Citigroup stock jumps on better-than-expected revenue for the third quarter

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Jane Fraser CEO, Citi, speaks at the 2023 Milken Institute Global Conference in Beverly Hills, California, May 1, 2023.
Mike Blake | Reuters

Citigroup reported its third-quarter results on Friday morning, with solid growth in both institutional clients and personal banking fueling higher-than-expected revenue.

Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

Earnings per share: $1.63. Not comparable to the expected $1.21 due to divestitures. Excluding divestitures, earnings per share were $1.52.Revenue: $20.14 billion, vs. expected $19.31 billion

Revenue and net income rose by 9% and 2%, respectively, year over year.

Citigroup’s institutional clients unit reported $10.6 billion in revenue, up 12% year over year and 2% from the second quarter. The personal banking and wealth management division generated $6.8 billion in revenue, up roughly 10% year over year and 6% from the second quarter.

“Despite the headwinds, our five core, interconnected businesses each posted revenue growth resulting in overall growth of 9%,” CEO Jane Fraser said in a press release.

Shares of the bank rose 2% in premarket trading. Citigroup’s stock was down 8% for the year entering Friday.

Among other banks that reported quarterly results on Friday morning, JPMorgan and Wells Fargo both showed stronger-than-expected revenue numbers in their third-quarter reports.

Citigroup reported $1.84 billion in loan loss provisions at the end of the quarter, up slightly from $1.82 billion at the end of the second quarter.

Citigroup will discuss the results in a conference call later Friday morning. Investors will be looking for more detail about the reorganization of the bank under Fraser.

Friday’s earnings report includes the period during which Fraser announced that the bank would be divided into five main business lines, the latest change for the CEO since taking over in March 2021. The new structure, announced on Sept. 13, is expected to include job cuts.

Another initiative under Fraser has been Citi selling off its retail banking business in some international markets. The latest move on that front came on Oct. 9, when the bank announced that it had struck a deal to sell its onshore consumer wealth portfolio in China.

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CBS News’ tweet on Hamas attack on Israelis placing ‘scare quotes’ around word ‘massacred’ slammed online

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An X post from CBS News describing how an Israeli family was “massacred” outside the Gaza Strip was strongly criticized on social media Thursday, leading the outlet to play cleanup online.

The media organization promoted a story regarding the miraculous survival of a pair of Israeli twins after it was discovered that their parents hid them right before the Hamas attack on Saturday. However, in the brief X post on its official account, CBS News used quotation marks around the word “massacred.” It later said it was simply quoting an Israeli military member who used the term, but social media users balked at the framing.

“10-month-old Israeli twins were found hidden and unharmed at kibbutz where Hamas ‘massacred’ their parents and beheaded children,” the post read.

This choice for quotation marks offended several social media users for appearing to make light of a devastating surprise attack by Hamas against Israel.

NETANYAHU SAYS ‘HAMAS IS ISIS’ AS ISRAEL PREPARES FOR GROUND INVASION OF GAZA 

“CBS news with scare quotes around the word massacred,” The Spectator contributing editor Stephen Miller observed.

Conservative commentator Steve Guest remarked, “Completely disgraceful framing from CBS News. Why the scare quotes?”

“There is no low CBS ‘News’ will not go to,” Digital strategist and conservative X user Eric Spracklen lamented.

“Is it not a real massacre? Why the quotes on that word, CBS?” RedState investigative journalist Jennifer Van Laar asked.

Ohio Rep. Bill Johnson similarly asked, “Really think the quotation marks are necessary here?”

“Media outlets I am once again asking you to stop letting twentysomethings run your socials,” podcast host Jen Monroe commented.

ISRAELI COUPLE REPORTS FOR DUTY AFTER SURVIVING HAMAS’ ATTACK ON MUSIC FESTIVAL: ‘WE WANT TO HELP OUR FRIENDS’ 

Hours after the original post was made, CBS News wrote a clarification that explained the word “massacre” was part of a larger quote.

