Blaming 'the gun lobby' and the NRA for violence is a 'convenient fiction' to avoid offending white people

John Stoehr
June 03, 2022

Wayne LaPierre speaking at the 2018 Conservative Political Action Conference (CPAC) in National Harbor, Maryland. (Gage Skidmore/Flickr)

USA Today ran a frontpage story this morning about “the gun lobby” fattening its impact “far beyond the NRA.” It rounds up the various groups united in opposition to gun-law reform. Altogether, last year these organizations spent nearly $16 million on lobbying, a record.

The story was on the frontpage, because spending by “the gun lobby” is topical. The president, in mourning two teachers and 19 children shot to pieces in the Uvalde massacre, demanded the Republicans, especially in the Senate, stand up to “the gun lobby.” The USA Today report provided valuable context. There’s more here than the NRA.

I’m somewhat blind to numbers. I don’t usually pay attention to dollar amounts. Today, however, I happened to notice that while $16 million is a lot to normal people, to the very obscenely rich, who can spend such vast sums as to bend political reality in their favor, it’s pocket change.

As if to provide a point of comparison, another story in today’s paper was about Kremlin capo Andrey Melnichencko, who lost a super-yacht to international sanctions against Russia, but managed to save another. The former is worth $600 million. The latter is worth $300 million.

That’s serious money. Standing up to a “gun lobby” that’s spending a $16 million a year is one thing. A billion bucks, though, is another. One of these the Republicans can weather easily. The other would hurt so much you’d never ever again consider standing up to “the gun lobby.”

My point here is that the NRA and the others are not so powerful as to justify the Republicans’ stand against gun-law reform for the last decade. What’s driving them isn’t money so much as “gun culture,” which is a polite way of describing a white-power reaction to the forces of liberal democracy threatening the “natural order of things.”

A second point

The NRA etc. are not so powerful as to back conservative Senate Democrats into a corner. Joe Manchin, as well as three or four other Democratic senators, wouldn’t lose much by standing up to them.

Yet they have not.

I think they understand that “the gun lobby” is for them a convenient fiction. Instead of demanding that their respectable white constituents acknowledge the political advantages inherent in being respectable white constituents – by calling “gun culture” a manifestation of white power and by calling gun control a manifestation of liberal democracy – Democratic Senators can instead blame “the gun lobby” for Washington’s impotent reaction to a decade of murdered innocents.

Ditto for Joe Biden.

I would presume that the president knows perfectly well what I’m spelling out here: that blaming “the gun lobby” is doublespeak used to avoid offending white supporters steeped in, to paraphrase Neil Meyer, the deep American reverence for guns and mythological manliness.

That’s my second point. The same white-power impulses pushing the Republicans against gun-law reform are the same white-power impulses pushing just enough Democratic senators away from it. This framing is so dominant as to constitute our political reality, which is another way of saying that racism constitutes our political reality.

The result, as long as the Senate filibuster remains intact, is congressional impotence in the face of a decade of murdered innocents. The result is a country in which the pernicious dread and fear of terrorism anytime anyplace colonizes the American mind.

A third point

To their immense credit, my left-liberal brethren are empurpled with frustration and rage. They cannot accept and will never accept a present time that’s bound by the white-power parameters of the past.

That’s good. We must keep fighting.

But let’s not let the political advantages inherent in being white liberals blind us to the resilience of those deeply rooted political advantages. (I do not intend to explain to nonwhite liberals what they already know.)

Desperate for action of any kind, white liberals are loudly and in increasing numbers calling on Biden to lean harder on Joe Manchin and the other conservative Senate Democrats. Force them to take a stand against “the gun lobby,” they say. Force them to carve out an exception to the filibuster to pass a weapons ban and other reforms.

And if they balk, well, at least the base of the Democratic Party, when it comes time to vote in November, will know exactly who to blame.

As The Atlantic’s Molly Jong-Fast said Wednesday: “A win on guns would not only protect children; it would shore up Biden’s anemic poll numbers and excite the Democratic base. If Democratic voters don’t show up this fall, it will be because they’ve lost faith in Democrats’ ability to deliver. And yet, Democrats seem to be terrified to deliver.”

Molly is far from alone. White liberals have been calling on party leaders to do something in increasing numbers and with increasing volume. But due to their desperation (I’m being generous here), white liberals have not thought enough about the true character and deep history of the problem. “Do something” is a variation of “the gun lobby.”




It’s a convenient fiction.

We could and should demand that white liberals acknowledge the historic political advantages inherent in being white liberals. “Exciting the base” in November would therefore be a moot point. The base would already be crystal clear about who’s to blame and what. But that’s hard work, even for – perhaps especially for – white liberals.

Instead, it’s easier to demand party leaders do something, anything, saying if they don’t, the base of the Democratic Party won’t turn out.

Yet, as I said, the base should already know who’s to blame and what. That is, if it’s not blinded by the white-power impulses involved on account of benefitting from those very same white-power impulses. Blaming party leaders is the path of least resistance. It’s a convenient fiction white liberals use to avoid offending other white liberals.

In doing so, white liberals end up reinforcing a framing of the issue that’s so dominant as to constitute our political reality, which is another way of saying racism constitutes our political reality.

As long as the pernicious fear of terrorism anywhere anytime colonizes our minds, none of us, no one, is free. White liberals can choose freedom from history. They must start with themselves.


John Stoehr is a fellow at the Yale Journalism Initiative; a contributing writer for the Washington Monthly; a contributing editor for Religion Dispatches; and senior editor at Alternet. Follow him @johnastoehr.

