Cycling insurance subsidies

These little emergency patches to the failed market are going to keep happening. This one is about to happen twice, in fact. 

Donelon said he will ask the legislature to approve more cash for a second round of grants during the regular legislative session set to convene on April 10.

Insurance companies who get grant money have to match the value of the grant dollar-for-dollar and write twice the sum of that amount in premium every year. For example, if one company received a $10 million grant, it would contribute an additional $10 million in surplus funds and be responsible for writing $40 million in premiums every year in south Louisiana parishes.

Donelon noted on Friday that the program was all but a "verbatim repeat" of a grant initiative spearheaded after Hurricanes Katrina and Rita wreaked havoc on the state in 2005. This time, though, insurers are not required to take policies directly from Louisiana Citizens.

Each time the new emergency turns the ratchet, the subsidies only "incentivize" insurers to remain in the market. But they do so at newly increased rates and less favorable terms for policyholders. So the true effect of each rescue plan is just gradual acclimation to ever-worsening circumstances.  

Maybe it should be the job of the democratically elected Insurance Commissioner to figure out a better solution to all of this.  But that seems hard. And, really, who even wants that job anymore?

Ok but why?

This can't just be explained away as a big, "Whoops! Turns out we didn't know how banks work!"  Although Dayen does at least entertain that possibility here. I guess you kind of have to given how stupid everything does feel these days. But still, no. It can't just be that. 

Contrary to their belief, Silicon Valley big brains are not the first ones to figure out that deposit insurance doesn’t protect their payroll accounts. Companies manage this small risk of bank failure through recognized insurance strategies. There are private-sector solutions like Intrafi’s Insured Cash Sweep, which essentially cuts up large accounts into $250,000 pieces and splits them across the banks participating in its network. CDARS, another Intrafi product, is a less liquid option that segments cash into CDs. Some prior FDIC officials have expressed anger at these schemes, but there also are cash management accounts with a “sweep” feature, or additional insurance to take out (this Forbes story has several examples).

Any risk manager worth their salt at a company knows of a panoply of ways to avoid the threat of bank failure on deposits. “The pain of having to explain this,” Porter said to me.

Importantly, SVB was part of the network of cash sweep banks; it had an offer on its website about it. But according to Adam Levitin, there were only $469 million in reciprocal deposits, which is where cash sweep would show up. In other words, almost nobody banking at SVB used them.

Why not? There are a couple of options. One, Silicon Valley startups are so bad with money that they never thought of this. (It’s incredible that Roku, which has been around for a while, had nearly half a billion dollars on hand at SVB, without hedging that risk at all.) The fact that VC big brains were toying with new types of deposit insurance this weekend that already exist (it’s like Uber reinventing the bus) raises that possibility.

The other possibility is that SVB wanted that money kept with them. There are very strange stories coming out about how SVB required companies to hold their money with them in exchange for venture debt agreements, and then gave cheap “white glove” service to founders: low-interest mortgages, lines of credit, and the like. SVB might have had a reason to want their hands on that money exclusively.

Is that sort of "white glove" service not precisely the reason FNBC executive Ashton Ryan was found guilty on 46 counts of fraud? Remember that? It just happened last month.  

Prosecutors convinced the jury that Ryan was the "quarterback" of a team of conspirators, as Assistant U.S. Attorney Ryan McLaren put it in closing arguments.

The list of "scoundrels" he said conspired with Ryan included Mississippi developer Gary Gibbs, who testified that he was essentially bankrupt as far back as 2013. For years, Ryan kept lending him $1 million each month to cover up his insolvency, documents showed, as he spent the proceeds on a private jet, luxury cars and top-of-the-line fishing boats. Gibbs owed the bank $123 million by the time it collapsed.

There were similar stories for other borrowers like Kenneth Charity, a transplant from Washington D.C. who had plans to get rich in the post-Hurricane Katrina real estate market, but who could never file his taxes or other documents on time — or make meetings — as his projects floundered. Ryan kept lending to Charity until his debt reached $18 million.

