Category: Financial & National Risk

  • Amtrak Was Born a Fiction, and Fifty Years Later Nobody Has Fixed It

    A For-Profit Company Nobody Believed Would Turn a Profit

    Every government corporation in this series has had to pretend, at some level, to be a real business. Amtrak is the only one where the pretending was written into the planning documents. When Congress drafted the Rail Passenger Service Act of 1970, internal analysis explicitly described the new National Railroad Passenger Corporation as a corporation organized for profit.

    One of the planners, John McClellan, later admitted what everyone involved already knew: most of the planning team was dubious of the “for profit” claim, but neither the White House nor the more conservative members of Congress were willing to sign off on an entity that was set up from the start to be a perpetual ward of the state, according to an Eno Center for Transportation history of the Act’s drafting.

    Amtrak began operating on May 1, 1971, taking over the common carrier obligations of private railroads that had been losing money on passenger service for decades, in exchange for the right to use those railroads’ tracks at incremental cost, according to the Federal Railroad Administration. It has never once turned a profit in fifty five years of operation, and the fight over whose fault that is has been running, essentially unchanged, for almost the entire time.

    The Same Question, Asked Since 1979

    GAO has been auditing Amtrak’s finances since the agency’s early years, and the title of its 1979 review says everything: Should AMTRAK’s Highly Unprofitable Routes Be Discontinued? By 1995, GAO was still laying out the same three options it always lays out: eliminate the subsidy and privatize the railroad, which GAO itself conceded was unlikely to work because no Amtrak route earns enough revenue to cover its own costs and few private firms would take on that risk; realign the national route network around the most cost effective corridors; or keep funding the whole thing and hope efficiency gains eventually close the gap.

    They never have. By 1998, GAO found Amtrak had consumed roughly 21 billion dollars in federal operating and capital funding since 1971 while reducing its annual net loss only marginally, from 834 million dollars in fiscal year 1994 to 762 million in fiscal year 1997, with losses already projected to climb back toward 845 million the following year.

    By 2020, cumulative federal subsidies to Amtrak had passed 50 billion dollars, according to a policy analysis from the Cato Institute — a figure that predates the 2021 infrastructure law’s further 66 billion dollars in rail funding, part of it going directly to Amtrak and part to state rail grants. No independent source has published a clean post-2021 cumulative total, in part because the infrastructure law’s Amtrak-specific allocations are disbursed over time and tracked separately from annual operating subsidies.

    The 2025 to 2026 reauthorization debate is, structurally, the same conversation GAO was already having in 1979: current testimony from the Department of Transportation cites GAO findings that long-distance routes account for 15 percent of Amtrak’s riders but 80 percent of its financial losses, and calls once again for ending subsidies to underperforming long-distance service and separating Northeast Corridor infrastructure into its own governance structure.

    The Ledger That Blames the Trains Nobody in Washington Rides

    Here is where it gets genuinely strange, because Amtrak’s own numbers do not agree with themselves. Amtrak’s internal accounting system, called Amtrak Performance Tracking, assigned the Northeast Corridor a 352 million dollar above the rail profit in fiscal year 2025, while attributing a 622 million dollar loss to the long-distance inter-regional routes that serve the rest of the country, the same routes GAO and DOT keep flagging as the problem.

    But a Trains Magazine analysis argues this allocation runs essentially backwards, and it quotes two former Amtrak chiefs to make the point. Former CEO Wick Moorman told Congress in writing that eliminating the entire long-distance network would actually increase Amtrak’s total loss and subsidy requirement by 435 million dollars a year, meaning those routes are net contributors once the Northeast Corridor’s fixed costs are honestly allocated rather than parked somewhere else in the ledger.

    Former Amtrak President David Gunn reportedly went further, warning that if Congress ever gave Amtrak less than its full subsidy request, the railroad would have to close the Northeast Corridor before it touched the long-distance routes.

    Whether or not you buy the full argument, the fact that Amtrak’s own former leadership and Amtrak’s own official accounting cannot agree on which half of the network is actually losing money, after fifty five years and one accounting system built for exactly this purpose, tells you something about how useful that accounting system actually is for anyone trying to make an honest funding decision.

    It also tells you who benefits from the current framing. That is, the Northeast Corridor serves the members of Congress who appropriate Amtrak’s budget every year, and an accounting method that quietly shields it from scrutiny while pointing the finger at rural long-distance service is, at minimum, a very convenient place for the numbers to land.

    Fifty Billion Dollars and Counting

    Even the number Amtrak takes to Congress each year is a chosen number rather than a neutral one. Amtrak requests funding based on what it calls its adjusted operating loss, 598.4 million dollars in fiscal year 2025, a figure that specifically excludes roughly a billion dollars a year in depreciation, 364 million dollars in capital project planning costs, and hundreds of millions more in expenses that sit on the operating side of the ledger under ordinary accounting rules but that Amtrak has decided are not relevant to the number it wants Congress to see.

    None of this makes Amtrak unique in wanting to look better on paper than it is. What makes it worth closing this series’ current stretch on is how openly the fiction was built in from day one. TVA and the RFC grew into unaccountable financial structures over time, as the incentives shifted. The FDIC‘s clean design cracked under a genuine stress test nobody had planned for.

    Amtrak was chartered as a for-profit corporation by people who wrote down, at the time, that they did not believe it would be profitable, because admitting the truth would have meant admitting they were building a permanent federal dependent. Fifty five years, more than 50 billion dollars in direct subsidies before the 2021 infrastructure law, and one internal accounting system whose own former executives cannot agree with it later, that is exactly what they built.

    Next in this series: the Pension Benefit Guaranty Corporation, the quiet federal backstop between millions of workers and the pension promises their employers could not keep.

