All about risk
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Insurance prices have surged across America in the past two years, with homeowner’s insurance climbing 21%, while CPI rose just 5%. (Source: Bloomberg)
Jerry Theodorou of R Street Institute is interviewed about Florida homeowners insurance.
Author(s): Wall St. Week
Publication Date: 6 Dec 2024
Publication Site: Bloomberg TV
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George, who is 51 years old, has been a police officer in Chester County for 31 years. He has lived a life of action — which comes with some feelings of invincibility. “As a police officer, there are times we think we are indestructible,” he explains.
Because of his active lifestyle — and no signs of heart problems whatsoever — heart disease was the furthest thing from George’s mind. “I walked anywhere from 6 to 8 hours a day. I was never winded, never tired, and I had no numbness. All of those telltale signs of heart disease — I never got any of them,” George explains.
Through a collaboration between Chester County Hospital and local police departments, George was offered a free cardiac risk screening for first responders. Despite zero signs of heart disease, he figured he might as well take advantage. Little did he know, he would end up having open-heart surgery just a few months later.
Publication Date: 10 Feb 2020
Publication Site: Chester County Hospital, Penn Medicine blog
Link: https://www.bloomberg.com/opinion/articles/2024-10-14/td-was-convenient-for-criminals?srnd=undefined
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But TD Bank’s problem — which led to the largest AML-failures penalty ever — was not just about ignoring red flags. The more fundamental problem is that TD Bank tried to do its anti-money-laundering compliance on the cheap, and the prosecutors and regulators hate that. The Justice Department says:
[The TD Bank Global Anti-Money Laundering (GAML) group]’s budget was a primary driver of its decisions about projects, hiring, staffing, and technology enhancements throughout the relevant period. GAML executives strove to maintain what TD Bank Group referred to as a “flat cost paradigm” or “zero expense growth paradigm,” meaning that each department’s budget, including GAML’s, was expected to remain flat year-over-year, despite consistent growth in TD Bank Group’s revenue over the relevant period. This budgetary pressure originated with senior bank executives and was achieved within GAML and US-AML by [its chief AML officer] and [its Bank Secrecy Act officer], both of whom touted their abilities to operate within the “flat cost paradigm without compromising risk appetite” in their self-assessments. GAML’s base and project expenditures on USAML were less in fiscal year 2021 than they were in fiscal year 2018 and were not sufficient to address AML deficiencies including substantial backlogs of alerts across multiple workstreams, despite TDBNA’s profits increasing approximately 26% during the same period. In 2019, [the chief AML officer] referred to the Bank’s “historical underspend” on compliance in an email to the Group senior executive responsible for the enterprise AML budget, yet the US-AML budget essentially stayed flat. GAML and US-AML employees explained to the Offices that budgetary restrictions led to systemic deficiencies in the Bank’s transaction monitoring program and exposed the Bank to potential legal and regulatory consequences.
That, I think, is why the fine was so big. The message that this case is meant to send to banks is “if your compliance team wants more money to build a better AML program, you’d better give it to them, because otherwise we will fine you orders of magnitude more money than you would have spent.” The attorney general said:
TD Bank chose profits over compliance, in order to keep its costs down.
That decision is now costing the bank billions of dollars in criminal and civil penalties.
The deputy attorney general added:
We are putting down a clear marker on what we expect from financial institutions — and the consequences for failure.
When it comes to compliance, there are really only two options: invest now – or face severe consequences later.
As I’ve said before, a corporate strategy that pursues profits at the expense of compliance isn’t a path to riches; it’s a path to federal prosecution.
One job of a bank is to stop crime, which means that banks employ thousands of people who essentially work for the US Department of Justice. But the Department of Justice has no direct control over how many of those people there are, how much they get paid or what resources they have. Law enforcement agencies cannot directly set the banks’ budgets for anti-money-laundering programs, even though those budgets really are part of law enforcement. It is, perhaps, a frustrating situation: The Justice Department would like banks to spend more money catching criminals, and it can’t quite make them.
Except obviously it can. The Justice Department can’t directly set banks’ AML budgets, but it can do it indirectly, and it just did. If you are a bank compliance officer and you want to hire 2,000 people and get some shiny new computers, you can go to your regulators and say “do we need to spend this money on AML,” and they will say “that would be better,” and you will go to your chief executive officer with a transcript of the TD Bank press conference, and you will get whatever you want.
