Thursday, August 11, 2022

SEC proposes more transparency

rules into hedge fund exposures

·Senior Reporter

Wed, August 10, 2022

The Securities & Exchange Commission (SEC) is proposing an amendment to a rule that would require private equity funds and hedge funds to disclose more information about their investments and assets to better surveil systemic risks.

The proposal would require certain advisers to hedge funds and private equity funds to report key events, and enhance reporting requirements for large private equity and liquidity fund advisers.

“With this final rule, regulators will gain transparency into an important sector of the financial marketplace to better assess risk to the overall system,” SEC Chair Gary Gensler said.

Specifically, the SEC proposal would expand reporting requirements for large hedge funds’ investment exposure and open investment positions, including reporting on exposures to different types of assets in order to offer insight into a fund’s portfolio concentration and large exposures to any specific assets. In particular, authorities are looking for funds to break out digital asset strategies.

People exit the headquarters of the U.S. Securities and Exchange Commission (SEC) in Washington, D.C., U.S., May 12, 2021. Picture taken May 12, 2021. REUTERS/Andrew Kelly

In addition, the proposal would expand reporting requirements on large hedge funds’ borrowing and financing arrangements with counterparties, including central clearing counterparties.

The amendments, which are being proposed jointly with the Commodity Futures Trading Commission (CFTC), are a reporting tool used by these agencies and the Financial Stability Oversight Council (FSOC) to monitor systemic risk in the financial system.

'Far better transparency'

The action comes after Congress mandated the SEC and the CFTC following the Financial Crisis to consult with FSOC to create reporting requirements for advisers to private funds to offer more transparency for regulators to protect against systemic risks.

The SEC is taking action in this specific area of the financial sector as private funds have grown some 90% since 2010 to $20 trillion worth of assets, and are poised to surpass the size of the commercial banking system, which weighs in at $23 trillion.

Gensler said that if trends continue, then the private funds sector will become larger than the commercial banking sector.

SEC Chair Gary Gensler testifies before a Senate Banking, Housing, and Urban Affairs Committee oversight hearing, September 14, 2021. REUTERS/Evelyn Hockstein/Pool

According to the chair, the SEC was also moved to take action on this now rather than later given the uncertainty in the markets in the first six months of this year following Russia's attack on Ukraine and central banks around the world beginning to raise interest rates. The SEC is focused on the relationship between hedge funds and their brokers or banks and what the risks are right now given that uncertainty, he added.

Crypto is a key area where regulators would gain visibility and oversight should the proposal be signed into legislation.

"We don't currently have the visibility that we would if we had this proposal,” Gensler told reporters on Wednesday. “If we were able to finalize and adopt [this], we would get far better transparency, though not to the level that a bank examiner would have.”

Additionally, the SEC has deemed it appropriate to break out exposure to crypto and crypto assets on any balance sheet and liability side as a separate category, and not for funds to account for crypto under cash and cash equivalents on the balance sheet.

“We know Bitcoin is very different than cash, than U.S. dollars,” Gensler said.

US Senators Warren, Sanders Ask Key Bank Regulator to Rescind Crypto Guidance

Nikhilesh De Wed, August 10, 2022

U.S Sens. Elizabeth Warren (D-Mass.), Bernie Sanders (I-Vt.), Richard Durbin (D-Ill.) and Sheldon Whitehouse (D-R.I.) asked the Office of the Comptroller of the Currency to rescind interpretative letters allowing banks to engage in crypto activities and explain how involved banks are becoming in crypto.

In an open letter addressed to Acting Comptroller Michael Hsu, the lawmakers said they were concerned that several interpretative letters published in 2020 and 2021 under former Acting Comptroller Brian Brooks (now CEO of crypto company Bitfury) that allowed banks to provide crypto custody services, issue payments with stablecoins, bank stablecoin issuers and engage in other crypto-related activities "essentially granted banks unfettered opportunity" to engage in problematic crypto activities. The interpretative letters, which also includes one published during Hsu's tenure, did not address any of the risks tied to crypto banking activities, the lawmakers said.

"Given the risks posed by cryptocurrencies to banks and their customers, we request that you withdraw OCC Interpretive Letters 1170, 1172, 1174, and 1179 and coordinate with the Federal Reserve and the Federal Deposit Insurance Corporation to develop a comprehensive approach that adequately protects consumers and the safety and soundness of the banking system," the letter said.

The OCC issued these letters between July 2020 and January 2021, when Brooks helmed the regulatory agency. At the time the crypto industry saw the guidance letters as potentially aiding mainstream adoption of crypto by letting regulated institutions – banks – become more involved in the industry.

Crypto activities do not have much in the way of retail protections, the lawmakers said, pointing to the collapse of Terra and Three Arrows Capital, and the bankruptcies of Celsius Network and Voyager Digital.

"While you declared that 'there has been no contagion from cryptocurrencies to traditional banking and finance' during this recent market turmoil, it is clear that stronger protections are necessary to mitigate crypto’s risks to the financial system and consumers," the lawmakers said.

The senators also asked a series of questions about how many banks have been approved to engage in crypto activities, what kinds of services those banks provide, the dollar volumes the banks hold tied to crypto and whether any of these banks are involved in other crypto-related activities such as trading derivatives.