BACKROOM, BOURBON,CIGARS,GUNS
The NRA’s ‘Shadow Convention’ Reveals the Group’s True Purpose

Tim Dickinson
Mon, May 30, 2022,

Wayne LaPierre - Credit: Brandon Bell/Getty

On the third floor of Houston’s massive convention center, far above the noise and rabble of the gun show at the National Rifle Association’s annual meeting, a luxury hospitality suite was closed to normal NRA members. It was reserved instead for the gun lobby’s biggest donors, who belong to its “Ring of Freedom.” Here, grandees could escape from the masses, sink into plush leather couches, belly up to the refreshment tables, and marvel at a surreal pair of massive taxidermy installations, including one of a grizzly bear felling a moose.

The NRA loves to bash “the elites” — in Hollywood and the media — whom they blame for whipping the nation into what they describe as gun-grabbing hysteria after a mass shooting like the one that left 19 elementary school children dead in Uvalde, Texas. The organization holds itself out as a stalwart defender of the everyman against “the world’s most powerful, deceitful and ruthless opponents,” as NRA honcho Wayne LaPierre put it in a Saturday address to NRA members.

But at its annual meeting in Houston, the NRA hosted a high-end shadow convention for its own elite members and backers — many of them executives of gun manufacturers and sellers. These “Ring of Freedom” events underscore how the NRA has transformed itself from a pro-second amendment organization, focused on the liberty interests of its members, into a front group for gun industry itself.

The NRA today is best understood as a stalwart defender of gun commerce. The NRA doesn’t sell weapons, but it sells the fear that sells the guns — always warning its members against a rising tide of violence, from which they must be prepared to defend themselves with deadly force. Meanwhile, its lobbyist go to the mat in Washington and state capitals across the country to block restrictions on the kinds of weapons that dealers can sell, and to open up new markets — including by passing conceal-carry laws, so that Americans gun consumers don’t just purchase a gun for the home, but plunk down on another to take to town. When school massacres occur, the NRA predictably pushes to expand guns into another new market — the classroom — a move that could turn the nation’s more than 3 million teachers into gun buyers.

The mass of NRA members at the annual convention are motley crew. They dress in camo shorts and “Let’s Go Brandon” hats. Some sport bushy gray beards, tattoos, and T-shirts with the sleeves torn off. The more fashionable are outfitted in trim fitting tactical gear, but most would not look out of place at a NASCAR rally. Most have little interest in the political meetings and training sessions on the top floors of the convention hall. They’ve come to check out massive gun show that the NRA’s commercial partners have assembled on in the convention showroom on the first floor.

But if you look closely, you’ll also identify a rarefied group of NRA convention gowers who dress like they’re ready to take in the Kentucky Derby, decked out in tailored jackets and southern cocktail finery.

The NRA welcomes such well-heeled members into its Ring of Freedom if they pony up at least a thousand dollars a year. These individuals get to rub elbows with the gun lobby’s mega-donors, who give more than $1 million lifetime, and are inaugurated into the “Golden Ring of Freedom.” These folks, mainly firearm industry CEOs, are bestowed gold blazers, which mark them in the convention hall as VVIPs.

The annual meeting in Houston featured a slate of private events for these grandees that was not publicized to rank-and-file NRA members. The Ring of Freedom elites were invited to arrive a day early, stay in a special bank of rooms at the luxury Marriott Marquis — replete with a rooftop “lazy river” pool in the shape of the state of Texas and its own private “sky bridge” walkway crossing to the convention center, neatly avoiding the crowds of protesters on the sidewalks below.

A schedule obtained by Rolling Stone indicates these NRA bigwigs began to celebrate, on Thursday, just two days after the Uvalde massacre, with a morning clay pigeon shoot, and an “NRA Ring of Freedom Corporate Partners’ Luncheon.” (The attendees weren’t disclosed but the NRA lists among its “Top Ten Industry Allies” the likes of Ruger, Smith & Wesson, Taurus, and Glock.)

Friday morning in the George Bush Grand Ballroom of the convention center, the NRA hosted its Ring of Freedom Celebration Breakfast. A bouncer stood at the door to keep average members at bay, but from the door NRA CEO Wayne LaPierre could be seen on a large screen, feting Larry and Brenda Potterfield, founders of Midway USA, an online gun shop that was the lead sponsor of the convention. He bestowed on them the “NRA Defender of Freedom” award.

At noon, there was the Annual Women’s Leadership Forum Luncheon, attended by NRA members who looked like they were on their way to a high end wedding reception, held at a roped-off room of the Marquis.

Amid the Friday night speeches, when even Donald Trump and LaPierre performed rituals of mourning for the children of Uvalde, the Potterfields — Larry in his gold blazer — were trotted out on stage to underscore the power of cash at the NRA. They held an enormous check for $21 million, representing the sum of donations to the NRA from the dealer’s long-running “round up” program, which lets buyers send some pocket change from every purchase to the rifle association.

That night, in the ballroom of the nearby Hilton, the NRA staged a dinner and auction to benefit its lobbying arm, NRA-ILA. Attendees, dressed to the nines — including one woman who wore boots that appeared to be fashioned of actual zebra skin — and swigged Perrier as they picked up their wristbands for a closed-door event billed as featuring “Second Amendment leaders, industry executives and special guests,” to bid on auction finery including “engraved firearms, fine art, hunts and one-of-a-kind items.”

On Sunday, the NRA’s “Grand Ole Night of Freedom Concert” was canceled after all the artists pulled out, out of respect for the victims of Uvalde. The NRA was mum on whether its planned “Cigar and Bourbon Reception,” scheduled to follow the concert, went forward.

