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Lessons Learned (and Forgotten) After the 1987 Stock Market Crash

Today marks the 30th anniversary of "Black Monday," one of the worst days in Wall Street history. The Dow Jones lost dropped nearly 23 percent in a single day of trading. These days, it seems like the stock market only goes up. 30 years ago today it crashed. Lest we forget, this is what that felt like. The crash exposed problems in how the markets operated and how they were regulated. In the aftermath, there were Congressional hearings and even the creation of the Presidential Task Force on Market Mechanisms chaired by future Treasury Secretary Nicholas Brady. Other than the creation of circuit breakers to halt trading and prevent panic sell-offs, few new regulations were implemented. As the market recovered and the national economy continued to grow, people moved on, until the next crash. Today, we look at the response to the 1987 crash, and what it says about today's financial system. This is the third story as a part of WNYC's Crash Course, a series about the stock market crash of October 19, 1987, and what it can tell us about today's financial markets. If you've ever regretted a decision about investing in the stock market, how did you make that choice? Tell us your story.

Governors Race in New Jersey Gets Feisty

Democrat Phil Murphy and Republican Lt. Gov. Kim Guadagno clashed Wednesday over what polls show is a big issue in the Nov. 7 gubernatorial election. Murphy called Guadagno's plan to cap a portion residents' property taxes at 5 percent of income a gimmick. "That sounds like an overstock item at Crazy Eddie's, that's not a plan," Murphy said. "You have to back it up with real money." Guadagno says her plan could save voters an average of $800 annually. For her part, she took every opportunity to paint Murphy as a rich guy who is out of touch and will raise taxes. The candidates met Wednesday at William Paterson University in a debate broadcast on CBS stations in New York and Philadelphia. They're campaigning to succeed GOP Gov. Chris Christie. Guadagno ripped into Murphy's proposal to create a public bank that would provide non-profit student loans for less. "The public bank of New Jersey is what I call the wacky bank of New Jersey," Guadagno said. "I can't imagine a worse idea than giving all of the receipts to some bureaucrat in Trenton to hand out to other people." Murphy leads Guadagno in polling. He has $5 million to Guadagno's $1 million in reserves.

What Men Can Do In The Wake of #MeToo

As sexual harassment allegations against Harvey Weinstein continue to make waves, the #MeToo campaign has taken over social media. The slogan was created by social activist Tarana Burke nearly a decade ago to shed light on sexual abuse experienced by women of color. In the wake of the Harvey Weinstein and other sexual misconduct cases, women are using the phrase to share their personal stories of harassment and sexual abuse on Facebook and Twitter. The numbers are staggering: yesterday, Twitter reported the hashtag had been used more than 1.2 million times. Now, many are asking — what are men going to do about persistent harassment and abuse of women? Nicholas Powers, a poet and English professor at SUNY, and author of the article "Now All Men," said it starts with speaking up, no matter how uncomfortable it might be. "Just intervene," he said. "Not only if you see a woman being harassed, but even intervene in the behaviors that lead up to that harassment." Men often hesitate to do so because it excludes them from the clique of masculinity, Powers said. Making jokes at a woman's expense or creating a scene of sexual harassment allows them to bond with other men. But, he added, "There has to be some other way that we can be men with each other that doesn't mean dehumanizing women as sort of a ritualistic practice."