Why Carlyle's Billionaire Founders Had Enough of Their Chosen Successor

Heather Perlberg and Dawn Lim
Tue, August 9, 2022

(Bloomberg) -- Inside Carlyle Group, battle lines were forming. On one side: Kewsong Lee, the executive hand-picked to assume the mantle of Carlyle’s co-founders and clear the path for a new generation of leaders. On the other: the very people who hand-picked him.

Growing tensions within the private-equity firm -- between a new CEO eager to assert power and an old guard reluctant to give it up -- reached the breaking point last week. Carlyle’s board members decided they had lost confidence in Lee’s leadership. The CEO, after seeking a larger pay package for his contract set to renew at the end of 2022, abruptly stepped down.

The change was announced Sunday night in a statement devoid of all that drama, saying both sides mutually agreed that “the timing is right” to find a new CEO and that founder William Conway would serve in the interim. But insiders said it was a long time coming.

And so ended one of the earliest attempts by some of the private-equity world’s original titans to find worthy heirs, a process proving difficult across the industry. Carlyle’s founders began prepping years ago, giving control to a pair of co-CEOs, Lee and Glenn Youngkin, who were supposed to work together seamlessly, each with different strengths and styles. But Lee sidelined Youngkin -- who made a successful jump to politics -- and then ended up with little choice but to leave, too. The firm is now starting its hunt anew.

Current and former executives and others close to Carlyle described how the latest drama unfolded over the past several months on the condition they not be named because of concern it could affect their work with the company.

Spokespeople for Carlyle and Lee had no comment.

This year began with Youngkin, 55, becoming governor of Virginia and Lee, 56, tightening his grip on the company they had once run together. But there were frictions between the sole CEO and some Carlyle stalwarts.

For years, Lee focused on consolidating businesses, cutting fat and putting resources in areas where he saw opportunities to grow the fee streams prized by shareholders, such as credit. He wasn’t known to be deferential to Carlyle veterans and welcomed how Zoom democratized internal dynamics. Starting in 2020, for example, he would often ask the same question in investment committee meetings: “Who’s the youngest person in the room? What have we missed?”

Supporters, including many current and former employees, saw him as a shrewd leader with the kind of investing smarts that Carlyle needed to move beyond its roots as a leveraged buyout firm and compete with more diversified peers. For all of their successes, the founders were known for taking chances that didn’t pay off. The firm took stakes in hedge funds like Emerging Sovereign Group and Claren Road Asset Management only to exit them. Lee inherited some of the mess from past missteps and played a large role in cleaning it up.

Decisive and assertive, Lee put his mark on things quickly. Credit is now 38% of its assets, up from 22% in the second quarter of last year, reflecting his drive to diversify revenue. When it was time to make a key decision on an expansion into insurance, emulating some competitors, Lee steered the board’s discussion to get the outcome he wanted. He talked to them about taking a minority stake in Fortitude Re -- his preference -- rather than taking a majority holding with a higher regulatory cost. That deal would eventually help the firm lock in about $48 billion in assets from Fortitude.

Yet some executives at Carlyle were concerned that Lee’s push to shore up balance-sheet capital for growth initiatives would affect the size of dividend payouts. That intensified a debate inside Carlyle over how aggressively the firm should expand beyond its private equity businesses into other areas such as credit.

Eroding Values

Founders Conway, Daniel D’Aniello and David Rubenstein had always sought to foster a tight triumvirate at the top and prided themselves on being collegial and building consensus, people familiar with their style said.

But increasingly, some members of the board -- where the founders still sit -- worried that Lee was eroding Carlyle’s genteel values, risking the alienation of investors and employees. A wave of departures, including Tyler Zachem, Rodney Cohen and Ashley Evans, stirred a debate over whether talent loss was becoming more commonplace. At one point this year, the head of human resources, Bruce Larson, presented data to the board showing that recent attrition wasn’t unusual.

What’s more, Carlyle was falling out of favor with shareholders. By the end of last week, the stock was down 31% this year, worse than at Apollo Global Management Inc., KKR & Co. and Blackstone Inc.

Some of Lee’s attempts to grow the firm were posing new risks. A purchase of collateralized loan obligation assets from CBAM Partners earlier this year made Carlyle a major manager of those bundles of loans, but it exposed the firm to a selloff that ensued.

Fundraising for Carlyle’s flagship strategy went slower than expected. The firm told investors in June that it had so far gathered about $15 billion for its new buyout and growth fund. That’s less than the $17 billion it anticipated collecting by roughly midyear on the way to a $22 billion target. Lee had slashed the team at Carlyle responsible for raising money from the largest institutional investors, such as pensions, sovereign wealth funds and endowments in 2020.

His assertive style worked for dealmaking but it increasingly ruffled the founders, whose roles gradually diminished as he encouraged them to step back. He rebuffed their attempts to help bring in more money and provide advice.

The three founders had all taken on new projects in recent years. Rubenstein, for instance, writes books and hosts a show on Bloomberg Television.

But with departures and the stock slide continuing, the trio of billionaires -- who collectively hold more than 25% of the company -- were increasingly feeling the need to intervene.

In recent months, Lee worked with advisers to sketch out a compensation package for his next contract, seeking to boost his potential payout to a level more commensurate with what rival firms paid their leaders, people with knowledge of the situation said. But the other side wasn’t interested in such a negotiation. After he asked for a package worth as much as $300 million over five years, the three founders never responded, the Financial Times reported.

They’d had enough and Lee resigned.

Still, the strategy will remain the same, according to people close to the firm.

