Tag Archives: United States

Several states wary of $48 billion opioid settlement proposal

Several states wary of $48 billion opioid settlement proposal
By Tom Hals and Nate Raymond

(Reuters) – Several U.S. states that have been ravaged by the opioid epidemic are pushing back on a proposed $48 billion settlement framework that would resolve thousands of lawsuits against five drug companies accused of fueling the addiction crisis.

The proposal would bring an end to all opioid litigation against AmerisourceBergen Corp<ABC.N>, Cardinal Health Inc<CAH.N> and McKesson Corp<MCK.N>, drugmaker Teva Pharmaceutical Industries Inc<TEVA.TA><TEVA.N>, and Johnson & Johnson<JNJ.J>.

The companies have proposed paying $22.25 billion cash mostly over 18 years, while services and drugs to treat addiction valued at $26 billion by the companies would be provided over the coming decade, mostly by Teva.

Officials in states such as Ohio, New Hampshire and West Virginia — all hard hit by the deadly drug addition crisis — voiced concerns about the proposal.

James Boffetti, the associate attorney general for New Hampshire, said in an interview he was troubled that payments were stretched over many years.

“The concern is, I think, the states need money now to create the infrastructure for treatment,” he said.

Small states fear the money will be divvied up by population rather than need.

“Any global opioid settlement that doesn’t reflect the unique and unprecedented damage imposed on West Virginia through the opioid epidemic should be DOA,” West Virginia Attorney General Patrick Morrisey said on Twitter on Tuesday.

Some 400,000 U.S. overdose deaths between 1997 and 2017 were linked to opioids, according to government data. Roughly 2,600 lawsuits have been brought nationwide by states, local and tribal governments.

The three distributors in a joint statement said they were committed to finalizing a global settlement and would continue working with the other parties on the details of the framework. Teva declined to comment.

J&J said in a securities filing on Wednesday the deal would lower third quarter profit by $3 billion.

The proposal, announced on Monday, was hammered out by the companies and attorneys general in North Carolina, Pennsylvania, Tennessee and Texas.

It will need broad support among state attorneys general and will have to overcome opposition from the lawyers representing local governments that sued. Those lawyers declined to sign on when presented the proposal last week.

Under the settlement framework, money for each state would be divvied up, with 15% going to the state treasury, 15% for local governments that filed lawsuits and 70% going to a proposed state fund aimed at addressing the crisis.

Boffetti predicted it would takes weeks for states to determine whether they back the settlement framework.

North Carolina’s attorney general, Josh Stein, acknowledged that a detailed term sheet needs to be developed.

“There are a lot of details and mechanics that need to be added to it,” Stein told Reuters in an interview. “That will happen in the coming weeks.”

The proposal did win a major supporter on Tuesday. Tom Miller of Iowa, the longest-serving attorney general, publicly backed the proposal, calling the framework “an important step in addressing the crisis.”

Colorado’s attorney general, Phil Weiser, called it a “very promising development.”

The lawsuits accuse distributors of failing to flag and halt a rising tide of suspicious orders and drugmakers of overstating the benefits of opioids while downplaying the risks.

The companies have denied any wrongdoing. Drugmakers say their products carried government-approved labels that warned of the addictive risks of opioids, while distributors argue their role was to make sure medicines prescribed by licensed doctors were available for patients.

The proposed deal has widened a fault line between attorneys general and local governments.

Cities and counties generally hired private attorneys to bring their cases, and attorneys general want to limit the amount of the settlement that goes to pay private lawyers. The attorneys for local governments also generally opposed Teva contributing opioid treatment drugs to the settlement, instead of cash, in part because of concerns that the framework placed an inflated value on those drugs.

Last week’s talks failed to reach a global deal, and on Monday, the three wholesale distributors and Teva struck a last-minute $260 million settlement with two Ohio counties, averting the first federal trial over opioids.

North Carolina’s Stein said he looked forward to resolving concerns about the proposal and warned that settling lawsuits individually was unsustainable.

“If we proceed on the current path and each county and city brings their case and extracts whatever amount they may be able to get from these companies, the companies will end up bankrupt,” he said. “The opioid crisis is a national problem that demands a national solution.”

(Reporting by Tom Hals in Wilmington, Delaware and Nate Raymond in Boston, Massachusetts; Editing by Noeleen Walder and Sandra Maler)

Manure, trash and wastewater: U.S. utilities get dirty in climate fight

Manure, trash and wastewater: U.S. utilities get dirty in climate fight
By Nichola Groom

PIXLEY, Calif. (Reuters) – Joey Airoso has always been proud of his cows, whose milk goes into the butter sold by national dairy company Land O’Lakes. Now he has something new to brag about: the vast amounts of gas produced by his 2,900-head herd is powering truck fleets, homes and factories across the state of California.

“It’s pretty incredible if you think about it,” Airoso said during a recent tour of his 1,500-acre farm, as a stream of watered-down manure flowed from cow sheds into a nearby pit. There the slurry releases methane that is captured and eventually piped into fueling stations and buildings.