Small nuclear power projects may have big waste problems -study

Tue, May 31, 2022, 3:44 PM·3 min read
By Timothy Gardner

WASHINGTON, May 31 (Reuters) - A planned new generation of small nuclear reactors will create more waste than conventional reactors, while treatments to make some types of waste safe could be exploited by militants trying to obtain fissile materials, a study published on Tuesday said.

The projects, called small modular reactors (SMR), are designed to be simpler and safer than conventional plants in the case of accident. They are also expected to be built in factories as opposed to today's massive light-water reactors that are built on site and typically run billions of dollars over budget.

SMR backers say they are a safe way to boost generation of virtually emissions-free electricity and will help curb climate change.

But the reactors would create more radioactive waste, per unit of electricity they generate, than conventional reactors by a factor of up to 30 according to a study https://www.pnas.org/doi/full/10.1073/pnas.2111833119 published in the Proceedings of the National Academy of Sciences.

Some of the reactors, with molten salt and sodium-cooled designs, are expected to create waste that needs to go through additional conditioning to make it safe to store in a repository. Those treatments are vulnerable to being converted by militants to make fissile materials for a crude nuclear bomb, it said.

Allison Macfarlane, a co-author of the study and former head of the U.S. Nuclear Regulatory Commission, said SMR designers "don't pay that much attention in general to the waste ... because the thing that makes money for them is the reactor."

"But it's important to know about the waste products and whether they're going to pose any difficulties in disposing of them and in managing them," Macfarlane said.

The United States has no plan to permanently store long lasting, toxic nuclear waste, after Washington stopped funding the Yucca Mountain waste site in Nevada. Instead, the waste, which the industry calls spent nuclear fuel, mostly sits at nuclear plants in pools and later in dry casks made of steel and concrete.

"Even if we had a robust waste management program, we think there would be a lot of challenges to deal with some of the SMR waste," said Lindsay Krall, the study's lead author.

NuScale Power Corp reactors, which could use light water as a coolant, as do conventional nuclear plants, would produce about 1.7 times more waste per energy equivalent than traditional reactors, the study found.

Diane Hughes, a NuScale spokesperson, said the study used outdated design information and incorrect assumptions about the plants.

Other reactors, being planned by Terrestrial Energy and Toshiba Corp that plan to use fuels and coolants different than traditional reactors are also expected to create more waste per unit of energy, the study said. Those reactors would likely require additional procedures known as conditioning which offer pathways to proliferation, it said.

Simon Irish, Terrestrial Energy's chief executive, said its plant would generate less waste per unit of power and the company is developing a conversion process to make waste more geologically stable than waste from current reactors.

Toshiba did not immediately respond to a request for comment.

(Reporting by Timothy Gardner; editing by Richard Pullin)

Southern Company Says It's Back on Track for Its Big Nuclear Plant

By Reuben Gregg Brewer - Jun 1, 2022 

KEY POINTS

Southern Company is building two nuclear power plants that it says are on track to be operational in late 2023.

Nuclear power is a clean energy source.

Building nuclear power plants is expensive and notoriously difficult.


NYSE: SO
The Southern Company

Market Cap
$80B
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Price as of June 3, 2022, 

Southern is promising that this time it really is getting close to finishing its late and over-budget nuclear power plants.

The Southern Company (SO -0.91%) is generally a boring utility known for paying a reliable dividend. In fact, for 75 consecutive years the dividend has either been increased or held steady. That's an impressive record, but the company's record on its Vogtle nuclear power project isn't nearly as good. This quarter, though, management is confident that it really has the project back on track. Here's the newest plan to get these nuclear plants up and running.

A good idea

Southern is, at this point, the only electric utility building nuclear power plants in the U.S. It is making this investment for a very good reason, given that nuclear power doesn't emit carbon. It is therefore a clean energy source. Environmental advocates would argue that the inherent riskiness of nuclear power, given a few notable meltdowns or near meltdowns, makes it an undesirable source of electricity. There's a case to be made there.

 

IMAGE SOURCE: GETTY IMAGES.

However, it is also important to put the nuclear disasters that have happened into broader context. For example, the Fukushima plant suffered from an earthquake and tsunami, a level of devastation that wasn't planned for. Three Mile Island didn't cascade into a major catastrophe. And Chernobyl involved material human errors. There have been many lessons learned from earlier problems that have been incorporated into more modern nuclear power plant designs. Today's plants, including the model being built by Southern Company that is already being used in China, are expected to be safer than older ones. And, other than these major incidents, nuclear power has proven to be pretty safe and reliable.

For Southern, the two plants it is constructing are expected to provide years of reliable baseload power. Collectively known as the Vogtle project, it will allow the company to provide cleaner electricity and balance the inherent volatility of renewable clean power sources like solar and wind. So, from a long-term perspective, it sounds like a pretty good idea for the giant utility.

Missing the mark

The problem is that the Vogtle project has been going poorly for years. That includes the original contractor filing for bankruptcy, a move that led another utility that was using the same contractor to simply call off its nuclear power plans. Southern didn't do that, opting to take over management of the project itself. By that point, however, Vogtle was already way over budget and late. Southern was starting to get things moving again when the pandemic hit, with the health scare leading to labor issues that caused more delays and cost overruns. Ongoing labor and supply chain issues likely aren't helping any.

It has not been pretty, but in the first quarter Southern put out a schedule that it says it can meet. The key end dates include putting the Vogtle 3 in service between the fourth quarter of 2022 and the first quarter of 2023. Vogtle 4 is then slated to go live between the third quarter of 2023 and the fourth quarter of 2023.