Ryan's defense during his trial was laughable. In so many words, he said that he was just trying to help some guys out.  Maybe the loans were reckless or outside the bounds of what was usual, but he was being "altruistic."  He literally used this term. It's a popular one among financial criminals these days. What it amounts to, in Ryan's case, is an explicit admission of guilt. He knew the law and broke it anyway for... reasons. 

It's that what's going on at SVB? Because, as Dayen explains, any CFO at any of the firms banking there had to have known how to responsibly insure themselves against risk.  But they just... opted not to. Dayen also suggests the same firms still could have dug themselves out of the mess their own mess. (A mess they created and then triggered as if on purpose, it seems.)

SVB’s losses aren’t really that major in the grand scheme; the haircut that depositors would take under normal rules would be minimal. It might take a minute, which with payroll being due was a risk startups didn’t want to take. But they have well-heeled benefactors—the VCs shouting about the end of the world—who could have supplied whatever bridge support was needed for companies they still profess to believe in.

But they chose not to do that either. Why? So far the only answer seems to be, to see if they could.  But what else?

Billy is in trouble again

Billy is always in trouble.

The oversight of Louisiana's nine museums is plagued by lack of leadership, no coherent budget and low morale among employees that may be affecting museum operations, Legislative Auditor Mike Waguespack said Monday morning. The report says the state Office of State Museum has not had a permanent director since 2016.

The review also said the office lacks a comprehensive plan for exhibits and lacks a clear budget for museum programs and exhibits. It said staff reductions totaling 42% since 2009 pose a major challenge for the sites. The Office of State Museum is part of the Department of Culture, Recreation and Tourism, which is led by Lt. Gov. Billy Nungesser.

The auditor's report is available here if you feel like looking through it. 

Also for some background on that vacant director's job, Billy fired the last permanent director. Soon afterward, we had this episode where the consultant then holding the interim position resigned in protest over Nungesser's "pretty strange crap" management. 

Lt. Gov. Billy Nungesser has been using a Lower Pontalba Building apartment and space in other state museum buildings in the French Quarter for his personal benefit and has engaged in a pattern of political interference with the agency's operations, the Louisiana State Museum's interim director said Monday while resigning in protest.

Nungesser’s interference includes attempting to override museum officials and board members who objected to plans to loan U.S. Sen. John Kennedy artworks for his office in Washington, D.C., and threatening to sell museum works of art on eBay to raise funds, said Tim Chester, a museum consultant who took the interim position in October.

“I have never encountered anything like this in the 40 years I’ve worked in the field, ever,” Chester said. “I’ve seen some pretty strange crap come down in museums, but this one takes the cake.”

There's just something about those Pontalba apartments, right? Anyway, a few years later, there was more consulting from another consultant. Their feedback was also bad. 

A 2019 report by the consulting firm Lord Cultural Resources said the current arrangement "creates political interference and tension, makes fundraising a challenge and could risk OSM losing accreditation."

Eventually (inevitably?) the FBI got involved.  In response, Billy implied the investigation was initiated by political opponents like, for example, Jeff Landry, who was expected to face Nungesser in this year's gubernatorial election.  And that's all very plausible. Although, Billy's crystal ball obviously needs a little polishing.  Here's how he saw things playing out at the time.

He also said he doesn’t believe Landry will run for governor, saying “he’s got bigger problems.”

“In an open primary, he can’t win,” Nungesser said. “I always thought John Kennedy gets re-elected and he runs (for governor). And listen, I welcome anyone to run. But let’s run in a fair race and let the people of Louisiana choose. If they close the primary you’re going to get the far right and the far left. And we got enough divisiveness in Baton Rouge.”

A spokesman for Landry declined to comment. A message to the Louisiana Committee for a Conservative Majority was not immediately returned Saturday.

Nungesser’s fiery speech came after FBI agents interviewed one of his staffers as well as legislators in a probe of his office, he said. Nungesser said he didn’t know what the probe was about, but heard it was at least partly related to grants from his office.

He added that investigators have been calling lawmakers and others who stayed at the Lower Pontalba apartments in the French Quarter, which his office operates. He said he doesn’t know whether the FBI or state auditors are looking into that.