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  • Federal Register Watch: October 7, 2026

    Wednesday’s Federal Register, Volume 91, Number 193, ran 148 numbered pages, and the headline rules were mostly absent. What the issue offered instead was a cluster of privacy notices in which three federal agencies described, in their own words, new or enlarged piles of personal data. The Treasury Department is assembling a file on student borrowers, the Justice Department is building a firearms rights database and asking to keep it largely closed to the people in it, and the Drug Enforcement Administration is widening who counts as a subject of its aviation records. The Labor Department, meanwhile, abandoned a rulemaking it spent fifteen months not finishing.

    Treasury Takes the Student Loan File

    The most consequential item is easy to miss because it carries a dull name. Treasury’s notice of a new system of records, Department of the Treasury .033, covers Federal Student Aid portfolio research, analysis, oversight, reporting and compliance records. Under an interagency agreement, the Education Department will hand Treasury data, including personally identifiable information, on recipients of federal student grants and loans under Title IV of the Higher Education Act. The notice names three Education sources, the National Student Loan Data System, the Default Management Collection System and the Enterprise Data Management and Analytics Platform Services, and it concedes that some of the data may come from education records protected by the Family Educational Rights and Privacy Act. The Office of the Fiscal Assistant Secretary and the Office of Economic Policy will run it.

    The categories of records are broad. Treasury lists loan origination, disbursement, repayment, default, collection, discharge and consolidation data, plus application and eligibility information such as dependency, income and household details. The people covered include borrowers, co-signers, endorsers, parents and spouses, along with anyone who files an inquiry or complaint. Treasury says it will use the material for research, modeling, forecasting, audit coordination and responses to oversight bodies, and it promises role based access controls, audit logging and periodic access reviews. Education remains the custodian of the underlying program records, but Treasury wants its own single system anyway, because the records serve one Treasury mission under one governance framework.

    One purpose deserves a second look. The tenth listed purpose is to support program transition, implementation, reporting and closeout activities tied to the transfer, ownership, administration, oversight or management of the portfolio. What follows is an inference and not a statement in the notice. The wording suggests Treasury expects some part of the student aid portfolio to change hands or change managers, and it is building the paper trail before the move. The reasoning rests only on that purpose line and on the notice’s repeated references to Treasury’s ownership and administration responsibilities, and the notice never says a transfer is planned. Comments are due November 6 under docket TREAS-DO-2026-0628. The notice lists no Privacy Act exemptions for the system, which makes it a useful contrast with the next item.

    A Second Chance With the Blinds Drawn

    The Office of the Pardon Attorney published two companion documents. One is a notice of a new system of records, the Firearms Rights Restoration Electronic Records Database. The other is a proposed rule exempting that database from parts of the Privacy Act. The database will receive, track and adjudicate applications under 18 U.S.C. 925(c), which lets people barred from possessing firearms ask the Attorney General for relief. The notice explains that since 1992 Congress has restricted the Bureau of Alcohol, Tobacco, Firearms and Explosives from spending its appropriated funds on those investigations, which left the program unusable, and that the Attorney General withdrew ATF’s delegation in March 2025 after reviewing the matter under Executive Order 14206. A final rule on the application process followed in August 2026.

    The records will live on the FBI’s Electronic Departmental Order service inside the Next Generation Identification system, and the database will interface with the National Instant Criminal Background Check System. Justice proposes to claim exemptions under subsections (j)(2) and (k)(2) of the Privacy Act, the law enforcement provisions, from several requirements, including the rights to request access to and amendment of one’s own records. The stated reasons are that notice, access and amendment would reveal the nature and scope of the adjudication, chill candid communication among officials advising the Attorney General, and expose people who gave information under a promise of confidentiality. Those are real interests. They are also bought with the applicant’s own access and correction rights, which is what the exemption does by its terms. Comments on both documents are due November 6.

    Down the page, the DEA republished and retitled its aviation records system as the DEA Aviation Division Reporting System, last published in full in 2000. The old notice covered pilots. The revision adds DEA employees and contractors, vendors, detainees, inmates, non-DEA law enforcement personnel and other federal employees and contractors, and it updates the record categories, purposes and routine uses. Comments are due November 5. The addition of detainees and inmates suggests the system now tracks passengers as well as crews, an inference drawn only from the expanded list of covered individuals.

    Labor Declines to Move Its Furniture

    The Wage and Hour Division withdrew a proposed rule it published on July 2, 2025, which would have removed from the Code of Federal Regulations the Fair Labor Standards Act interpretive parts that were never issued or amended through notice and comment. The idea was to demote those parts to subregulatory guidance posted elsewhere. The comment period ran 30 days. The Department received six substantive comments, two in favor and four opposed, and it denied 10 requests for more time. Fifteen months later, Administrator Andrew B. Rogers signed the withdrawal, which took effect October 6.

    The stated reason is that further action no longer aligns with the Department’s needs, priorities and objectives, a sentence that could justify almost any abandoned project. The notice adds that commenters raised concerns about the effect on specific industries and that the Department will keep looking for ways to modernize its interpretive guidance. For employers and workers who rely on those parts, the practical result is that the guidance stays exactly where it was.

    The Rest of the Docket

    The Federal Reserve extended the comment period on its Regulation O proposal by 30 days, to November 4, after commenters asked for more time. The August 4 proposal would update the rule on loans by member banks to their insiders, index outdated dollar thresholds, and address how the rule applies to banks that lend to companies presumed to be controlled by large asset managers through passive investment funds. The Copyright Office opened a notice of inquiry on music streaming fraud at the request of Representative Scott Fitzgerald of the House Judiciary Committee, with comments due November 23 and replies December 21. The notice puts domestic streaming revenue for sound recordings at about $9.5 billion.

    The Office of the U.S. Trade Representative confirmed that the two 2018 Section 301 actions on China did not terminate on their four year anniversaries, because domestic industry representatives asked that they continue, and the statutory review goes on. The Department of Energy withdrew the appendix B test procedure for commercial warm air furnaces in a final rule, finding an uncertain gain in representativeness that did not outweigh the burden. The IRS asked for comments, due December 7, on its information collection for Trump Account elections. The Office of Special Counsel published a notice naming the members of its Senior Executive Service Performance Board, and sanctions actions from the Office of Foreign Assets Control filled 17 pages. The only presidential document was Proclamation 11071, designating National Manufacturing Day.

