not have standing to sue. The states appealed to the 8th US Circuit Court of Appeals, which granted their request for a preliminary injunction.

If the justices decide that none of the parties have standing, the cases will be dismissed and Biden’s program will be allowed to move forward.

source

Snowfall tops 6.5 feet and rainfall tops 5 inches across southern California



CNN
 — 

A winter storm dumped massive amounts of precipitation across southern California this weekend, including more than 6.5 feet of snow to Mountain High and more than 5 inches of rain to Cucamonga Canyon.

The hefty snowfall totals included 5 feet to Snow Valley, 57 inches to Bear Mountain Snow Summit, 50 to 55 inches to Wrightwood Acorn Canyon, 45 inches to Green Valley Lake, 38 inches to Mount Baldy, and 36 inches to Lake Arrowhead, according to the National Weather Service in San Diego.

Palm trees stand in front of the snow-covered San Gabriel Mountains .

In addition, heavy rainfall brought several inches of rain to the area, including more than 4 inches in Holy Jim Canyon, Lower Silverado Canyon and Henshaw Dam; more than three inches in La Jolla Amago, Costa Mesa, Mount Woodson and Carlsbad Airport; and more than two inches to John Wayne Airport, Escondido, San Bernardino and Temecula, according to the service’s 5-day rainfall reports.

A vehicle skidded off the snowy roadway into a small pond in the Sierra Pelona Mountains near Green Valley, California.

The precipitation came as a rare blizzard warning was in effect for parts of southern California and the Los Angeles region, spawning unfamiliar wintry conditions at higher elevations.

The storm made for dangerous travel conditions in some areas. In Los Padres National Forest, State Route 33 was closed due to rock slides and erosion from this and previous storms, according to video from the California Department of Transportation.

Lynda Sandoval and her husband, who live in Frazier Park, about 65 miles northwest of LA, have been unable to leave their home since Friday, Sandoval told CNN. Heavy snow created dangerous driving conditions in the area and officials have closed sections of Interstate 5.

She told CNN she prepared for the snowstorm and has enough food to last her a few days but is shocked by how much snow has fallen in the area.

In an aerial view, drivers pass through the snow-covered Sierra Pelona Mountains in Los Angeles County.

“I never have seen this much snow living up here. Neighbors that have been here longer than us said the last snow related to this was back in 2011 but not this severe,” Sandoval said. “It took over 4 hours to get our truck out yesterday and all our neighbors are shoveling snow whenever there is a break. The community up here is amazing with neighbors helping neighbors during this time. They’re sharing groceries and shoveling snow in driveways.”

The same storm system is moving east and is expected to produce a significant damaging wind event across the central US on Sunday. More than 20 million people are under the threat of severe storms Sunday from western Texas to Illinois, including Oklahoma City, Tulsa, Kansas City, Fort Worth, and St. Louis.

Meanwhile, a new winter storm is set to bring more rain and snow to the western US, starting with the Pacific Northwest on Sunday.

More than a foot of snow is possible with the system across the Sierras and Cascades. A second system will be right on the first’s heels, pushing inland across the Pacific Northwest tonight bringing even more snow.

A person clears snow from their windshield in Los Angeles County, in the Sierra Pelona Mountains.

An additional 1 to 2 feet of snow is possible across the Cascades, Sierras, and Rockies through Tuesday. Isolated areas of the Sierras could see up to 3 feet.

The snowstorms will create dangerous or impossible travel conditions across the western mountain ranges through the beginning of this week.


source