Collapse

The next big step for Vogtle 3 is for fuel to be loaded sometime around October, which was pushed out from August. Vogtle 4, meanwhile, will start key testing between January and February 2023, pushed out from October 2022. Fuel load is scheduled for July or August of 2023, out from April. The company has nearly $1.7 billion in capital spending ahead of it on this project, rounding out a total spend of $10.4 billion.

That, however, is just Southern's share. The total project cost started out at around $14 billion but has now ballooned, according to some estimates, to more than $30 billion. Partners in the project, including the government, are pitching in the rest. Clearly, Southern has been having a rough time getting this plant done.

Almost there

At this point, Southern really has no choice but to keep pushing forward with the Vogtle project. And the completion date, while moved out yet again, is slowly getting closer, with both plants under construction nearing important milestones. This is just one of many things Southern is working on, but it is an important one for investors to monitor given the high-profile nature of the construction effort and the long-term clean energy it will provide... when Vogtle 3 and 4 are finally complete.

MOTLEY FOOL

Global refiners falter in efforts to keep up with demand

The Valero refinery next to the Houston Ship Channel is seen in Houston

Mon, May 30, 2022
By Laura Sanicola

(Reuters) -Refiners worldwide are struggling to meet global demand for diesel and gasoline, exacerbating high prices and aggravating shortages from big consumers like the United States and Brazil to smaller countries like war-ravaged Ukraine and Sri Lanka.

World fuel demand has rebounded to pre-pandemic levels, but the combination of pandemic closures, sanctions on Russia and export quotas in China are straining refiners' ability to meet demand. China and Russia are two of the three biggest refining countries, after the United States. All three are below peak processing levels, undermining the effort by world governments to lower prices by releasing crude oil from reserves.

Two years ago, margins for making fuel were in the dumps due to the pandemic, leading to multiple closures. Now, the situation has reversed, and the strain could persist for the next couple of years, keeping prices elevated.

"When the coronavirus pandemic occurred, demand for global oil was not expected to fall for a long time, and yet so much refining capacity was cut permanently," said Ravi Ramdas, managing director of energy consultancy Peninsula Energy.

Global refining capacity fell in 2021 by 730,000 barrels a day, the first decline in 30 years, according to the International Energy Agency. The number of barrels processed daily slumped to 78 million bpd in April, lowest since May 2021, far below the pre-pandemic average of 82.1 million bpd.

Fuel stocks have fallen for seven straight quarters. So while the price of crude oil is up 51% this year, U.S. heating oil futures are up 71%, and European gasoline refining margins recently hit a record at $40 a barrel.

STRUCTURALLY SHORT

The United States, according to independent analyst Paul Sankey, is "structurally short" on refining capacity for the first time in decades. U.S. capacity is down nearly 1 million barrels from before the pandemic to 17.9 million bpd as of February, the latest federal data available.

LyondellBasell recently said it would shut its Houston plant that could process more than 280,000 bpd, citing the high cost of maintenance.

Operating U.S. refiners are running full-tilt to meet demand, especially for exports, which have surged to more than 6 million bpd, a record. Capacity use currently exceeds 92%, highest seasonally since 2017.

"It's hard to see that refinery utilization can increase much," said Gary Simmons, Valero chief commercial officer. "We've been at this 93% utilization; generally, you can't sustain it for long periods of time."

The U.S. ban on Russian imports has left refiners in the northeast United States short of feedstocks needed to make fuel. Phillips 66 has been running its 150,000-bpd catalytic cracker at its New Jersey refinery at reduced rates because it cannot source low-sulfur vacuum gasoil, according to two sources familiar with the matter.

RUSSIA CAPACITY IDLED, CHINA RESTRICTING EXPORTS

Russia has idled about 30% of its refining capacity due to sanctions, according to Reuters estimates. Outages are currently about 1.5 million bpd, and 1.3 million bpd will likely stay offline through the end of 2022, J.P. Morgan analysts said.

China, the second-largest refiner worldwide, has added several million barrels of capacity in the last decade, but in recent months has cut production due to COVID-19 restrictions and capped exports to curb refining activity as part of an effort to cut carbon emissions. China's throughput dropped to 13.1 million bpd in April, the IEA said, down from 14.2 million bpd in 2021.

Other countries are also not adding to supply. Eneos Holdings, Japan's largest refiner, does not plan to reopen recently closed refineries, a spokesperson told Reuters.

Some new projects worldwide have been hit by delays. A 650,000-bpd refinery in Lagos was supposed to open by the end of 2022 but is now delayed until the end of 2023. A source with direct knowledge said the refinery has not yet hired a company to do commissioning work which will take several months.

There have been some restarts. French major TotalEnergies began the process of restarting the 231,000 bpd Donges refinery in April after shutting in December 2020, while a 300,000-bpd complex in Malaysia restarted earlier this month.

SUPPLY CRUNCH

Diesel users have been squeezed, particularly in agriculture. Ukrainian farmers are short, as supply from Russia and Belarus has been cut off due to the war.

Sri Lanka, which is in the midst of a fuel crisis, shut its only refinery in 2021 because it lacked sufficient foreign exchange reserves to buy imported crude. It is looking to reopen that facility because fuels are even more expensive.

Brazil's state-owned Petrobras told the government that importers may be unable to secure U.S. diesel for tractors and other farm equipment to harvest crops in one of the world's biggest agricultural producers.

“If refineries in the U.S. get damaged during hurricane season, or anything else contributes to the market’s tightness, we could be in real trouble," said a Brazilian refining executive.