Airoso is tapping into a growing market among U.S. utilities for so-called renewable natural gas, or biomethane, that is being driven by the fight against climate change.

For farmers, it is a way to get ahead of a wave of greenhouse gas regulation and make a bit of cash at the same time. And for utilities that buy or transport the gas, it is a way to respond to the increasing demands of customers and lawmakers to cut their reliance on fossil fuels.

“It is not something very many people are aware of yet, but it makes sense once it’s explained,” said Emily O’Connell, director of energy markets policy at the American Gas Association, the trade group for gas utilities.

Renewable natural gas can come from manure, landfills or wastewater and is interchangeable with gas drilled out of the ground. It cuts greenhouse gas emissions by ensuring significant volumes of methane that would have been produced anyway never reach the atmosphere. Methane is a far more potent greenhouse gas than carbon dioxide when it escapes into the air unburned.

Nationwide, more than a dozen utilities have started developing renewable natural gas production through partnerships with farmers, wastewater treatment plants and landfill operators, while nine have proposed price premiums for customers who choose it as a fuel, according to the American Gas Association industry group. Renewable natural gas is currently between four and seven times more expensive to produce than fossil gas, a gap that its proponents hope will narrow as the fuel becomes more widely used.

BUSES, STOVES

California’s SoCalGas, the nation’s largest natural gas distribution utility, is one of the industry’s top proponents of the alternative fuel. It has committed to making renewable natural gas 20 percent of its supply by 2030, said Sharon Tomkins, vice president of strategy and engagement.

She said California has enough biomethane potential “to make a significant dent in reducing the overall emissions from both the agricultural sector as well as reducing the carbon intensity of our gas stream.”

Across the country, Vermont Gas hopes to one day supply only renewable natural gas, leveraging the state’s preponderance of dairy farms. The utility’s renewable natural gas supply currently stands at less than 1 percent of overall volumes, according to spokeswoman Beth Parent. But the company is helping large energy buyers in the state, like cleaning products maker Seventh Generation, Middlebury College and Vermont Coffee Company transition to using biomethane.

CenterPoint Energy, Southwest Gas, DTE Energy and NW Natural are among the other gas utilities seeking to integrate more renewable natural gas into their systems. Last year Dominion Energy partnered with meat producer Smithfield Foods on a $250 million venture to capture methane emissions from hog farms.

“It’s good for their business,” said Marcus Gillette, spokesman for the Coalition for Renewable Natural Gas, an industry lobbying group. “Many are on missions to decrease emissions from their side of the energy sector as much as possible.”

Until now, nearly all the market for biomethane has come from bus fleets and other vehicles that are able to use state and federal subsidies to make the fuel competitive with fossil gas. Production of the fuel doubled between 2015 and 2018 to 304 million ethanol gallons equivalent thanks to the incentives, according to a report from consulting firm Bates White.

Today about three quarters of renewable natural gas production is still used for transportation, though Gillette said that is shifting as more utilities seek to provide it for heating, cooking and industrial uses.

Some states are more aggressive in bolstering the renewable natural gas industry than others.

Oregon, for example, passed a bill in August that sets a goal of making renewable natural gas account for 30% of what is carried in the state’s gas pipeline network by 2050.

California, meanwhile, has mandated a 40 percent reduction in methane emissions by 2030, something that will spell specific regulatory curbs on agriculture in the coming years. Methane accounts for about 9 percent of the state’s greenhouse gas emissions, half of which comes from livestock.

For Airoso, that made tapping into the growing biomethane market an easy decision. “We’ve got a $10 mln investment here, so I had to figure out how I protect my investment,” he said.

(Reporting by Nichola Groom; editing by Richard Valdmanis and Chizu Nomiyama)

Attorney General Barr launches effort to prevent more mass shootings

Attorney General Barr launches effort to prevent more mass shootings
By Sarah N. Lynch and Andy Sullivan

WASHINGTON (Reuters) – U.S. Attorney General William Barr on Wednesday announced an initiative to prevent mass shootings by intervening to provide mental-health treatment and other forms of counseling to potentially violent individuals.

The new effort, announced in a memo to federal prosecutors and law enforcement officials, follows dozens of deadly mass shootings in the United States this year, including a massacre of 22 people at a Walmart in El Paso, Texas and another just one day later in Dayton, Ohio, in which nine people were killed.

Barr said a training conference at FBI headquarters in December will present “proven models for engaging extremely challenging individuals” and consider new ideas to face such threats.

In one successful case, Barr said, the FBI worked with parents and social-service workers to get court-ordered supervision and mental-health treatment for a young person who was the subject of a threat investigation.

Lawmakers are considering whether they need new laws to help the FBI investigate domestic terrorism instigated by U.S. residents who are motivated by white supremacy, anti-Semitism or other ideologies that are protected by the U.S. Constitution’s free-speech guarantees.