  • Federal Register Watch: October 6, 2026

    Tuesday’s Federal Register, Volume 91, Number 192, ran 630 pages, and three documents account for 424 of them. Two are Securities and Exchange Commission proposals, one on crypto custody and one on who may charge performance fees, and the third is a 120-page final rule on health insurance price transparency. The more revealing material sits in the margins, where FinCEN retired two proposals that would have watched crypto move and the Treasury Department shielded a new fraud tip line from the Privacy Act.

    Self-Custody, Now With Paperwork

    Start with the SEC’s proposal on adviser and fund custody rules and crypto custody rules, which runs 234 pages and takes comments until December 7. The core idea is that a registered investment adviser could hold a client’s crypto itself when no permitted custodian is available, provided the adviser documents that finding in writing at the outset and again every quarter. The release adds conditions. The adviser must mitigate cybersecurity risks and review its controls at least annually, and it must obtain internal control reports within six months and yearly after that. A fund’s board would have to decide, before the adviser takes possession and annually afterward, that the asset would receive reasonable care in the adviser’s hands.

    It is a tidy structure, and the release is candid about why custody rules exist. It recounts that when the adviser and the custodian are the same party, the adviser can move the assets directly, and that a separate custodian’s account statement is what discourages unauthorized trading. The proposal then builds a path for the adviser to be both. The justification is practical and not frivolous. The SEC says custodians cannot support every token, that new assets may have no custodian at all, and that state trust companies have been unsure whether they count as banks, a problem staff addressed with a September 2025 no-action letter. The release also leans on the Crypto Task Force the commission created in January 2025 and on Executive Order 14178. A safeguard that rests on the fox’s quarterly memo about the henhouse is still a safeguard, technically. The comment file will show whether it is a good one.

    Its companion, Investment Adviser Performance-Based Compensation Modernization, would widen who may pay advisers a share of capital gains. It would expand the arrangement for registered funds and business development companies under conditions, and it would extend the exemption to investors who meet the Regulation D accredited investor definition. Comments are also due December 7. The SEC expects the change to let a wider range of advisers offer regulated funds and to put more strategies inside them. Whether shareholders were asking for more performance fees is a question the comment file will answer.

    The Mixers Are Forgiven

    Pages 63513 to 63515 hold the day’s best contrast. FinCEN withdrew its 2023 proposal to treat international crypto mixing as a class of transactions of primary money laundering concern, and it separately withdrew a 2020 proposal on transactions involving unhosted wallets. The mixing rule would have required covered financial institutions to report mixing transactions, with customer identity details attached. The wallet proposal would have required reports and identity verification above $10,000, and recordkeeping above $3,000, when a counterparty used an unhosted or otherwise covered wallet.

    The stated reasons come in two registers. On mixers, FinCEN cites commenters’ concern that the definition was broad enough to chill legitimate activity and burden institutions, and it points to a July 2025 report from the President’s Working Group on Digital Asset Markets, which said the administration supports lawful users transacting privately on public blockchains. In the same notice the agency concedes that illicit actors still use mixers to hinder investigations and says it will keep monitoring. On wallets, the explanation is that withdrawal is part of making digital asset rules fit for purpose, and FinCEN will take no further action. Deputy Director Jimmy L. Kirby signed both.

    Set that beside the SEC’s custody proposal and the day has a theme. The government is making room for crypto to be held, and moved, with fewer questions put to the people doing the moving. Each agency has reasons, and some of them are good. But the same Tuesday that loosens one reporting net shows the Treasury Department weaving another, which brings us to the third item.

    A Tip Line With a Privacy Shield

    Treasury’s final rule on Privacy Act exemptions concerns a new system of records, Treasury .032, for Federal Program Waste, Fraud, and Abuse Tip Intake and Referral Records. The system will take in tips from the public, agencies, contractors and grant recipients about suspected fraud, improper payments and misuse of federal funds, then triage them and refer them to other agencies and inspectors general. Treasury exempts the system from certain Privacy Act provisions under the law enforcement investigatory material provision, effective November 5, and cites Executive Orders 14249 and 14395 as the policy backing.

    Treasury received two comments on its June proposal. One called the exemptions overly broad and raised transparency and oversight concerns. The other supported protecting genuine investigatory material but urged Treasury to narrow the exemption and preserve protections for records that are not law enforcement related. Treasury kept the exemptions, and says they do not reach every record merely because it sits in the system. That is a fair limit on paper. In practice a tip line is where a neighbor’s grudge and a real fraud look identical at intake, which is exactly the stage at which access and correction rights matter most.

    Three other privacy filings ran the same morning, and they are mostly housekeeping. The Nuclear Regulatory Commission republished 13 systems of records notices after a comprehensive review, with four (NRC 27, 36, 39 and 40) substantively revised and comments due November 5. The National Archives is revising NARA 44, its reasonable accommodation records, to cover pregnancy and childbirth requests under the Pregnant Workers Fairness Act and to move some processing into a web based application. The FDIC rescinded two applicant recruiting systems because an Office of Personnel Management government-wide notice already covers them.

    The Rest of the Docket

    The 120-page Transparency in Coverage final rule, a joint product of the IRS, the Labor Department’s benefits arm and CMS, takes effect December 7. Citing Executive Order 14221, it adds contextual files and data elements such as product type and network name to the machine-readable pricing files, changes the level at which data is aggregated, lengthens the reporting period and lowers the claims threshold for out-of-network historical data, trims reporting frequency, and requires pricing information to be available by phone.

    The FDA opened a request for information on ibogaine trial design, covering dose escalation, care setting, safety monitoring and stopping rules, and noted that HHS is funding development and that the first federally supported trials are expected to enroll adults with opioid use disorder and adults with PTSD. Comments are due November 20. The agency also issued device rules classifying a hyperoxia monitor used with pulse oximetry, a focused ultrasound system for non-thermal tissue ablation and a high throughput DNA sequencing test for hereditary cancer predisposition, plus an exemption for certain clinical toxicology test systems.