Investors though are concerned. The stock tumbled 7% on Monday and fell as much as 5.2% on Tuesday, as analysts highlighted the uncertainty created by the CEO’s abrupt exit.

“We doubt that there is anything substantively wrong with the company,” Oppenheimer analysts including Chris Kotowski wrote in a note to clients. “It is, in our mind, most likely a case of the empire striking back.”

Carlyle Partner and Investor-Relations Head Urquhart to Join Coatue

Gillian Tan
Wed, August 10, 2022

(Bloomberg) -- Carlyle Group Inc.’s global head of investor relations Nathan Urquhart is leaving the firm to become president at Coatue Management, according to a letter to investors seen by Bloomberg News.

New York-based Urquhart will start at Coatue in the coming months and will get involved in key management responsibilities, according to the letter, which confirmed an earlier Bloomberg News report. He will also oversee investor relations and fundraising efforts.

Urquhart was a partner at Carlyle and on its leadership and operating committees. He joined in 2019 after about 11 years at Oz Management. Urquhart had stints at UBS Group AG and JPMorgan Chase & Co. as well.

A Coatue spokesman declined to comment.

Carlyle said in a statement that David McCann has been appointed interim head to replace Urquhart, who will stay at the firm through year-end.

Coatue is led by Philippe Laffont, who started the hedge fund in 1999 after working at Julian Robertson’s Tiger Management. It managed about $59 billion as of Dec. 31.

Urquhart’s departure follows the unexpected resignation of Carlyle Chief Executive Officer Kewsong Lee on Sunday.

Manulife’s Canadian Operations Cushion Blow From Covid-Hit Asia

ANOTHER PROVIDER OF PENSION & BENEFITS PLANS TO PRIVATE SECTOR UNIONS

Kevin Orland
Wed, August 10, 2022

(Bloomberg) -- Manulife Financial Corp.’s Canadian business boosted profit last quarter on the back of rising sales and lower-than-expected benefit use, cushioning the toll that continued Covid restrictions are taking on its Asian operations.

Core earnings in Canada rose 8.5% from a year earlier to C$345 million ($270 million) in the second quarter, the Toronto-based company said Wednesday. Overall second-quarter profit topped analysts’ estimates.

Chief Executive Officer Roy Gori said that Manulife’s home country of Canada remains a “strong growth market” for the company and one it continues to invest in as the penetration of insurance products is still relatively low. The country’s economy also has remained resilient through the turbulence of this year, he said.

“Canada does have low unemployment and has benefited from the commodities boom, and that puts Canada in quite a unique and strong position to help manage through what will be a challenging macroeconomic environment,” Gori said in an interview.

Annualized premium equivalent sales in Canada rose 32% from a year earlier, the company said. Core earnings in the operation also were helped by policy use in the group benefits business that was less than the company had expected, Gori said.

Meanwhile, Manulife’s core earnings in Asia fell 2.5% last quarter, hurt by lower sales in Hong Kong and in the Japanese corporate-owned life market. Gori said he expects the remaining restrictions in Manulife’s Asian markets to be temporary and that the company will start to resume more positive sales momentum in the coming quarters.

Manulife shares have risen 0.3% this year, compared with a 6.3% drop for the S&P/TSX Composite Index.

Also in the release:

Net income fell 59% to C$1.09 billion, or 53 cents a share.

Excluding some items, profit was 78 cents a share. Analysts estimated 76 cents, on average.

Core earnings in the global wealth and asset management business fell 14% to C$305 million.

LUNCH PAIL ECONOMICS

Finance industry urged to hire more working class managers

Wed, August 10, 2022
By Huw Jones

LONDON, Aug 11 (Reuters) - Financial services companies should set "stretching targets" for appointing people from working class backgrounds to senior positions, a UK government-sponsored report said on Thursday.

The finance industry is already making efforts to appoint more women, Black and ethnic minorities on to boards and into roles like chief executives and chairs but targets for socio-economic background have featured less in corporate diversity efforts.

A taskforce commissioned by the government and led by the City of London Corporation surveyed more than 9,000 employees across 49 financial and related professional firms and found the sector is out of kilter with society.

The taskforce said that 49% of all levels of seniority in the finance industry were from a professional background, rising to 64% for senior leaders. For the UK population as a whole, 37% of working people are from a professional background.

Socio-economic background can amplify other inequalities, particularly related to ethnicity and gender, it said.

Working class employees, who are also female or an ethnic minority, are even less likely to hold senior level positions and less likely to feel included in the workplace.

White men from a professional background account for 45% of senior roles, compared with 23% for their female counterparts while just 13% of senior roles are filled by white men from working class families.

The survey defined working class as having a parent working in a routine and manual occupation, such as receptionists, van drivers, plumbers and electricians.

The lack of inclusion of people from working class backgrounds poses a risk to employee retention and productivity in what is already a tight UK labour market, the taskforce report said.

"This data provides a robust baseline by which the sector can begin to track its progress on socio-economic diversity and address gaps," said Catherine McGuinness, who chaired the taskforce.

"We urge firms to collect data, set stretching targets and ensure they provide a level playing field for all."

The report urged firms to join, Progress https://www.progresstogether.co.uk Together, launched in May and which sets out best practice guides and benchmarking to drive changes in socio-economic diversity.

Accountants KPMG became one of Britain's first companies to set a target for staff from working class backgrounds to help close a pay gap and diversify its staff.