“The word massacred was in quotations because we were referencing Maj. Gen. Itai Veruv of the IDF, who said of Kfar Azza, ‘It’s not a war or a battlefield; it’s a massacre,’” the new post read.

The original post containing the quoted “massacred” is still on the CBS News account.

The Israeli government declared war against Hamas on Saturday after the terrorist group fired thousands of rockets out of Gaza and invaded, killing over 1,200 Israelis and taking hostages, including soldiers, women, children and elderly civilians. Israel’s retaliatory assault on Gaza has killed more than 1,400 people, according to Palestinian authorities. At least 27 Americans have also been killed.

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Tennessee lawmaker calls on House GOP to ‘lock the door’ and work through weekend to elect speaker

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A Tennessee Republican lawmaker is calling on his party to convene and “lock the door” until a speaker is chosen — even if it means sacrificing the weekend.

Tennessee GOP Rep. Andy Ogles is sending around a dear colleague letter to his fellow House GOP lawmakers calling for the conference to continue meeting until a speaker is chosen.

Fox News Digital obtained the letter Ogles is sending around to his House Republican colleagues amid the battle for the gavel.

THE HITCHHIKER’S GUIDE TO WHY SCALISE’S SPEAKER MATH MAY NEVER WORK AND THE PUSH TO RESURRECT MCCARTHY

“As the GOP Conference remains deadlocked in the contest for Speaker of the House of Representatives, it is clear that going to the Floor and having a drawn-out competition damages our credibility with the American people,” Ogles wrote in the letter Thursday.

“For the sake of good governance, we owe it to our constituents to meet later today at Conference, lock the door, and not adjourn until we have selected our new Speaker — weekends are no longer eligible for time off,” the Tennessee freshman lawmaker continued.

Ogles wrote that the GOP conference “can no longer continue the song and dance routine of meeting and adjourning without coming to a consensus.”

“Americans shouldn’t be asked to wait longer for Congress to renew its efforts to tackle the opioid crisis, the border crisis, the spending crisis, and the barbaric terrorists responsible for the unprovoked attack against Israel,” the letter reads.

“We cannot afford to allow our Caucus to appear as if it is [lackadaisical] in its approach to good governance,” Ogles wrote. “I look forward to seeing each of you later tonight.”

Ogles’ letter comes as the House sits at a standstill without a top dog to lead the lower chamber after former Speaker Kevin McCarthy’s historic ouster last week.

House Majority Leader Steve Scalise, R-La., was chosen as the GOP’s nominee for speaker on Wednesday, but he dropped out of the race Thursday night following a closed-door meeting with fellow House Republicans.

SCALISE DROPS OUT OF RACE FOR HOUSE SPEAKER

It quickly became clear after his nomination that Scalise did not have the support needed to win a House-wide vote. With just a razor-thin majority, he could only afford to lose four GOP members to still clinch the gavel without Democratic support.

House Republicans are expected to meet Friday morning to choose a new speaker candidate.

Fox News Digital’s Elizabeth Elkind contributed reporting.

 

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Stocks making the biggest moves premarket: JPMorgan, Wells Fargo, Citigroup, Dollar General and more