The FBI in the past has come under criticism for how it documents and follows up on investigative leads about possible shooters.

In the wake of the Feb. 18 mass shooting at a high school in Parkland, Florida, the FBI’s No. 2 official David Bowdich told Congress the bureau should have done more after it received warnings about the gunman, Nikolas Cruz.

Earlier this year, the FBI requested bids for a contractor who could help it try to detect national security threats by trawling through social media sites.

(Reporting by Sarah N. Lynch and Andy Sullivan; Editing by Angus MacSwan)

Venezuela exodus set to top 5 million as long-term needs grow, officials say

Venezuela exodus set to top 5 million as long-term needs grow, officials say
By Stephanie Nebehay

GENEVA (Reuters) – The exodus of Venezuelans is on track to reach 5 million people, as pressure grows on neighboring countries to provide them with long-term support, United Nations and European Union officials said on Wednesday.

Some 4.5 million refugees and migrants have fled Venezuela since 2015, according to official figures, but more are using illegal crossing points because they lack identity papers, said Eduardo Stein, joint special representative of the U.N. refugee and migration agencies.

The crisis has worsened since the United States imposed sanctions, including on the pivotal oil industry, in an effort to oust leftist President Nicolas Maduro in favor of opposition leader Juan Guaido. Dozens of nations recognize Guaido as interim president, saying Maduro rigged a 2018 election.

Roughly 5,000 people leave Venezuela daily, although the number fluctuates as more states require visas, Stein said.

“The experience of other crises in the world shows us that those who would want to go back to Venezuela if the crisis in political terms were to be solved today, it will take a good two years or maybe even more,” Stein told a news conference.

A U.N. regional humanitarian response plan of $739 million for this year is expected to nearly double for 2020, he added.

The initially welcoming attitude to Venezuelans around South America has soured amid accusations they bring crime, crowd the job market, and strain social services.

The United Nations and European Union are hosting a meeting on Oct. 28-29 in Brussels to raise awareness of needs. Donors and officials from the World Bank and Inter-American Development Bank are due to attend, but no Venezuelan representatives.

“This is the most severe and fastest-growing refugee migrant crisis in Latin American history, at least recent history,” said Walter Stevens, EU ambassador to the U.N. in Geneva. “There are estimates also that it could further increase if the situation does not change, quickly reaching 5 million.”

Colombia is the top destination for Venezuelan migrants fleeing the long-running crisis, which has caused widespread shortages of food and medicine. Some 1.4 million Venezuelans live in Colombia.

The flow is overwhelming the financial and administrative capacities of host countries to provide education and health services, Stein said.

“Nine receiving countries have agreed to accept expired (Venezuelan) passports as valid documents. And so with an expired passport you can get a temporary permit sometimes for two years,” he stated.

(Reporting by Stephanie Nebehay, editing by Larry King)

Syrian Kurdish forces tell U.S. they met truce obligations: U.S. official

Syrian Kurdish forces tell U.S. they met truce obligations: U.S. official
By Darya Korsunskaya and Humeyra Pamuk

SOCHI, Russia/WASHINGTON (Reuters) – The commander of Kurdish forces in northeast Syria told the United States he had met all obligations set out in a U.S.-brokered truce, a senior U.S. official said on Tuesday, as Washington warned it would punish Turkey if it resumes hostilities.

The five-day truce in Turkey’s cross-border offensive to allow the withdrawal of Kurdish YPG fighters from the border area ends at 10 pm (1900 GMT) on Tuesday, and President Tayyip Erdogan has said Turkey could then press on with fighting.

Earlier on Tuesday, as he flew to Russia for talks on Syria, Erdogan said hundreds of Kurdish fighters remained near to Syria’s northeast border despite the truce demanding their withdrawal.

Erdogan said up 800 fighters from the Kurdish YPG militia had left the area near the border, where Turkey plans to establish a “safe zone” extending more than 30 km (20 miles) into Syria, but 1,200 to 1,300 of them remained.

However, the senior U.S. administration official said Ankara and Washington were in contact to agree that the withdrawal has taken place, and that Turkey’s pause in its military offensive into Syria would turn into a permanent halt of the campaign.

Erdogan held talks on Tuesday with President Vladimir Putin of Russia, the other main international power in Syria, in the Black Sea resort of Sochi.

Turkey began its cross-border operation nearly two weeks ago following U.S. President Donald Trump’s decision to withdraw American troops from northern Syria.

The American withdrawal from Syria has been criticized by U.S. lawmakers, including some of Trump’s fellow Republicans, as a betrayal of Kurdish allies who have helped the United States fight Islamic State in Syria.

Trump said on Monday it appeared that the five-day pause was holding despite skirmishes, and that it could possibly go beyond Tuesday’s expiry, but Erdogan said the fighting may resume.

“If the promises given to us by America are not kept, we will continue our operation from where it left off, this time with a much bigger determination,” he said.

