Mayor Emanuel has had to fight opposition continually because of budget issues. Chicago (like the state of Illinois) is in dire fiscal straits, and Emanuel closed public schools, waged war with the Chicago Teachers Union, and privatized some trash collection, unusual moves for a liberal Democrat. But he had to cut costs in many ways, and he showed effective leadership in arguing his case and eventually persuading most Chicagoans and a majority of the City Council that his cuts were painful but necessary.

The crisis now is a starkly different challenge. It’s about justice, race, death – issues far deeper and more emotional than money. In addition, Emanuel’s own role is a problem. His administration argued for months to avoid releasing the video of the McDonald shooting, and a Chicago Tribune columnist has alleged that it did so because the video would have caused trouble for Emanuel’s reelection campaign earlier this year. Emanuel fired police superintendent Garry McCarthy on Dec. 1, which had to be done, but it was hard not to wonder if he was trying to protect himself.

Another problem: Crossing the police, for any mayor at any time, is dangerous. As a rule, police forces are more popular than mayors; even when individual officers behave reprehensibly, the general public tends to support the force overall. Emanuel needs to reform the Chicago police without seeming to criticize the force. He’s taking on this seemingly impossible job in the conventional way, appointing a task force that will recommend changes several months from now.

But there’s a larger issue. In a previous era, Emanuel could have moved confidently through this crisis by following the strategy he’s using: dismissing the superintendent, forming the task force, giving the conciliatory speech addressing “the issues of crime and policing — and the even larger issues of truth, justice and race,” as he did yesterday. But we’re in the era of ubiquitous video, and the videos just keep coming. Yesterday the city released a video of police Tasering a black prisoner who later died in custody; also yesterday the city argued successfully to avoid releasing videos of a police shooting a 17-year-old black carjacking suspect. On Monday, prosecutors said they would not charge an officer seen in a video shooting a black suspect.

Emanuel seems to be doing all the right things. But if the videos keep coming, and if he’s to continue as mayor, he’ll need to rewrite the leadership playbook.

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What We're Reading Today

Shareholders doubt new Yahoo plan

Instead of spinning off its $31-billion stake in Alibaba as planned, Yahoo will "reverse spin-off" the rest of its business into a new company. The IRS refused to bless Marissa Mayer's original plan; the new one, suggested by Starboard Value Fund's Jeffrey Smith, avoids the risk of losing billions to Uncle Sam. Shareholders nonetheless punished Yahoo's move, apparently because it includes keeping rather than selling Yahoo's operating businesses, reducing the company's worth by $1.5 billion after the announcement. Fortune

Wal-Mart to launch Walmart Pay

The company will be the first U.S. retailer to offer its own mobile payment option, which will integrate with the store's app and will work with all major credit cards. Doug McMillon's company continues to work with an industry consortium that is developing a mobile wallet. Reuters

Uber's class-action suit just expanded

The federal judge overseeing the case in California, which argues that Uber's drivers are employees rather than independent contractors, initially kept workers from joining the case if they didn't opt out of an arbitration clause. Judge Edward Chen has now reversed his ruling. The original ruling could have greatly reduced the number of drivers who could join the suit. About 160,000 in California have driven for Travis Kalanick's company since Aug. 2009. Quartz

Angela Merkel battles anti-migrant backlash

Since the Paris attacks, the German chancellor has dealt with adversaries and supporters within her conservative party questioning her decision to allow immigrants from Syria and Iraq. Merkel hasn't backed away from her open-door policy, saying it's a moral duty. Continuing to provide refuge for the migrants could prove her biggest test yet. WSJ

Building a Better Leader

Workers fear taking time off

In a survey, 33% of employees say they're uncomfortable taking time off from work for vacation. Only 48% said their companies value work-life balance. Philly Voice

The one thing a leader should never hide 

You must remain true to yourself in your leadership style and understand your weaknesses. Fortune

Director pay for S&P 500 companies hits new highs

Median pay of $233,600 is up 17% since 2010. It's particularly high in the oil, mining, and energy industry at $275,000. NYT

Car Troubles

VW cheating began in 2005

Hans-Dieter Pötsch, Volkswagen Group's chairman, said that the emissions cheating began because of stricter U.S. clean air laws and the company's inability to update its diesel engines quickly enough. He added that the cheating originated with individual employees but persisted because of weak oversight and management that "tolerated breaches of the rules." CEO Matthias Müller said the company is still developing a fix for the affected vehicles. USA Today

GM pays pre-bankruptcy ignition-switch claims

While CEO Mary Barra and GM apologized for its failures to disclose ignition switch defects sooner, it hired lawyer Kenneth Feinberg to settle claims from before the company's 2009 bankruptcy. A judge had ruled the company is shielded from claims for pre-bankruptcy losses. Of the 4,343 claims filed, Feinberg found that 399 were eligible for compensation for a total payout of $595 million. Over 30% of those incidents occurred before the bankruptcy. NYT

Fiat Chrysler to pay $70 million fine

The National Highway Traffic Safety Administration accused Sergio Marchionne's company of not properly reporting vehicle injury and crash incidents. Detroit News

Up or Out

Cindy Whitehead, CEO of Sprout Pharmaceuticals, which created the first "female Viagra," has stepped down. She will continue to consult with Valeant, Sprout's parent company. Chicago Business Journal

CEO of Chase Card Services at JPMorgan Eileen Serra will step down in January. She will be succeeded by current president of Mortgage Banking Kevin Watters. Business Insider

Arthur Taylor, former CBS President who sold the New York Yankees to George Steinbrenner, has died at 80. NYT

Fortune Reads and Videos

Chevron slashes budget by 24%

It will spend only $1 billion on exploration. Fortune

U.S. Energy Secretary says Obama doesn't need Congress...

...to tackle climate change.  Fortune

Brands rolling out super luxe holiday ads...

...for Youtube. Burberry, Balmain, Dior, and Louis Vuitton are just a few of the brands using this social strategy. Fortune

Hyperloop testing to begin in Nevada

Elon Musk's vision for speedy travel will begin tests next year.  Fortune

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