Author(s): Matt Levine
Publication Date: 14 Oct 2024
Publication Site: Bloomberg
Link: https://www.upi.com/Health_News/2024/05/10/firefighters-face-cancer-dangers/8411715363541/
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Compared to the general public, firefighters have a 9% higher rate of certain cancers, likely due to their exposure to high levels of carcinogens released into the air as buildings burn. The incidence of multiple myeloma — the first cancer Perez developed — is about 50% higher in firefighters than in the general population.
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Dr. C. Ola Landgren has been researching links between occupational exposures and multiple myeloma for a number of years — particularly in first responders such as firefighters. At Memorial Sloan Kettering Cancer Center in New York and the National Cancer Institute, Landgren began to recognize patterns.
In New York, for example, Landgren had three myeloma patients who lived on the same block on Staten Island. Their houses had been covered by dust after the World Trade Center towers fell in 2001.
“Myeloma has a precursor condition known as MGUS, which is more common in the population, allowing us to identify risks earlier,” Landgren said. “We’ve actually observed higher rates of MGUS in first responders compared to the general population.”
MGUS — which stands for monoclonal gammopathy of undetermined significance — has also been linked to pesticide use among farmers and exposure to Agent Orange among veterans of the Vietnam War. Levels also were higher in firefighters, police officers and construction workers who were on-site immediately after the 9/11 attacks.
Author(s): Lori Saxena, HealthDay News
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Link: https://nymag.com/intelligencer/article/staged-car-crashes-insurance-fraud.html
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There’s a narrow path to such ostentation for the non-famous and non-college-interested who mock the idea of an actual job. Mize found his muse in the con and his ability to rope others into it. Here’s how they say it happened: He struck when you wanted cash. When totems of the middle class were slipping from reach. When you needed a down payment. To pay off credit cards. To start a business. When asking your parents for money made you feel like a failure. When you were suffocated by medical bills, neither earning enough to pay nor poor enough for government help.
Yet money alone doesn’t completely explain why the people closest to Mize entered the ring. Mize had a way of making himself your center of gravity, the one from whom you wanted approval, mentorship, love. Mize could be fun, even thrilling. But getting all that meant pleasing him. And pleasing him meant fraud.
Author(s): Lauren Smiley
Publication Date: 3 Oct 2022
Publication Site: NY Mag
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Uptake of the current COVID-19 vaccine is higher in non-profit facilities than in for-profit or government facilities (Figure 2). The percentage of nursing facility residents who received the updated vaccine is 46% in non-profit facilities compared with 35% in for-profit facilities and 43% in government facilities. Uptake of the fall 2022 vaccine was also highest in non-profit facilities and lowest in for-profit facilities. Rates of vaccine uptake for nursing facility staff were low in all types of facilities with minimal variation across facility types (data not shown).
Author(s): Priya Chidambaram and Alice Burns
Publication Date: 13 Feb 2024
Publication Site: KFF, Medicaid
Link: https://www.upi.com/Health_News/2024/03/01/nursing-home-staffing-shortage/8751709302182/
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Although the pandemic has ended, staffing shortages and employee burnout still plague U.S. nursing homes, a new government report finds.
But the problems didn’t end there: The report, issued Thursday by the Inspector General’s Office at the U.S. Department of Health and Human Services, showed that infection-control procedures were still sorely lacking at many facilities.
Not only that, COVID-19 booster vaccination rates remain far lower than they should be, with only 38% of residents and 15% of staff up-to-date on their shots, according to a recent KFF report.
Author(s): Robin Foster
Publication Date: 1 Mae 2024
Publication Site: UPI
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The United States is knee-deep in what some experts call the opioid epidemic’s “fourth wave,” which is not only placing drug users at greater risk but is also complicating efforts to address the nation’s drug problem.
These waves, according to a report out today from Millennium Health, began with the crisis in prescription opioid use, followed by a significant jump in heroin use, then an increase in the use of synthetic opioids like fentanyl.
The latest wave involves using multiple substances at the same time, combining fentanyl mainly with either methamphetamine or cocaine, the report found. “And I’ve yet to see a peak,” said one of the co-authors, Eric Dawson, vice president of clinical affairs at Millennium Health, a specialty laboratory that provides drug testing services to monitor use of prescription medications and illicit drugs.
