Securities Attorney Briefing 19JUN2017


Trump’s Business Ties in the Gulf Raise Questions About His Allegiances

LONDON — President Trump has done business with royals from Saudi Arabia for at least 20 years, since he sold the Plaza Hotel to a partnership formed by a Saudi prince. Mr. Trump has earned millions of dollars from the United Arab Emirates for putting his name on a golf course, with a second soon to open. He has never entered the booming market in neighboring Qatar, however, despite years of trying. Now a feud has broken out among these three crucial American allies, and Mr. Trump has thrown his weight firmly behind the two countries where he has business ties, raising new concerns about the appearance of a conflict between his public role and his financial incentives. Mr. Trump has said he is backing Saudi Arabia and the United Arab Emirates because Qatar is “a funder of terror at a very high level.” But his stance toward Qatar, which is host to the largest American air base in the region, has differed sharply from the positions of the Pentagon and State Department. The secretaries of defense and state have stayed neutral, urging unity against the common enemy of the Islamic State. Mr. Trump is the first president in 40 years to retain his personal business interests after entering the White House. Other senior officials in the executive branch are required to divest their assets. Critics say his singular decision to hold on to his global business empire inevitably casts a doubt on his motives, especially when his public actions dovetail with his business interests. “Other countries in the Middle East see what is happening and may think, ‘We should be opening golf courses’ or ‘We should be buying rooms at the Trump International,’” said Brian Egan, a State Department legal adviser under the Obama administration. “Even if there is no nefarious intent on behalf of the president or the Trumps, for a president to be making money from business holdings in sensitive places around the world is likely to have an impact.” A spokesman for the White House declined to address questions about the appearance of a conflict of interest. The spokesman, Michael Short, said in an email only that Mr. Trump had “formally extracted himself” from management of his business, the Trump Organization. More:

AP Exclusive: Manafort had plan to benefit Putin government

WASHINGTON (AP) — President Donald Trump’s former campaign chairman, Paul Manafort, secretly worked for a Russian billionaire to advance the interests of Russian President Vladimir Putin a decade ago and proposed an ambitious political strategy to undermine anti-Russian opposition across former Soviet republics, The Associated Press has learned. The work appears to contradict assertions by the Trump administration and Manafort himself that he never worked for Russian interests. Manafort proposed in a confidential strategy plan as early as June 2005 that he would influence politics, business dealings and news coverage inside the United States, Europe and the former Soviet republics to benefit the Putin government, even as U.S.-Russia relations under Republican President George W. Bush grew worse. Manafort pitched the plans to Russian aluminum magnate Oleg Deripaska, a close Putin ally with whom Manafort eventually signed a $10 million annual contract beginning in 2006, according to interviews with several people familiar with payments to Manafort and business records obtained by the AP. Manafort and Deripaska maintained a business relationship until at least 2009, according to one person familiar with the work. “We are now of the belief that this model can greatly benefit the Putin Government if employed at the correct levels with the appropriate commitment to success,” Manafort wrote in the 2005 memo to Deripaska. The effort, Manafort wrote, “will be offering a great service that can re-focus, both internally and externally, the policies of the Putin government.” More:–politics.html

Republicans slam Trump’s new policy toward Cuba

President Trump’s new U.S. policy toward Cuba was met with strong opposition from within the Republican Party on Friday. Trump announced a slew of new restrictions that curtail travel and commercial ties between the U.S. and Cuba, fulfilling one of his campaign promises to roll back Obama-era rules with the communist country. “I am canceling the last administration’s completely one-sided deal with Cuba,” Trump said in Miami’s Little Havana neighborhood, where he announced the change. The move was immediately criticized by Republican members in both houses of Congress, including Rep. Justin Amash (R-Mich.), who accused Trump of “dancing with the Saudis and selling them weapons” while talking about national security. Rep. Tom Emmer (R-Minn.) joined in Amash’s criticism, accusing Trump of abandoning his campaign promise to fight the “status quo.” Emmer also released a statement hitting the Trump administration over the decision. “Most importantly, today’s announcement creates a very real security risk for the American people and our homeland by inviting foreign nations into our backyard to fill a void that today’s announcement is creating,” Emmer wrote Friday. Sens. Jeff Flake (R-Ariz.) and Patrick Leahy (D-Vt.), who co-sponsored the Freedom to Travel to Cuba Act with 53 other senators, bashed Trump for the abrupt reversal of the Obama administration’s policy. “Any policy change that diminishes the ability of Americans to travel freely to Cuba is not in the best interests of the United States or the Cuban people. It is time Senate leadership finally allowed a vote on my bipartisan bill to fully lift these archaic restrictions which do not exist for travel by Americans to any other country in the world,” Flake wrote in a statement. Leahy accused the White House of “re-declaring war” on Cuba with the new policy. “This is a hollow retreat from normalization that takes a swipe at Americans’ freedom to travel, at our national interest, and at the people of Cuba who yearn to reconnect with us – all just to score a political favor with a small and dwindling faction here at home,” Leahy wrote. “This White House, by reaffirming the embargo, has re-declared war on the Cuban people.” Leahy and Flake’s bill, if passed, would lift the restrictions on U.S. tourism in Cuba. It has 55 total co-sponsors but has not yet been brought to the floor for a vote in the Senate.

Russia considers opening military base in Cuba

WASHINGTON -Russia is looking to expand its military presence and has its eye on Cuba and other Latin American countries. Defense Minister Sergei Shoigu said Russia has come up with a list of countries where it’s considering opening military bases. They include Cuba, Nicaragua, Venezuela and Vietnam, according to Russia’s state-owned RIA Novosti news agency. “The talks are under way,” Shoigu told reporters in Moscow. Russia has made several inroads in Cuba, including in nuclear energy, train repair and air traffic control technology. Cuban President Raul Castro visited Moscow last year to attend the 70th anniversary celebration of the defeat of the Nazis in World War II and the Red Army’s key role in the defeat. Cuban state media has cited the Russian military overtures, but the Castro administration has not offered any public indication of whether they’re welcomed. Gregory Weeks, the editor of the academic journal The Latin Americanist, doubts Cuba would allow the Russian government to open a military base on the island as it could be seen as a threat to the United States at a time when the island nation is seeking better relations with its larger northern neighbor. “I don’t see any chance of that happening,” said Gregory Weeks, the chairman of the department of political science and public administration at the University of North Carolina at Charlotte. “I don’t think Cuba want this. Cuba just spent years trying to improve relations with the U.S.. If they allow Russia to open a military base, all that would blow up.” Russia pulled out of Cuba and Vietnam in the early 2000s as part of efforts to lower its military presence and improve ties with the United States. They included closing it Lourdes signals intelligence base in Cuba and the Cam Rahn naval base in Vietnam, which the country is considering reopening. Russia has made inroads in Nicaragua, which has raised concerns in Washington. It was one of several reasons cited by members of Congress who voted to restrict Nicaraguan President Daniel Ortega government’s access to loans from international financial institutions unless it accepts international observers and takes other steps to promote democracy.