“SAFE ZONE”

Turkey says it wants to set up a “safe zone” along 440 km (275 miles) of border with northeast Syria, but its assault so far has focused on two border towns in the center of that strip, Ras al Ain and Tel Abyad, about 120 km apart.

A Turkish security source said initially the YPG was pulling back from that 120 km border strip. He said Erdogan and Putin would discuss a wider withdrawal from the rest of the border in their talks on Tuesday in the Russian Black Sea resort of Sochi.

Syrian and Russian forces have already entered two border cities, Manbij and Kobani, which lie within Turkey’s planned “safe zone” but to the west of Turkey’s military operations.

Erdogan has said he could accept the presence of Syrian troops in those areas, as long as the YPG are pushed out.

“My hope is that God willing we will achieve the agreement we desire,” he said before leaving for Sochi.

The Kremlin said it hoped Erdogan would be able to provide Putin with more information about Ankara’s plans for northeast Syria, and was also studying what it described as a new idea from Germany for an internationally controlled security zone in northern Syria involving Turkey and Russia.

German Defense Minister Annegret Kramp-Karrenbauer said the step should stabilize the region so that civilians could rebuild and refugees could return on a voluntary basis.

Russia is a close ally of Syrian President Bashar al-Assad. Turkey has backed rebels seeking to oust Assad during Syria’s more than eight-year-long civil war but has dropped its once-frequent calls for Assad to quit.

Ankara is holding covert contacts with Damascus, partly via Russia, to avert direct conflict in northeast Syria, Turkish officials say, although publicly hostility between the two governments remains.

“Erdogan is a thief and is now stealing our land,” Assad said during a rare visit to a separate frontline in Syria’s northwestern Idlib region, the last major bastion of Turkey-backed rebels.

Some 300,000 people have been displaced by Turkey’s offensive and 120 civilians have been killed, according to the Syrian Observatory for Human Rights, a UK-based war monitor. It said on Sunday 259 fighters with the Kurdish-led forces had been killed, and 196 Turkey-backed Syrian rebels. Turkey says 765 terrorists but no civilians have been killed in its offensive.

The U.S. withdrawal has left a vacuum into which Turkish forces have pressed in from the north, while from the southwest Russian-backed Syrian troops have swept back into territory they were driven from years ago.

(Additional reporting by Ali Kucukgocmen and Ezgi Erkoyun in Istanbul, Ahmed Rashid in Baghdad and Andrei Kuzmin in Moscow; Writing by Dominic Evans; Editing by Gareth Jones)

U.S. companies facing worker shortage race to automate

U.S. companies facing worker shortage race to automate
By David Randall

NEW YORK (Reuters) – U.S. companies are responding to the lowest unemployment rate in almost 50 years by increasing their focus on automation in order to maintain healthy margins as labor costs tick higher, a Reuters analysis of corporate earnings transcripts shows.

The attempt to save money through technology does not come down to just installing more robots in factories. Instead, companies appear to be confronting the lack of low-cost workers by investing in software and machines that can perform tasks ranging from human resources management to filling prescriptions.

Citigroup Inc, for instance, said that it is expanding its cloud infrastructure to replace routine tasks that used to require human labor. Health insurance company UnitedHealth Group told investors that its automation efforts should save the company over $1 billion next year. And Corona beer brewer Constellation Brands Inc said that its spending on automation should increase the efficiency in which it packs bottles in a variety pack, shaving costs.

Those investments are helping keep wage growth in line despite historically-low unemployment. Average hourly earnings were unchanged in October despite the unemployment rate falling to 3.5% from 3.7%, while the annual increase in wages fell slightly to 2.9%.

“I’m not at all worried about margin pressure from wages” because of increased productivity due to corporate spending on automation, said Jonathan Golub, chief U.S. equities strategist at Credit Suisse Securities.

Overall, companies have discussed automation on quarterly earnings calls more than 1,110 times since the beginning of the year, a 15% increase from this time last year and nearly double the mentions by this time in October, 2016, according to Refinitiv data. Corporate orders of robotics alone rose 7.2% over the first half of this year compared with 2018, totaling $869 million in spending, according to the Association for Advancing Automation.

Fund managers and analysts say that corporate spending on automation is contributing to positive earnings surprises. Nearly 83% of companies in the S&P 500 that have release third quarter earnings so far have reported earnings above expectations, compared with an average 65% beat rate since 1994, according to I/B/E/S data from Refinitiv.

“You’re seeing companies benefit in ways that aren’t easy to see when you look at the balance sheet, and all those investments start to add up and help protect margins,” said Matt Watson, a portfolio manager at James Investment Research.

Watson said that he is now buying companies that are benefiting from the use of automation because they trade at much more attractive valuations than the companies that provide it, which he is steering clear of.

FedEx Corp, for example, is investing in systems to both automate its shipping facilities and is testing robots that can handle some deliveries, he said. He is also buying shares of broker-dealer LPL Financial Holdings Inc, which is automating more of its client-relations platform to increase efficiency, he said.