The report, which takes a deep dive into the nation’s drug trends and breaks usage patterns down by region, is based on 4.1 million urine samples collected from January 2013 to December 2023 from people receiving some kind of drug addiction care.
Its findings offer staggering statistics and insights. Its major finding: how common polysubstance use has become. According to the report, an overwhelming majority of fentanyl-positive urine samples — nearly 93% — contained additional substances. “And that is huge,” said Nora Volkow, director of the National Institute on Drug Abuse at the National Institutes of Health.
Author(s): Colleen DeGuzman
Publication Date: 21 Feb 2024
Publication Site: KFF Health News
Link: https://dbrech.irit.fr/pls/apex/f?p=9999:1::::::
https://www.irit.fr/~Guillaume.Cabanac/problematic-paper-screener
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🕵️ This website shows reports the daily screening of papers (partly) generated with:► Automatic SBIR Proposal Generator► Dada Engine► Mathgen► SCIgen► Tortured phrases… and Citejacked papers 🔥⚗️ Harvesting data from these APIs:► Crossref, now including the Retraction Watch Database► Dimensions► PubPeer
Explanation: https://www.irit.fr/~Guillaume.Cabanac/problematic-paper-screener/CLM_TorturedPhrases.pdf
Author(s): Guillaume Cabanac
Publication Date: accessed 16 Feb 2024
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Looking a bit more closely you see why Grail’s test is actually useless, or dangerous, or both. Let’s start with the sensitivity of the test. For a cancer screening test to work, it must find disease before it has caused symptoms — when it is in an early or premalignant stage. Say what you want about lung cancer screening, mammography, PSA, and colonoscopy (I’m talking to you Drs. M and P) but at least they look for, and succeed at finding, early stage/premalignant disease. Here is the sensitivity of the Galleri test by stage: stage 1, 16.8%; stage 2, 40.4%; stage 3, 77%; stage 4, 90.1%.
The test is nearly worthless at finding stage 1 disease, the stage we would like to find with screening. The type of disease that is usually cured with surgery alone.
How about specificity? Let’s consider a fictional, 64-year-old male patient who presents to his internist worried about pancreatic cancer. I pick pancreatic not only because it is a scary cancer: we can’t screen for it, our treatments stink, and it seems to kill half the people in NYT obituary section. I also chose it because it is the anecdotal disease in the WSJ article.
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Working through the math (prevalence 0.03%, sensitivity 61.9%, specificity 99.5%), this means our patient’s likelihood of having pancreatic cancer after a positive test is only 3.58%. For our patient, we have caused anxiety and the need for an MRI. You almost hope to find pancreatic cancer at this point to be able to say, “Well, it was all worth it.” If the MRI or ERCP is negative, the patient will live with fear and constant monitoring. (You will have to wait until next week to consider with me the impact of this test if we were to deploy it widely).
If the evaluation is positive, and you have managed to diagnose asymptomatic, pancreatic cancer, the likelihood of survival is probably, at best, 50%.
Let’s end this week with two thoughts. First the data for the Galleri test is not good, yet. The test characteristics are certainly not those we would like to see for a screening test. Even more importantly, good test characteristics are just the start. To know that a test is worthwhile, you would like to know that it does more good than harm. This has not even been tested. The WSJ article scoffs at the idea that we would want this data.5
Author(s): Adam Cifu, MD
Publication Date: 15 Feb 2024
Publication Site: Sensible Medicine, substack
Link: https://www.bloomberg.com/opinion/articles/2024-01-18/coinbase-trades-beanie-babies
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An important meta-story that you could tell about financial markets over the past few years would be that, for a long time, interest rates were roughly zero, which means that discount rates were low: A dollar in the distant future was worth about as much as a dollar today. Therefore, investors ascribed a lot of value to very long-term stuff, and were not particularly concerned about short-term profitability. Low discount rates made speculative distant-future profits worth more and steady current profits worth less.
And then interest rates went up rapidly starting in 2022, and everyone’s priorities shifted. A dollar today is now worth a lot more than a dollar in 10 years. People prioritize profits today over speculation in the future.
This is a popular story to tell about the boom in, for instance, tech startups, or crypto: “Startups are a low-interest-rate phenomenon.” In 2020, people had a lot of money and a lot of patience, so they were willing to invest in speculative possibly-world-changing ideas that would take a long time to pay out. (Or to fund startups that lost money on every transaction in the long-term pursuit of market share.) In 2022, the Fed raised rates, people’s preferences changed, and the startup and crypto bubbles popped.
