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Authored by Chase Smith via The Epoch Times,

New York Gov. Kathy Hochul has directed the state Department of Health to consider ending the state's Medicaid social adult day care benefit.

The directive came on the same day that state and federal investigators carried out a crackdown on providers suspected of fraud, and on the same day that Hochul announced 16 arrests in a separate auto insurance fraud investigation.

Hochul, a Democrat, stated at an Oct. 20 press conference that she had told the department to look at "all options to eliminate continued fraud, waste and abuse." Those options include phasing out the benefit and moving participants to other services for older New Yorkers. The department's recommendations are due by Dec. 31.

Social adult day care is a non-medical benefit offered through New York's Medicaid managed long-term care program.

It provides daytime supervision, meals, social activities, and personal care in a community setting. More than 400 programs serve about 45,000 Medicaid members at an estimated cost of more than $500 million a year, according to the governor's office. The federal Centers for Medicare & Medicaid Services (CMS) approves the benefit and helps fund it.

The announcement followed what the governor's office called a months-long investigation targeting more than 100 providers. The state Department of Health, the state Office of the Medicaid Inspector General, and the state attorney general's Medicaid Fraud Control Unit worked with the FBI and the federal Health and Human Services inspector general.

FBI agents and state officials raided programs across New York City on Oct. 20. CMS Administrator Dr. Mehmet Oz called the operation the largest enforcement action of its kind.

Hochul said she had gone to Washington to meet with Oz to discuss working together against Medicaid fraud, and that the investigation is targeting providers suspected of money laundering, kickbacks, and improper billing.

"We will find you, we will prosecute you, and we will hold you accountable," Hochul said.

At the same press conference, Hochul announced that a joint investigation by the State Police and the Department of Financial Services had led to 16 arrests in auto insurance fraud cases.

The cases involved nearly $500,000 in attempted fraudulent claims in New York City and Suffolk, Onondaga, Monroe, and Erie counties. Hochul said New Yorkers pay about $4,000 a year for auto insurance, almost $1,500 more than the national average, and that she expects the arrests and insurance reforms in this year's state budget to start lowering rates.

Reviewing Adult Day Care Claims

Regarding the crackdown on adult day care fraud, Hochul ordered the department and the state Medicaid inspector general to require health plans to review social adult day care claims before paying them and to pursue payment suspensions. A moratorium on new providers that the department imposed in July remains in effect until January 2027 and may be extended.

State Health Commissioner Dr. James McDonald said the department will advise Hochul on whether further reforms can deliver accountability or whether participants would do better under other services.

"Medicaid is a lifeline for millions of New Yorkers," Hochul said in a statement. "Protecting that lifeline means defending access to care and defending the integrity of the programs that provide it."

The program has drawn scrutiny before. A February audit by state Comptroller Thomas DiNapoli found that managed care plans paid $2.4 billion for adult day care services from January 2019 through October 2024. Payments rose more than 141 percent from 2021 to 2023.

Auditors identified $285 million in questionable payments to centers for dates after at least one plan had dropped them from its network. That included more than $28.6 million to centers terminated for cause, such as fraud.

In one case, a center that one plan cut for fraud, waste, and abuse in 2021 stayed in the networks of 18 other plans and was paid more than $12.9 million afterward.

Auditors also found that a Flushing center with a legal capacity of 323 billed for 530 people on a single day in September 2022.

In its response to the audit, the Health Department said the comptroller's sampling method could overstate how widespread the problems were. The comptroller's office called that statement misleading.

Earlier this year, two people in Brooklyn pleaded guilty to a $68 million adult day care fraud scheme, according to the governor's office.

Asked whether ending the benefit would require federal approval and what services the participants would move to, the state Health Department referred The Epoch Times to the governor's announcement.

Hochul faces Republican Bruce Blakeman in the Nov. 3 governor's race.

Blakeman's campaign and CMS did not respond to a request for comment from The Epoch Times before publication.

Authored by Nathan Worcester via The Epoch Times,

Even as Republican campaign spending intensifies and the president holds rallies across the country for candidates, many forecasts still look grim for the party in power.

Observers from across the political spectrum predict that Democrats will retake the House, and maybe even the Senate.

What's on the agenda if Democrats win big?

Lawmakers and insiders have outlined a range of possibilities and priorities, including pushback against the Iran war, renewed attention to data centers and artificial intelligence (AI), and congressional investigations targeting everything from the Trump family's finances to the Epstein files.

Yet, President Donald Trump's vetoes may limit Democrats' effectiveness in implementing an affordability-focused plan touted by House Minority Leader Hakeem Jeffries (D-N.Y.), as could disputes within that party.