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Check out the companies making headlines before the bell: UnitedHealth — The largest health insurer by revenue rose more than 1% after beating analysts’ third-quarter expectations. The company, part of the Dow Jones Industrial Average, posted adjusted earnings of $6.56 per share on revenue of $92.4 billion. Analysts polled by LSEG had expected per-share earnings of $6.32 on revenue of $91.37 billion. BlackRock — BlackRock fell by 1.8% premarket after missing third-quarter revenue forecasts. The asset manager reported $4.52 billion in revenue, lower than the consensus estimate of $4.54 billion from LSEG. Blackrock did beat on earnings: $10.91 adjusted per-share earnings, greater than the estimated $8.26 per share. PNC Financial Services Group — Pittsburgh-based PNC dipped by 0.2% after reporting third-quarter results. Revenue came in $5.23 billion, worse than the $5.32 billion expected by analysts polled by LSEG. But earnings topped forecasts: $3.60 per share, better than the anticipated $3.11 per share. Dollar General — Dollar General jumped 7% after Gordon Haskett upgraded shares to buy. The Wall Street firm said the discount chain’s latest leadership change could help stabilize the company. JPMorgan Chase & Co. — The country’s largest bank reported third-quarter financial results Friday , boosting its profit from a year earlier to $4.33 per share – a figure not immediately comparable to LSEG estimates. Revenue came in at $40.69 billion for the quarter, compared to the LSEG estimate of $39.63 billion. The shares were little changed in early morning trading. Wells Fargo — Wells Fargo added nearly 2% after third-quarter earnings and revenue topped expectations . The bank posted revenue of $20.86 billion, more than the $20.11 billion estimated by analysts polled by LSEG. Earnings were not immediately comparable but the bank’s earnings per share of $1.48 in the quarter, or $1.39 excluding discrete tax benefits, appeared to top the LSEG consensus per-share earnings of $1.24. Citigroup — Citigroup was higher by 2% after beating third-quarter revenue expectations. The Jane Fraser-led bank reported revenue of $20.14 billion, more than the consensus estimate of $19.31 billion from LSEG. Earnings was not immediately comparable. JD.com — JD.com shares slid more than 4% in premarket trading. Morgan Stanley downgraded the Chinese e-commerce stock to equal-weight and cut its price target, citing weak consumer demand. Post Holdings — Shares gained 0.5% after JPMorgan initiated coverage of the St. Louis-based breakfast cereal maker with an overweight rating, citing strong cash flow. — CNBC’s Tanaya Macheel contributed reporting

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Down to the wire: It’s time for the SEC to decide its next move in the bitcoin case

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Another busy day for the SEC. The Securities and Exchange Commission has until midnight Friday to decide if it wants to appeal the U.S. Court of Appeals for the D.C. Circuit’s ruling that the agency was wrong to reject an application from Grayscale Investments to create a spot bitcoin ETF. Should they decide not to appeal, they will likely be forced to approve the Grayscale application to convert to a spot bitcoin ETF, and possibly to approve all other spot bitcoin applications as well. The SEC is allowed to request a rehearing. The Federal Rules of Appellate Procedure states that “The petition must state with particularity each point of law or fact that the petitioner believes the court has overlooked or misapprehended and must argue in support of the petition. Oral argument is not permitted.” This leaves the SEC in a tough position. It’s not clear what the court has “overlooked or misapprehended,” especially since the ruling was unanimous. Is there some other novel angle the SEC could argue they have not argued before? That’s not clear. New rules on short sales also coming Separately, the SEC Commission will vote Friday to adopt two new rule proposals regarding short sales. One rule would require Wall Street firms to provide more information about securities lending, which is usually done for the purpose of shorting. The rule would require lenders of securities to provide information on their securities lending transactions to FINRA or another securities association, including the amount of securities being loaned and the rates or fees at which it is being loaned. Ultimately, much of this goes back to the Dodd-Frank Act, which was enacted in 2010. Part of that act directed the SEC to promulgate rules that would provide more information on the loaning or borrowing of securities. Yes, you read that right: that was in 2010. The making of government regulations sometimes moves very slowly — very slowly. The second would require institutional investors to file short sale positions on a monthly basis. This information is supposed to supplement short sale data that is currently reported to FINRA, but in greater detail. The filing would be confidential, and the SEC will then publish the aggregate short sales by each security. The SEC says this will help the market better understand the role short sellers play in the market. “This would provide the public and market participants with more visibility into the behavior of large short sellers,” SEC Chair Gary Gensler said when the proposed rule changes were announced in February 2022. Much of this rule came out of the the Gamestop events of 2021 , which amplified the gaps in reporting around shorts and securities lending. Both of these rules are part of the 50 or so rule proposals the agency has adopted or is considering adopting under Gensler this year.