Oral Arguments Heard in Lawsuit Against Trump

A federal judge on Wednesday pressed government lawyers to explain why President Donald Trump's ownership of hotels patronized by foreign government officials didn't violate the Constitution, a key question that could shed light on Trump's finances if a civil lawsuit heard in New York is allowed to proceed. At issue in the case brought by the left-leaning public policy group Citizens for Responsibility and Ethics in Washington is the interpretation of the so-called foreign "Emoluments Clause" of the Constitution, a provision meant to prohibit bribery of federal officials by foreign governments. A lawyer for CREW, which represents competing restaurateurs, hotel owners and others in the industry, said during oral arguments in Manhattan federal court that by doing business with foreign officials with an interest in currying favor with the White House, Trump runs afoul of the Constitution. A lawyer for the Department of Justice disagreed, saying a violation only happens if an actual act is done in exchange for a payment. U.S. District Judge George B. Daniels said he'd rule on whether the case can go forward in the next 30 to 60 days. The government has sought to dismiss the case. If Daniels allows the case to proceed, it could reveal much about Trump's business and personal finances, possibly forcing him to disclose tax returns and other financial information in the course of discovery. Trump, who made his fortune in real estate, marketing and entertainment, bucked decades of precedent by refusing to release his tax returns during the 2016 presidential elections. That has fueled suspicions about his possible conflicts-of-interests as well as concerns about the source of his income, including whether any of it comes from sources abroad. Government lawyer Brett Shumate argued for a precise definition of the Emoluments Clause, saying that because an emolument includes the exchange of payment for an official act, Trump's business income couldn't qualify as such a payment. Daniels repeatedly questioned him on that point and others, proposing that if the president promises to take an official act in exchange for money - by signing a treaty, for example - the money transferred is an emolument whether or not the president ever follows through on the action. The framers of the Constitution didn't just want the president not to take money from foreign governments, "they wanted him to not take the promise of the money," he said. Later in the hearing, Daniels pushed CREW attorney Deepak Gupta to explain why the issue is even something the courts should have to resolve, asking at one point whether Congress, instead of the courts, was best suited to resolve the case. "They have the power to act if they had a concern about acting," Daniels said, at one point likening litigation on behalf of rival hotels, restaurants and good-government groups to "a street fight" with the president. The clause at issue allows for that, saying no U.S. official can "accept any present, emolument, office, or title of any kind whatever, from any king, prince, or foreign state" without the consent of Congress. Attorneys for CREW say that court precedent on the topic gives the judicial branch authority to explore the issue. CREW, in a lawsuit first filed in January, has argued that Trump, who didn't put his businesses in a blind trust after becoming president, has an unfair business advantage while in the White House that harms his rivals in the industry, taking away their business and enriching him by actors with an incentive to curry favor for official acts. As part of their case, they submitted affidavits from industry experts detailing the competitiveness in the market for high-end hotels and restaurants in New York and Washington, D.C., that cater to foreign diplomats and other government officials. Two other emoluments-related lawsuits have also been filed against Trump by members of Congress and the attorney generals for Maryland and the District of Columbia.

When Good Ideas Go Bad on Wall Street

Thirty years after "Black Monday" — one of the worst days in Wall Street history — economists and historians are still analyzing the causes of the crash. One factor, a new, financial strategy that had become incredibly popular, "portfolio insurance." As it turned out, traders, investors and regulators were ill-informed about how this shiny, new tool that was supposed to minimize risk would actually perform in a market downturn. "When you have new technology that is ill-understood, both by traders and regulators, it's dangerous," said Karen Shaw Petrou, managing partner at Federal Financial Analytics. "It's like giving a six year-old boy a Ferrari. It's really not a good idea." A look back at the 1987 crash, and what it says about future declines in the stock market. This is the second story as a part of WNYC's Crash Course, a series about the stock market crash of October 19, 1987, and what it can tell us about today's financial markets. If you've ever regretted a decision about investing in the stock market, how did you make that choice? Tell us your story.

Subway Groper vs. Harvey Weinstein: Who's DA Vance More Likely to Prosecute?