    The remainder includes NHTSA and NTIA eliminating obsolete 911 grant program regulations, a NHTSA request for information on prehospital blood transfusion, HUD‘s 2027 designation of Difficult Development Areas and Qualified Census Tracts, the SEC’s acknowledgment of ICE Futures U.S. filing Form 1-N under Section 6(g) to register as a national securities exchange, a NOAA final rule under Amendment 62 raising Gulf of America red grouper catch limits, effective October 2, an EPA Notice of Availability seeking comment on initial air quality designations under the 2024 revised annual PM2.5 standard, which tightened the annual limit to 9.0 micrograms per cubic meter and carries a 30-day public comment period, and 15 pages of OFAC sanctions actions. The issue carried no presidential documents and no executive orders.

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  • The Postal Service Passed Its Pay Audit. The Bill Just Got Postponed.

    Credit where it is due. The Postal Service Office of Inspector General reviewed the compensation, benefits, and bonus authority of 158 postal officers and executives for calendar year 2025 and found nothing to flag. No one exceeded the Executive Schedule Level 1 salary cap of $250,600. None of the eleven employees the Board designated as “critical senior executive” positions cleared 120 percent of the Vice President’s compensation, the $347,280 ceiling PAEA allows for a maximum of twelve such slots. The auditors made zero recommendations. Management, for its part, declined to comment, which in bureaucratic terms is the sound of an agency that has nothing to argue about.

    A Rare Clean Bill

    This is not nothing. The OIG’s CY2020 audit found a $5,833 monetary impact from noncompliance, a rounding error by federal standards but a finding nonetheless. This year there is no finding at all. The Postal Service is, in the narrow and specific sense that this audit measures, playing by its own rules. A watchdog publication built on the premise that institutions rarely get audited into a compliment owes it to its readers to say so when one does.

    But an audit that measures compliance with a cap is not the same as an audit that asks whether the cap means anything. It measures whether water stayed inside the container. It does not ask what happens to the water that would have overflowed.

    The Account That Never Closes

    Buried in Table 2 of the report, well past the highlight box that most readers will stop at, is the answer. When an executive’s earned compensation would push them over their statutory ceiling, the Postal Service does not simply withhold it. It defers it into an interest bearing account and pays it out later, in whatever future year the executive’s total compensation happens to sit below the cap.

    Deputy Postmaster General Douglas Tulino, who also holds the titles of Chief Operating Officer and Chief Human Resources Officer, a three hat arrangement that ought to raise its own eyebrows, deferred $198,650 in calendar year 2025 alone. His running balance sits at $515,462.18. Joseph Corbett is carrying a deferred balance of $538,887.66. David Steiner, the Postmaster General, has $86,695 sitting in the same holding pattern. This is not back pay owed for work not yet done. It is compensation already earned, already valued, simply held in escrow until the calendar catches up to the paycheck.

    The Office of Legal Counsel blessed this arrangement back in 2013, and the Postal Service formalized it in an August 2023 pay policy. It is legal in the fullest sense of the word. It is also, functionally, a way of making a hard salary cap into a soft one. The cap does not limit what an executive is paid. It limits when.

    Twelve Chairs, One Very Full Ledger

    The PAEA’s critical positions exception exists for a defensible reason, the argument that the Postal Service competes for executive talent against private logistics firms that pay considerably more than the federal government ever will. Fair enough. But the mechanism built to enforce a ceiling on that competition has, in practice, become a mechanism for deferring rather than denying the money that would breach it.

    Consider the company those eleven names keep. Chief Retail and Delivery Officer. Chief Logistics and Infrastructure Officer. Chief Technology Officer. Chief Information Officer. General Counsel. These are, by any measure, executive suite jobs at a nine figure operating budget, and the audit confirms their occupants are being compensated like it, just with the accounting spread across tax years instead of concentrated into one that would trip the wire.

    None of this requires a conspiracy. It requires only that a statutory salary cap, once it collides with an actual executive compensation market, gets engineered around rather than enforced. The engineering happens to be perfectly legal, transparently disclosed in an annual report, and blessed by the Justice Department. That is precisely what makes it a story rather than a scandal. Scandals get investigated and end. This just continues, one interest bearing dollar at a time.

    Solvency for Me, Not for Thee

    Here is the number that belongs next to Table 2, and does not appear anywhere in the OIG’s report because it was outside the audit’s scope. The Postal Service closed fiscal year 2025 with a net loss of $9.0 billion under GAAP, an improvement over the $9.5 billion loss the year before only in the sense that a slower car crash is still a car crash. Controllable loss, the figure USPS itself prefers because it excludes costs management says it cannot influence, still came in at $2.7 billion, up nearly a billion dollars from the prior year. Compensation and benefits expense across the organization rose $1.7 billion year over year, the single largest driver working against the modest revenue gains from Ground Advantage and stamp price increases.

    Postmaster General Steiner told the public in November that “the occasional appearance of financial progress is far outweighed by the reality of our significant systemic annual revenue and cost imbalance,” and asked Congress for changes to pension funding rules, the statutory debt ceiling, and workers’ compensation administration. He is not wrong that the agency’s finances are structurally broken. It is worth noting, in the same breath, that while the institution pleads for relief from Congress, its own compensation ledger keeps a small number of executives’ pay intact, merely rescheduled, interest accruing the whole time.

    The Postal Service passed its compliance audit. It deserves to be told so plainly. But compliance with a cap that bends rather than breaks is a different achievement than the audit’s clean headline suggests, and an agency nine billion dollars in the red is not obviously the place where “we will pay you later, with interest” should be standard operating procedure for the corner office.

    For more USPS OIG coverage, see Nashville’s Postal Honor System Just Failed an Audit — on four OIG reports finding that the compliance data Nashville reported to USPS headquarters bore little relationship to what auditors found on the floor — and The Pantry That Held a Federal Problem, on a joint OIG-DEA investigation that dismantled a drug distribution network running through the postal system.