Cuban leader Raul Castro says he will retire in 2018

Cuban President Raul Castro announced on Sunday he will step down from power after his second term ends in 2018, and the new parliament named a 52-year-old rising star to become his first vice president and most visible successor. “This will be my last term,” Castro, 81, said shortly after the National Assembly elected him to a second five-year tenure. In a surprise move, the new parliament also named Miguel Diaz-Canel as first vice president, meaning he would take over if Castro cannot serve his full term. Diaz-Canel is a member of the political bureau who rose through the Communist Party ranks in the provinces to become the most visible possible successor to Castro. Raul Castro starts his second term immediately, leaving him free to retire in 2018, aged 86. Former President Fidel Castro joined the National Assembly meeting on Sunday, in a rare public appearance. Since falling ill in 2006 and ceding the presidency to his brother, the elder Castro, 86, has given up official positions except as a deputy in the National Assembly. The new government will almost certainly be the last headed up by the Castro brothers and their generation of leaders who have ruled Cuba since they swept down from the mountains in the 1959 revolution. Cubans and foreign governments were keenly watching whether any new, younger faces appeared among the Council of State members, in particular its first vice president and five vice presidents. Their hopes were partially fulfilled with Diaz-Canel’s ascension. He replaces former first vice president, Jose Machado Ventura, 82, who will continue as one of five vice presidents. Commander of the Revolution Ramiro Valdes, 80, and Gladys Bejerano, 66, the comptroller general, were also re-elected as vice presidents. More:

Russia to target any ‘flying objects’ over Syria where its aviation is active: agencies

Russia’s Defense Ministry said on Monday it would view as targets any flying objects over Syria in the areas of the country where its air forces operate, Russian news agencies reported. The statement followed after a U.S. warplane shot down a Syrian army jet on Sunday in the southern Raqqa countryside, with Washington saying the jet had dropped bombs near U.S.-backed forces and Damascus saying the plane was downed while flying a mission against Islamic State militants. The Defense Ministry also said that it was suspending its interaction with the United States on preventing air incidents over Syria from June 19, the agencies reported. The U.S. did not use its communication channel with Russia ahead of the downing of the Syrian government warplane, the ministry was quoted as saying.

France’s Emmanuel Macron seizes big majority in parliament

PARIS — French President Emmanuel Macron won a large majority in the lower house of parliament Sunday, freeing his hand to carry out an agenda that includes overhauling a rigid labor code. A projection for France 2 television after the second round of the parliamentary election showed an alliance led by Macron’s centrist La République En Marche (LRM) party winning 361 seats out of 577 in the National Assembly, well over the threshold for an absolute majority. However, the victory fell short of forecasts that Macron’s camp would claim as many as 460 seats and was also marred by a record-high abstention rate of around 56 percent. In coming months, voters’ relative lack of enthusiasm will provide fuel for opposition forces, such as resurgent far-left leader Jean-Luc Mélenchon, to claim Macron lacks the legitimacy to implement his policies. “There is a strong majority tonight… the French people want change but they’re also vigilant and there is a challenge for us — a responsibility to make things change, ” said Christophe Castaner, spokesman for the caretaker government Macron appointed after winning the presidential election last month. “We may have let people think a bit too much that everything was settled in advance,” he said, reflecting on the low turnout and the fact Macron’s win was less overwhelming than predicted. He added: “There is no victory tonight. The real victory will be in five years, when France will have changed.” More:

Van rams worshippers leaving London mosque, injuring 10

A van plowed into worshippers near a London mosque on Monday, injuring 10 people in what police said was a deliberate attack on Muslims that was being treated as a terrorist incident. Shortly after midnight, the hired vehicle swerved into a group of people leaving prayers at the Muslim Welfare House and the nearby Finsbury Park Mosque in north London, one of the biggest in the country, witnesses said. “This had all the hallmarks of a terrorist incident,” said Neil Basu, senior national co-ordinator for counter-terrorism policing. “This was an attack on London and all Londoners.” If confirmed by the authorities as terrorism, it would be the fourth attack since March in Britain and the third to involve a vehicle deliberately driven at pedestrians. The attack comes during the Muslim holy month of Ramadan when Muslims were attending special prayers. Abdulrahman Aidroos said he and his friends had been tending an old man who had suffered a heart attack when the van was driven at them. “When he was running he was saying ‘I wanna kill more people, I wanna kill more Muslims’,” he told BBC TV. He said he had helped tackle the driver and pin him down with others until police arrived. Basu thanked those who detained the driver, adding: “Their restraint in the circumstances was commendable.” The suspected van driver, aged 48, was arrested on suspicion of attempted murder and will be questioned by counter-terrorism officers. “I would like to … thank our Imam, Mohammed Mahmoud, whose bravery and courage helped calm the immediate situation after the incident and prevented further injuries and potential loss of life,” said Toufik Kacimi, the chief executive of the Muslim Welfare House. Police said the man who was being given first aid at the scene before the vehicle was driven into pedestrians had died but it was not clear whether his death was directly linked. More:



F.B.I. Botched Evidence Collection in Fraud Case, Judge Rules


Federal prosecutors contend that Benjamin Wey, a New York financier with an art for self-promotion, made tens of millions of dollars through a long-running stock manipulation scheme. But the government’s case against Mr. Wey may be falling apart after a federal judge ruled this week that, in early 2012, law enforcement botched a daylong search of his office in Lower Manhattan and his nearby apartment for evidence of wrongdoing. Judge Alison Nathan of Federal District Court in Manhattan said in a 92-page ruling that none of the documents, email messages, business receipts, computer hard drives and other records gathered in those searches could be used against Mr. Wey at his trial because the search warrants were overly broad and did not specify the crimes he was suspected of committing. The judge also said the 17 agents with the Federal Bureau of Investigation who conducted the searches were largely indiscriminate in seizing property — taking such things as drug prescriptions, X-rays of Wey family members and his children’s school records and test scores. She also noted that the raids took place more than three years before Mr. Wey was indicted in September 2015 and that authorities took a long time returning personal materials to Mr. Wey and his family. The ruling embarrassed federal prosecutors and was made just months before Mr. Wey’s trial date in October on securities fraud and money laundering charges. It is not clear what other evidence prosecutors have against Mr. Wey. As the founder of New York Global Group, Mr. Wey has made a fortune helping Chinese companies acquire what are known as shell companies — often the remnants of publicly traded companies — in deals called reverse mergers. “We honestly don’t know what the government’s evidence is at this point,” said David Siegal, Mr. Wey’s lawyer and a partner with Haynes and Boone.