“I'm not blaming anyone for that, but it's a coincidence that I haven't seen any polls but everybody tells me, 'They can't beat you for governor if you run in an open primary.' Because I help everybody. And I don't crucify anybody just to make a political grandstand.”

Well, here we are in March 2023 and Kennedy is not running. Landry is running. And Billy, who was told by "everybody" that he was unbeatable is the one with bigger problems now.

Commercial STRs in the queue now

After a decade of dealing with this, we have reached the point now where City Councilmembers can no longer pretend they do not understand the problem. But they can still pretend they are trying to do something about it. Until they don't. 

The New Orleans City Council on Thursday took another step to rein in short-term rental permits in commercial areas, passing a temporary ban along some busy corridors abutting residential neighborhoods.

The motion, which passed unanimously, aims to close a loophole that critics say lets investors build what are essentially hotel suites next door to full-time residents. It prohibits renewal for a more than one quarter of the New Orleans' 1,200 commercial short-term permits, although permitting officials said they will make exceptions for those issued within the past six months.

It's the same process as what is happening now with residential STRs.  The new regs will inevitably grandfather in everything that currently exists and create new language by which the problem can continue to expand even as councilmembers claim to be "reining it in." Then in another couple of years we will "discover" that the new system is still bad and tweak it some more.. but grandfather in the next batch, of course. Repeat forever. Or at least until nobody actually lives here. 

How many cops does it take to go move five barricades?

This turns out to be a very complicated question! 

Part of the problem, according to officials, is that the 1971 ordinance that created the mall does not specify which agency is in charge of blockading the streets. The ordinance only states that Royal Street is to be closed to traffic from Bienville to Orleans streets on weekdays between 11 a.m. and 4 p.m. and weekends between 11 a.m. and 7 p.m. It provides no other instructions.

At an April 25 City Council committee meeting, which coincided with the reopening of the mall, NOPD Deputy Chief Hans Ganthier said in the past his officers, musicians, and even sanitation workers took it upon themselves to erect and take down the barricades, but there was never an official policy. At the time, Ganthier was commander of the 8th District, which includes the French Quarter.

NOPD Lt. Samuel Palumbo told council members that going forward his community liaison officers would be in charge of the barricades during the week and a traffic officer from the supplemental police patrol program might move them on the weekends. Neither has happened. 

When Ellestad asked Ganthier for an update at the end of last year, he said the deputy chief sounded less willing to help than he did at the council meeting. 

Even some of us old heads might not remember all the way back to 2019. So this article helpfully reminds us that the city took advantage of the Hard Rock hotel collapse to "temporarily" shut down the pedestrian mall and kept it that way for a few years because of... something something pandemic. The reasons given for all of that were vague. Who knew the lower five blocks of Royal was such a critical artery for emergency response?  

Well now that the emergencies are over.. or at least now that they have been allowed to fade into the background with all the other noise.. the pedestrian mall was supposed to be back.  But, for some reason, nobody remembers how to move the barricades or who is supposed to move them. 

But Ellestad, who was at the managment district meeting, said the issue was not just about the city’s failure to put of barricades, but the fact that performers are harassed when they try to do it themselves. Ellestad said that often comes from a private security patrol that is managed by FQMD itself, called the Upper Quarter Patrol. 

“A lot of these problems actually come from the Upper Quarter Patrol enforcing,” Ellestad said. “The barricades aren’t there. Performers try to set up the barricades and then the private enforcement will tell them that if they move the barricades they will be in jeopardy for citation or arrest. So if FQMD is not going to be part of the process in creating a plan, is it possible then to make sure they’re not involved in the enforcement?”

The French Quarter is crawling with cops. NOPD cops, Harbor Police cops, State Police cops, the private cops who work for various businesses as well as those contracted to FQMD.  None of them can figure out how to move a barricade, although they are available to stop you from doing it. 

What we don't see addressed with much depth in this article is the matter of why this situation persists. All we are told is that Councilman King hasn't taken any action and the mayor's office didn't comment for the story. Obviously it isn't happening just by accident.