(Reporting by Laura Sanicola; additional reporting by Florence Tan in Singapore, Ron Bousso in London, Yuka Obayashi in Tokyo, Sabrina Valle in Houston, Julia Payne in Lagos, and Uditha Jayasinghe in Colombo, Sri Lanka; Editing by David Gregorio)

IMPERIALISM IS FINANCIAL CAPITALI$M

First Horizon shareholders approve proposed $13.4B deal with TD

Enlarge
First Horizon Building in Downtown Memphis
STEPHEN MACLEOD | MBJ

By John Klyce – Reporter, Memphis Business Journal
May 31, 2022

First Horizon announced on Feb. 28 it had entered into an agreement to be acquired by Toronto-based TD Bank Group, in an all-cash transaction valued at $13.4 billion, or $25 per share.

Now, the Memphis-based institution has taken a major step toward completing the deal — it’s gained shareholder approval.

First Horizon held a special meeting of shareholders on Tuesday, May 31, at its Downtown headquarters, to consider and vote on the merger proposal, as well as other proposals related to the merger. According to a press release, shareholders voted to approve the deal. The $25 per share is a significant premium over First Horizon's stock price on Jan. 6, when First Horizon was approached about the merger. That day, the price closed at $18.09. On Friday, May 27, First Horizon's stock price closed at $23.10.

"Approval of the transaction demonstrates the confidence our shareholders have in the financial and strategic benefits of the transaction and the value it provides our associates, clients, and communities," said president and CEO Bryan Jordan, in a press release. "Following the completion of the transaction, the combined organization will have immediate scale benefits and be well positioned to create extraordinary value with a shared customer-centric strategy and broader client capabilities."

Over the past few months, more details about the transaction with TD have been revealed, with a proxy statement filed with the U.S. Securities and Exchange Commission (SEC) containing a wealth of information.

For example, a section of the proxy is dedicated to a timeline of the deal's progress, charting negotiations from the first inquiry received by president and CEO Bryan Jordan on Jan. 6, to the execution of the agreement on Feb. 27.

It contains Jordan’s employment agreement with TD — which includes a $9 million retention award, in the form of restricted stock units — and the golden parachute compensation executives could receive, as a result of the merger. These aren't necessarily guaranteed payouts, because certain employment conditions in their change-in-control agreements (CICs) must be met to trigger those elements of the compensation. But all together, the bank’s leaders could receive a total of nearly $100 million.

The proxies also note TD’s commitment to the Bluff City, asserting that it “intends to maintain significant business, employment, and community engagement in the Memphis metro area following the closing.”

This tracks with what executives have said previously. First Horizon is the last of the large, publicly traded banks based in Memphis. Previously, Union Planters Bank and National Commerce Financial Corp. were also headquartered here. But Union Planters was acquired by Regions in 2004 for $6 billion, while National Commerce was acquired by SunTrust that same year for $6.98 billion.

The number of local employees at those institutions dropped over time after the acquisitions; and when the deal was announced, MBJ asked Jordan how First Horizon can avoid a similar fate. Here’s what he said:
“If I look at other mergers TD has done in the past, what they’ve shown is not only the ability to maintain employment but to leverage the capabilities of organizations, and, in often cases, grow employment. This was a rapidly growing organization, and I think we have a strong ability in this combination to minimize the adverse impact on the communities that we serve."

Post-acquisition, the new TD Bank Group would have more than 2,600 branches and nearly 30 million customers. In the U.S., First Horizon's $89 billion in assets would push the combined TD Bank Group past $600 billion in assets. The U.S operations of TD Bank stands to hit 10.7 million customers across 1,560 locations in 22 states. The First Horizon-TD transaction is expected to close in November 2022.

ESG Backlash Has Fund Clients Demanding Proof It Works

Lisa Pham
Tue, May 31, 2022,

ESG Backlash Has Fund Clients Demanding Proof It Works

(Bloomberg) -- Investment clients are demanding more evidence that ESG asset managers can deliver on their promises, amid a steady stream of criticism that the industry is on the wrong track.

“There’s a lot of pressure on investment managers to demonstrate the value that they’re getting out of their stewardship work,” said Peter Reali, managing director of responsible investment and engagement at Nuveen LLC, which oversees about $1.3 trillion. And when it comes to wider industry efforts to cut portfolio emissions, ESG investment professionals “definitely hear the complaints and concerns,” he said.

Environmental, social and governance investing has drawn an increasingly vocal chorus of detractors this year, with everyone from US Republicans to Elon Musk weighing in. But fund bosses are also facing more targeted criticism from ESG insiders, with notable highlights including hedge fund activist Chris Hohn’s recent diatribe against so-called ESG engagement strategies. At the same time, regulators are growing more explicit in their warnings that a crackdown is coming.

Against that backdrop, clients are asking more specific questions around things like proxy voting, and they want evidence that ESG engagement is actually “getting companies to move,” Reali said.

But despite much of the ESG industry’s focus on climate, the data suggest the investment industry isn’t really moving the needle. Last year, global CO2 levels rebounded to their “highest level in history,” the International Energy Agency said in March. Meanwhile, the ESG industry has surpassed $40 trillion in value, according to Bloomberg Intelligence.

Simon Rawson, director of corporate engagement at nonprofit ShareAction, said he’s seen relationships between asset managers and the companies in which they hold stakes sometimes get too comfortable.

“If they’re going to be robust stewards and challenge companies, they also need to be able to have courageous conversations,” he said. “And honestly, most of the time they aren’t prepared to compromise the relationship that they have with the company.”

In the current climate of ESG skepticism, “tea-and-biscuits engagement with companies just doesn’t cut it anymore,” he said.