“You don’t need to get into the nitty gritty when it’s back-of-the-napkin obvious that these companies are saving money” through increased productivity, Watson said.

The fastest-growing sectors of automation are in logistics and healthcare, said Jeremie Capron, head of research at ROBO Global, the company behind the $1.2-billion Robo Global Robotics & Automation ETF <ROBO.P>. The firm’s ETF is up nearly 20% for the year to date, in line with the performance of the benchmark S&P 500 index.

Capron sees the greatest opportunity in companies like Zebra Technologies Corp <ZBRA.O>, which makes radio-frequency identification device readers and real-time location systems that are used in hospitals and e-commerce fulfillment centers, he said. Shares of the company are up nearly 30% for the year to date.

Declining costs and a new generation of smaller systems should continue to push revenue growth in the sector, he said.

“We’ve hit the level where you don’t need great engineering skills to deploy automation because the software has made it so much easier to use,” he said. “You’re seeing not only large multi-national groups automate, but those technologies are increasingly available to smaller and mid-sized businesses.”

(Reporting by David Randall; Editing by Alden Bentley and Nick Zieminski)

Dallas orders curfew after tornado shreds homes; thousands without power

Dallas orders curfew after tornado shreds homes; thousands without power
(Reuters) – Police declared a curfew on Monday in parts of Dallas where a powerful tornado tore apart homes and flipped cars, leaving tens of thousands without power for a second night.

Three people were reported hospitalized with non-life-threatening injuries after the Sunday storm ripped through north Dallas with maximum wind speeds of 140 mph (225 kph), according to the National Weather Service.

Emergency management workers went door to door in areas such as Preston Hollow and Richardson, checking homes without roofs or crushed by fallen trees, tagging structures with orange spray paint.

“#DallasTornado you took my job! my school!” one Twitter user, Monica Badillo, posted, along with images of shattered windows and debris at Primrose School in Preston Hollow, where she said she worked.

The Dallas Police Department (DPD) asked residents to stay indoors between 7 p.m. and 7 a.m. and told non-residents to stay out of areas where the twister left a miles-long swath of destruction.

“DPD is urging residents to remain vigilant and not enter the impacted areas for their own safety,” the department said, adding it had received reports of looting that had so far turned out to be false.

Dozens of residents were expected to spend the night at a leisure complex turned into a shelter near Love Field Airport, city authorities said.

The winds were powerful enough to cave in a Home Depot <HD.N> do-it-yourself store, leaving a mangled mess of ceiling beams.

The tornado caused traffic chaos, with numerous roads blocked and dozens of stop lights out, transport authorities said.

Fire rescue officials said it would take another day to make a final assessment of the destruction, with less than half of the affected area checked by nightfall.

About 42,000 people were without power by Monday evening, according to utility firm Oncor, which pressed helicopters and drones into its effort to find and fix damaged lines.

Some residents should prepare for a possible multi-day outage as destroyed electric equipment is rebuilt, it added.

Although no fatalities were reported in the Dallas area, severe storms were blamed for at least three deaths in Oklahoma and one in Arkansas, state authorities said.

(Reporting by Subrat Patnaik in Bengaluru, Rich McKay in Atlanta, Gabriella Borter in New York and Andrew Hay in New Mexico; Editing by Andrea Ricci and Clarence Fernandez)

How a major U.S. farm lender left a trail of defaults, lawsuits

How a major U.S. farm lender left a trail of defaults, lawsuits
By P.J. Huffstutter

HARROD, Ohio (Reuters) – After completing a credit review in a half-hour phone call, a BMO Harris Bank underwriter cleared $12 million in loans for Ohio corn and soybean producer Greg Kruger in 2013.

Kruger had initially asked for a $2 million loan to build a grain elevator. But the Chicago-based bank, one of the largest U.S. farm lenders, ended up selling him a $5 million loan for the elevator and another $7 million to finance crops, machinery and debt consolidation, according to documents in the Ohio foreclosure case the bank filed to seize Kruger’s farm.

When Kruger offered to supply receipts of sold grain and other standard documentation, his loan officer told him not to bother. “‘Don’t worry. We’ll make the numbers work’,” Kruger, 67, recalled the officer saying.

Five years later, after aggressively expanding its U.S. farm loan portfolio, the bank called in Kruger’s loans as corn and soy prices collapsed and the United States was starting a trade war with China. As the U.S. agricultural economy sours and farmers’ financial woes pile up, BMO Harris is leaving behind a trail of farmers such as Kruger who have lost nearly everything.

The bank, a subsidiary of Canada’s Bank of Montreal  has struggled to recoup some of its investments through a slew of bitter legal fights, according to a Reuters review of court documents and bank regulator data, as well as interviews with dozens of U.S. farmers, bankers, and former and current BMO Harris employees.

“BMO Harris did push for growth, and they’ve had some of those deals blow up spectacularly in their faces,” said John Blanchfield, founder of Agricultural Banking Advisory Services, a consulting firm.