(Reporting by Huw Jones. Editing by Jane Merriman)

Rivian Earnings Due With EV Startup's Production Outlook Key

ADELIA CELLINI LINECKER
08/10/2022

Rivian (RIVN) reports second-quarter earnings on Thursday after the market close, amid layoffs and supply-chain issues. RIVN stock rose on Wednesday.

Rivian has begun its restructuring plan that includes laying off about 6% of its workforce, or about 900 people, according to an Aug. 1 TechCrunch report, citing an internal email.

The layoffs are affecting every department, except manufacturing operations at its Normal, Ill., factory.

Meanwhile, Rivian is also having difficulty delivering vehicles to customers on time. Rivian Forums reported on June 11 that some Rivian SUV reservation holders had received an email indicating delayed deliveries. Some who had an April-May delivery date were told they'd have to wait until the August-September time-frame; others until October-December.

The company reportedly gave two reasons: supply-chain issues and service-infrastructure availability.

"As we've continued to navigate a tight supply chain, we've had to reduce complexity wherever possible, including prioritizing certain build combinations over others," an email provided to Rivian Forums stated. "We continue to prioritize deliveries in locations where service infrastructure is in place so that we can provide the full ownership experience to Rivian owners from day one."

Rivian's R1T all-electric pickup truck was the first of its kind to hit the market in July 2021, beating out the Tesla (TSLA) Cybertruck, which has yet to enter production, and the Ford (F) F-150 Lightning.

Rivian Earnings

Estimate: FactSet analysts expect the company to post a loss of $1.63 a share vs. a 66-cent loss in the year-ago quarter. Sales are seen coming in at $335.4 million. There is no year-ago revenue figure.

Results: Check back Thursday.

Rivian has already said it produced 4,401 EVs in Q2, for a first-half total of 6,954.

Investors will want to know if Rivian still expects to produce 25,000 vehicles in 2022, which would require a continued ramp up.
Rivian Stock

Shares rose 1.9% to 37.40 on the stock market today. RIVN stock is well off its all-time high of 179.47, according to MarketSmith. But it's nearly doubled from its record low of 19.25 on May 11.

Rivian stock has an RS Rating of 41 out of a best-possible 99. Its Accumulation/Distribution Rating is B+, indicating a moderate amount of buying of its shares among institutional investors.

Tesla stock rose 3.9% on Wednesday. CEO Elon Musk sold $6.9 billion worth of TSLA stock in recent days in preparation to pay for the Twitter deal he is currently fighting in court.

EV startup Lucid[ticker symb=LCID rose 4.35% on Wednesday, after sinking 6.7% the day before to a one-month low. LCID stock tumbled Aug. 4 after the luxury EV sedan maker halved 2022 production targets, its latest output cut.

Ford, which raised the price of the F-150 Lightning by $6,000-$8,500 on Tuesday, retreated 3.7% Tuesday but rebounded to gain 3.1% on Wednesday.
Tax Credits Coming, But Rivian Won't Benefit Much

Rivian is prioritizing production of electric vans for Amazon. On July 21, Amazon rolled out its first Rivian electric delivery vans.

The EV startup has more than 90,000 R1 EV preorders as of May 9, including more than 10,000 new orders since a March price increase.

Rivian hiked the price of its R1T electric pickup around 17% in March, which increased the base cost to about $78,975 from $67,500. The price of the R1S SUV jumped about 20%, bringing the new base price to about $84,000 from $70,000. All prices are before federal tax credits.

Congress is on the verge of approving new EV tax credits. But Rivian won't qualify for most of them.

The new $7,500 incentive includes new price limits. The price limits are $80,000 for zero-emission vans, SUVs, and trucks. Electric sedans up to $55,000 qualify.

Meanwhile, few electric vehicles will qualify for the new EV credits' requirements on local vehicle assembly and rules on sourcing for battery minerals and materials.

For Older Americans, Health Bill Will Bring Savings and 'Peace of Mind'

“Here seniors are in their golden years, and the only people seeing gold are the pharmaceutical companies.”

Sheryl Gay Stolberg and Noah Weiland
Wed, August 10, 2022

Bob Miller was prescribed Betaseron, a brand-name drug that cost more than $10,000 a year. He said he stopped taking it in 2016, citing the high expense. (Jenn Ackerman/The New York Times)

WASHINGTON — After Pete Spring was diagnosed with dementia in 2016, he and his wife emptied their checking account in part to pay for his prescription drugs, then ran through $60,000 in pension payments before resorting to a charge card to help make sure Spring had the heart and Alzheimer’s medications he needed to survive — just two of the 11 drugs he took.

Spring, of Marietta, Georgia, died in April, before the unveiling of the tax, climate and health bill that the Senate passed over the weekend. The measure aims to lower the cost of prescription drugs for people on Medicare, like Spring; his wife, Gretchen Van Zile, has been left to look back on what felt like an outrageous injustice.

“Here seniors are in their golden years,” said Van Zile, 74, “and the only people seeing gold are the pharmaceutical companies.”

Nearly 49 million people, most of them older Americans, get prescription drug coverage through Medicare, yet many find that it does not go very far. Low-income people qualify for government subsidies, so those in the middle class — people Spring and Van Zile — are hit hardest by high drug costs.

The Senate bill, which the House is expected to pass Friday, then send to President Joe Biden’s desk, could save many Medicare beneficiaries hundreds, if not thousands of dollars a year. Its best-known provision would empower Medicare to negotiate prices with drugmakers with the goal of driving down costs — a move the pharmaceutical industry has fought for years, and one that experts said would help lower costs for beneficiaries.