Reali said Nuveen is trying to make it easier for clients to track and monitor how well near-term ESG targets are being met. Having a 2050 net-zero emissions goal “is worthless without interim targets, interim goals and progress reporting,” he said. “The systems have to be built now. I think people are really underestimating the challenge we’re facing here.”

Mirza Baig, global head of ESG investments at Aviva Investors, said it’s “difficult to argue that, as an industry, we have done enough.” Despite the rhetoric, “in too many areas, we are still operating on a business-as-usual basis, while bolting on renewables and energy efficiency initiatives.”

Baig singled out a tendency in the industry to rely on the environmental metric of carbon intensity, whereby a company’s carbon footprint is measured as a percentage of the total.

“The problem is absolute emissions levels continue to rise,” he said. “This strategy of continuing to invest substantial sums in brownfield oil and gas sites, but then supplementing that with lower carbon solutions, in aggregate will take us further away from a Paris Aligned energy mix in the future.”

While it’s important to approach the subject of decarbonization “with a degree of realism,” the ESG industry needs to ask itself whether it’s done enough and at a fast enough pace, Baig said.

“I think we can all objectively say it hasn’t,” he said.

Most Read from Bloomberg Businessweek

CRIMINAL CAPITALI$M
Deutsche Bank Replaces DWS’s Woehrmann After Greenwash Raid

Steven Arons, Sheryl Tian Tong Lee and Ambereen Choudhury
Wed, 1 June 2022, 5:06 am·4-min read

(Bloomberg) -- Deutsche Bank AG’s embattled DWS Group Chief Executive Officer Asoka Woehrmann resigned hours after a police raid at the asset manager, the culmination of months of controversy surrounding the executive.

Stefan Hoops, head of the German lender’s corporate bank, will assume the top role at DWS from June 10, according to a statement Wednesday. His previous role will be taken by David Lynne, who leads the corporate bank for Asia-Pacific based in Singapore.

The departure of one of Deutsche Bank CEO Christian Sewing’s former close allies underscores the rising pressure since former DWS chief sustainability officer Desiree Fixler’s allegations that the company inflated its ESG credentials. The raids add to a growing list of regulatory and legal headaches for Sewing after law officials swooped into both firms in Frankfurt on Tuesday.

DWS shares fell as much as 8% in Frankfurt on Wednesday, adding to a 5.7% drop the previous day. The stock was down 7.3% at 31 euros ($33) as of 1:05 p.m. local time.

“The allegations made against DWS and me over the past months, including personal attacks and threats, however unfounded or undefendable, have left a mark,” Woehrmann wrote in a farewell message to staff seen by Bloomberg. “They have been a burden for the firm, as well as for me and, most significantly, for those closest to me. So it is with an extremely heavy heart that I have agreed with the firm to resign.”

The greenwashing probes also underscore the growing scrutiny of money managers and their sustainability claims as demand for ESG investments soars. Assets tied to environmental, social and governance issues are expected to surge to more than $50 trillion by 2025, or about a third of global assets under management, according to Bloomberg Intelligence.

“Asset managers, especially those operating in markets such as Europe and the US, need to make sure they can support their ESG claims given regulators’ scrutiny of greenwashing,” said Mak Yuen Teen, a professor at the National University of Singapore who researches corporate governance.

For Woehrmann, the raid was another blow after he faced scrutiny over his use of personal email for business purposes and the role his relationship with a German businessman played in deals.

While the negative news flow around DWS in recent months had annoyed the bank’s top brass, Bloomberg has reported, Sewing had stood by Woehrmann. Earlier this year he said that the executive had “done an outstanding job” and in Wednesday’s statement thanked him for his “impressive work and performance.”

He took over the DWS job in 2018, soon after the asset manager’s poorly-received initial public offering. Investors had yanked billions of euros from its funds and Sewing asked Woehrmann to turn the asset manager around after he’d impressed him running the bank’s German retail operations. He managed to stem the outflows and morale improved.

Woehrmann also slashed costs at the asset manager while boosting revenue. The firm last year achieved the highest pretax profit since before its listing four years ago.

Like Woehrmann before him, Hoops is close to Sewing and he has spent his entire career at Deutsche Bank, most of it in the trading unit before Sewing tapped him in 2019 to turn around the flagging transaction banking business.

The business was supposed to be a centerpiece of the overhaul but has seen results outshone by those at the investment bank. The unit has faced strong interest-rate headwinds, though Hoops’ relentless focus on introducing deposit charges for clients has recently contributed to two consecutive quarters of double-digit revenue growth.

Growing Chorus

The ESG industry has recently faced attacks from a growing chorus of detractors. Jim Whittington, head of responsible investment at Dimensional Fund Advisors, said the sustainability trend is struggling both in terms of real-world impact and returns. HSBC Holdings Plc’s asset management unit recently suspended its head of responsible investment after he questioned the sense of focusing on climate change.

The US Securities and Exchange Commission floated tighter rules last week to ensure a product’s name is squarely focused on its actual strategy, with most observers fixating on what the restrictions mean for socially responsible investing. The proposals could hit thousands more funds trading everything from value and growth stocks to bonds and emerging markets.

Misleading Claims

Fixler has said that DWS’s claims that hundreds of billions of its assets under management were “ESG integrated” were misleading because the label didn’t translate into meaningful action by relevant fund managers. DWS has since stopped using the label.

Woehrmann fired former sustainability officer Fixler in March last year, saying in a memo to staff that her unit hadn’t made enough progress. She sued for unfair dismissal but lost the case before a Frankfurt labor court in January.