Still, some potential outcomes, such as even more delays or blocks of Trump's judicial and Cabinet nominees, seem baked into the cake - especially so if Democrats capture enough seats to bypass tie-breaking votes from Vice President JD Vance.

Pollsters Rich Baris and Mark Mitchell, both of whom predicted Trump's 2024 victory, see Republicans on track to lose the House and possibly the Senate.

During a Sept. 30 press conference, Senate Minority Leader Chuck Schumer (D-N.Y.) said that his party was working to take the Senate in part to stymie the president's nominees for the Supreme Court and other courts.

Other possibilities - for instance, another Trump impeachment or two downstream of anticipated investigations - are far short of inevitable, at least partly because of the costs they may impose on some Democrats.

Impeachments

One man who understands the costs of an impeachment proceeding is Joe Cunningham.

The South Carolina Democrat entered the House after an upset victory in 2018, flipping a longstanding Republican district during a midterm election cycle that saw Democrats pick up dozens of seats in the lower chamber.

The lawmaker, who was a member of the moderate Blue Dog Democrats, lost his 2020 reelection bid to the current representative, Rep. Nancy Mace (R-S.C.).

"I could argue that I lost my seat because of my impeachment vote," Cunningham told The Epoch Times, adding, "I don't have any regrets at all."

Rep. Joe Cunningham addresses the crowd at the South Carolina Democratic Party State Convention in Columbia on June 22, 2019. Sean Rayford/Getty Images

Retreading that familiar territory could hurt Democratic incumbents in purple districts, he said, arguing that Democrats should prioritize economic issues rather than an impeachment proceeding he predicted would "consume all the oxygen."

A Senate conviction - the step after impeachment that would actually remove Trump from office - would need support from two-thirds of that chamber. That's hard to imagine in even the rosiest midterm scenarios for Democrats.

Jeffries, though a vocal Trump critic who has accused him of unprecedented corruption, has not committed to impeaching the president.

President Donald Trump takes the stage during a rally at the Majestic Valley Arena in Kalispell, Mont., on Oct. 14, 2026. Travis Gillmore/The Epoch Times

Of course, Trump is not the only administration official Democrats might try to impeach.

Since the second Trump administration began, House Democrats have taken initial steps to oust Health and Human Services Secretary Robert F. Kennedy Jr., former Homeland Security Secretary Kristi Noem, and Education Secretary Linda McMahon.

Attorney General Todd Blanche has also faced heavy scrutiny from congressional Democrats, who opposed his nomination.

He's also encountered criticism from his own party, including from Rep. Thomas Massie (R-Ky.) who accused Blanche of failing to comply with his legislation demanding the release of the Epstein files. A cosponsor of that bill, Rep. Ro Khanna (D-Calif.), floated impeachment of Blanche in September.

That month, Massie also introduced articles of impeachment against Pentagon chief Pete Hegseth, alleging his conduct of the Iran War has violated the War Powers Resolution of 1973. An early House recess short-circuited a push for a vote before the midterms.

Lindsey Cormack, a political scientist at the Stevens Institute of Technology noted Khanna's support for the Hegseth impeachment in an interview with The Epoch Times, saying he "will likely be targeted."

War Secretary Pete Hegseth speaks at Anduril Industries in Sparrow Point, Md., on Oct. 6, 2026. Madalina Kilroy/The Epoch Times

Investigations

The bigger - and broader - story might be investigations.

A flurry of subpoenas could hit those in and around the administration as Democrats seek to highlight alleged corruption.

Rep. Jamie Raskin (D-Calif.), ranking member of the House Judiciary Committee, and Sen. Richard Blumenthal (D-Conn.) have previewed possible probes into 1789 Capital, Donald Trump Jr.'s venture capital firm, and cryptocurrency deals involving the president and his family.

Despite the passage of the Epstein Transparency Act in 2025, redactions in them have driven controversy and could also spur action.

Khanna has said his fellow Democrats should make the Epstein files a major focus in the event they regain control of Congress.

The Justice Department has said the redactions in the files are intended to protect Epstein victims and their families.

Dave Spencer, host of the Practically Political podcast, advised Democrats to pick their battles carefully.

"If they launch too many investigations at once, the American people could begin to see it as overkill," he told The Epoch Times.

Data Centers and AI

Democrats may tackle two closely related issues currently in the spotlight - data centers and AI.

The proliferation of data centers, closely linked to the AI boom and backed by the president, has faced pushback in some local communities.

The Republican-backed Ratepayer Protection Act, legislation aimed at constraining the higher electric bills that hit some consumers after data centers arrive, passed the House but failed in the Senate before that chamber recessed.