  • The Fund That Worked Until It Almost Didn’t: FDIC, 2023, and the Return of the Bank Run

    The Slogan With an Asterisk

    The FDIC’s marketing has one genuinely remarkable claim behind it: since the agency opened its doors in 1934, no depositor has ever lost a penny of insured deposits. It is the rare piece of government messaging that happens to be true. It is also, on its own, a slightly misleading way to describe what actually happened in March 2023, when the failure of three regional banks forced federal regulators to quietly abandon the very insurance limit the FDIC exists to enforce.

    Of the entities covered so far in this series, the FDIC comes closest to the textbook version of a government corporation Congress imagined when it wrote the 1945 Government Corporation Control Act: funded entirely by risk based premiums on the industry it regulates, receiving no annual appropriations, and repaying its initial seed capital rather than leaning on the kind of soft, interest free financing that let TVA and the RFC balloon into open ended liabilities. That design held up for ninety years. Then three banks failed inside two weeks, and the difference between “the FDIC works” and “the FDIC has discretion to decide who actually gets protected” became very hard to ignore.

    The Cleanest Design in the Series, Almost

    The FDIC was created by the Banking Act of 1933 after more than 9,000 banks failed between the 1929 crash and 1933, wiping out roughly 1.3 billion dollars in depositor losses, according to the FDIC’s own institutional history. Congress gave it an initial 289 million dollar loan from the Treasury to get started, a debt the agency subsequently repaid in full. Since then, the FDIC has funded its operations entirely through insurance premiums charged to member banks and earnings on its Treasury securities holdings, a structure the Federal Reserve Bank of Minneapolis has noted receives no congressional appropriations at all, which puts the FDIC closer to actually behaving like the self-sustaining commercial entity every government corporation is nominally supposed to be.

    That design worked exactly as intended for eight decades, through the savings and loan crisis and the 2008 financial crisis alike. Then, on March 10, 2023, Silicon Valley Bank failed, followed within days by Signature Bank and, weeks later, First Republic, together the second, third, and fourth worst bank failures in American history, according to reporting on the FDIC’s own inspector general findings. GAO later found that the Federal Reserve and FDIC had identified concerns about both SVB and Signature Bank as far back as 2018, but neither regulator escalated those concerns into formal enforcement action in time to force a fix before the banks collapsed. The FDIC itself estimated the failures would cost the Deposit Insurance Fund roughly 18.7 billion dollars, the bulk of it tied not to ordinary insured deposits but to the decision to protect deposits above the standard 250,000 dollar insurance limit entirely.

    The Limit That Got Overridden Anyway

    That decision is the part worth sitting with. Federal law lets Treasury invoke a systemic risk exception, on the joint recommendation of the FDIC and the Federal Reserve, to cover deposits beyond the statutory cap when a bank failure threatens the wider financial system. GAO reviewed the invocation for SVB and Signature Bank and concluded the decision likely helped prevent broader instability, noting that deposit outflows from smaller banks slowed within a week of the emergency action. In other words, the mechanism worked. But the mechanism only exists because the ordinary insurance limit, the thing depositors are told to rely on and the thing the premium structure is actually priced around, turned out not to be sufficient the moment a bank run could happen at the speed of a group chat rather than a physical line outside a branch.

    The FDIC’s own inspector general did not let the agency off easy afterward. A review released in December 2024 found the FDIC’s readiness to resolve large regional bank failures was, in the OIG’s words, not sufficiently mature to facilitate a consistently efficient crisis response, citing gaps in staffing, technology, and coordination across divisions. The OIG issued eleven recommendations, and the same reporting noted GAO’s own parallel review found FDIC lacked even a centralized system for tracking supervisory recommendations across its own examiners, meaning emerging risks at supervised banks could fall through cracks nobody was specifically watching for.

    Deregulating the Morning After

    Here is where the story takes a turn that fits uncomfortably well with the rest of this series. Rather than responding to that OIG report with a tightening of supervisory practice, the FDIC’s new leadership moved in the opposite direction. Travis Hill, installed as acting chairman on January 20, 2025, moved quickly to reshape the agency’s regulatory posture. Within weeks, he rescinded the FDIC’s 2024 Statement of Policy on Bank Merger Transactions and withdrew four other pending regulatory proposals, part of what one law firm’s analysis described as a wholesale regulatory purge. The stated goal was making merger review faster and more predictable for the banking industry. The practical effect was that the same agency whose own watchdog had just flagged coordination and readiness failures in the run up to 2023 spent its next chapter loosening the review process for the kind of consolidation that produces exactly the large, complex institutions whose failures are hardest to manage. Hill, confirmed by the Senate as the agency’s 23rd chairman in December 2025 and sworn in the following January, had by then already set the agency’s direction.

    This is not corruption or mismanagement in the way the RFC’s cronyism was, and it is not the multi-decade debt spiral TVA has been running twice now. It is something quieter: a genuinely well designed, self-funded government corporation discovering that even its cleanest structural feature, premium funded insurance with a hard dollar cap, still depends on a discretionary political judgment call about who gets bailed out beyond that cap when the alternative looks worse. The FDIC did not need a conservatorship. It needed an emergency exception to its own rules within days of a crisis starting, which is a smaller version of the same problem.

    Why It Matters

    Every entity in this series so far has hit the same wall from a different direction. The RFC discovered that market discretion without oversight curdles into cronyism. Fannie and Freddie discovered that dodging the 1945 Act’s accountability regime just moves the risk somewhere less visible until it detonates. TVA discovered that a debt ceiling only constrains behavior for as long as Congress declines to raise it, which turns out to be not very long at all. The FDIC, built about as well as a government corporation can be built, discovered that the line between “self-funded insurance program” and “implicit federal guarantee” gets redrawn the moment enough money is at stake, and that the agency meant to price and contain that risk can still be caught flat footed by how fast it moves in an era of instant digital withdrawals.