Still, ESG assets have continued to pour into the bank. DWS funds saw record net inflows of 48 billion euros ($51 billion) in 2021, with ESG products accounting for 40% of the total, according to a press release.

MMM YARG GROWL CRUNCH EAT CREDIT

Zombie Firms Face Slow Death in US as Era of Easy Credit Ends


Lisa Lee
Tue, May 31, 2022, 

BLOOMBERG



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(Bloomberg) -- They are creations of easy credit, beneficiaries of central bank largesse. And now that the era of unconventional monetary policy is over, they’re facing a challenge like never before.

They are America’s corporate zombies, companies that aren’t earning enough to cover their interest expenses, let alone turn a profit. From meme-stock favorite AMC Entertainment Holdings Inc. to household names such as American Airlines Group Inc. and Carnival Corp., their ranks have swelled in recent years, comprising roughly a fifth of the country’s 3,000 largest publicly-traded companies and accounting for about $900 billion of debt.

Now, some say, their time may be running short.

Firms that could once count on virtually unfettered access to the bond and loan markets to stay afloat are being turned away as investors girding for a recession close the spigot to all but the most creditworthy issuers. The fortunate few that can still find willing lenders face significantly higher borrowing costs as the Federal Reserve raises interest rates to tame inflation of more than 8%. With surging input costs poised to eat away at earnings, it’s left a broad swath of corporate America with little margin for error.

The end result could be a prolonged stretch of bankruptcies unlike any in recent memory.

“When interest rates are at or close to zero, it’s very easy to get credit, and under those circumstances, the difference between a good company and a bad company is narrow,” said Komal Sri-Kumar, president of Sri-Kumar Global Strategies and former chief global strategist of TCW Group. “It’s only when the tide runs out that you figure out who is swimming naked.”

Of course, there have been any number of moments over the past decade when zombie firms have appeared on the cusp of a reckoning, only for markets to be tossed a last-minute lifeline. But industry watchers note that what makes this time different is the presence of rampant inflation, which will limit the ability of policy makers to ride to the rescue at the 11th hour.

That’s not to say that a wave of defaults is imminent. The Fed’s unprecedented efforts to bolster liquidity following the onset of the pandemic allowed zombie companies to raise hundreds of billions of dollars of debt financing that could last months, even years.

Yet as the central bank works to quickly unwind the stimulus, the effects on credit markets are already plain to see.

Junk-rated companies, those ranked below BBB- by S&P Global Ratings and Baa3 by Moody’s Investors Service, have borrowed just $56 billion in the bond market this year, a more than 75% decline from a year ago.

In fact, issuance in May of just $2.2 billion is set to be the slowest for the month in data going back to 2002.

“If rates had not been so low, many of them would have gone under” already, said Viral Acharya, a professor at New York University’s Stern School of Business and former deputy governor of the Reserve Bank of India. “Unless we have another full-blown financial crisis, I don’t think the Fed’s capacity to bail out is necessarily that high. Especially when they are explicitly saying they want to reduce demand. How is that consistent with keeping these firms alive?”

Raising cash in the leveraged loan market hasn’t been much easier amid concern monetary policy tightening could tip the US into a recession. New loan starts of under $6 billion in May compare with more than $80 billion in January, according to data compiled by Bloomberg.

What’s worse, companies that piled loans onto their balance sheets to ride out the pandemic now face the daunting prospect of higher interest rates eating a larger and larger share of their earnings.

The Fed is set to boost its target rate by 3 percentage points by the end of next year, according to Bloomberg Economics, driving up floating-rate benchmarks that underpin corporate loans.

Even the few speculative-grade firms that can raise funds are having to pay up to tap the market.

Cruise-ship operator Carnival sold $1 billion of eight-year notes that yield 10.5% earlier this month, a stark contrast to the $2 billion it was able to raise just seven months prior at a rate of 6%.

At the same time, US corporate profits fell in the first quarter by the most in almost two years as some companies struggled to pass along rising costs for materials, shipping and labor onto consumers.

Of the 50 largest zombies by outstanding debt, half reported lower operating margins in their latest results, data compiled by Bloomberg show. The trend is only going to get worse, according to Viktor Hjort, global head of credit strategy at BNP Paribas SA.

“Price increases have only been fairly recent,” Hjort said. “We’ll see that start to have an impact in the second and third quarter results.”

Stumbling Along

Zombie firms get their nickname because of how they tend to stumble along, weighed down by their debt burdens yet with sufficient access to capital markets to roll over their obligations. They drag on overall productivity and economic growth because they can’t afford to invest in their businesses, and tie up assets that could be better used by stronger players.

While the exact criteria market experts use can vary, many economists consider zombies to have interest-coverage ratios below one over a given period. To account for the impact of the pandemic, Bloomberg’s analysis looked at the trailing 12-month operating income of firms in the Russell 3000 index relative to their interest expenses over the same span.

Roughly 620 companies didn’t earn enough to meet their interest payments over the past year, down from 695 12 months prior, but still well above pre-pandemic levels.

Matt Miller, a spokesperson for American Airlines, said that the company has a “strong liquidity balance of $15.5 billion and anticipate being profitable in the second quarter.”

A representative for Carnival said that the company plans to have its entire global fleet sailing by the end of the year, and has been working over the past 12 months to refinance its debt at more attractive rates.

AMC didn’t respond to a request seeking comment.

One name no longer on the list is Exxon Mobil Corp., one of the biggest beneficiaries of rising oil prices and widening fuel margins. Booming profits have allowed the energy giant to pare down debt to $48 billion, from roughly $70 billion at the end of 2020.