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El Salvador gradually fills new mega prison with alleged gang members

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With tattoo-covered faces, and wearing white shirts and shorts, gang members captured during El Salvador’s state of exception are gradually filling the country’s new mega prison.

Unveiled earlier this year, the prison 45 miles southeast of the capital now holds some 12,000 accused or convicted gang members, barely a quarter of its 40,000 capacity.

Prisoners here do not receive visits. There are no programs preparing them for reinsertion into society after their sentences, no workshops or educational programs.

EL SALVADOR PASSES NEW RULES ALLOWING MASS TRIALS FOR ACCUSED GANG MEMBERS IN CRACKDOWN EFFORT

The exceptions are occasional motivational talks from prisoners who have gained a level of trust from prison officials. Prisoners sit in rows in the corridor outside their cells for the talks or are led through exercise regimens under the supervision of guards. They are never allowed outside.

President Nayib Bukele ordered its construction when El Salvador began making massive arrests early last year in response to a surge in gang violence. Since then, more than 72,000 people have been arrested for being alleged gang members or affiliates.

Human rights organizations have said that thousands have been unjustly detained without due process and dozens have died in prisons.

When Bukele unveiled the Terrorism Confinement Center in February, he tweeted: “El Salvador has managed to go from being the world’s most dangerous country, to the safest country in the Americas. How did we do it? By putting criminals in jail. Is there space? There is now.” His justice minister said later those imprisoned there would never return to communities.

The prison’s massive scale and lack of any sort of rehabilitation have been criticized by human rights organizations.

Bukele’s security policies are widely popular among Salvadorans. Many neighborhoods are enjoying life out from under the oppressive control of gangs for the first time in years.

EL SALVADOR DEPLOYS 1,000 COPS, 7,000 SOLDIERS TO RURAL PROVINCE IN MASSIVE GANG CRACKDOWN

Walking through one of the prison’s eight sprawling pavilions Thursday, some prisoners acknowledged a group of journalists with a nod of the head or slight wave. Journalists were not allowed to speak with them or to cross a yellow line two yards from each cell. Guards’ faces were covered with black masks.

Each cell holds 65 to 70 prisoners. Steel walkways cross atop the cells so guards can watch prisoners from above. The prison does have dining halls, break rooms, a gym and board games, but those are for guards.

“We’re watching here all day, there’s no way to escape, from here you don’t get out,” said a guard with his face covered.

Melvin Alexander Alvarado, a 34-year-old “soldier” in the Barrio 18 Sureño gang serving a 15-year sentence for extortion, was the only prisoner that prison officials allowed to speak with journalists. He said prisoners were treated well and were fed.

Alvarado, his shaved head and his arms completely covered in gang tattoos, said he hoped people would help him find a job when he gets out and give him a chance at a new life. He planned to speak to young people, discouraging them from joining a gang.

“I lost everything here, I lost my family, everything,” he said.

 

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[World] Steve Scalise drops out of US Speaker race

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Watch: Scalise bows out of Speaker’s race, citing ‘schisms’

Republican congressman Steve Scalise has dropped out of the race to become Speaker of the US House of Representatives just a day after his party nominated him.

Mr Scalise, 58, had struggled to gain enough votes to secure an overall majority in the chamber.

The announcement came after a last-minute meeting of Republicans in the House of Representatives on Thursday.

It is unclear who the party will now nominate for the position.

Speaking to reporters following the meeting, Mr Scalise said that “we have to have everybody put their agendas on the side and focus on what this country needs”.

“This House of Representatives needs a Speaker and we need to open up the house again. But clearly, not everybody is there. And there’s still schisms that have to get resolved,” he said.

Despite defeating right-wing rival Jim Jordan in a secret ballot on Wednesday, Mr Scalise faced growing dissension from rank-and-file Republicans.

Efforts to sway them enough to gain the 217 votes he needed to secure a win as Speaker were unsuccessful on Thursday.

In his remarks that night, Mr Scalise acknowledged that “it wasn’t going to happen”.