Banks Told to Keep Skin in Game. They Securitized That Too


Few would argue with the stated mission of The Academy Group: to educate, mentor and find jobs for underprivileged youth. But along the way, the Chicago non-profit is also doing something a bit less lofty — helping Wall Street sell collateralized loan obligations, a cousin of those complex debt instruments that went horribly wrong during the 2008 financial crisis. The foundation and its chief benefactor, the billionaire Mark Walter, committed $160 million for an investment in a Chicago money manager that uses financial engineering to transform junk-rated loans into bonds rated as high as AAA. For the charity, the deal brings the prospect of steady cash flows and, Walter says, a future employer for its graduates. For the CLO manager, it means a deep pocket that enables the firm to comply with post-crisis rules intended to make the instruments less risky. Across Wall Street, similar symbiotic relationships have sprouted up as the market for securitized products faces new regulations requiring issuers to eat their own cooking. While each situation is a little different, the goal is typically the same: help firms that bundle consumer and corporate loans into bonds to raise the money needed to comply with the rules without forcing them to pay up themselves. And it’s all perfectly legal. More:


U.S. bank investors hope Fed stress test results lead to big payouts


Investors are hoping the Federal Reserve will allow big U.S. banks to put an estimated $150 billion in idle capital toward stock buybacks, dividends and profit-boosting investments in the coming weeks after conducting a regular examination of financial strength. On Thursday, the Fed is scheduled to begin releasing results from its two-part annual stress test, which was adopted in response to the financial crisis, to gauge banks’ ability to weather an economic storm that could threaten the stability of the system. The results will be the first since Republican President Donald Trump took office. Trump has not yet made any appointments to the Fed, but Republicans have turned up pressure on the central bank to cut red tape and ease regulations. Wall Street analysts said they will be parsing language the Fed uses in presenting the results for any signs that its approach is starting to soften. Analysts say they do not expect the Fed to announce any explicit changes to the stress test, but they do expect higher payouts. According to their estimates, the Fed could allow banks to distribute nearly as much capital to shareholders over the next year as they generate in profits, a benchmark not hit since before the 2008 crisis. Higher payouts “would be significant from a signaling standpoint” that regulators are easing up on capital requirements, said Steven Chubak, a bank analyst at Nomura Instinet. “That is a key part of the value case for a lot of these stocks.” Banks going through the stress tests have roughly $150 billion more capital than they need, Morgan Stanley analyst Betsy Graseck estimates. She expects the typical big bank to be allowed to increase stock buybacks by 27 percent and dividends by 8 percent, for a combined capital payout of 95 percent of annual earnings, up from 84 percent last year. The Fed first conducted stress tests in 2009 as a way to boost confidence in the financial system. Congress codified the test into law the following year as part of a broader financial reform package, and the Fed came to see it as an important tool to ensure that banks not only maintain enough capital to withstand economic storms, but also run their businesses in ways that avoid operational calamities. However, bankers complain that stress tests have morphed into an overly complex and time-consuming process that occurs in the secrecy of a black box. They have pleaded for more details about models the Fed uses to conduct the numeric part of the tests, and more clarity on a qualitative component that judges factors like risk management. The Fed has been making some changes to enhance transparency, but officials say that revealing too much would allow lenders to game the exams. “We are concerned that releasing all details on the models would give banks an incentive to adjust their business practices in ways that change the results of the stress test without changing the risks faced by the firms,” Fed Chair Janet Yellen told Congress in a letter on Friday. “The result could be less effective stress tests.” Thursday’s results, known as DFAST, will show how much capital the biggest banks would have after an imagined crisis. Shortly after the Fed posts its numbers, big banks tend to disclose results under their own models. Banks can compare the scoring and then scale back and resubmit their capital plans to improve their chances of a passing grade. On June 28, the Fed will announce whether it has approved the plans in a further examination known as the Comprehensive Capital Analysis and Review, or CCAR. More:


The Car Was Repossessed, but the Debt Remains


More than a decade after Yvette Harris’s 1997 Mitsubishi was repossessed, she is still paying off her car loan. She has no choice. Her auto lender took her to court and won the right to seize a portion of her income to cover her debt. The lender has so far been able to garnish $4,133 from her paychecks — a drain that at one point forced Ms. Harris, a single mother who lives in the Bronx, to go on public assistance to support her two sons. “How am I still paying for a car I don’t have?” she asked. For millions of Americans like Ms. Harris who have shaky credit and had to turn to subprime auto loans with high interest rates and hefty fees to buy a car, there is no getting out. Many of these auto loans, it turns out, have a habit of haunting people long after their cars have been repossessed. The reason: Unable to recover the balance of the loans by repossessing and reselling the cars, some subprime lenders are aggressively suing borrowers to collect what remains — even 13 years later. Ms. Harris’s predicament goes a long way toward explaining how lenders, working hand in hand with auto dealers, have made billions of dollars extending high-interest loans to Americans on the financial margins. These are people desperate enough to take on thousands of dollars of debt at interest rates as high as 24 percent for one simple reason: Without a car, they have no way to get to work or to doctors. With their low credit scores, buying or leasing a new car is not an option. And when all the interest and fees of a subprime loan are added up, even a used car with mechanical defects and many miles on the odometer can end up costing more than a new car. Subprime lenders are willing to take a chance on these risky borrowers because when they default, the lenders can repossess their cars and persuade judges in 46 states to give them the power to seize borrowers’ paychecks to cover the balance of the car loan. Now, with defaults rising, federal banking regulators and economists are worried how the strain of these loans will spill over into the broader economy. For low-income Americans, the fallout could, in some ways, be worse than the mortgage crisis. More:


Silicon Valley could be next target for Trump-style nationalism


As tech royalty converges on the White House today for an American Technology Council meeting, the darlings of Silicon Valley are in danger of becoming the devils of Trumpism’s nationalist wing.

This won’t happen overnight, but danger signs are everywhere. Axios Tech Editor Kim Hart wrote last week that the giants, with their “enormous concentrations of wealth and data,” are “drawing the attention of economists and academics who warn they’re growing too powerful.” Turns out it’s government, too. The Bannon wing of the White House would like to take on the lords of the Valley now over outsourcing, the concentration of wealth and their control over our data and lives. But this fight is on hold for a later date, officials tell us. The bigger problem for tech is that many Americans are rethinking their romantic views of the hottest and biggest companies of the new economy. As people look for villains to blame, tech might get its turn:

  • Some shine has come off Facebook (though not in user data, Dan Primack points out: People still love the service), as executives fend off grievances about fake news, live violence and the filter bubble.
  • Silicon Valley makes itself a juicy target with its male dominance, concentration of wealth (in both people and places), and reliance on foreign workers.
  • Robots will soon be eating lots of jobs, with working-class, blue collar workers — an engine of the Trump coalition — at the most immediate risk. Many think this will be the story of the next 10 years.
  • Anyone familiar with military intelligence will tell you cyber-risk is much greater than most people realize. Russians used cyber tools to try to throw the 2016, and electronic attack is perhaps the greatest U.S vulnerability to an international power.