    None of this means deposit insurance is a bad idea, any more than TVA’s debt history means public power is a bad idea. It means the closest thing this series has found to a genuine success story still needed an emergency override within its first real stress test in fifteen years, and that the policy response since has been to loosen the very oversight machinery that watchdog after watchdog just said was not ready. Whichever government corporation this series covers next, that is the question worth asking of it: not whether the design looks sound on paper, but what happens the first week the design gets tested for real.

    Next in the series: Amtrak, the only government corporation here whose founding fiction was written into the planning documents on day one — by the same planners who privately doubted it.

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  • Deja Vu on the Clinch River: TVA’s New Nuclear Bet Looks a Lot Like Its Last One

    The Success Story With an Asterisk

    Two articles into this series (introduced in Meet the Fourth Branch)—one on the RFC and one on Fannie Mae and Freddie Mac—both anchored on entities that blew up spectacularly, it seemed only fair to promise readers one that actually worked.

    The Tennessee Valley Authority was supposed to be that entity: a New Deal creation from May 18, 1933, still delivering power to more than nine million people across seven states, still self-financing off electricity sales rather than congressional appropriations, still standing while the Reconstruction Finance Corporation and the RFC’s mortgage-guaranteeing offspring both required federal intervention to survive their own ambitions.

    Here is the asterisk. TVA’s own regulator has spent the better part of four decades documenting a debt history that looks less like a success story and more like a rehearsal for one, and TVA is currently in the middle of placing the exact same kind of bet that got it into trouble the first time, on the exact same patch of land.

    Forty Times the Original Debt Ceiling

    TVA’s early financing was almost absurdly generous by modern standards. Congress appropriated roughly a billion dollars to the agency between 1933 and 1959, charged no interest on any of it, and ultimately treated more than a fifth of that money, 258.3 million dollars, as a straightforward taxpayer equity contribution that was never expected to be repaid at all, according to a Heritage Foundation institutional history of the agency. In 1959, Congress restructured TVA to finance itself through power revenues and its own bond issuance rather than direct appropriations, and set a statutory debt ceiling to keep the new arrangement disciplined.

    That ceiling did not hold the line for long. By 1979 Congress had raised it to 30 billion dollars, forty times the amount originally authorized twenty years earlier, driven almost entirely by TVA’s nuclear construction program. TVA started seventeen nuclear generating units during the 1960s and 1970s and completed only seven of them, according to GAO’s own account of the agency’s finances, a failure rate that turned billions of dollars of half built reactors into pure liability with no offsetting electricity to sell. By 1995, GAO reported that TVA carried 26 billion dollars in debt, with 14 billion dollars of that sunk into nonproducing nuclear assets that were not even included in the rates TVA charged customers, and warned in plain language that if TVA could not compete effectively as electricity markets opened up, the federal government might end up covering TVA’s debt itself.

    The debt problem eventually stabilized. The pension problem did not. By fiscal year 2016, GAO found TVA’s pension plan was only 54 percent funded, with unfunded liabilities that had grown steadily for a decade, and TVA had not even been reporting the shortfall in its own required performance plans. It got worse before it got better: TVA’s own numbers, reported by the Chattanooga Times Free Press, showed the plan falling to roughly 60 percent funded in 2019 and the underfunding widening to 5.6 billion dollars in 2020, driven largely by falling interest rate assumptions rather than any single management failure. Since then the pension picture has improved materially: according to the White House FY2026 Budget Appendix, as of September 30, 2024, the TVA Retirement System reported an estimated seventy-nine percent funding ratio and an unfunded liability of roughly 2.3 billion dollars—better than a decade ago, though still a meaningful gap on TVA’s balance sheet.

    Same River, New Reactor

    Here is where the story loops back on itself in a way that would be hard to invent. One of the reactors TVA never finished during its 1970s nuclear buildout was the Clinch River Breeder Reactor, a federally funded prototype fast breeder sited on TVA owned land near Oak Ridge, Tennessee, with TVA slated to buy its output. Congress killed the project in October 1983 after roughly 1.7 billion dollars had already been spent, amid years of cost estimates that kept sliding further out of reach no matter when anyone checked them.

    In May 2025, TVA became the first utility in the country to submit a construction permit application to the Nuclear Regulatory Commission for a new small modular reactor, specifically the BWRX-300, a boiling water small modular reactor design developed by GE Vernova and Hitachi.

    The site TVA chose is Clinch River, the same 1,200 acre property where the federal government’s last big nuclear swing already failed once. The Nuclear Regulatory Commission issued its Final Supplemental Environmental Impact Statement for the project on April 6, 2026, per the Federal Register notice, and its Final Safety Evaluation Report on June 25, 2026, finding no safety bars to issuing the construction permit, and has targeted a permit decision for the fall of 2026, meaning a yes or no could arrive shortly before or after this article appears.

    The Department of Energy has since selected TVA for up to 800 million dollars in cost shared federal funding to advance the project, on top of a separate 400 million dollar DOE grant announced in December 2025; TVA’s board has also approved up to 350 million dollars to explore small modular reactor development at Clinch River, according to the White House FY2027 Budget Appendix. TVA has additionally signed on for a 6 gigawatt small modular reactor deployment program with a private developer, framed by the current administration as central to an American nuclear renaissance and an energy dominance agenda.

    None of this is happening because nuclear has been quietly carrying TVA’s business. Local reporting in late 2025 found TVA’s nuclear generation had actually hit its lowest level since 2007 over the preceding year, even as the agency signed on for what would be the largest small modular reactor deployment commitment in the country.

    The bet is being placed on projected future demand, principally from data centers and population growth, using the identical playbook of federally backed capital investment that produced a 26 billion dollar debt pile and a decade of underfunded pensions the last time TVA tried it.

    For some background, the TVA’s total long-term debt stood at approximately twenty-three billion dollars as of June 30, 2026, according to its most recent quarterly filing with the Securities and Exchange Commission, down from the mid-1990s peak but still a substantial balance sheet obligation.