A representative for Exxon didn’t respond to a request seeking comment.

‘More Zombies’

Any significant uptick in bankruptcies will make it more difficult for the Fed to engineer a so-called soft landing that allows the US to avoid a recession, according to Vincent Reinhart, chief economist at Dreyfus and Mellon.

“You worry that the mechanism of financial fragility generally, zombie firms in particular, are an accelerant to what the Fed does,” Reinhart said. “As rates rise it pushes more of those firms into distress, and amplifies the tightening by the Fed of financial conditions and credit availability.”

Equity investors may already be awakening to such risks. Zombie firms in the Russell 3000 have plunged 36% over the past year on average, versus just 4.3% for the broader gauge, data compiled by Bloomberg show.

Still, even as some zombies end up in bankruptcy, effectively killing them, new ones will emerge, as inflation pushes more companies into distress. The number of living-dead companies can stay close to current levels or even rise for some time, according to Noel Hebert, direct of credit research at Bloomberg Intelligence.

“The combination of interest-rate hikes and inflation will produce more zombies,” Hebert said. “By year-end, we’ll have more.”

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CRIMINAL CAPITALISM WINK,WINK

The death knell for SPACs?

Connie Loizos
Tue, May 31, 2022,


It was a tough day for special purpose acquisition companies, or SPACs, which had already fallen out of favor after roughly 18 months in the limelight.

First, Senator Elizabeth Warren announced today that she's planning a bill that targets the SPAC industry. Called the "SPAC Accountability Act of 2022," the bill would expand the legal liability of parties involved in SPAC transactions, close loopholes that SPACs have "long exploited to make overblown projections," and lock in longer the investors sponsoring a deal.

Even if the bill never passes, SPACs look to be starting a new chapter, given that the SEC is today concluding a 60-day public comment period on a number of its own proposed guidelines for SPACs, specifically around disclosures, marketing practices and third-party oversight.

As TechCrunch noted in a weekend look at numerous electric vehicle SPACs to flounder, if the SEC's rules are approved, the barrier of entry to going public via a SPAC will rise to the same level as companies choosing the more traditional IPO listing process, including to hold liable banks associated with SPACs for misstatements related to the merger. (To protect itself, Goldman Sachs has already said it's no longer working with most SPACs that it took public and pausing work with new SPAC issuance.)


It's not as if either initiative will abruptly stop SPACs in their tracks. They began losing momentum when the SEC warned in March 2021 that SPACs weren’t accounting correctly for investor incentives called warrants. Indeed, while 247 SPACs were closed in 2020, the majority of the SPACs closed in 2021 (a stunning 613 of them) came together in the first half of the year, before the SEC made it quite so plain that it planned to do more on the regulatory front.

Now those many blank-check companies need to find suitable targets in a market turned bearish, and the clock is ticking. Given that blank-check companies are typically expected to merge with a target company within 24 months of investors funding the SPAC, if those hundreds of SPACs can't complete mergers with candidate companies within the first half of next year, they'll either have to wind down (which can mean millions of lost dollars for SPAC sponsors) or else seek out shareholder approval for extensions.

It's even worse than it sounds. With the time between when a deal is announced to when the SEC has time to review it taking up to five months, according to SPACInsider founder Kristi Marvin, even SPACs that strike a deal tomorrow couldn't ask their shareholders to vote on it until roughly November.

In fact, while lawmakers and regulators seem late to the party, they're not too late to watch for unnatural acts as SPAC sponsors do everything in their power to get their deals completed.

Already, a number of SPAC sponsors has already begun to ask their shareholders for more time to get a deal done, some of them apparently hoping investors might warm again to the once-obscure financial vehicles. Magnum Opus, the SPAC that last August announced plans to take Forbes public, filed two deadline extensions this year. It would have needed to obtain its shareholders' approval for an extension yet again to keep the deal alive; instead, reports the New York Times, Forbes today scrubbed the deal.

Also bound to happen more: More redemptions that leave SPACs with far less cash on hand for their mergers, and more SPACs that announce target companies outside of their area of expertise.

Surf Air Mobility is a perfect example of both. A nearly 11-year-old electric aviation and air travel company in Los Angeles that operates via a membership model, it recently announced it would be going public via a merger with the SPAC Tuscan Holdings Corporation II.

Given that Tuscan was a little long in the tooth as SPACs go — it went public in 2019 -- it had to ask shareholders to approve an extension. Many backers instead redeemed their shares, shrinking the size of the capital pool Tuscan had to work with. Still, enough shareholders said yes to an extension that things are moving forward for now. Other SPACs might not be so lucky.

"A lot of SPACs will liquidate over the next two years," says Matthew Kennedy, a senior IPO strategist at Renaissance Capital. "I think shareholders are just looking at [the performance of companies taken public via SPACs] and saying, 'Why would I hold this if I have a four out of five chance of losing money?'"

Tuscan was also originally targeting -- but not limited to -- a company in the cannabis industry -- not a travel company. There's nothing legally wrong with that, underscores Marvin, noting that SPACs always feature boilerplate language about their efforts not being limited to a particular industry or geographic region. She also observes that it isn't the first SPAC to shop far outside its stated sector of interest.

Still, unexpected curveballs could further give investors pause when it comes to SPAC tie-ups.

Consider an earlier SPAC, Hunter Maritime, which came together in 2016 with the help of Morgan Stanley to acquire one or more operating businesses in the international maritime shipping industry, per its original prospectus. Three years later, it acquired a China-based wealth manager instead and rebranded. Today that combined company, NCF Wealth Holdings, is no longer a company.