The plight of BMO Harris and its customers reflects broader distress in the U.S. farm sector. Farmers are struggling to pay back their loans or obtain new ones. Shrinking cash flow is pushing some to retire early and a growing number of producers to declare bankruptcy, according to farm economists and legal experts.

BMO Harris may yet face more defaults, judging by its high level of delinquent loans. At the end of June, nearly 13.1% of its farm loan portfolio was at least 90 days late or had stopped accruing interest because the lender doubts the money will be paid back – compared to 1.53% for all U.S. farm loans at banks insured by the Federal Deposit Insurance Corporation (FDIC). BMO Harris had the highest rate among the 30 largest FDIC banks, according to a Reuters analysis of loan data the banks reported to the regulator.

Ray Whitacre, head of BMO Harris Bank’s U.S. diversified industries unit, said in a statement that the bank’s distressed loans do not represent “the overwhelming majority” of its borrowers’ experiences. The Bank of Montreal and its U.S. businesses have been in farm lending for more than a century, he said. The bank takes a long-term view of helping farmers through “all stages of the economic cycle,” Whitacre said.

BMO Harris spokesman Patrick O’Herlihy attributed the high delinquency rates to the bank’s lending in the upper Midwest, where dairy and grain operators have faced serious financial challenges. Sam Miller, BMO Harris’ managing director of agriculture banking, said the bank is keeping a closer eye on its customers with cash-flow shortages and lending to fewer mid-sized operators. “We have to be more vigilant in underwriting the risk,” Miller said in an interview.

The bank declined to comment on any individual loans or borrowers, or on the prospect that it could face additional defaults based on its delinquency rates.

MISSING COLLATERAL

The bank’s exposure to the farm sector reached a peak of $1.59 billion in 2018. Most other major banks have been scaling back their farm-loan portfolios since about 2015, as prices fell due to a global grains glut, according to the Reuters analysis of FDIC data.

Among the BMO Harris deals that went belly-up was $43 million in farm operating loans to McM Inc, run by Ronald G. McMartin Jr. in North Dakota. The farm filed for Chapter 7 bankruptcy in 2017.

BMO Harris secured a $25 million loan with McM’s grain, cattle and other farm crops, along with other assets. McM agreed to use the sale of these crops to pay the bank back, according to a copy of the loan.

During the bankruptcy proceedings, BMO Harris’ attorneys told the court it was unable to locate all the crops backing its loans, alleging that McM had sold some of the crops to pay other creditors first. Court documents also show the bank had not audited some of the farm’s financial statements. An outside consultant later found McM’s accounts receivable and inventory was overstated by at least $11 million, according to court filings. Neither McMartin nor his attorney responded to requests for comment.

Some experts and bankruptcy attorneys representing former BMO Harris customers say the bank issued too many loans for too long that farmers simply could not pay back. The problems, they said, stem from the aggressive practices of some loan officers and a lack of oversight by bank auditors.

Michael and Byron Robinson borrowed $2.5 million in an agricultural loan and another $2.5 million on a line of credit in 2013 through their Indiana businesses, court records show. The bank sued the Robinsons in federal court as part of its foreclosure process in 2016 and later sold the farmland at auction. The property brought far less than the value the bank had estimated the properties were worth to justify the original loans, said their bankruptcy attorney, Maurice Doll.

Michael and Byron Robinson did not respond to requests for comment. Doll said BMO Harris had loaded his clients up with far more debt than they could reasonably pay.

‘DON’T WORRY. IT’LL BE FINE’

The Indiana-based BMO Harris banker working with the Robinsons and Kruger, Thomas “T.J.” Mattick, found his customers through farm magazine advertisements, word of mouth, at church gatherings and from rural loan brokers who were paid a finder’s fee, according to interviews with 10 farmers and one loan broker.

“I thought I could trust him,” Kruger said. “We would talk about church and faith all the time.”

When the Robinsons were looking to expand their corn and soybean operations, Mattick convinced them to buy two new farms instead of one – with BMO Harris financing 100% of the deal, said Michael Morrison, the Robinsons’ farm bookkeeper and a former agricultural banker.

Morrison told Reuters he was concerned by how the bank’s underwriters valued the family’s grain in storage, on the premise that its value would continue to rise – even as grain prices were starting to soften at the time.

“We used to say that T.J. never saw a loan he didn’t like,” Morrison said. “I kept telling them, ‘Don’t do this. Don’t take on the debt.’ But T.J. kept telling them, ‘Don’t worry, it’ll be fine’.”

Mattick, who no longer works for the bank, denied that he encouraged borrowers to take on more debt they could pay back. In written answers to questions from Reuters, Mattick said “extensive underwriting and analysis” were conducted on the loans for Kruger and the Robinsons, as with any other file.