    Betting the Rate Base Again

    None of this means TVA is destined to repeat the Clinch River Breeder Reactor’s fate specifically. Small modular reactor technology is a genuinely different bet than a 1970s liquid metal fast breeder, and federal cost sharing this time is explicit up front rather than discovered after the fact.

    But the structural pattern this series keeps returning to is exactly present here, where a government corporation with an implicit federal backstop and a statutory debt ceiling that Congress has shown a consistent willingness to raise whenever the number gets inconvenient, making a decades long capital commitment to a nuclear technology that has never been built at commercial scale in the United States, funded partly by federal grants that do not show up as taxpayer risk until something goes wrong.

    TVA is not the RFC and it is not Fannie Mae. It has never needed a conservatorship or a liquidation act. But the entity billed in this series as the exception that proves government corporations can work has, on its own regulator’s paper trail, already run the exact experiment it is running again, on the same riverbank, with the same optimism about demand that never quite materialized the last time.

    Whether TVA gets to keep its status as this series’ good example may depend less on nuclear physics than on whether Congress and TVA’s own management have actually learned anything from the debt ceiling they raised forty times to pay for the last round of reactors that never got built.

    Sources: GAO, Shedding Light on Tennessee Valley Authority Debt (2017); GAO, Tennessee Valley Authority: Financial Problems Highlight Need for Long-Term Solutions (AIMD/RCED-95-134, 1995); NRC Final Supplemental Environmental Impact Statement, Clinch River SMR (Federal Register, April 6, 2026); DOE, TVA selected for up to $800 million SMR cost-sharing; TVA SEC quarterly filing (Q3 FY2026).

    Next in the series: the FDIC, the other entity in the running for the series’ success story, and what the 2023 collapse of Silicon Valley Bank revealed about how much daylight there really is between “well run” and “the last one standing.”

  • Federal Register Watch: September 17, 2026

    EPA moved to unwind its own legal basis for regulating power-plant greenhouse gases, finalizing a repeal of its 2024 carbon standards for electric generating units while, on the same day, proposing to rescind the underlying 2015 findings that justified regulating those emissions at all.

    • EPA proposes rescinding the 2015 findings behind power-plant climate rules. EPA proposed rescinding the 2015 findings that greenhouse gases from fossil-fuel power plants endanger public health, the legal foundation beneath a decade of federal climate regulation for the sector. The agency offers three separate arguments for reversing itself, including that Congress never clearly authorized EPA to regulate power plants over climate change under the “major questions doctrine,” and that eliminating the entire U.S. power sector’s emissions would have only a negligible effect on global temperatures. Because this is a proposed rule rather than a final one, it opens debate instead of closing it: comments are due November 2 and a virtual public hearing is set for October 1, giving utilities, states, and advocacy groups a real chance to contest the reasoning before it can take legal effect. Read the proposal.
    • EPA finalizes repeal of most of the 2024 Carbon Pollution Standards. In a companion action published the same day, EPA finalized the repeal of most of its 2024 Carbon Pollution Standards, including emission guidelines for existing coal- and gas-fired power plants and carbon-capture requirements the agency itself adopted only two years earlier. Unlike the proposal above, this one is already final, meaning it takes legal effect without any further public comment. Pairing a final repeal with a still-pending proposal to erase the legal findings underneath it is an unusual sequence, since it leaves EPA’s authority to write any future power-plant rule resting on a foundation the agency has separately proposed to tear down. Read the final rule.
    • FDIC calls a merger-policy board meeting on unusually short notice. The FDIC gave notice of a board meeting held with less than seven days’ advance warning, short of the one week of public notice its Sunshine Act procedures normally require, to take up two proposed rules on bank merger transactions and “state bank parity” plus a vote to rescind an existing supervisory guidance document. Federal open-meeting law expects an agency to state why a shortened notice period was necessary, and this notice offers no reason, which matters because that explanation is the only real check on how much warning the public and affected banks get before a board acts on merger policy. Read the notice.
    • FDA denies exemption for AI radiology software, despite a title that reads the other way. FDA denied a device maker’s petition to exempt certain AI-based radiology software, including cancer-detection and triage tools, from the premarket notification process that normally requires FDA clearance before a device can be sold. The agency found that relying on the company’s prior clearances and a proposed post-market monitoring plan wasn’t enough to show that skipping that clearance review would leave patients just as safe. It’s worth flagging because the document’s own title, “Exemption From Premarket Notification,” names the type of request under review rather than its outcome; read quickly, it can look like FDA loosened oversight of AI diagnostic tools when the agency in fact declined to. Read the notice.
    • Commerce renews export ban on Aeroflot, citing an active violation. The Commerce Department’s Bureau of Industry and Security renewed its temporary denial of export privileges against Russia’s PJSC Aeroflot, citing evidence the airline kept operating U.S.-regulated aircraft components in violation of the denial order Commerce had renewed just last September. A temporary denial order cuts a company off from anything subject to U.S. export rules, and a finding that Aeroflot defied the prior renewal, rather than the agency simply extending it as a precaution, signals that the restriction isn’t achieving compliance and that Commerce is now treating the airline as an active violator rather than a monitored risk. Read the order.

    This edition draws on the Federal Register’s full docket of 72 documents published on September 17, 2026. Set aside as routine: airworthiness directives, OMB/PRA information-collection notices, Coast Guard drawbridge and safety-zone notices, SEC self-regulatory-organization filings, FERC combined filings and blanket-authorization notices, cultural-property exhibition determinations, Postal Service product notices, and other standard administrative filings that didn’t trip an institutional-significance or anomaly signal.

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  • The SEC’s Most Brazen Impostor: How “WealthTutor” Forged Its Way Into Your Portfolio

    Three Names, One Scam: How WealthTutor Played Adviser Dress Up While Regulators Napped

    You have read the press release. Some plucky staff in gray suits finally noticed that a company calling itself WealthTutor Corp was about as real as a late night trading bot on Telegram. The irony is not that the firm lied. Of course it lied. The irony is that it lied in public, on government forms, on a government website, for months, while the same government now congratulates itself for spotting the forgery it had been hosting.