There are plenty of comments in the story from the street performers who have been affected by the mall closure but nothing from anyone who might be opposed to reopening it.  Which is strange because such comments do exist on record. Of course, it's perhaps expecting a lot of old heads to remember all the way back to 2015... even if those old heads are the very same reporter writing this week's story who also wrote this back then. 

A coalition of French Quarter businesses led by Brennan's restaurant has asked that the New Orleans Police Department permanently close the Royal Street pedestrian mall and reopen the street to vehicles during the day. The request reignites an almost 40-year-old debate over access to Royal Street and whether pedestrian-only hours hurt or help the Vieux Carre.

Brennan's general manager Christian Pendleton cited the recent terrorist attacks in San Bernadino, Calif., and Paris, as well as last month's mass shooting in Bunny Friend Park in New Orleans' 9^th Ward, in making the request.

Hey there's always an emergency somewhere that might justify the policy change you want. The Brennan's cabal had to throw a bunch of them out there before the right ones came along. Anyway let's see who else was in on that.

The letter was signed by representatives of every business in the 400 block of Royal Street, including Latrobe's, Brass Monkey Antiques, Ida Manheim & Pugh, Moss Antiques, LolaNOLA, the Martin Lawrence Gallery and James H. Cohen antique weapons and rare coins. Pendleton asked that City Hall "leave Royal Street open every day, and at all times."

You think maybe some of them are available for comment now?  Might be worth an ask.  There are some choice quotes some of them delivered the last time around.

Rosemary James, co-owner of Faulkner House Books on nearby Pirate's Alley, said the mall "should never have been enacted in the first place," that it "serves no useful purpose whatsoever," causes "terrible traffic problems" and "poses a threat to (the) safety and security of those who own property and businesses in the French Quarter and who actually pay taxes."

Yesterday, MACCNO tweeted an acknowledgement of people "working behind the scenes to find a compromise." I guess these business and property owners must be the side that is being compromised with?  Maybe someone will check back in with them to see.

"Along with"

 Seems like "along with" might be a bit of a stretch in this passage. 

A development agreement for the former Six Flags amusement park has been finalized, nearly a year after Mayor LaToya Cantrell’s administration chose Bayou Phoenix to take on the project.

The agreement will eventually allow the group led by businessman Troy Henry to access the site and begin pre-construction work. Details of the agreement were not immediately available, but Bayou Phoenix has proposed to build a warehouse on the 227-acre site, along with a water park, hotel, ball fields and other amenities.

If I had to guess at what's going to happen, at the very least I would assume the warehouse project is, "prior to" any remaining development which could be pending for a very long time.  

This doesn't yet say what, exactly has been agreed to.  Back in November, it was clear that Henry was seeking private control over a public asset beyond which was either legally or morally appropriate.  We'll see what he got soon, I guess. 

Update: Case in point, re: public investment going toward private profit.  Apparently the city is chucking in another 1 million dollars toward Henry's warehouse. 

Of course right up until then it was fine

Jeff and Shane have decided they are gonna put off the deal where they give each other bullshit gigs for a while. 

Guidry is Landry’s top political ally and a major donor to his campaign. Landry also hired Guidry to serve as a “special agent/investigator” for the Attorney General’s office.

Landry reported making between $50,000 and $100,000 in 2020 and 2021 from his role on the Harvey Gulf board, where he provided legal advice. Several experts said the arrangement may run afoul of a law that says the attorney general must devote his full time to that office, as well as of ethics laws that prohibit public officials from getting certain payments and gifts outside of their state salaries.

Landry’s campaign did not respond to messages seeking comment on his resignation.

“He just felt he needed to resign from the board in 2022 to run for governor in 2023,” Guidry said, adding that Landry didn’t provide a lengthy explanation for his decision. Guidry said he replaced Landry with a former schools superintendent from Michigan. The company’s website indicates the new board member is Ronald Wilson.

We'll see how they feel after the election. 

Company town

The highlight of yesterday's City Council hearing about the Cantrell Administration's stonewalling of union organizers came from JP Morrell. 

Lloyd Permaul, the executive director of AFSCME’s Louisiana-based chapter — which Cantrell previously acknowledged as city employees’ bargaining unit — told Verite that while Tuesday’s meeting should help, he doesn’t know exactly what is going to happen next.