Demonstrators protest construction of the Stratos data center in Utah's Box Elder County during a rally at the state Capitol in Salt Lake City on May 23, 2026. Natalie Behring/Getty Images

Democrats have touted a different data center bill, the GRID Savings Act, that would make the companies building out data centers pay for grid and transmission upgrades associated with the boom. GRID stands for Guarding Ratepayers from Increased Demand-costs.

Adam Swart of Crowds on Demand, a paid protester firm, weighed in on grassroots opposition to the buildout to data centers, describing it as "one of the strangest emerging bipartisan issues."

"Tucker Carlson-style Republicans and progressive Democrats increasingly oppose them, while the establishments of both parties largely support them. I suspect Congress eventually passes 'reform' that sounds restrictive but actually makes it easier for the industry to build," he told The Epoch Times.

AI could also spur action.

Amid the tech competition with China and AI-driven economic growth, Trump has cautioned against excessive regulation of the technology, which he has dubbed "super intelligence." Yet some lawmakers, including many Democrats, want more guardrails on those systems as some industry leaders publicly worry about AI safety.

Cunningham said that while he is not in line with the leftmost wing of the Democrats, AI regulation would be "more populist than socialist," and important for his party to address to win back support for 2028.

On Oct. 7, Rep. Lori Trahan (D-Mass.), who has worked with Rep. Jay Obernolte (R-Calif.) on legislation to regulate AI, published a draft version of a bill that would impose a stricter liability standard on AI developers.

Other Priorities

Carmack, the political scientist at the Stevens Institute of Technology, told The Epoch Times she expects Democrats to apply pressure on AI and another contentious matter - immigration - through both legislation and spending negotiations.

Spencer too expects immigration to fuel spending battles between Republicans and Democrats.

Reconciliation bills passed by the GOP-controlled Congress have locked in years of funding for Immigration and Customs Enforcement as well as U.S. Customs and Border Protection.

If Democrats perform well enough in the midterms, they could also step up their challenges to tariffs, food stamp cuts, the scope of military spending, and the Iran War, among other Trump policies.

Iranian-made Zolfaghar missiles are displayed at Azadi Square in Tehran on Aug. 2, 2026. Atta Kenare/AFP via Getty Images

The expiration of enhanced Affordable Care Act (ACA), or Obamacare, premium subsidies, which triggered the longest government shutdown in history in late 2025, may come back into focus too.

Jeffries and Schumer have both vowed to tackle ACA restrictions championed by Republicans.

Legislation unveiled on Oct. 1 by the New York Democratic delegation, which includes both legislators, would roll back limits to the scope of those who can use ACA premium tax credits, a result of last year's One Big, Beautiful Bill Act.

"The ACA subsidies are a hugely popular issue, and Democrats would almost certainly make restoring them a priority," said Spencer.

Limits and Division

Insiders and experts see a narrow and highly political path to some action as the threat of a Trump veto looms over possible Democratic attempts to legislate on their affordability promises.

Spencer said Democrats could "advance popular legislation that would require Trump to either sign it or veto it."

Cunningham said Democrats could force hard choices through bills targeting the costs of everyday goods. He hopes the party will pursue legislation on prescription drug prices and anti-competitive practices by large corporations.

If Democrats rule Capitol Hill, they will still have to manage conflicts in their own camp.

At the Democratic National Committee's August meeting, dueling resolutions on Immigration and Customs Enforcement - one calling for reform, the other for abolition - underscored ideological divides within the party.

Rep. Alexandria Ocasio-Cortez (D-N.Y.) at a hearing on Capitol Hill on March 5, 2025. Madalina Vasiliu/The Epoch Times

Republican control of Congress during the first half of Trump's second term was marked by conflict, both between different wings of the party and between the House and Senate.

Whether Democrats curb their infighting or not, the future looks explosive.

"This will be an adversarial two years in the run-up to the 2028 presidential elections," Cormack predicted.

Democratic dominance on Capitol Hill - and just how adroitly they tangle with Trump - would also give voters a yardstick ahead of 2028.

"If Democrats want to build a lasting majority - if they want to build some momentum going into 2028 - they've got to start making deliveries for people, for Americans who are getting crushed under this economy," said Cunningham.

When a bank runs out of room to lend to hedge funds piling into the most crowded trade on the planet, there are two options: stop lending, or find more room. Barclays found more room...