But the legislation would also take more direct steps to keep money in people’s pocketbooks, although they would be phased in over time.

Beginning next year, insulin co-payments for Medicare recipients would be capped at $35 a month. As of 2024, those with costs high enough to qualify for the program’s “catastrophic coverage” benefit would no longer have to pick up 5% of the cost of every prescription. And starting in 2025, out-of-pocket costs for prescription medicines would be capped at $2,000 annually.

“This a huge policy change and one that has been a long time coming,” said Stacie Dusetzina, an associate professor of health policy at Vanderbilt University. “For people needing high-cost drugs, this will provide significant financial relief.”

Between 2009 and 2018, the average price more than doubled for brand-name prescription drugs in Medicare Part D, the program that covers products dispensed by pharmacies, the Congressional Budget Office found. Between 2019 and 2020, price increases outpaced inflation for half of all drugs covered by Medicare, according to an analysis from the Kaiser Family Foundation.

Perhaps no drug has been talked about as much as insulin, a diabetes medication that is more than 100 years old. Prices for insulin and its analogues have risen so fast that many diabetes patients who rely on the drug put themselves at risk by taking less than is prescribed to cut costs.

A 2020 commentary in the medical journal Mayo Clinic Proceedings reported that one vial of Humalog, a commonly prescribed insulin analogue, cost $21 in 1999 and $332 in 2019 — an increase of well over 1,000%. (Amid congressional scrutiny, the drug’s maker, Eli Lilly, promised in 2019 to market a lower-cost generic version.)

More than 3 million Medicare beneficiaries take one of the 42 different types of insulin that are covered by Medicare, according to an estimate by the Kaiser Family Foundation, which found that the average out-of-pocket cost is $54 a month. But for some people, the costs are much higher.

Evelyn Polay, 82, of Merrick, New York, spends more than $1,200 every three months on four diabetes medicines, including Humalog and another type of injectable insulin, which she has been taking for about 30 years.

She still works as a part-time bookkeeper and counts herself as fortunate. “It’s not a question of do I eat or do I take my medicine,” she said.

But she worries about other people, including her grandchildren, three of whom also have diabetes. Democrats tried to apply the bill’s proposed $35 co-payment to all insulin prescriptions, including those covered by private insurers. But Republican senators forced the removal of that language — even though seven of them wanted to keep it in the bill.

To hear the voices of older Americans who confront high drug costs month in and month out is to hear fear and worry, anger and stress. Many say they are figuring out how to get by, skipping vacations and other niceties for which they saved.

For Kim Armbruster, 65, who recently retired after a 40-year nursing career, keeping down the costs of her medications for diabetes, psoriatic arthritis and Graves’ disease, an autoimmune disorder affecting the thyroid, has been a scramble since she started on Medicare in March.

Armbruster, of Cary, Illinois, said she had saved extra insulin from prescriptions filled when she had commercial insurance, enough to keep costs down before a monthly cap kicks in. But her other conditions have caused immense financial strain.

By June, she had reached Medicare’s threshold for catastrophic coverage after paying more than $7,000 for Enbrel, a drug she takes for arthritis; Synthroid, which she takes for Graves’ disease; Eliquis, for atrial fibrillation, insulin and her insulin pump.

“It’s all about thinking ahead, looking for alternatives and strategizing the home budget to be able to take the necessary meds,” she said. Learning to keep up with costs, she added, had been like “baptism by fire, to learn everything I can possibly learn about it to maneuver drug costs and stay healthy without complications.”

The carousel of medications taken by Spring, the dementia patient who died in April, included eye-popping price tags for drugs including Eliquis, for a heart condition, and Namenda, an Alzheimer’s drug. Spring also took an antidepressant and medications to dull the side effects from Namenda.

Those drugs ran the couple around $1,000 a month. Had the $2,000 annual out-of-pocket cap been in place when her husband was alive, Van Zile said, they would have reached it by March every year. Van Zile retired from her job working for Fulton County in Georgia so that she could take care of her husband, further cramping their savings.

“His sense of humor put a smile on my face every day,” she said. “The bitter aspect of it was the financial stress.”

Democrats have been promising for years to lower the cost of prescription drugs. So have some Republicans, including former President Donald Trump. But the Senate bill passed along party lines, without any Republican votes. In the 50-50 Senate, Vice President Kamala Harris broke the tie with her vote.

Republicans, and the pharmaceutical industry, insist that the measure will stifle innovation and reverse progress on therapies and treatments, including those for cancer care — a high priority for Biden. The industry’s main trade group, PhRMA, says the bill, which imposes stiff penalties on companies that refuse to negotiate, amounts to government price setting — not negotiation.

At a media briefing last month, Stephen J. Ubl, CEO of PhRMA, warned that Democrats were “about to make a historic mistake that will devastate patients desperate for new cures.”

Supporters of the measure say new treatments are meaningless if patients can’t afford them. The promise of Medicare, enacted in 1965, has always been that it would take care of older Americans. The prescription drug benefit was not added until 2003.

It includes the provision for catastrophic coverage, in which the government picks up the full cost of medicines — except for 5%, paid by the patient — after an individual spends $7,050 a year out of pocket. The Kaiser Family Foundation says that 1.3 million Medicare beneficiaries hit the catastrophic threshold each year; 1.4 million have out-of-pocket costs of $2,000 or more.