“I don’t know how to tell you how I feel coming out of that meeting,” Permaul told Verite. “I can’t even tell you I’m optimistic with the group I’m working with up there, to be honest with you. I don’t know.”

Permaul said that he hasn’t faced similar issues with the other government agencies he deals with in the state, including in Baton Rouge, Jefferson Parish and Plaquemines Parish.

“She’s the only mayor within this state that hasn’t met with me,” Permaul said.

“We are supposed to be the blue island in a state of red,” Morrell said, referring to New Orleans’ reputation as the most Democratic-leaning part of the state. “But everything I’m hearing is that this city is more hostile to unions than Jefferson Parish is. Do you know how ridiculous that is?”

JP's full comments are better if you watch the video. Lot's of "this is stupid!" and I think at one point he even says, "This is the most asinine thing I've ever heard in this chamber." The sequence starts around the 1:39:00 or 1:40:00 mark. This link should get you there.  

At the same time, though, JP's casting of New Orleans as "the blue island in a state of red" is simplistic and misleading. Especially when it comes to labor politics. JP and anyone who pays a lick of attention should know well that this city's power structure both in and out of government is generally conservative and viciously anti-union.  The Cantrell Administration, in particular, is closely allied with the city's business and non-profit elite where the dominant ideology promotes privatization of public services and the outsourcing and gigification of work. 

With regard to city workers in particular, her administration has exhibited constant hostility. Just a few examples would include the tacit approval of Metro Disposal's use of prison labor to break a strike, the freezing out organizing efforts at EMS, Public Works, and NORD a well-documented and dishonest attempt to de-fund the library system, and an attempt to relocate City Hall premised explicitly on a plan to downsize the permanent workforce.  In 2020, the mayor moved to replace a member of the City Civil Service Commission for the stated reason that the commissioner was too favorable to unions. 

So, while, we can certainly understand and support Morrell's outrage yesterday, his framing of the matter as though it should come as some sort of surprise may actually do more harm than good. The first step to building a stronger working class and a more union-friendly city is recognizing the size and scope of the challenge. And pretending that Cantrell's behavior is some kind of outlier instead of entirely representative of the rabidly anti-labor company town we actually live in, does not help with that. 

Just pick a number

So let's see. The recall campaign spent its final month loudly boasting that it had enough signatures to trigger an election.  They would not tell anyone how many signatures that was, exactly. Instead they literally said, "trust us," to anyone who asked. Then they suddenly discovered... very nearly at the last minute, in fact... that they might lower the threshold they already claimed to have met by filing a lawsuit.

Why were they not concerned about this at the outset of the circus?  They didn't say.  How many signatures are actually on the public record, they were the custodians of? Still not saying. Can the newspaper see them, in accordance with the legal agreement they had signed? No, that is actually none of your business now.  Instead we must focus on the lawsuit because "ACCURATE VOTER ROLLS, WASTE AND FRAUD MUST BE STOPPED, ARGLE BARGLE, ETC." 

Or... maybe we'll just make up a number instead. 

The LaToya Cantrell recall campaign's lawsuit against Secretary of State Kyle Ardoin is close to being settled, a lawyer for the campaign said at a virtual court hearing Wednesday.

Recall lawyer Laura Cannizzaro Rodrigue told the judge overseeing the case, Jennifer Medley, that the two sides were putting the final touches on a deal that would resolve the lawsuit, which alleges that the recall's signature goal was artificially inflated by thousands of names because of errors on the active voter list.

Sources said Tuesday that the two sides were trying to settle on a number that would set a new minimum cutoff for the recall petition, which must currently prove that it has collected 49,976 signatures to force a vote on Cantrell's fate.

The Registrar of Voters is apparently dismissed from the lawsuit now. So we're no longer even asking anyone to re-canvass and get that accurate count we were so concerned about five minutes ago.  Instead we are going to resolve the "artificially inflated" signature goal by artificially deflating it. 

This whole thing has always been a joke.  I do hope that's finally sinking in for anyone who might have taken it seriously.