“There were people who told me they were fine with me three days ago who were moving the goalpost and making up reasons… that had nothing to do with anything,” he said. “Look, there were games being played and I said I’m not going to be part of it.”

But he did vow to stay on as majority leader of his party, telling reporters that he had “a job that I love”.

Compared to Mr Jordan, Mr Scalise was considered a more traditional candidate in the race. He worked his way up through the Republican party’s leadership, building a reputation as an effective legislator and fundraiser along the way.

Until a Speaker is chosen, the House of Representatives is unable to pass any bills or approve White House requests for emergency aid – including potentially for Israel.

Additionally, it means that Congress is unable to pass any spending bills that would allow the government to avoid a potential shutdown in mid-November.

Before Mr Scalise’s withdrawal from the race, House Republicans had made a number of proposals to end the turmoil on Capitol Hill.

One option would see the House’s Acting Speaker, Patrick McHenry, given additional powers for a temporary period that would allow the chamber to function, and, crucially, avoid a government shutdown.

Doing so, however, would require opposition Democrats to co-operate. Lawmakers on Thursday were split about whether the move would be a viable solution.

A second option would see Democrats come together with Republicans to successfully elect a consensus candidate.

Some Democrats have also suggested that a few Republicans could cross the aisle to vote for Minority Leader Hakeem Jeffries to become Speaker – although that option is seen as a long-shot by many on Capitol Hill.

The Speaker position has been vacant for 10 days since Kevin McCarthy was ousted by Republican hardliners who voted against him after he made a deal with Senate Democrats to fund government agencies.

Many of those same lawmakers refused to vote against Mr Scalise on Wednesday and Thursday.

Following the announcement, some lawmakers suggested that they hoped Mr Jordan – who had backed Mr Scalise after Wednesday’s ballot – would now become the nominee.

But Mr Jordan too faces an uphill climb in uniting the Republican caucus behind him, with one lawmaker – Ann Wagner – telling Politico that the Ohio congressman’s concession to Mr Scalise earlier in the week had been so “ungracious” it evoked “gasps in the room”.

When asked if he would support Mr Jordan after dropping out of the race, Mr Scalise replied pointedly that “it’s got to be people that aren’t doing it for themselves and their own personal interest”.

Mr McCarthy, for his part, said only that House Republicans have to “figure out their problems, solve it and select the leader”.

 

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Four unlikely speaker scenarios

Congress 

After Majority Leader Steve Scalise dropped out of the House speaker race last night, attention quickly turned to Rep. Jim Jordan (R-Ohio) as being next in line.

A few other names have drifted into the conversation, as well, including Majority Whip Tom Emmer (R-Minn.), Rep. Kevin Hern (R-Okla.) and Rep. Patrick McHenry (R-N.C.), the acting speaker pro tempore, who for the first time cracked open the door to being drafted when he said Thursday, “it’s up to the will of the conference.”

Also hanging in the air are four other, more far-fetched scenarios that might resemble “West Wing” or “Veep” plot lines (we’re not quite sure which):

1. Rep. Troy Nehls (R-Texas) hasn’t let go of the fantasy of a Speaker Donald Trump. “At some point in time, we all need to lay down our weapons and call in the leader of our party and have him address our conference,” the congressman told CNN’s Manu Raju.

2. The “Only Kevin” crowd hasn’t let go of the fantasy of resurrecting former speaker Kevin McCarthy. They are circulating a new letter arguing for the restoration of the ousted GOP leader.

3. Democrats, including Minority Leader Hakeem Jeffries, continue to float the idea of lending their votes to a speaker candidate under a bipartisan governing arrangement. But things would have to get significantly more dysfunctional for this path to become viable. “All Republican options have to fail first,” one Democratic House member said last night.

4. Rep. Dave Joyce (R-Ohio) wants the House to vote on giving McHenry the full powers of a speaker for a set time period, perhaps 30 to 90 days. He says he’s been workshopping the details of the plan with the House parliamentarian. (Do note that Rep. Matt Gaetz (R-Fla.), who orchestrated McCarthy’s ouster, has already expressed his displeasure with this plan.)

