The Wall Street Journal - 22.02.2020 - 23.02.2020

THE WALL STREET JOURNAL. ** Saturday/Sunday, February 22 - 23, 2020 |A

WASHINGTON—President
Trump is considering four can-
didates to be his permanent di-
rector of national intelligence,
after removing an acting spy
chief, Joseph Maguire, whose
subordinate had informed law-
makers of Russia’s apparent
preference for Mr. Trump in
this year’s election.
The president didn’t identify
any candidates in the running,
but he said on Twitter he plans
to fill the post in the coming
weeks. The White House didn’t
offer additional comment.
Pete Hoekstra, the U.S. am-
bassador to the Netherlands
and former Republican chair-
man of the House Intelligence
Committee, is among contend-
ers and is being pushed by peo-
ple close to the White House,
according to people familiar
with the matter. Reached by
phone, Mr. Hoekstra declined to
comment.
Mr. Trump’s tweet came
amid growing uncertainty
about the future of the Office of
the Director of National Intelli-
gence, known as ODNI, which
was established in the wake of
the Sept. 11, 2001, attacks to
better coordinate intelligence
among more than a dozen
agencies, including the Central
Intelligence Agency and Na-
tional Security Agency.
The new director would step
into a role that hasn’t had a
permanent chief since last sum-
mer, when Mr. Trump pushed
out Dan Coats, a Republican
former senator who viewed the
threat posed by Russia to U.S.
elections as paramount, in dis-
agreement with his boss. This
week, Mr. Trump named Rich-
ard Grenell, the U.S. ambassa-
dor to Germany and Trump loy-
alist who has publicly
questioned Russian interfer-
ence, as acting director, to suc-
ceed Mr. Maguire.
Mr. Trump lashed out at Mr.
Maguire this month after learn-
ing that one of his subordinates
had briefed the House Intelli-
gence Committee about Rus-
sia’s apparent preference for
Mr. Trump in the 2020 presi-
dential race, people familiar
with the matter said. Mr.
Trump has questioned the con-
clusion of U.S. intelligence
agencies that Russia interfered
in the 2016 contest in order to
help him win.
Mr. Trump, at a campaign
rally in Las Vegas on Friday,
dismissed reports that U.S. in-
telligence agencies believe Rus-
sia may seek to interfere in the
2020 election on his behalf,
calling them “disinformation.”
The classified hearing was
attended by both Democrats
and Republicans, and the intel-
ligence drew from assessments
from U.S. intelligence agencies,
people familiar with the matter
said.
A person familiar with the
matter said Mr. Maguire was
unlikely to be tapped for the
permanent director of national
intelligence position regardless
of the recent Oval Office clash.
Mr. Maguire resigned on Friday
after briefly returning to his
previous post as director of the
intelligence community’s Na-
tional Counterterrorism Center,
a U.S. official said.
Mr. Grenell has also said
that he wouldn’t be the nomi-
nee to be the permanent intelli-
gence chief.
Mr. Maguire’s acting deputy,
Andrew Hallman, is also leaving
that post and is returning to
the CIA. Democrats and former
officials said the White House
appeared to be filling the of-
fice’s top ranks with loyalists to
Mr. Trump who, like Mr.
Grenell, have limited or no in-
telligence experience.
Other personnel moves in-
cluded the installment of Kash
Patel, a former top national se-
curity official who previously
worked to help Republicans
challenge the origins of the in-
vestigation into Russia’s inter-
ference in the 2016 election, in
a senior adviser role at ODNI to
work alongside Mr. Grenell, a
person familiar with the matter
said.
Federal law on executive
branch vacancies dictates that
Mr. Grenell can serve in the
role only until March 11 unless
Mr. Trump submits a formal
nomination to the Senate for a
permanent successor.
—Warren P. Strobel
contributed to this article.

BYCATHERINELUCEY
ANDDUSTINVOLZ

President

Weighs

Spy Chief

Candidates

Rules limited water supply for farmers during the state’s drought to protect species like smelt.

RICH PEDRONCELLI/ASSOCIATED PRESS

Administration’s threats not

only put women’s health on

the line, but illegally threaten

crucial public health funding

that Californians rely on.”

Friday’s response raises the

stakes in the battle between

California and the administra-

tion over abortion, with po-

tentially billions of dollars of

health funding on the line and

a legal battle likely to follow.

The HHS Office for Civil

Rights said last month the

state’s abortion coverage re-

quirement violated federal law

that banned government enti-

ties that receive HHS funding

from discriminating against

health-care organizations be-

cause they don’t provide abor-

tion or abortion coverage.

The department gave Cali-

fornia 30 days to signal com-

pliance before it said it would

take action that could result

in cutting HHS funds. Califor-

nia gets $51 billion from HHS

for its Medicaid program, ac-

cording to the Kaiser Family

Foundation.

Roger Severino, director of

the HHS rights office said, “For

decades Californians could

choose whether or not they

wanted abortion-free health

insurance coverage until Cali-

fornia took away that option.

Religious groups say Cali-

fornia’s mandates force them

to violate their beliefs by pur-

chasing health insurance that

covers abortions or by using

their premiums to help pay for

other consumers’ abortions.