As a public defender in Manhattan, Zora Ahmed wasn't surprised when she heard Manhattan DA Cyrus Vance, Jr. declined to prosecute studio executive Harvey Weinstein back in 2015 for allegedly groping a model. But she said she was disappointed. "To me it just highlighted this tale of two justice systems," she explained. Two systems because Ahmed said Weinstein was never arrested. Nor were President Trump's children when prosecutors said they lied to buyers about their Trump SoHo development. But Ahmed said people who aren't rich or powerful do get arrested — particularly for groping people on subways. "I thought about many of my clients where there is no confession, as there was in the Harvey Weinstein case, and they were still very aggressively prosecuted," she said. "Their lives were ruined on even thinner evidence and less culpability." Ahmed is with a group called 5 Boro Defenders that's now calling for DA Vance to resign. They're not just upset about the Trump and Weinstein cases. Instead, they're worried that Vance's office isn't serious enough about reforming the criminal justice system to make it less punitive for everyone. "In comparison to the other four boroughs it is more punitive and seeks incarceration more often than others," Ahmed claimed. On groping, Weinstein could have been charged with either misdemeanor forcible touching or sexual abuse had Vance chosen to prosecute him (Weinstein denied all claims of non-consensual sex, and Vance said there wasn't enough evidence to prosecute him). Those charges carry maximum sentences in jail of one year and 90 days, respectively. Ahmed said many of her clients are charged with these same offenses for allegedly groping people on subways (or, as it's also known, "subway grinding"). Joan Vollero, a spokeswoman for Vance's office, said that's not a fair comparison. "Cases involving sex abuse on the subway typically have many more witnesses than other types of misdemeanor sexual abuse. Often, one of those witnesses is a police officer who observes the crime in progress." But Ahmed said that doesn't justify all arrests for subway groping. "Those cases are brought routinely and often times against Central American, Latin American men and there's definitely a profile that the police officers are looking for," she explained. When the defendants insist they're innocent, she said, "the prosecutors are just not willing to hear that side of the story, they are very convinced of our client's guilt." WNYC obtained data from the state's Division of Criminal Justice Services on what happens to people arrested for forcible touching and sexual abuse. It's not clear that Vance is more punitive than other DA's. Citywide in 2016, about half of all arrests for forcible touching lead to convictions and about 37 percent were dismissed. District attorneys declined to prosecute in 3.7 percent of all cases. In Manhattan, though, 52 percent of arrests resulted in convictions that year and 41.7 percent were dismissed. Vance declined to prosecute 1.9 percent of the cases. For sexual abuse, there were also more dismissals than the citywide rate but Vance declined to prosecute a little more often. The 5 Boro Defenders point to other data to claim Vance is especially punitive. They cite a study finding 38 percent of the city's jail population came from Manhattan's criminal court in 2016, although Manhattan processed only 29 percent of the criminal caseload. But Vollero said that Manhattan figure is inflated because it also included the Special Narcotics Prosecutor's office. It's a separate office and it handles cases in all five boroughs. Without that data, she said Manhattan would account for less than a quarter of all those in Rikers. Vollero acknowledged Manhattan does have the highest rate of felony convictions of any borough but Manhattan also had more felony arrests in 2016 than any other borough but Brooklyn. She also disputed Ahmed's claim that Vance is less supportive of treatment options for defendants than the Bronx and Brooklyn DAs, saying the study she cited is old. By contrast, Vollero pointed to evidence that Vance is progressive. He recently announced he'd stop prosecuting turnstile jumpers. And he dedicated funds to a statewide college in prisons program and to a citywide program that can keep more people out of jail before their trials by putting them under supervised release. Recently, Vollero said he unveiled plans for an ambitious early diversion program, offering eligible participants over the age of 18 pre-arraignment intervention opportunities throughout Manhattan. He also commissioned an independent study of his office that found a pattern of racial disparities, which he addressed by training all staffers. James Jacobs, a criminal law professor at New York University's Law School who also has a doctorate in sociology, said it's easy to use selective data points to portray Vance — or any DA — as overly harsh. "I would want to see a good bit of systematic study — and more than what comes out because of a decision not to prosecute Harvey Weinstein," he said. Jacobs also said it's easy to go after Vance because he's in the headlines, and because of what's going on locally and nationally with criminal justice reform. "There's a tremendous bandwagon now against mass incarceration and to decarcerate," he explained. "That's like a drumbeat and we hear that all the time from academics certainly, and from advocacy groups." But those advocacy groups say scrutinizing the Manhattan DA presents an opportunity to keep talking about who gets prosecuted and who doesn't. Especially since Vance has no opponents on the ballot in next month's election.

Subway Groper vs. Harvey Weinstein: Who's DA Vance More Likely to Prosecute?