People increasingly distrust technology, and the companies will increasingly be in the crosshairs. Richard Edelman — president and CEO of the global communications firm — wrote in introducing Edelman’s 2017 Trust Barometer: “[O]ngoing globalization and technological change are now further weakening people’s trust in global institutions, which they believe have failed to protect them from the negative effects of these forces. Be smart: Tech executives are very aware of the public’s unsettled mood and fearful that if they completely disengage with Trump the White House will turn on their companies. That’s why many are here today! Dive deeper: “What Apple’s Tim Cook will tell Trump” (CEOs come with their own agendas: He’ll raise topics the White House hadn’t planned) Off embargo at 6 a.m.: “Silicon Valley’s elite comes to Trump’s Washington.”


The Blood Harvest


The thing about the blood that everyone notices first: It’s blue, baby blue. The marvelous thing about horseshoe crab blood, though, isn’t the color. It’s a chemical found only in the amoebocytes of its blood cells that can detect mere traces of bacterial presence and trap them in inescapable clots. To take advantage of this biological idiosyncrasy, pharmaceutical companies burst the cells that contain the chemical, called coagulogen. Then, they can use the coagulogen to detect contamination in any solution that might come into contact with blood. If there are dangerous bacterial endotoxins in the liquid—even at a concentration of one part per trillion—the horseshoe crab blood extract will go to work, turning the solution into what scientist Fred Bang, who co-discovered the substance, called a “gel.” “This gel immobilized the bacteria but did not kill them,” Bang wrote in the 1956 paper announcing the substance. “The gel or clot was stable and tough and remained so for several weeks at room temperature.” If there is no bacterial contamination, then the coagulation does not occur, and the solution can be considered free of bacteria. It’s a simple, nearly instantaneous test that goes by the name of the LAL, or Limulus amebocyte lysate, test (after the species name of the crab, Limulus polyphemus). The LAL test replaced the rather horrifying prospect of possibly contaminated substances being tested on “large colonies of rabbits.” Pharma companies didn’t like the rabbit process, either, because it was slow and expensive.

So, now, the horseshoe blood test is a big business. “Every drug certified by the FDA must be tested using LAL,” PBS’s Nature documentary noted, “as do surgical implants such as pacemakers and prosthetic devices.” I don’t know about you, but the idea that every single person in America who has ever had an injection has been protected because we harvest the blood of a forgettable sea creature with a hidden chemical superpower makes me feel a little bit crazy. This scenario is not even sci-fi, it’s postmodern technology.


In Hamptons House, a Link to Manafort and Jared Kushner’s Dad


Jared Kushner was a junior at Harvard when an enterprising political operative was drawn into his family’s orbit. His name: Paul Manafort. It was 2002, and, back then, few might have imagined that the two men’s worlds would intersect one day in the figure of Donald Trump. But the Kushners and the Manaforts, it turns out, go way back — at least when it comes to two of New York’s great obsessions: money and real estate. Kushner, of course, is now the son-in-law and confidante of President Trump. Manafort is a big-time Republican strategist and Trump’s former campaign manager. Both have been pulled into the vortex of questions surrounding the administration and Russia. But 15 years ago, when Trump was still running casinos, Manafort’s wife, Kathleen, received a mortgage on a 10-bedroom home in the Hamptons on Long Island. The $150,000 loan was made by NorCrown Bank, in Livingston, New Jersey, whose chairman was Kushner’s father, Charles, the patriarch of the family real estate empire and, at the time, a Democratic powerbroker in New Jersey. NorCrown was acquired by Valley National Bancorp in 2005. Jared married Trump’s daughter, Ivanka, in 2009. “Paul Manafort did not know Charles Kushner 15 years ago when this transaction occurred,” said Jason Maloni, a spokesman for the Manaforts. “He has never met or talked with him in his life. These loans are all ordinary, arm’s length transactions.” He declined to comment about Kathleen Manafort. Charles Kushner declined to comment for this article. More:


GOP considers cancelling August recess to salvage agenda


Alarmed by the stalemate on healthcare reform, lack of progress on tax reform and appropriations bills that are far behind schedule, Republican lawmakers across Congress are increasingly willing to consider cancelling the month-long August recess. Senate Republican negotiators reported that they are not close to a deal on healthcare reform and that scheduling a vote by July 4, which Senate Majority Leader Mitch McConnell (R-Ky.) has pushed, is likely unrealistic. That impasse has held up work on a budget resolution, which is necessary to move tax reform and the annual appropriations bills. Once Republicans vote on a budget resolution for 2018, it will wipe out the special vehicle they plan to use to pass healthcare reform with a simple majority vote — a vehicle that was set up by the budget resolution for 2017. Lawmakers calculate there are only 45 legislative days until the end of the fiscal year, Sept. 30.

With the party still sharply divided on health and tax reform, it looks increasingly possible that Republican lawmakers will leave town in July for a month-long break without any major accomplishments under their belts. “I think there’s a majority that probably supports being here,” said Sen. David Perdue (R-Ga.), referring to the possibility of cancelling or cutting short the August recess. He said GOP lawmakers need to make progress on the budget and spending bills to avoid a government shutdown scenario in September, as well as progressing on tax reform. “I don’t want to wait until the last week to be forced into a [continuing resolution]. That’s ridiculous,” he said of the likelihood Congress will have to pass a short-term continuing resolution to avoid a government shutdown. Perdue said colleagues are also “facing the reality if we don’t we get some kind of tax package on the books this year” the country could find itself in a recession.


Kushner Is Said to Be Reconsidering His Legal Team


Representatives of Jared Kushner, President Trump’s son-in-law and senior adviser, have quietly contacted high-powered criminal lawyers about potentially representing him in the wide-ranging investigation into Russia’s influence on the 2016 election, according to three people briefed on the matter.