Abortion-rights groups say

that states have the long-held

right to regulate their own in-

surance markets. They say

that abortion, which has been

legal nationally for decades, is

a medical procedure that

should be covered just like

prenatal and maternity care.

WASHINGTON—California

disputed a Trump administra-

tion assertion that the state is

violating U.S. law by requiring

insurers to cover abortion, af-

ter federal officials threatened

to withhold funding if it

doesn’t change its policy.

California Democratic Attor-

ney General Xavier Becerra

wrote in a letter to the Depart-

ment of Health and Human

Services that the state’s abor-

tion-coverage requirement

wasn’t in violation of federal

law. It also noted that Califor-

nia provided a religious exemp-

tion in 2015 to the mandate.

“California has the sover-

eign right to protect women’s

reproductive rights. Political

grandstanding should never in-

terfere with that,” Mr. Becerra

said in a statement before the

letter was sent. “The Trump

BYSTEPHANIEARMOUR

California Fights U.S. Over

Abortion-Coverage Mandate

California officials sued the

Trump administration Thursday,

asserting the president’s order

granting the state’s farmers more

access to water could lead to the

extinction of several fish species.

A day earlier, President

Trump authorized an Interior De-

partment order that allows Cen-

tral Valley farmers to pump

more water, fulfilling a 2016

campaign promise to loosen re-

strictions in the state, delighting

farmers and prompting anger

from environmentalists. The law-

suit, filed in the U.S. District

Court in San Francisco, chal-

lenges the new order and argues

recent biological opinions pre-

pared by federal agencies are

unlawful.

Rules for the federal Central

Valley Project and California

State Water Project limited wa-

ter supply for Central Valley

farmers during the state’s years-

long drought to protect threat-

ened species like smelt and

salmon.

“Our team of career profes-

sionals did a great job using the

best available science to develop

new operational plans for the

coordinated operation of the

Central Valley Project and State

Water Project,” U.S. Interior Sec-

retary David Bernhardt said in

response to the lawsuit.

—Jennifer Calfas

U.S. NEWS

cline. The amount of bail bonds

written fell about 10% to just

over $14 billion in 2018, ac-

cording to an analysis of indus-

try data by insurance-ratings

firm A.M. Best Co. From 2009

through 2016 the industry

grew by about 25%, but more

recently it experienced two

straight years of declines.

Bail-bond companies have

long been essential to the U.S.

criminal-justice system, help-

ing defendants who can’t af-

ford bail by posting the cash

for their release and ensuring

they show up in court. In ex-

change, they charge a fee of

about 10% of the amount of

bail and can seize collateral if a

defendant misses court.

The most serious pressure

on the bail-bond industry has

been a host of changes to local

laws governing how judges re-

lease the accused pretrial, as

state politicians question the

value of bail. More than 20

states and numerous counties

have largely eliminated cash

bail for low-level and nonvio-

lent offenders in recent years.

“If criminal-justice reform

were to take effect in enough

states, they could be in serious

trouble,” said David Blades, a

senior industry analyst at A.M.

Best, of bail-bond companies.

He added that he doesn’t be-

lieve the industry is yet under

existential threat.

Industry experts said the

bail industry’s gradual decline

could become a free fall if a

law passed in 2018 goes into

effect in California. The state is

by far the industry’s largest

market, accounting for one-

quarter of the bail-bond indus-

try’s revenue, according to the

American Bail Coalition, a

trade association for bail insur-

ance companies.

The California measure

would replace cash bail with an

algorithm that would help de-

termine whether those accused

of a crime were safe to release.

Implementation has been sus-

pended until a referendum is

held in November.

“Everybody is collectively

holding their breath to see

what happens in California,”

said Jeff Clayton, the American

Bail Coalition’s executive direc-

tor.

Even without specific regu-

latory changes, Mr. Clayton

said the industry is finding it-

self under pressure. Judges are

letting more low-risk offenders

go free, leaving bail-bond com-

panies to deal with higher-risk

offenders who require more

monitoring.

Bail-bond agents have had

accounts refused or closed at

some large banks, including

Bank of America Corp., Mr.

Clayton said.

Activists have also targeted

the bail-bond industry by pres-

suring insurers and financial

firms that “provide the finan-

cial underpinning for the entire

bail-bond industry,” said Udi

Ofer, director of the justice di-

vision at the ACLU.

The ACLU and another pro-

gressive civil-rights advocacy

group, Color of Change, em-

barked on a campaign that in-

cluded sending letters to En-

deavour and meeting with the

private-equity firm to try to

get it to sell its stake in Alad-

din, which the fund described

as the largest retail pretrial re-

lease service provider in the

country, operating 50 locations

and employing 600 people.

—Ben Eisen

contributed to this article.

The bail-bond industry is

under intense pressure as more

states virtually wipe out cash

bail and financial firms look

for an exit from an increasingly

controversial profit center in

the criminal-justice system.

Most recently, private-eq-

uity firmEndeavour Capital

says it sold its stake in Califor-

nia-based Aladdin Bail Bonds,

one of the country’s largest

bail-bond providers. The move

came after Endeavour and its

investors faced pressure from

the American Civil Liberties

Union and others who say bail

is part of a justice system that

discriminates against minori-

ties and low-income defen-

dants.