I suppose, though, that you could tell a similar story about environmental investing? Climate change is, plausibly, a very large and very long-term threat to a lot of businesses. If you just go around doing everything normally this year, probably rising oceans won’t wash away your factories this year. But maybe they will in 2040. Maybe you should invest today in making your factories ocean-proof, or in cutting carbon emissions so the oceans don’t rise: That will cost you some money today, but will save you some money in 2040. Is it worth it? Well, depends on the discount rate. If rates are low, you will care more about 2040. If rates are high, you will care more about saving money today.
We have talked a few times about the argument that some kinds of environmental investing — the kind where you avoid investing in “dirty” companies, to starve them of capital and reduce the amount of dirty stuff they do — can be counterproductive, because it has the effect of raising those companies’ discount rates and thus making them even more short-term-focused. And being short-term-focused probably leads to more carbon emissions. (If you make it harder for coal companies to raise capital, maybe nobody will start a coal company, but existing coal companies will dig up more coal faster.)
But that argument applies more broadly. If you raise every company’s discount rate (because interest rates go up), then every company should be more short-term-focused. Every company should care a bit less about global temperatures in 2040, and a bit more about maximizing profits now. Maybe ESG was itself a low-interest-rates phenomenon.
Anyway here’s a Financial Times story about BlackRock Inc.:
BlackRock will stress “financial resilience” in its talks with companies this year as the $10tn asset manager puts less emphasis on climate concerns amid a political backlash to environmental, social and governance investing.
With artificial intelligence and high interest rates rattling companies globally, BlackRock wants to know how they are managing these risks to ensure they deliver long-term financial returns, the asset manager said on Thursday as it detailed its engagement priorities for 2024.
BlackRock reviews these priorities annually as it talks with thousands of companies before their annual meetings on issues ranging from how much their executives are paid to how effective their board directors are.
“The macroeconomic and geopolitical backdrop companies are operating in has changed. This new economic regime is shaped by powerful structural forces that we believe may drive divergent performance across economies, sectors and companies,” BlackRock said in its annual report on its engagement priorities. “We are particularly interested in learning from investee companies about how they are adapting to strengthen their financial resilience.”
There is a lot going on here, and it is reasonable to wonder— as the FT does — whether BlackRock’s shift from environmental concerns to high interest rates is about the political and marketing backlash to ESG. But you could take it on its own terms! In 2020, interest rates were zero, and BlackRock’s focus was on the long term. What was the biggest long-term risk to its portfolio? Arguably, climate change. So it went around talking to companies about climate change. In 2024, interest rates are high, and the short term matters more, so BlackRock is going around talking to companies about interest-rate risk.
I don’t know how AI fits into this model. For most of my life, “ooh artificial intelligence will change everything” has been a pretty long-term — like, science-fiction long-term — thing to think about. But I suppose now “how will you integrate large-language-model chatbots into your workflows” is an immediate question.
Author(s): Matt Levine
Publication Date: 18 Jan 2024
Publication Site: Bloomberg
Link: https://reason.com/2024/01/10/the-feds-shouldnt-subsidize-fancy-risky-beach-houses/
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Sen. John Kennedy (R–La.) is upset because Sen. Rand Paul (R–Ky.) wants to limit federal flood insurance.
But Paul is right. In my new video, Paul says, “[It] shouldn’t be for rich people.”
That should be obvious. Actually, federal flood insurance shouldn’t be for anyone. Government has no business offering it. That’s a job for the insurance business.
Of course, when actual insurance businesses, with their own money on the line, checked out what some people wanted them to insure, they said, “Heck no! If you build in a dangerous place, risk your own money!”
Politically connected homeowners who own property on the edges of rivers and oceans didn’t like that. They whined to congressmen, crying, “We can’t get insurance! Do something!”
Craven politicians obliged. Bureaucrats at the Federal Emergency Management Agency even claim they have to issue government insurance because, “There weren’t many affordable options for private flood insurance, especially for people living in high-risk places.”
But that’s the point! A valuable function of private insurance is to warn people away from high-risk places.
Author(s): John Stossel
Publication Date: 10 Jan 2024
Publication Site: Reason