According to a Bloomberg exclusive published Tuesday, Barclays (BARC) executives wanted extra capacity to lend more aggressively to hedge fund clients as Asian AI stocks went vertical earlier this year. The fix: the bank's macro rates traders ended up lending part of their own capital allocation to the prime financing business through an internal auction. The reason they had to: over the summer Barclays had reached its maximum limits on how much financing it could extend to hedge fund clients in Asia. Bloomberg's verdict: Barclays and its peers are "finding ways to meet demand, despite bumping up against internal constraints."

In other words, the internal risk limits did their job, flagged that the bank had lent enough... and the bank responded by moving the goalposts.

Below we walk through why this matters, why Barclays is hardly alone, and why Goldman's own prime book data shows exactly how the banks "fixed" the problem (hint: more shorts, not fewer longs).

"Disciplined"... Right Up To The Limit

The pitch inside Barclays, per Bloomberg's sources, was simple: allocate more balance sheet to higher-returning businesses like prime brokerage (housed in the global markets unit run by Adeel Khan) given the "huge growth" expected in Asian tech stocks. Rates traders, whose returns on balance sheet don't look nearly as sexy as financing Korean memory stocks at peak euphoria, became the donors.

Barclays' official line:

"We deploy our investment bank balance sheet dynamically, responding to client opportunities while maintaining a disciplined approach to risk and returns."

Translation: we found a client opportunity, and we deployed dynamically. Meanwhile, the "disciplined" part kicked in only after the limit was hit.

Regular readers will recall that the Bank of England had already started poking around exactly this corner of the market just as the AI trade was cracking in July:

Bank of England probes Asian equity risk at prime brokers

Korean degens about to blow up the world

— zerohedge (@zerohedge) July 29, 2026

And as we noted when regulators finally found their situational awareness (Sep 24), the BoE is specifically looking at the rapid growth of London prime brokers financing Asian equities this year, after names like SK Hynix went vertical. London prime brokers financing Asian equities... it's almost as if someone had a specific bank in mind.

The Irony: Barclays Was The One That Said No To Leopold

Here's the twist that makes the story worse, not better. Per Bloomberg, Barclays had previously declined to take on Situational Awareness as a client because of concerns over concentration risk in the AI sector. Good call, as it turned out.

For those who missed it (i.e., regulators), Leopold Aschenbrenner's fund was running roughly 4x leverage via total return swaps, largely through Goldman, on a long AI infrastructure / short software book. When AI rolled over in July, the margin calls hit, and the fund dumped its entire public book on Ken Griffin's doorstep at roughly a 10% discount, collapsing from $45 billion to about $10 billion in a matter of days ("Situational Bewareness", Jul 30). Citadel, naturally, soared 6% in July on the firesale (Aug 5), and promptly flipped almost all of it (Aug 21). Our take at the time:

Archegos 2.0 it was.

*SITUATIONAL AWARENESS ASSETS SAID TO FALL TO $10 BILLION

Down from $45BN less than a month ago. Historic implosion.

Who is Archegos 3.0... there is still about $500BN in TRS excess leverage

— zerohedge (@zerohedge) July 30, 2026

So the "prudent" bank avoided the single most obvious blowup of the year, and still maxed out its Asian hedge fund lending to the point where it had to borrow capital from another desk to keep going. Which tells you that Leopold wasn't the problem; he was merely the most visible symptom of a market where everyone was levered to the same AI theme through the same few dealers' balance sheets.

Everyone Ran Out Of Balance Sheet

None of this should come as a surprise. Back in June, we highlighted Bloomberg strategist Simon White's warning that futures funding rates were exploding amid soaring total return swap demand (Jun 15). As White put it at the time:

"We are also seeing dealers offering a record amount of leveraged exposure to stocks via futures and total return swaps. Equity inventory on their balance sheet has risen to a high of $223 billion... This is demand driven, but also dealers' balance sheets are likely running into supply issues due to regulatory constraints." (emphasis ours)

Barclays has now confirmed the "supply issues" part, and how it got around them.

And we know how that story ended:

The chip/memory trade peaked THE DAY total return swap funding costs hit a record (as noted back in June).

The entire trade was all just leverage - largely from Situational Awareness - masking as narrative

— zerohedge (@zerohedge) August 23, 2026

Barclays isn't the only one bumping its head on the ceiling. Bloomberg notes that Goldman said earlier this month that demand for equities financing continues to exceed available industry capacity, with CFO Denis Coleman saying it allowed the bank to "remain selective in deploying resources." Back in July, Coleman said that in prime and FICC financing there was "far more demand across the segment than we're willing to engage." UBS CFO Todd Tuckner, meanwhile, said in July the bank's equities balance sheet was being used "more sparingly" for prime brokerage.