Some of Mr. Kushner’s allies have raised questions about the link between his current lawyer, Jamie S. Gorelick, and Robert S. Mueller III, the special counsel appointed to investigate the Trump campaign’s ties to Russia, according to one of the people who spoke on condition of anonymity. Before the Justice Department named him to the special counsel post, Mr. Mueller was a law partner with Ms. Gorelick at the Washington firm of WilmerHale. Such connections are common in Washington legal circles and are often resolved by an acknowledgment from the client of the possible conflict. In this case, Ms. Gorelick urged Mr. Kushner to consider other representation first. In recent days, Mr. Kushner has had discussions with at least one prominent trial lawyer, one of the people said. And if Mr. Kushner chooses to hire a new lawyer, this person may either supplement or replace Ms. Gorelick’s team. So far, Mr. Kushner’s legal team remains unchanged. Ms. Gorelick, who has repeatedly said Mr. Kushner will cooperate with all Russia-related inquiries, is preparing him for a meeting with investigators for the Senate Select Committee on Intelligence. Mr. Kushner also provided a statement on Sunday from Ms. Gorelick describing the recent discussions with other lawyers as seeking advice as opposed to replacing or adding to his legal team. “After the appointment of our former partner Robert Mueller as special counsel, we advised Mr. Kushner to obtain the independent advice of a lawyer with appropriate experience:


Mueller team lawyer brings witness-flipping expertise to Trump probes


A veteran federal prosecutor recruited onto special counsel Robert Mueller’s team is known for a skill that may come in handy in the investigation of potential ties between Russia and U.S. President Donald Trump’s 2016 campaign team: persuading witnesses to turn on friends, colleagues and superiors.

Andrew Weissmann, who headed the U.S. Justice Department’s criminal fraud section before joining Mueller’s team last month, is best known for two assignments – the investigation of now-defunct energy company Enron and organized crime cases in Brooklyn, New York – that depended heavily on gaining witness cooperation. Securing the cooperation of people close to Trump, many of whom have been retaining their own lawyers, could be important for Mueller, who was named by the Justice Department as special counsel on May 17 and is investigating, among other issues, whether Trump himself has sought to obstruct justice. Trump has denied allegations of both collusion and obstruction. “Flipping” witnesses is a common, although not always successful, tactic in criminal prosecutions. Robert Ray, who succeeded Kenneth Starr as the independent counsel examining former President Bill Clinton, noted that Trump’s fired former national security advisor, Michael Flynn, has already offered through his lawyer to testify before Congress in exchange for immunity, suggesting potential willingness to cooperate as a witness.

“It would seem to me the time is now to make some decisions about what you have and what leverage can be applied to get the things you don’t have,” Ray said, referring to Mueller’s team. Trump, Vice President Mike Pence, Trump’s son-in-law Jared Kushner and others close to the president already have hired their own lawyers to help navigate Mueller’s expanding probe and ongoing congressional investigations. Kathryn Ruemmler, who served as White House counsel under former President Barack Obama, said Weissmann is willing to take risks to secure witness testimony that other prosecutors might not. Ruemmler worked with Weissmann on the Justice Department’s Enron task force that investigated the massive corporate fraud that led to the company’s 2001 collapse. Ruemmler recalled that Weissmann had a hunch that former Enron treasurer Ben Glisan would be willing to talk despite already having pleaded guilty without agreeing to cooperate. So Weissmann had U.S. marshals bring Glisan before the grand jury from prison, Ruemmler said. More:


THE MEMO: For Trump, danger signs in the polls


President Trump’s willingness to flout convention and stoke controversy may be starting to hurt him, even among previously strong supporters. Trump has defied political norms ever since the start of his campaign two years ago. He brushed aside calls to become a more conventional candidate, and it paid off, making him the nation’s 45th president. But Trump’s approval rating, always low by historical standards, has been sliding since he took office in January. Crucially, many recent surveys detected an erosion of his support among Republicans and independents. Trump’s job performance wins approval from only 35 percent of the public, while 64 percent disapprove, according to a new poll released late last week from The Associated Press and the NORC Center for Public Affairs Research. That is one of the worst findings yet for Trump in any major survey. The same poll found that 65 percent of Americans think their president has little or no respect for the nation’s democratic institutions and traditions. The second finding does not necessarily spell doom for Trump, given that a large segment of his support comes from people who like him because of his willingness to rebel against “business as usual” in Washington. But it is a warning sign for the president, at the very least. Republican strategist Dan Judy argued that voters who had backed Trump with some ambivalence over Democratic nominee Hillary Clinton last November were among those most likely to be put off by the various controversies to afflict the White House, and by the president’s incendiary style. “A lot of people — the ‘Not Hillary’ Trump voters — knew who Donald Trump was, they knew what kind of person he was,” said Judy, who worked with the president’s GOP primary rival Sen. Marco Rubio (Fla.) last year. “They were willing to tolerate some of the theatrics and some of the disruption it led to, as long as it led to a policy agenda they supported. “The longer he goes without real policy victories, the less patience they are going to have.” Those voters appear to be becoming jaded with the apparently endless storms that have afflicted the Trump presidency. But, as usual, there is no sign of the president backing down or tempering his public pronouncements. Over the past week, amid reports that Trump is under investigation by Special Counsel Robert Mueller for possible obstruction of justice, the president unleashed Twitter barbs at Hillary Clinton, the “fake news media” and fired FBI director James Comey. On Friday morning, Trump appeared to take aim at his own deputy attorney general, Rod Rosenstein, who appointed Mueller after Comey’s firing. “I am being investigated for firing the FBI Director by the man who told me to fire the FBI Director! Witch Hunt,” Trump wrote.

Sen. Dianne Feinstein (D-Calif.) was among those firing back at Trump. In a statement released a few hours later, she asserted that, “The message the president is sending through his tweets is that he believes the rule of law doesn’t apply to him.” Though Trump’s defenders have long argued that pollsters underestimate his support and his base is resilient, there is some data to back up the skeptics.

In the RealClearPolitics average as of Friday afternoon, Trump’s job performance was registering 39.9 percent approval and 53.6 percent disapproval. Polling and data expert Nate Silver wrote on Twitter earlier this month that, “Good reporting needs to be able to distinguish between Trump’s Bannonist base (20-25% of the country) and all Trump voters (46%).”


Trump’s personal lawyer hires attorney: report


President Trump’s personal lawyer, Michael Cohen, has hired his own attorney as the special counsel investigation into Russian election interference progresses, NBC News reported Friday. Cohen has hired Washington, D.C., attorney Stephen M. Ryan, according to NBC’s Katy Tur. A source told Tur that Cohen will testify before the House Intelligence Committee on Sept. 5, adding that the testimony was delayed due to “scheduling and logistics.” Tur also reported that Michael Caputo, a communications adviser brought on board the Trump campaign by Paul Manafort, has been contacted by the FBI. Caputo has also hired his own attorney — former New York state Attorney General Dennis Vacco. Caputo was asked in May to testify before the House Intelligence Committee.  Cohen and Caputo aren’t the only figures connected to Trump who have hired their own attorneys. Trump hired an attorney to represent him in the investigation in late May, while Vice President Pence’s staff announced Thursday that he had hired Virginia attorney Richard Cullen.