Mattick denied telling Kruger that he would “make the numbers work” without standard documentation such as sold-grain receipts. And he said BMO Harris would not have given the Robinson’s 100% financing on their farms unless they pledged additional collateral. BMO Harris declined to comment on Mattick’s statements regarding individual loans and bank policy, and Reuters could not independently verify them.

“I worked with clients to help them determine what they could afford and never would have counseled them to incur debt beyond what they could afford,” Mattick said.

(Reporting By P.J. Huffstutter; additional reporting by Jason Lange and Pete Schroeder in Washington; editing by Caroline Stauffer and Brian Thevenot)

Mexico sends in elite troops to patrol city after cartel battle

Mexico sends in elite troops to patrol city after cartel battle
By David Alire Garcia

CULIACAN, Mexico (Reuters) – Mexico sent in special forces troops on Monday to patrol a northern city in the wake of a cartel assault that freed Joaquin “El Chapo” Guzman’s son in a hail of bullets, and also won a U.S. promise to help stop gun-smuggling at their shared border.

More than 400 soldiers turned up in Culiacan over the weekend after gunmen from the Sinaloa cartel briefly took control of the city and forced security forces to free the drug lord’s son from a botched arrest attempt last week.

“We are going to protect the citizens, that is our mission,” said General Carlos Ramon Carrillo de Villar, who oversaw formations of soldiers marching at a media event. “We are fighting insecurity.”

The convoys of army trucks with mounted machine guns rumbling through Culiacan’s streets were meant to instill confidence. However, a national poll on Monday showed two thirds of respondents believe drug lords and mobsters are more powerful than the government after the gunbattles last week that forced an army retreat.

Sinaloa public safety director Cristobal Castaneda told news anchor Joaquin Lopez Doriga that 13 people were killed during the disturbances that ran late into Thursday night.

President Andres Manuel Lopez Obrador has insisted the decision to release Ovidio Guzman was the only way to save lives after cartel henchmen erected roadblocks, torched trucks and opened fire with heavy, military-style weapons.

After a telephone call with U.S. President Donald Trump over the weekend, Mexican Cabinet ministers met U.S. Ambassador Christopher Landau to ask for help stemming the flow of weapons bought legally in the United States and sold to cartels south of the border.

“We both agreed to move quickly to share information and deliver specific results,” the U.S. Embassy in Mexico said on Twitter, calling it Operation Frozen. “The commitment made by Mexico and the United States will strengthen capacities to address and reduce one of the causes of violence.”

The Mexican government said earlier in a statement the United States had promised efforts to clamp down on the illegal trade, which is believed to be the source of most firearms in the hands of Mexican criminals.

“Arms trafficking is a significant problem and one the United States is addressing with renewed focus in Mexico,” a State Department official said in response to a question from Reuters.

ILLEGAL WEAPONS

Videos of the attacks in Culiacan last week showed cartel soldiers firing armor-piercing .50 caliber rifles and at least one truck mounted with a heavy machine gun – weaponry that is not available by legal means in Mexico.

Lopez Obrador has faced heavy criticism for the handling of the raid, which critics say looked like a capitulation to criminals and risked encouraging cartels to use more force to resist arrests.

The president has defended his policy of trying to dial down clashes with drug cartels to reduce murder rates.

Many people could have been killed had security forces attempted to hold Guzman against the cartel foot soldiers, Lopez Obrador told a regular news conference.

“Not just the criminals, who are also human beings, the soldiers, who we must protect,” he said, “but (also) civilians.”

“I always have great belief in the wisdom of the people, and I know that the majority of Mexicans supported the government’s decision,” the veteran leftist said.

Homicide data released on Sunday offered some hope for the strategy, showing murders fell in September for the third straight month.

Mexican authorities opened some 2,403 murder investigations, in the month, a decline of 7% from the same month in 2018 and the lowest monthly total since April, according to government figures. The months of July through September were the three most violent in 2018.

Even so, the number of murders remains on track to surpass last year’s record total of 29,000.

One poll released on Monday showed opinion was split over the operation in Culiacan. A survey by newspaper Reforma said 49% disagreed with the release of the younger Guzman after his brief arrest by military police versus 45% who backed it.

A separate survey by polling firm GCE put the numbers at 54%-34% against letting him go. Both surveyed 400 people.

The GCE poll showed 63.5% of respondents believed drug traffickers were more powerful than the government.

More than three-quarters in the GCE poll believed the release of Guzman would encourage gangs to continue their operations, while nearly seven out of 10 in the Reforma survey said organized crime was strengthened by what had happened.

(For a graphic on ‘Murders in Mexico’ click https://tmsnrt.rs/2qqSqoW)

(For a graphic on ‘Bungled arrest’ click https://tmsnrt.rs/32sdppv)

(Additional reporting by David Graham; Editing by Frank Jack Daniel, Tom Brown and Paul Tait)

For Syrian Kurds, a leader’s killing deepens sense of U.S. betrayal

For Syrian Kurds, a leader’s killing deepens sense of U.S. betrayal
By Tom Perry and Ellen Francis

BEIRUT (Reuters) – Kurdish politician Hevrin Khalaf spent the final months of her life building a political party that she hoped would help shape Syria’s future, drawing the attention of U.S. officials who said it would have a say in what happened once the war ended.