Put differently: Goldman and UBS publicly say they are rationing, and Barclays (which has spent years clawing its way up the prime brokerage league tables) is the one finding creative ways to fill the excess demand its rivals are turning away. When the biggest prime brokers on the Street are telling you demand exceeds what they're willing to finance, being the marginal lender who says yes is not usually a winning position.

How The Banks "Fixed" It: Make The Clients Short More

The most interesting detail in the Bloomberg piece is buried near the end: traders at Barclays, as at other banks including Goldman, worked with hedge fund clients to limit their balance sheet use by encouraging them to take more short positions, which lessen the burden on prime brokers' books (short proceeds help fund the longs internally).

And that is precisely what shows up in Goldman's own prime brokerage data. In his weekend note ("US EQUITIES - heightened demand for protection", Oct 18, available to pro subs), Goldman's Lee Coppersmith wrote:

"Our PB data showed US L/S net leverage fell 3.2pts last week, the largest weekly decline since Liberation Day and fourth-largest over the past five years. At 43.7%, net leverage now sits at a five-year low."

But here's the kicker:

"What's notable about the reduction in hedge fund net exposure is that essentially all of it since the end of July has come from an increase in shorts (not a reduction in longs) – h/t GS' Vincent Lin for the stats. Short exposure is now near five-year highs, while long exposure remains in the 53rd/72nd percentiles over the past three/five years… Said another way, managers have aggressively reduced their directional exposure, but haven't meaningfully reduced their long books." (emphasis ours)

The numbers: since July 31, long leverage is down a whopping 0.5pt to 128.8%, while short leverage is up 8.0pt to 85.1%, the 100th percentile over five years. Do the napkin math and gross leverage is roughly 214%, i.e., up, not down, since the Situational Awareness blowup.

Coppersmith is under no illusions about what that means if the pain continues:

"If the performance pressure continues, there's certainly scope for further de-grossing through long sales and short covering, but it's also worth recognizing just how much more defensive a lot of portfolios now look." (emphasis ours)

And the de-grossing has already started in the very names the prime brokers were financing in Asia:

"Global Tech saw its largest percentage net selling on record since 2016, with semis accounting for 57% of US technology net selling. A pretty remarkable unwind taking place across some of the most popular areas of the market." (emphasis ours)

UBS' trading desk sees the same setup. Here is desk trader Torsten Sippel in his weekly note (Oct 18, available to pro subs):

"This week's action looks like a positioning reset rather than broad equity liquidation, action very similar to the Situational Awareness driven unwind a couple months ago... That distinction matters given Hedge Fund net exposure has already fallen to the 30th percentile while gross remains above the 90th percentile on a five-year basis, leaving portfolios vulnerable to additional de-grossing if P&L pressure persists." (emphasis ours)

Translation: nobody actually de-risked. The longs are still there. The banks simply asked clients to bolt on more shorts so the net looks tamer and the prime broker's balance sheet usage looks lighter. That works beautifully... until longs and shorts move against the fund at the same time, which, as Leopold could tell you, is exactly what happened in July when AI infrastructure dumped and software ripped. A hedged book with 214% gross is still a 214% gross book.

The Payoff Comes Thursday

Why stretch so hard? Because it pays. Barclays' equities arm is expected to report £865 million ($1.2 billion) in Q3 revenue on Thursday, per Bloomberg consensus, which would be its best third quarter since at least 2009, the year after it bought Lehman's North American business. We are sure the Lehman reference is purely coincidental.

Prime brokerage has been the key driver of equities revenue across the Street this year, and the volatility that "fueled much of the surge in trading revenue" was itself largely a function of the leverage the prime brokers were extending. It's a closed loop: banks lend to funds, funds bid up AI, AI volatility generates trading revenue, revenue justifies more balance sheet for prime. Right up until the loop runs in reverse.

Bottom Line

Barclays' spokesperson insists the bank maintains "a disciplined approach to risk and returns." Perhaps. But discipline usually means that when you hit a limit, you stop, not that you hold an auction to borrow capital from the rates desk so you can keep financing the hottest trade in Asia. And when the "solution" to clients' bloated balance sheet usage is to have them pile on shorts, pushing short leverage to five-year highs while long books barely budge, the system isn't less levered; it's just levered in a way that looks better on the prime broker's capital report.

With the BoE already examining London prime brokers' Asian equity books, with UBS saying last week's de-grossing looked like a replay of the Situational Awareness unwind, and with gross leverage still near record, we suspect the question isn't whether Archegos 3.0 is out there, but which prime broker's balance sheet it's sitting on. The one that turned away Leopold may not be the one that turned away everyone.

We'll check back after Barclays reports on Thursday, and listen carefully for whether anyone on the call asks about Asia.