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Hamas militants trained for its deadly attack in plain sight and less than a mile from Israel's heavily fortified border



CNN
 — 

The footage is from the last two years, but it is chillingly prescient. In a December 2022 video, Hamas fighters can be seen flooding a training area, shooting rockets and capturing pretend prisoners as they surround mock Israeli buildings.

The camp, CNN analysis shows, had just been constructed, and was very close to Erez Crossing, the pedestrian passageway between Gaza and Israel that Hamas fighters ultimately breached last weekend in a bloody attack which killed over 1,200 people in Israel.

Another video taken more than a year ago, shows Hamas fighters practicing take-offs, landings and assaults with paragliders – the same unusual assault mode that Hamas deployed with lethal effect in the same Oct. 7 attack.

A CNN investigation has analysed almost two years of training and propaganda video released by Hamas and its affiliates to reveal the months of preparations that went into last week’s attack, finding that militants trained for the onslaught in at least six sites across Gaza.

Two of those sites, including the arid training site shown in the December video, were a little more than a mile from the most fortified and patrolled section of the Gaza-Israel border. Of the remaining sites: one is located in central Gaza, and the other three in far south Gaza.

Two years of satellite imagery, also reviewed by CNN, show no indication of an offensive Israeli military action against any of the six identified sites.

Not only was there activity in the last several months at the camps, but some camps also absorbed surrounding farmland, converting it from agriculture to barren area for training in the last two years, according to satellite imagery.

In the stunned aftermath of Hamas’ ruthless incursion – where militants abducted 150 people, overran Israeli military bases, and laid waste to towns and farms – questions are being raised about the intelligence and operational failures by Israel’s security apparatus.

The fact that Hamas trained for the attack in plain sight for at least two years raise further questions as to why Israel, home to the Middle East’s most sophisticated military and spying operation, was unable to pick up on and stop the October 7 attack?

When CNN reached out to the Israel Defense Forces (IDF) for comment, its international spokesperson Lt. Col. Jonathan Conricus said the findings were “nothing new.”

He added that Hamas has “had many training areas” and Israel’s military had “struck many training areas over the years in the different rounds of escalation.”

Conricus noted that Israel has not had a major escalation with Hamas in over two years, in reference to when hostilities between Israel and Hamas erupted in 2021. It followed weeks of tension in Jerusalem, where a group of Palestinian families faced eviction from their homes in East Jerusalem in favor of Jewish nationalists.

Conricus also said that Hamas may have made the facilities “look civilian.”

However, five of the sites – the sixth is a landing strip – do not have civilian features and are nearly identical in how they are constructed and arranged.

They are all surrounded by massive earthen berms, which are taller than the buildings in the camps. The buildings – most have no roofs – are nearly all made from cinderblocks and cement.

Some camps have gates and fences, while others have street curbs but no paved roads.

Asked about the camps, Conricus said they could not answer CNN’s questions “since they relate to the complex analysis of intelligence at the same time that we are fighting a war.”

“This topic, together with numerous other issues, will be investigated by the IDF at the end of the war,” he added.

Senior Hamas official Ali Baraka, the head of the Lebanon-based Hamas National Relations Abroad, told RT Arabic following Saturday’s attack that the terror organization has been preparing for the attack for two years.

Metadata analyzed by CNN indicates that Hamas conducted the trainings for months, sometimes over a year, before releasing the propaganda montages on their social media channels.

The videos also foreshadow the events of October 7.

In one clip, militants are seen practicing take-offs, landings and assaults with paragliders. The metadata showed it was filmed over a year ago. The shadows and position of the sun in the video also indicates that filmed training sessions either lasted for hours, or took place on multiple days.

During the October 7 attack, paragliders took off at dawn close to two training camps geolocated by CNN that are near the Gaza-Israel border.

The videos show that the same practice take-off location the paragliders used had also been used to test Hamas’ own homegrown drones. Metadata indicates those tests took place months before the paragliding montages took place.