“You rarely hear people complain about turning age 65 and going on Medicare; it’s often a relief,” said Larry Levitt, the foundation’s executive vice president for health policy. “But the way Medicare now works, there can be some nasty surprises for people with very high drug expenses, and this bill will provide a lot of relief.”

A study conducted by Dusetzina highlighted how the middle class gets squeezed. She examined 17,076 new prescriptions issued between 2012 and 2018 for Part D beneficiaries, and found that those receiving subsidies were nearly twice as likely to obtain the prescribed drug within 90 days as those without subsidies.

Among those who did not qualify for subsidies, 30% of all prescriptions for cancer drugs went unfilled, as did more than 50% of prescriptions to treat immune system disorders or high cholesterol.

Patti Kellerhouse, a 64-year-old in Henderson, Nevada, was diagnosed with metastatic breast cancer in 2017 that had spread to her liver. On long-term disability through her employer, she had paid $10 a month out of pocket for the oral cancer treatment she needed. But when she transitioned to a Medicare Advantage plan, the medication cost more than $3,100 for the first month.

While she has been able to afford the price jump, it has stressed her financial planning. She is saving money for a new car, among other things. She said she has daughters and grandchildren whom she would like to continue supporting.

“I worked hard my whole life,” she said. “These are high co-payments. They shouldn’t happen when you’re at retirement age.”

Many Americans make tough choices about whether to continue taking drugs they need. Bob Miller, a 71-year-old multiple sclerosis patient in Prior Lake, Minnesota, is among them.

Every other day for 12 years, Miller took Betaseron, a brand-name prescription drug that can delay the progression of his disease by staving off flare-ups of numbness, muscle stiffness and other symptoms that can leave patients worse off than they were before. But the drug was expensive; even with his Medicare insurance, it cost more than $10,000 a year.

So he quit taking the drug in 2016 after consulting with his doctors, who told him he could “roll the dice” and survive without it — at least for the time being. Since then, he has lived with the unsettling worry that he is gambling with his own health.

“In the background, you don’t know what’s going on,” Miller said. “There might still be some damage being done to my nerve fibers.”

When a neurologist recently told him it might help to go back on a disease-modifying drug, Miller told him he would like to, if not for the prohibitive cost. The new legislation, he said, will deliver something he has been longing for: “Peace of mind.”

© 2022 The New York Times Company

The GOP’s False, Fearmongering

Claims About the IRS’s New Funding

Yuval Rosenberg

Wed, August 10, 2022

Democrats’ big climate, health care and tax plan provides $79.6 billion in additional funding over 10 years for the Internal Revenue Service. That money includes about $45.6 billion for stepped-up tax enforcement — a crackdown that is projected to raise $124 billion in net revenue.

Republicans have honed in on that funding and revenue in scaremongering messaging that warns that an army of IRS agents will be coming for middle-class taxpayers.

“Democrats are making the IRS bigger than the Pentagon, the Department of State, the FBI, and the Border Patrol COMBINED! Those IRS agents will come after you, not billionaires and big corporations!” Sen. Ted Cruz (R-TX) tweeted Sunday.
“Value shoppers at Walmart and other retailers, already struggling with higher prices and more expensive fuel to drive to the store, will get hit with 710,000 additional audits thanks to the Manchin-Biden Democrat bill,” Rep. Kevin Brady of Texas, the top Republican on the House Ways and Means Committee said in a statement this weekend.
“Do you make $75,000 or less? Democrats' new army of 87,000 IRS agents will be coming for you—with 710,000 new audits for Americans who earn less than $75k,” House Minority Leader Kevin McCarthy (R-CA) tweeted Tuesday.
“If you think the federal government is out of control now, God help us when you get 87,000 new IRS agents who are looking under every rock and stone to get money out of your pocket,” Sen. Lindsey Graham (R-SC) tweeted Wednesday.

Those warnings ignore assurances to the contrary from the IRS itself. IRS Commissioner Chuck Rettig said in a letter to Congress last week that the agency did not plan to increase audit rates for middle-class and low-income households. “These resources are absolutely not about increasing audit scrutiny on small businesses or middle-income Americans,” Rettig wrote. “As we have been planning, our investment of these enforcement resources is designed around Treasury’s directive that audit rates will not rise relative to recent years for households making under $400,000.”

The facts: Josh Kelety and Ali Swenson of the Associated Press write that Republicans are distorting the effects of the Democratic bill. Yes, it would add to the number of IRS employees — currently about 80,000 — “but it would not create a mob of armed auditors looking to harass middle-class taxpayers.”

The IRS will be releasing its hiring plans in the coming months, Kelety and Swenson report, but the new employees will be brought on over time, with many replacing workers who quit or retire. The agency has lost about 50,000 employees to attrition over the last five years, and it expects those losses to continue.

“There’s a big wave of attrition that’s coming and a lot of these resources are just about filling those positions,” Natasha Sarin, an economist who now serves as a counselor for tax policy and implementation at the Treasury Department, told Time.

Enforcement staff specifically has dropped by 30% since 2010, but the new hires won’t all be auditors.

“In all, the IRS might net roughly 20,000 to 30,000 more employees from the new funding, enough to restore the tax-collecting agency’s staff to where it was roughly a decade ago, Time’s Eric Cortellessa reports.