How Michael Flynn’s Disdain for Limits Led to a Legal Quagmire


WASHINGTON — Michael T. Flynn was a man seething and thwarted. In the summer of 2014, after repeatedly clashing with other Obama administration officials over his management of the Defense Intelligence Agency — and what he saw as his unheeded warnings about the rising power of Islamic militants — Mr. Flynn was fired, bringing his military career to an abrupt end. Mr. Flynn decided that the military’s loss would be his gain: He would parlay his contacts, his disdain for conventional bureaucracy, and his intelligence career battling Al Qaeda into a lucrative business advising cybersecurity firms and other government contractors. Over the next two years he would sign on as a consultant to nearly two dozen companies, while carving out a niche as a sought-after author and speaker — and ultimately becoming a top adviser to President Trump. “I’ve always had that entrepreneurial spirit,” Mr. Flynn said in an interview in October 2015. In the military, he added, “I learned that following the way you’re supposed to do things isn’t always the way to accomplish a task.” But instead of lofting him into the upper ranks of Beltway bandits, where some other top soldiers have landed, his foray into consulting has become a legal and political quagmire, driven by the same disdain for boundaries that once propelled his rise in the military. His business ties are now the subject of a broad inquiry by a special counsel investigating Russian interference in the 2016 election and possible collusion with Trump associates. That investigation now includes work Mr. Flynn did for Russian clients and for a Turkish businessman with ties to that country’s president, Recep Tayyip Erdogan. More:


Oliver Stone’s Vladimir Putin interviews are accidentally revelatory


The most telling moment in The Putin Interviews, director Oliver Stone’s four-hour conversation with Russian President Vladimir Putin, recorded over the course of nearly two years, comes late in the second hour. Stone is trying to get Putin to say whether he does or doesn’t like then-presidential candidate Bernie Sanders. Putin demurs entirely, but offers up a theory of how power functions. Should Sanders become president, Putin says, he would suddenly realize the vast weight of the American bureaucracy that existed underneath him. He might make some changes to the US on a domestic level, but he would ultimately be unable to change that much — the person at the head of the state matters less than the centuries of power the state has accumulated and will protect at all costs. People aren’t responsible for what happens; the vast structures surrounding them are. Look at Barack Obama, Putin suggests. He sincerely wanted to close the Guantanamo Bay prison, and did he? No. You can’t fight the state. This is telling for two reasons. The first is that it, if true, explains Putin’s motives in regards to the United States in the time since that interview was conducted in 2016. But the second reason is even more telling. This isn’t just how Putin sees [insert US president here]. It’s how he sees himself: as a conduit for the vast sweep of history, guided less by his own political beliefs and desires than by forces even he can barely understand. More:


Ad uses Scalise shooting against Ossoff in Georgia


CHAMBLEE, GA. — Democrat Jon Ossoff and Republican Karen Handel are both speaking out against an ad appearing to link Ossoff to Wednesday’s shooting at a Republican baseball practice outside of Washington, D.C. The television spot, which was produced by the Principled PAC, shows House Majority Whip Steve Scalise (R-La.) on a stretcher after the shooting, along with the sound of gunshots. “The unhinged left is endorsing and applauding shooting Republicans,” the ad’s narrator says. “When will it stop? It won’t if Jon Ossoff wins on Tuesday,” the narrator continues. The spot then shows several images and videos including one of comedian Kathy Griffin holding a fake severed head that looks like President Trump, as well as a letter that reads “Resist the Facist takeover. String up the collaborators.”

The ad then claims “these same leftists are all for Ossoff, and if he wins, they win.” “Stop Jon Ossoff. Stop Nancy Pelosi. Vote Karen Handel for Congress,” the narrators concludes. Ossoff called the politicization of the shooting that injured Scalise and four others last week “disgraceful.” “The man is fighting for his life. I think it’s disgraceful to politicize it, and I think Secretary Handel should call for it to come down,” Ossoff told a small group of reporters after a canvassing launch at his Chamblee field office. “You have a national tragedy that has united people. There are still be who are in critical condition. It’s just got no place in an attack ad.” A spokeswoman for Handel stopped short of demanding the ad be removed, but called the piece “disturbing and disgusting” in a release to the Atlanta Journal-Constitution. “For any group to use the shootings this week for political or personal benefit is shameful,” spokeswoman Kate Constantini said in a statement. “This group should be ashamed.” James T. Hodgkinson, who allegedly shot Scalise and four others at the baseball practice before being killed by police, had posted a series of anti-Republican Facebook posts, and reportedly had a hit list that included other Republican lawmakers.

The ad comes two days ahead of Tuesday’s sixth district’s special election for Health and Human Services Secretary Tom Price’s Georgia seat.


What Trump gets wrong about coal, natural gas and carbon


The closest thing President Trump has to a climate and energy policy is actually a collection of contradictions. He touts natural gas as a carbon-cutting mechanism, but he also promises to bring back the carbon-emitting coal industry. He talks about “clean coal,” but his actions will make it harder for “clean coal” technology to make any headway. Why it matters: Misleading statements are nothing new in Washington. But these contradictions are becoming the Trump administration’s core policy framework. Top officials, including Secretary of State Rex Tillerson and EPA Administrator Scott Pruitt have over the last couple of weeks repeatedly pushed these contradictory positions, so let’s take a closer look at them.

Carbon emissions:  Trump and his top advisers credit fracking, the technology that’s unlocked vast reserves of cleaner burning natural gas over the past decade, for why U.S. carbon emissions are at levels not seen since before 1994. That’s true for the most part, but the rest of the administration’s logic on this front is not. Fracking is lowering emissions because natural gas, which burns 50% less carbon emissions than coal, is displacing coal in America’s electricity mix. Pruitt and others cite the boom in natural gas to show America is addressing carbon emissions regardless of the Paris climate deal. They also say, though, that withdrawing from the accord and repealing Obama-era environmental regulations will help bring the coal industry back. By Pruitt’s own logic, if the Trump administration were to revive the coal industry, it would actually raise U.S. carbon emissions, undermining their only talking point associated with climate change. The EPA didn’t respond to multiple requests for comment. “Ironically, the most successful thing the Trump administration could do to bring back the U.S. coal industry would be to restrict the U.S. natural gas production, but that’s not what they’re trying to do either,” said Trevor Houser, partner at the analysis firm Rhodium Group. “They’re unlikely to succeed in bringing coal back, but if they were, U.S. emissions would go back up.” Coal: Trump talks a lot about “clean coal” and bringing back the coal industry. The term “clean coal” refers to technology that captures carbon from facilities like coal-fired power plants instead of emitting it into the air. Trump doesn’t actually talk about the technology when he uses the term. He’s wrong on both accounts: He can’t revive the coal industry, and his administration’s early moves are actually hurting the chances of “clean coal” technology taking off. Market forces outside of the Trump administration’s control, like Asian demand for coal and cheap natural-gas prices, are likely to keep the long-term future of the U.S. coal industry somewhere between stagnant and negative. That’s the reality no matter what Trump does with the Paris deal or Obama-era regulations. One Obama regulation helped expedite many companies’ decision to convert to natural gas: a 2012 rule imposing the first-ever federal limits on power-plant emissions of mercury and other toxic air pollution. The Trump EPA has signaled it may try to reverse at least parts of that rule. But if it succeeds, it wouldn’t bring back the coal plants that shut down. Power companies have already made the decades-long investment decisions to shift to natural gas and renewable energy, and market forces will ensure most companies don’t revert back to coal. More:


The Finance 202: Overhauling the tax code is more complicated than the Trump administration expected


But the proposal has faced resistance from multiple corners of the House Republican conference, including on the Ways and Means committee itself. Brady last week floated phasing in the tax over five years. That hasn’t won it new fans, and it continues to be a nonstarter in the Senate. That House Republican leaders haven’t moved on testifies more than anything to the lack of viable alternatives advanced by Senate and administration negotiators. On Tuesday, Ryan will deliver what his office is billing as his first major speech on taxes. The address to the National Association of Manufacturers comes a year to the week since the rollout of the House GOP’s tax blueprint. Ryan won’t get in the weeds, but “he will talk about what tax reform looks like, not just the benefits,” according to an aide.

Senate Republicans haven’t helped the project get out of the blocks. And for the rest of the month, at least, they’re likely to stay preoccupied with their own Obamacare repeal-and-replace effort, which Senate Majority Leader Mitch McConnell (R-Ky.) has said he’d like to bring to the floor before the July Fourth recess. Senate Finance Committee Chairman Orrin Hatch (R-Utah) on Friday put out a call for stakeholder input on taxes, asking for submissions by July 17. In the meantime, some GOP senators are working on their own proposals. Sen. Ron Johnson (R-Wisc.) is exploring a plan to eliminate corporate taxes altogether and replace them with revenue from taxing dividends and capital gains as ordinary income. Others are digging through a 2014 draft from then-Ways and Means Committee Chairman Dave Camp (R-Mich.) for new sources of revenue. Republicans leaders in the Capitol are meant to be working with the administration on forging consensus. “It seems they’re still far apart on what an agreement could be,” says Jonathan Traub, a former staff director for Ways and Means Republicans now with Deloitte. And the clock is working against them. Even if a rough sketch of a plan comes together by the end of the summer, it will be jockeying for attention in an already-crowded fall calendar. Republicans returning from the August recess could face intramural showdowns over a new budget resolution, a debt ceiling hike and a government funding package. More:




Tuscaloosa Mayor Walt Maddox: Democrats must be the ‘party of ideas and innovation’


Tuscaloosa Mayor Walt Maddox said today that he’s taking his time deciding on whether to run for governor. “As mayor you get to wake up every single morning and make a difference for the people you work for,” he said. “We certainly want to know if we were successful … could we implement the change that the state desperately needs, and are we the right fit for the party and ultimately the state of Alabama.” Maddox, who has served as Tuscaloosa mayor for 12 years, told today during a meeting of the Alabama Democratic Reform Caucus that he doesn’t have a timeline yet on when he could announce a run for the state’s highest office. About 50 members of the Alabama Democratic Reform Caucus met in Birmingham on Saturday for its second annual Democratic Action Summit. Sheila Gilbert, chair of the caucus, said the grassroots group is filled with progressive Democrats working to strengthen the party in Alabama and get more Democrats elected into office. Maddox and state Rep. Anthony Daniels, D-Huntsville, the Minority Leader of the Alabama House, spoke during the lunch event. Both Maddox and Daniels said the Democratic Party is going to have to take the offense and stop being the opposition party if it’s going to gain traction in the Republican-dominated state.  “Clearly, the events in Washington D.C. have created this tidal wave of enthusiasm (for the Democratic Party in Alabama), more than I have ever seen, but that’s never going to be enough to get you across the finish line,” Maddox said. “We are going to have to be the party of ideas and innovation.” Daniels said the Democratic Party needs to go back to its core principles and share its message with people in rural Alabama. “Today is to give optimism to the people here who are working on the ground, let them know that their work is not being done in vain, he said, of the summit. More:


Hanceville mayor makes pitch for New Orleans Confederate monuments


Mayor Kenneth Nail says he’s heard nothing but approval from Hanceville residents since reaching out to leaders in New Orleans with an offer to take that city’s now-banned Confederate monuments off their hands. “Everybody who’s approached me has said they think it’s a great idea, and it seems like I haven’t offended anybody — which is never the goal,” said Nail Saturday. “One of my good friends, who is black, even messaged me on Facebook and told me, ‘Look, some of my ancestors were forced to fight in that war [the Civil War], and I think it’s a good idea to remember these things.’ He told me, ‘I drive a truck, and I’ll even go down there and pick them up if the city needs me to.’” Nail recently sent a letter to New Orleans Mayor Mitch Landrieu, inquiring about the fate of four pieces of statuary removed from display in the wake of a 2015 New Orleans city council vote to censor from public view images of Confederate figures in the historic port city. The monuments depict Confederate Gens. Robert E. Lee, P.G.T. Beauregard, Confederate President Jefferson Davis, and the Battle of Liberty Place — a postwar insurrection, ultimately quelled by the 22nd U.S. Infantry, that was fought on and around New Orleans’ Canal Street. In Louisiana, controversy over the statues’ removal is ongoing, with litigation pending from the move’s opponents to have the statues restored at their former sites. Nail said he doesn’t know what New Orleans intends to do with the statues, and that he’s only interested in obtaining them if they can be had at little to no cost for his city. “I sent the letter to see what they might do,” said Nail. “I don’t know if they’re going to sell them, give them away, or something else. Honestly, we’re a small town, and if they end up selling them off for a lot of money, of course we couldn’t do that. If they do give them away, then I would approach the [Hanceville] city council to see how they want to proceed. “My view is that it’s an opportunity; a great teaching tool that we could have in our city,” he added. “It’s an opportunity for all of us to reflect on all our struggles, and to celebrate how far we’ve come — while clearly acknowledging that we had those struggles. Different symbols mean different things to different people. We definitely don’t need to forget or be blind to history, which I think some well-meaning folks in our society are kind of pushing for, intentionally or unintentionally. So far, there’s been no response from New Orleans. But, said Nail, win or lose, he’ll be content with the outcome. “What I told the mayor, and what I’ve told everyone I’ve talked about it with, is that, for me, remembering these people and these events is about heritage — not hate,” he said. “Anybody who knows me knows that I’m no racist. But ultimately, it will be up to the folks in New Orleans — and up to the people who live in Hanceville, and the Hanceville City Council — to decide what — if anything — happens next.”




Trump’s Cuba Policy Will Fail by Ben Rhodes

The architect of Obama’s Cuba opening argues that the president’s rollback is a pointless mistake.