Hamas terrorists are also seen in propaganda videos practicing with the type of weaponry they would use to attack on October 7. They created mock Israeli buildings and streets and are seen executing a number of different assault tactics on them.

At a training site hundreds of feet from the Erez Crossing, a wall of a building has a drawing of two palm trees and an animal figure that looks similar to Israel’s Erez Crossing battalion’s insignia.

The video shows them even practicing taking prisoners and zip-tying their hands at the camp.

Satellite imagery shows that the camp was constructed within the last year and a half.

In three of the training camps, they even created fake Israeli tanks consisting of what appears to be a large outer shell surrounding a truck. Fighters are seen practicing an attack against it, launching RPGs and other explosives.

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Chief diversity officers harm the students they say they help

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At the height of the pandemic, Congress appropriated an additional $190 billion to the nation’s schools in the hopes of preventing students from losing ground academically. One thing school districts did with that influx of cash was to hire chief diversity officers. Rather than stemming learning loss, however, chief diversity officers exacerbated the problem, especially among minority students. 

School districts create chief diversity officers or similar-sounding positions ostensibly to close racial achievement gaps by advocating for minority students and their particular needs. In practice, these bureaucrats enforce ideological orthodoxies on matters of race and gender that are educationally harmful for minority students.

Our national analysis of test scores finds that minority students had significantly greater learning loss during the pandemic in school districts that had hired chief diversity officers than in districts without one. Black and Hispanic test scores plummeted in districts with a chief diversity officer by an even wider margin than they did among White students in the same districts. 

CBS’ GAYLE KING SAYS ‘WOKEISM’ IS ‘TRUTHISM’ TO HER, ANNOYED BY WORD BECOMING PEJORATIVE

The extra decline in math achievement for Black and Hispanic students in districts with diversity officers was roughly one-quarter as large as the decline in learning for all students during that period. This additional learning loss translates into more than 4.5 percentile points on a nationally normed achievement test – a significant drop by any measure.

The negative effect of chief diversity officers held true even after we controlled statistically for how wide racial achievement gaps were in districts before the pandemic as well as for the trend in those gaps during the preceding decade. Racial achievement gaps went from bad to worse in these districts during the pandemic. 

Hiring a senior district official who insists that Black and Hispanic students not be held to the same standards of behavior or academic achievement as other students because of structural racism obviously undermined minority student success. 

In 2021, 39% of school districts with at least 15,000 students had a chief diversity officer. After $190 billion poured into schools, that percentage rose to 48%. Among the largest school districts (those with more than 100,000 students), 89% now have those bureaucrats.

But even among smaller districts with between 15,000 and 20,000 students, 40% have such a position. Federal COVID-19 money has facilitated the spread of this idea from universities into school districts, starting with the large ones but eventually making its way into modest-sized districts. 

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As chief diversity officers creep into every educational institution, they fail to improve academic achievement, but they do succeed at their true purpose: spreading their ideological orthodoxies on issues of race and gender. While school districts with these officers were more likely to suffer greater learning loss among minority students during the pandemic, they were also significantly more likely to adopt policies to hide information from parents about their own child’s gender issues.

Among school districts with a chief diversity officer, 40% recently adopted policies not to tell parents about their own children changing names, pronouns, or the bathrooms they use, compared to only 23% among districts without one. 

We don’t know whether these diversity officers directly contributed to districts adopting these policies, but we can clearly see that districts with them are more focused on advancing contentious ideological agendas than attending to student learning.

As school districts are obligated to spend the last of the $190 billion they received by the end of next year, many district officials and their fellow travelers fear that schools need to be rescued from this fiscal cliff by another injection of extra federal funds.

Rather than bleed the nation’s taxpayers further with nothing but destruction to show for it, school district officials should start cutting their spending. The first and most obvious expense they should eliminate is the chief diversity officer. 

CLICK HERE TO READ MORE FROM JAY P. GREENE

Madison Marino is a researcher in the Center for Education Policy at the Heritage Foundation.

 

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