    The Form ADV That Lived in Fantasy Land

    The Securities and Exchange Commission complaint against Ichcoin Tech Corp, later renamed WealthTutor Corp, reads like a parody of the agency’s own disclosure system. According to the civil complaint and the matching litigation release, the firm filed a Form ADV that claimed it was a registered investment adviser when it was not even close to eligible.

    They did not stop at lying about status. The form listed a CRD number that belonged to an entirely unrelated individual, phone numbers that rang into the void, and a principal office address that the company did not actually occupy. In other words, the very fields the public is told to trust as objective, verifiable data turned out to be performance art.

    The fake registration still shows its ghost in the SEC’s own investment adviser database. The adviserinfo page for firm number 323744 is right there on IAPD, with the status marked as withdrawn. It reads less like a regulator’s proud archive and more like a crime scene left intact for tourism.

    From Indicator Global to Ichcoin to WealthTutor

    Corporate shape shifting is not a new trick, but Ichcoin Tech Corp turned it into something close to performance art. The SEC describes the company as having been known at various points as Indicator Global Inc, Ichcoin Tech Corp, and finally WealthTutor Corp. Three corporate identities, one scheme, and a trail of paperwork that should have lit up every system that claims to monitor registration risk.

    This was not some back alley operation hiding in the shadows. The company used its evolving set of names to present itself as a sophisticated technology driven adviser. They did what every fraudster with a Canva account now does. Glossy website. Sleek branding. And in this case, the pièce de résistance, a forged SEC registration certificate proudly displayed online. The complaint spells it out. WealthTutor’s operators posted a counterfeit certificate to convince investors the SEC had blessed their act.

    The App That Was Really a Funnel

    The company did not just lie on paper. It built a trading fantasy for your phone. According to the SEC, Ichcoin Tech Corp rolled out a phony mobile trading application. Investors believed they were watching real positions and real balances. Behind the interface, the app was not routing trades. It was routing cash. Money in, nothing out, except to the people running the scheme.

    At least three investors fell for it. One lost nearly two million dollars. Think about the kind of trust it takes to move that much money into a brand new app from a little known firm with a churning name history. Then remember that the investor could look up the firm on a government website and see what looked like a real registration. The trust did not come out of nowhere. It was manufactured, with a generous assist from the illusion of regulatory vetting.

    Red Flags in the Wild, Silence in the Temple

    While officialdom slept, the people it loves to lecture were already sounding alarms. In December 2024, the Washington State Department of Financial Institutions quietly dropped an alert about alleged crypto related scams incorporating in the state. Among the usual menagerie of shell companies and blockchain flavored hallucinations sat Ichcoin Tech Corp. State regulators saw enough smoke to warn the public long before the SEC took federal action.

    Go lower down the hierarchy and the picture gets more damning. Users on Reddit’s r/CryptoScams were posting victim reports tied to the scheme as early as June 2024. Screenshots of fake app balances. Stories of withdrawal delays that turned into black holes. The usual pattern of online fraud, narrated in real time by the people living it. No subpoena necessary. No forensic data pull. Just a browser and a search bar.

    Yet according to the federal docket, the SEC did not file its case in the Northern District of New York until August 27, 2026, in SEC v. Ichcoin Tech Corp, now known as WealthTutor Corp, Case No. 1:2026cv01648. The litigation release followed a day later. By then, the money was long gone and the only thing left to protect was the narrative.

    The System That Believes Its Own Forms

    This case matters less for its cast of characters and more for what it reveals about the machinery around them. The SEC did not just get fooled by a clever fraud. It built the stage set. The Form ADV, with its air of bureaucratic precision, became a prop. The adviserinfo database, marketed as a safe public gateway to adviser credentials, became an unwitting recommendation engine. A forged certificate uploaded to a website completed the Holy Trinity of official looking fiction.

    Everyone is told to check registrations, verify CRD numbers, and read public filings. In this case, doing all that due diligence would have walked a careful investor straight into the trap. The official data did not counter the scam. It amplified it. When the same agency later announces that it has sprung into action to protect investors, it leaves out the awkward part where its own systems served as character witnesses for the defendant.

    What You Are Supposed to Forget

    None of this absolves WealthTutor or whatever name its operators are using this quarter. They built a phony trading app, forged credentials, and siphoned cash from at least three investors, including one seven figure victim. That belongs in court and, ideally, in prison. But if you stop the story there, you have accepted the comforting version. Rogue actors, vigilant regulators, problem solved.

    Look again at the timeline. Retail investors on a subreddit spotted smoke in mid 2024. A state regulator flagged the corporate shell in December 2024. The SEC’s own database showed suspicious registration details paired with unreachable phone numbers and a borrowed CRD number. A counterfeit SEC certificate sat in plain sight on the firm’s website. The federal enforcement machine caught up in late 2026, after the damage.

    The lesson is not that you should distrust every press release. You already do. The sharper lesson is that the symbols you are told to trust (registrations, certificates, public filings) are only as honest as the people who feed data into them and the people who are meant to check that data. In the WealthTutor case, the con artists did their part with unusual enthusiasm. The system did not.

    Next time you pull up an adviser record on a government site and feel the warm glow of institutional reassurance, remember Ichcoin Tech Corp. Remember Indicator Global, WealthTutor, and whichever alias comes next. The file may say registered. The certificate may look official. The only thing you can safely assume is that if the story ever collapses, the same people who built the stage will appear at the end to tell you they were heroes all along.


    WealthTutor represents one end of the federal regulatory spectrum “,” an agency so passive it hosted its own fraudsters’ credentials. The other end is worth examining too. Our coverage of the FTC’s breakroom panopticon documents what happens when a regulator overcorrects: a ten-year consent decree, a government-installed monitor paid by the companies he watches, and a forced asset transfer over a 70% share of the office kiosk market. The SEC’s WealthTutor failure and the FTC’s micromarket overreach are two ends of the same broken dial.

    Sources


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