Newark Is Making an Economic, and Moral, Case for an Amazon HQ

Amazon is on the hunt for a second headquarters, and cities around the country, from Tuscon to Frisco to Danbury, are competing to host it. "There is no other place in the country that Amazon should go but here," argued Newark Mayor Ras Baraka on Monday. "Everything else is a cliche. Right? Brooklyn sounds like a cliche, so does Denver, it's all cliche-ish." Whether the trash talk works or not, Newark is betting that something else will make Amazon listen: money. Mayor Baraka, Gov. Chris Christie and Senator Cory Booker got together this week to announce Newark's bid for Amazon, and they made cash subsidies the centerpiece. Specifically, $7 billion in tax breaks. Which is a little more than ten times Newark's annual budget. Another way to look at this: Amazon expects to spend $5 billion building this new headquarters, known as HQ2. So, if they choose Newark, their subsidy will be worth more than what they expect to actually spend constructing HQ2. How is that supposed to be worth it for New Jersey? In a tweet, NJ Policy Perspective called this a "tax-breaks-or-bust strategy." NJ's tax-breaks-or-bust strategy on #AmazonHQ2: at least $5B in state tax breaks + up to $1B in Newark tax abatements + no Newark wage tax — NJPolicyPerspective (@NJPolicy) October 16, 2017 What's really striking is the show of unanimity around this. In addition to Mayor Baraka, Gov. Christie and Sen. Booker, the state's legislative leaders and both gubernatorial candidates, Phil Murphy and Kim Guadagno, have endorsed the plan. And maybe the best pitch for Newark came from Sen. Booker yesterday, who put this in moral terms. By choosing Newark, he said, Amazon would demonstrate "that our inner city spaces are not places to be avoided, they are the undiscovered treasure." WNYC's Ilya Marritz spoke with Richard Hake about where Newark, and New York City, stand in the race for HQ2 before the pitch deadline this Thursday.

Remembering Black Monday, a Day of "Utter Devastation" on Wall Street

October 19th marks the 30th anniversary of what's called "Black Monday" when the Dow Jones had its biggest one-day percentage drop in its history; it was one of the worst days in trading in Wall Street ever. To this day, there's still no agreement as to what exactly sparked the crash, with historians and government officials pointing to a variety of contributing factors. But a major suspect in what it so bad was and investment strategy known as portfolio insurance. "We came so close to a system cracking meltdown, fuse blowing crisis. We need to know that," said Diana Henriques, a financial journalist and author of the new book A First-Class Catastrophe: The Road to Black Monday, the Worst Day in Wall Street History. This is the first of several stories in WNYC's Crash Course, a series about the stock market crash of October 19, 1987, and what it can tell us about today's financial markets. If you've ever regretted a decision about investing in the stock market, how did you make that choice? Tell us your story.

Remembering Black Monday, a Day of "Utter Devastation" on Wall Street

As Baseball Playoffs Come to the Bronx, We've Got Your Yankees v. Astros Trashtalk

Using short words that Brian Straw of Houston Public Media might understand, WNYC's Jim O'Grady explained that the Yankees have fallen two games behind in a playoff series before, only to come roaring back for the win. It happened just last week against the Indians behind the sterling starting pitching of C.C. Sabathia, who starts Game 3 against the Astros tonight in the Bronx. Speaking slowly, as if to a simpleton, Straw countered that the Astros were the best-hitting team in the major leagues, and would not be denied. He also reflected on how the team's success is lifting the city's spirits as it continues to grapple with devastation in the wake of Hurricane Harvey. O'Grady assured Straw that all New Yorkers are pulling for Houston's full recovery ... but that they're still looking forward to watching Astros lose.

As Baseball Playoffs Come to the Bronx, We've Got Your Yankees v. Astros Trashtalk

New Jersey's Voting Machines Are Vulnerable to Hacking

Next month, New Jersey residents will head to the polls to cast their votes for the state's next governor. But election watchdogs are warning that New Jersey voting machines on are at high risk of cyberattack—and it would be simple for a hacker to manipulate results without a trace. As Aaron Sankin reported for Reveal, New Jersey is one of only a handful of states to use voting machines that don't use paper ballots as a backup in case its digital systems fail. Without a verifiable paper trail, election officials might never know if the machines have been compromised. "If someone writes their vote down on a piece of paper, that's a thing that's hard to hack," Sankin told WNYC's Jami Floyd. "When it comes to the overall security of the election, there is a general consensus that paper ballots are superior."

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