Most voters aren’t concerned, poll finds: Despite the GOP messaging, a new Politico-Morning Consult survey finds that most voters aren’t worried about being audited. More than three-quarters of voters said they aren’t concerned about being audited, with the results consistent among Democrats, Republicans and independents. More than half of those surveyed, 56%, said that they are “not at all concerned” or “not too concerned” about an increased number of audits. A plurality of voters (48%) said that they believe higher income Americans would be subject to the greatest increase in audits, though 44% pointed to the middle class.

The survey of 2,005 registered voters was conducted August 5-7 and has a margin of error of plus or minus 2 percentage points.

The high price of a Sri Lankan family's bid to flee crisis

Wed, August 10, 2022
By Alasdair Pal and Santhush Fernando

KUDAMADUWELLA, Sri Lanka (Reuters) - As anarchy gripped the Sri Lankan city of Colombo in May, Meenu Mekala and Nirosh Ravindra gambled their family's life savings on a two-week, 4,700-km voyage aboard a rusting trawler with their two young sons. The decision ended in ruin.

Meenu, a Buddhist, and Nirosh, a Christian, met and fell in love as migrant labourers in Dubai, despite opposition from their families. They married in 2005 in Nirosh's home village of Kudamaduwella, two hours' drive north of Colombo.

They are among hundreds of Sri Lankans who have attempted to escape an unprecedented economic meltdown by boarding fishing boats bound for Australia.

Data from Sri Lanka's navy shows almost 1,000 people, many of them children, have been intercepted in Sri Lankan waters attempting to flee the country in the last three months. Exiting the country unofficially is considered an offence.

Some, like Meenu and Nirosh, made it to Australian waters, where they were caught, deported and then prosecuted by Sri Lankan authorities.

Meenu faces the charge of leaving the country from an unauthorised port, according to legal documents from the Criminal Investigation Department of Sri Lanka's police seen by Reuters.

Nirosh, accused of an additional charge of assisting in the logistics of the journey, was denied bail and awaits trial.

He denies the additional charge against him, Meenu said.

Nirosh's lawyer did not respond to requests for comment on his case. Sri Lanka's police and navy declined to comment on the couple's case, citing the ongoing legal proceedings.

"I was heartbroken," Meenu said, recalling the flight back to Sri Lanka on June 18 with one guard for every two passengers.

A spokesperson for the Australian Border Force declined to comment on the family's case, citing confidentiality.

Hit hard by the pandemic, which decimated tourism, and by tax cuts pushed through by the government of then-President Gotabaya Rajapaksa, Sri Lanka is experiencing its worst economic crisis since independence from Britain in 1948.

Fuel queues and soaring inflation have become the norm for Sri Lankans. Months of unrest toppled Rajapaksa in July, after protesters occupied government buildings in the commercial capital Colombo.

On May 9, after deadly violence flared between pro- and anti-government demonstrators, Meenu and Nirosh made the decision to leave.

Meenu, 44, and Nirosh, 46, paid 500,000 Sri Lankan rupees ($1,400) in total to unidentified smugglers for themselves and their two sons, aged 13 and 11.

NAVY PATROLS

Aboard Sri Lankan navy Fast Attack Craft P 4446, a lookout above deck sights a fishing boat sitting low in the water – a tell-tale sign of a boat loaded with migrants.

"Starboard, two nautical miles, one ship sighted sir," a voice on the radio crackled on the ship's bridge. Officer-in-command PRPD Dayarathne gently eased the throttle forward.

The daily patrol is one of around 50 along Sri Lanka's coastline, according to the navy, as authorities attempt to intercept migrants before they make it out of Sri Lankan waters.

Bare-chested fishermen stared as a five-man detail boarded the boat, armed with machine guns and batons. They searched the men and the boat, but it was carrying little more than nets and fish.

The Sri Lankan navy intercepted one boat smuggling would-be migrants in 2021, and none in 2020. In the three months to July, that number rose to 15.

A total of 911 people have been arrested attempting to leave Sri Lanka illegally in 2022, putting it on course to surpass 2013, the year the navy began keeping detailed records. Almost all were bound for Australia.

"We have seen these boats carrying nearly 100 people," Dayarathne said. "It's very dangerous."

If caught by Australian or Sri Lankan authorities, passengers face having passports cancelled for up to five years. Suspected organisers are denied bail and put on trial in Sri Lanka, with the prospect of jail terms.

In contrast to previous waves of attempted migration by Tamil groups persecuted during the country's civil war, many are now from the majority Sinhala community.

"Every Sri Lankan thinks if you have a chance, you leave." said Lakshan Dias, a lawyer who has represented would-be migrants. "It is pure desperation."

ROUGH JOURNEY

Some, like Meenu's vessel, make it through, slipping past patrols under cover of darkness.

For the first two nights, the seas off Sri Lanka's southern coast were rough. Crammed onto the 30-foot boat, 41 passengers battled nausea and hunger as waves pounded the hull.

The family slept in the open air to escape the stench of vomit in the hold. By day, the harsh sun and salt water spraying over the deck burnt their skin. Meenu said she wanted to turn back, but it was too late.

By June 9, and suffering a fuel problem, the boat neared the Cocos Islands, a remote Australian coral atoll off the southern coast of Indonesia.

It wasn't long before they were intercepted by the Australian coast guard - one of four vessels that made it from Sri Lanka that month, according to the Australian Border Force.

After around a week on a series of Australian coast guard vessels, they disembarked and were told they would be sent back to Sri Lanka, Meenu said.