To her colleagues in the Future Syria Party and Kurdish communities in Syria’s northeast more broadly, her killing became a symbol of betrayal by the United States.

As recently as Oct. 3, State Department officials reassured her at a meeting that Washington would safeguard northern Syria from a threatened Turkish assault by mediating between Kurdish-led forces and Ankara, according to a colleague who was present.

A state department official said the U.S. message to Syrian partners had been consistent: that American forces would be withdrawing from the country.

Days after the meeting, President Donald Trump announced U.S. forces would quit the region, leaving it vulnerable to attack by Turkey.

Kurdish fighters in northeast Syria, key allies in the U.S. battle against Islamic State, said rebels fighting on the Turkish side murdered Khalaf. She was 34.

She was slain on Oct. 12 along with a driver and aide when Turkey-backed fighters stopped their SUV on the M4 highway in northern Syria, according to the Kurdish-led Syrian Democratic Forces (SDF) and officials in her party.

The spokesman for the Turkey-backed Syrian rebel force, the National Army, at the time denied its fighters killed her, saying they had not advanced as far as the M4.

Last week, the spokesman, Youssef Hammoud, said the incident was being investigated among other “breaches”.

“If America hadn’t decided to withdraw, these factions … would not have dared to carry out their operations in that area,” said Moaz Abdul Karim, a Future Syria Party leader.

The U.S. State Department has said it was looking into reports of Khalaf’s death apparently while in the hands of Turkey-backed forces, calling the reports “extremely troubling”.

An autopsy report circulated by the SDF said Khalaf’s body had been riddled with bullets.

AMERICAN ASSURANCES

On Oct. 3, U.S. State Department representatives visited the Future Syria Party’s headquarters in the Syrian city of Raqqa and told Khalaf and party president Ibrahim al-Kaftan that American efforts in the region were aimed at mediation.

Since the party was founded in 2018, its leaders say U.S. officials have voiced their support. The party aims to attract members from across the ethnic spectrum in a region where critics said the Kurdish YPG militia had become too powerful.

“Yes, there was encouragement from the Americans to set up a party,” Kaftan said.

“The party was already being worked on by a team who believes in Syrian democracy. It was a Syrian idea, not an American one, but I repeat they were in favor of this idea,” he told Reuters in written answers to questions.

U.S. forces withdrew from a section of the border on Oct. 7, and soon afterwards Turkish troops mounted their third incursion into northern Syria since 2016.

Ankara views the YPG as a terrorist threat due to their links to a Kurdish insurgency at home. It has also said its operation in Syria was designed to create a buffer where some of the 3.6 million refugees who fled the Syrian conflict into Turkey could be re-settled.

DEEPLY INVOLVED

A civil engineer by training, Khalaf was deeply involved in the politics of northeast Syria from the earliest days of the war, now in its eighth year.

After leaving her job as a state employee, she helped to set up the Kurdish-led administration whose influence would eventually stretch over one third of Syria including predominantly Arab areas.

In 2018, she was elected secretary general of the Future Syria Party, which was launched from Raqqa, a predominantly Arab city where the SDF defeated IS in 2017 with U.S. backing.

Kaftan, an Arab architect from Manbij, was elected its leader, and he said that U.S. and French officials attended the ceremony.

The United States has long adopted a cautious political approach toward northern Syria, even as it backed the SDF militarily in the fight against IS.

Washington opposed the emergence of the Kurdish-led autonomous region and the main Kurdish groups were always kept out of the U.N. political process for Syria, despite their huge influence on the ground.

But according to Kaftan, U.S. officials including the envoy for Syria James Jeffrey told members of his party that it would have a role in international talks over Syria’s future.

The State Department official said the United States wanted a political solution to Syria’s conflict that included “full representation for all Syrians.

“U.S. officials, including Ambassador Jeffrey, made clear that this included the populations of northeast Syria and intervened repeatedly with the UN to this end.”

The fate of Kurds in northern Syria is now more uncertain than it has been for years. Stripped of U.S. protection, the SDF struck a deal for Syrian government forces to deploy into the region it controlled.

The SDF says Washington has stabbed it in the back.

Despite the Turkish incursion, which has sparked an exodus and killed scores of people, leaders of Future Syria Party hope it will have a role in shaping the next phase of Syria’s recovery from war.

Khalaf always believed the solution in Syria must come through dialogue with all concerned parties including the Syrian government and Turkey, Kaftan said.

“Hevrin didn’t sleep more than 4-5 hours a day,” he said. “But she would always say Syria deserves a lot from us, and for the people who have suffered through nine years of war, we must seek to secure a real, safe future for them.”

(Additional reporting by Humeyra Pamuk in Washington; Editing by Mike Collett-White)