Endeavour follows other

major financial firms that have

abandoned the bail-bond in-

dustry, amid falling revenues,

growing criticism from activ-

ists and an uncertain political

environment.Tokio Marine

HCC, a Houston-based insur-

ance company owned by

Japan’s Tokio Marine Holdings

Inc., said in April it was selling

Bail USA Inc., a bail-bond un-

derwriter, and no longer pro-

viding insurance for bail-bond

companies.Randall & Quilter

Investment HoldingsLtd., an

insurance company based in

Bermuda, said in a December

2018 financial report that it

was divesting itself of its U.S.

bail-bond business.

Endeavour didn’t respond to

questions about why it sold

Aladdin, and hasn’t disclosed

the buyer in the recent sale.

Aladdin and Randall &

Quilter didn’t respond to re-

quests to comment.

The decisions to exit bail-

bond companies come as the

industry enters a period of de-

BYLAURAKUSISTO

Bail-Bond Industry Loses Backers

Activist pressures and

justice-system shifts

prompting some firms

to abandon the field

The old San Francisco location of Aladdin Bail Bonds, one of the country’s largest bail-bond providers, this week.

IAN BATES FOR THE WALL STREET JOURNAL

Thebail-bondindustry

isshrinkingamid

regulatorychanges.

Total face amount of bail

bonds written

Source: AM Best

$

0

5

10

15

billion

2010 ’

$250,000 experienced a 10.3%

drop in inventory from a year

earlier in January. Meanwhile,

homes in the $250,000 to

$500,000 range saw inventory

fall 6%.

Amy Pearl, 54 years old, and

her 19-year-old college student

daughter, Grace, were looking

for a condominium in the Buf-

falo, N.Y., area this month.

When they found an apartment

they liked, in the suburb of

Williamsville, it was immedi-

ately off the market.

“It was Super Bowl Sunday,

so we were like ‘who’s going to

buy a house on Super Bowl

Sunday?’ But by Monday it was

gone,” Ms. Pearl said.

A few days later, they put in

an offer for a two-bedroom

unit in the same complex for

$94,000, and her daughter is

now in contract to buy it. Ms.

Pearl said her daughter will

live in the apartment with a

roommate, a cheaper option

than renting.

“We never thought we’d

move so quickly,” Ms. Pearl

said. “Things are just turning

really fast. You just have to be

ahead of the game.”

Recently, some signs have

emerged that more inventory

could be on the way. Residen-

tial permits, often a bellwether

for future home construction,

rose 9.2% in January from the

previous month, the Commerce

Department said Wednesday,

hitting a 13-year high.

A measure of U.S. home-

builder confidence remains

near a two-decade high, the

National Association of Home

Builders said Tuesday, despite

easing for the second straight

month in February.

While a lack of inventory is

hurting sales across much of

the country, the situation is

different in the South, Mr.

Frick said.

Existing-home sales in the

South increased 0.4% last

month and were up 11.7% com-

pared with a year earlier, ac-

cording to NAR.

U.S. home sales sputtered in

January, the latest sign that

some of the lowest interest

rates in half a century are fail-

ing to offset the high prices

and limited inventory keeping

many buyers on the sidelines.

Existing home sales fell 1.3%

in January compared with De-

cember at a seasonally ad-

justed annual rate of 5.46 mil-

lion, the National Association

of Realtors said Friday.

That compared with econo-

mists’ expectations for a 2%

decline last month.

Existing-home sales were up

9.6% in January from a year

earlier.

Despite rising incomes and

low mortgage rates, many buy-

ers are still struggling to find a

home for sale after a decade of

little new construction. NAR

said the housing inventory

level was the lowest for Janu-

ary since 1999.

“We’re stuck in this situa-

tion that will take us a few

years to dig out of,” said Rob-

ert Frick, corporate economist

at the Navy Federal Credit

Union. While a rise in new con-

struction and year-over-year

sales is encouraging, he said, it

will take awhile for supply to

catch up with demand.

A strong job market and low

interest rates aren’t providing

the impetus for home buying

that many economists have ex-

pected. The U.S. unemployment

rate was 3.6% in January, close

to a 50-year low. The average

interest rate on a 30-year fixed

mortgage was 3.62% in Janu-

ary, according to Freddie Mac,

well below the 4.46% in Janu-

ary 2019.

Now, some worry that slug-

gish home-sales activity and

fewer people moving could be-

comemoreofadragoneco-

nomic growth.

There was a 3.1-month sup-

ply of homes on the market at

the end of January compared

with 3.8 at the same time in

the previous year. Limited

housing stock has contributed

to higher home prices, with the

median sales price for an exist-

ing home in January up 6.8%

from the prior year at

$266,300.

Inventory has been tight at

the cheaper end of the market.

Homes priced from $100,000 to

BYKONRADPUTZIER

ANDWILLPARKER

Homes Sales Stumble

Amid Limited Supply

Sacramento Sues Over Water Access Rules

A strong job market

and low rates aren’t

providing the

impetus for buying.