Nirosh's arrest has left the family without any source of income, as well as mounting legal fees.

Meenu visits him twice a week, taking an hour-long bus ride to the prison in Negombo and bringing him home-cooked food to share with other prisoners.

On a recent visit, he complained about the poor quality of the drinking water, and pleaded with her to get him out, she said.

With the family's passports cancelled for five years, their dream of returning to Dubai is on hold and Meenu is left to care for the children at home, where icons of Buddha and Jesus adorn the walls.

(Reporting by Alasdair Pal and Santhush Fernando in Kadumaduwella; additional reporting by Uditha Jayasinghe and Kirsty Needham in Sydney; Editing by Mike Collett-White and Alexandra Hudson)

Native Americans urge boycott of 'tone deaf' Pilgrim museum

PHILIP MARCELO

Tue, August 9, 2022

PLYMOUTH, Mass. (AP) — Native Americans in Massachusetts are calling for a boycott of a popular living history museum featuring Colonial reenactors portraying life in Plymouth, the famous English settlement founded by the Pilgrims who arrived on the Mayflower.

Members of the state’s Wampanoag community and their supporters say Plimoth Patuxet Museums has not lived up to its promise of creating a “bi-cultural museum” that equally tells the story of the European and Indigenous peoples that lived there.

They say the “ Historic Patuxet Homesite,” the portion of the mostly outdoor museum focused on traditional Indigenous life, is inadequately small, in need of repairs and staffed by workers who aren’t from local tribes.

"We’re saying don’t patronize them, don’t work over there," said Camille Madison, a member of the Aquinnah Wampanoag Tribe on Martha’s Vineyard, who was among those recently venting their frustrations on social media. "We don’t want to engage with them until they can find a way to respect Indigenous knowledge and experience.”

The concerns come just two years after the museum changed its name from Plimoth Plantation to Plimoth Patuxet as part of a yearlong celebration of the 400th anniversary of the Mayflower landing.

At the time, the museum declared the “new, more balanced” moniker reflected the importance of the Indigenous perspective to the 75-year-old institution's educational mission.

“Patuxet” was an Indigenous community near “Plimoth,” as the Pilgrim colony was known before becoming modern day Plymouth. It was badly decimated by European diseases by the time the Mayflower arrived, but one of its survivors, Tisquantum, commonly known as Squanto, famously helped the English colonists survive their first winter.

“They’ve changed the name but haven’t changed the attitude,” said Paula Peters, a member of the Mashpee Wampanoag Tribe who worked for nearly 20 years at the museum, most recently as marketing director. “They’ve done nothing to ingratiate themselves with tribes. Every step they take is tone deaf.”

Museum spokesperson Rob Kluin, in a statement emailed to The Associated Press, said the museum has expanded the outdoor Wampanoag exhibit, raised more than $2 million towards a new Indigenous programs building and has “several initiatives in place” to recruit and retain staff from Native communities. He declined to elaborate.

The statement also cited a pair of grants the museum received to boost its Native American education programming. That included more than $160,000 from the National Endowment for the Humanities to host a workshop this summer for teachers on how to incorporate Indigenous voices into their history lessons.

The museum also noted that its new director of Algonquian Exhibits and Interpretation is an Aquinnah Wampanoag who serves on his tribe’s education committee.

Carol Pollard, whose late brother Anthony “Nanepashemet” Pollard played a key role in the development of the museum’s Indigenous programming as a leading Wampanoag historian, was among those dismayed at the state of the site.

Last week, large gaps were evident in the battered tree bark roof of the large wetu, or traditional Wampanoag dwelling, that is a focal point of the Indigenous exhibit. Neither of the two museum interpreters on site was wearing traditional tribal attire. Meanwhile, on the Pilgrim settlement part of the museum, thatched roofs on the Colonial homes had been recently repaired, and numerous reenactors milled about in detailed period outfits.

“I know my brother would be very disappointed,” said Pollard, who also worked as a gardener at the museum until last summer. “I guarantee you, people dressed in khakis and navy blue tops was not my brother’s vision.”

Former museum staffers say museum officials for years ignored their suggestions for modernizing and expanding the outdoor exhibit, which marks its 50th anniversary next year.

That, coupled with low pay and poor working conditions, led to the departure of many long-standing Native staffers who built the program into a must-see attraction by showcasing authentic Indigenous farming, cooking, canoe building and other cultural practices, they say.

“For more than a decade now, the museum has systematically dismantled the outdoor exhibit,” the Wampanoag Consulting Alliance, a Native group that includes Peters and other former museum staffers, said in a statement late last month. “Many steps taken to provide equal representation to Wampanoag programming have been removed, and the physical exhibit is in deplorable condition. The result has been the virtually complete alienation of the Wampanoag communities.”

Kitty Hendricks-Miller, a Mashpee Wampanoag who was a supervisor at the Wampanoag exhibit in the 1990s and early 2000s, says she worries about what non-Indigenous families and students are taking away from their visits to the museum, which remains a school field trip rite of passage for many in New England.

As Indian education coordinator for her tribe, she’s been encouraging teachers to reach out to Native communities directly if they’re seeking culturally and historically accurate programs.

“There’s this unwillingness to acknowledge that times have changed,” said Casey Figueroa, who worked for years as an interpreter at the museum until 2015. “The Native side of the Plymouth story has so much more to offer in terms of the issues we’re facing today, from immigration to racism and climate change, but they went backwards instead. They totally blew it.”

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