One of the most depressing things about President Donald Trump’s decision to roll back elements of the Cuba opening is how predictable it was. A Republican candidate for president makes last-minute campaign promises to a hard-line Cuban American audience in South Florida. Senator Marco Rubio and Congressman Mario Diaz-Balart hold him to those promises. The U.S. government announces changes that will hurt ordinary Cubans, harm the image of the United States, and make it harder for Americans to do business and travel somewhere they want to go. While President Obama raised the hopes of Americans and Cubans alike with a forward-looking opening in diplomatic, commercial and people-to-people ties, President Trump is turning back the clock to a tragically failed Cold War mindset by reimposing restrictions on those activities. While not a full reversal of the Obama opening, Trump’s actions have put relations between the United States and Cuba back into the prison of the past—setting back the prospects for reform inside of Cuba, and ignoring the voices of the Cuban people and a majority of Americans just so that he can reward a small and dwindling political constituency. It didn’t have to be this way, and it won’t stay this way. In the fall of 2014, after 16 months of secret negotiations, I travelled to the Vatican to tell representatives of Pope Francis that the United States and Cuba were prepared to begin normalizing relations. The Vatican diplomats met separately with the U.S. and Cuban delegations to verify that we were telling the truth. Then we all met together and read aloud the steps we were prepared to take. A Cardinal said the world would be moved by this example of former adversaries putting aside the past. One Vatican official who had lived in Cuba had tears in his eyes, a look of deep remembrance on his face. Cuba has long played an outsized role in the world’s imagination. To Americans, it has been the setting for the drama of mobsters, Castros, the Cold War, assassination attempts, boatlifts, and ideological conflict—mixed with the allure of a culture that finds full expression in Miami. To Latin America, Cuba has been a symbol for how United States tries to dictate the politics of the hemisphere—a legacy of democracy and economic progress, as well as coups and death squads. To the developing world, Cuba has been a symbol of sovereignty and resistance, and a supporter of revolution—for good or bad. From the Missile Crisis to the anti-apartheid movement; from the Kennedys to Obama era, this small island has put itself at the center of world events. More:


Morning Money

THE BUZZ: WHAT DID PREET KNOW? — Current chatter going around DC and NYC holds that former US Attorney Preet Bharara, whose office had been investigating Russian money laundering, turned over some significant information to special counsel Robert Mueller.

SPEAKING OF TRUMP INVESTIGATIONS — Here was Trump attorney Jay Sekulow on Fox News Sunday: “[N]ow he’s being investigated by the Department of Justice, he’s being investigated for taking the action that the Attorney General and Deputy Attorney General recommended him to take.”

Chris Wallace: “You stated some facts. First of all, you’ve now said that he is getting investigated after saying that you didn’t …

Sekulow: No. … No, he’s not being investigated!

Wallace: “You just said that he’s being investigated.

Sekulow: “No, Chris … ”

Wallace: “The tape will speak — Jay, the tape will speak for itself. You said he is being investigated.” Transcript.

MACRON WINS BIG IN FRANCE — Via AFP: “French President Emmanuel Macron’s centrist party swept to a large majority in parliamentary elections on Sunday, although it fell short of a predicted landslide. Macron’s year-old Republique en Marche and their allies won 351 seats in the 577-seat National Assembly, final results showed after the second round of an election which has eliminated many high-profile figures.

“The party Macron founded just 16 months ago has re-drawn the French political map, although the winning score was considerably lower than the 470 seats predicted by some pre-vote surveys. But it gives the 39-year-old president one of France’s biggest post-war majorities, strengthening his hand in implementing his programme of business-friendly reforms” Read more.

MUSLIMS TARGETED IN LONDON — Via The [London] Times: “Counterterror police are investigating a van attack on Muslims in north London which left one dead and eight injured. A 48-year-old man was arrested after swerving into a group of worshippers who were leaving evening prayers shortly after midnight.

“One man was pronounced dead at the scene. Police are informing his next of kin.
Two witnesses said that the driver got out of the white van after hitting about ten people and screamed that he wanted to ‘kill all Muslims’.” Read more.

VOTE GOLDMAN! — Bloomberg’s Max “Man About Town” Abelson on former Goldman Sachs execs Archie Parnell and Phil Murphy, both running for office on anti-Trump platforms:

“Seven months after Trump’s triumph left their party in tatters, Democrats are desperate to chip away at his influence. There are only half a dozen big elections left this year, a handful of chances to loosen the Republican grip on power. Two of the Democratic nominees, Parnell and Murphy, worked for the same Wall Street firm whose alumni now stock the Trump administration.”

DOWN TO THE WIRE IN GEORGIA — POLITICO’s Elena Schneider: “The Georgia special election between Republican Karen Handel and Democrat Jon Ossoff could come down to just a few thousand votes on Tuesday, after a six-month campaign that has attracted outsized national attention as a key early test for … Trump’s party.

“Trump, Vice President Mike Pence and House Speaker Paul Ryan have all trekked to Georgia and the campaigns and outside groups have spent a record $50 million in the last six months, building the stakes and the suspense to unprecedented levels in a House district that had always been solidly Republican — until Trump finished barely ahead of Hillary Clinton there in the 2016 presidential election” Read more.

DON’T SLEEP ON SEPTEMBER FED HIKE — Pantheon’s Ian Shepherdson: “In the wake of last week’s rate increase, the fed funds future puts the chance of another rise in September at just 16 percent. After hikes in December, March and June, we think the Fed is trying to tell us something about their intention to keep going; this is not 2015 or 2016, when the Fed happily accepted any excuse not to do what it had said it would do.”

DRIVING THE WEEK — Trump meets with tech CEOs at the White House on Monday … Senate Finance has a hearing on the fiscal 2018 budget at 10:00 a.m. on Wednesday … American Bankers Assoc. holds a forum on payments on Thursday at 8:00 a.m. … Senate Agriculture Committee holds a hearing at 9:30 a.m. Thursday on the nomination of J. Christopher Giancarlo to be chairman of the CFTC … House Financial Services picks up the flood insurance debate on Wednesday … Senate Banking Committee has a hearing at 10:00 a.m. Thursday on Economic Growth … Chicago Fed President Charles Evans speaks at 7:00 p.m. in NYC on Monday … Index of Leading Indicators on Thursday at 10:00 a.m. expected to rise 0.4 percent.

TECH AND TRUMP — POLITICO’s Steven Overly: “The fraught relationship between the country’s leading tech executives and President Donald Trump is about to get even more tense. The latest uncomfortable moment arrives Monday, when top tech CEOs are expected to sit down with Trump at the White House to talk about modernizing government technology.

“Many of the companies have refused to confirm their attendance publicly, in a sign of how sensitive their dealings with the Trump administration have become in a liberal Silicon Valley that loathes his policies on issues like immigration and climate change. It’s just the newest example of a dynamic that has ensnared some of the industry’s leading figures” Read more.

CLINGER FOR FDIC — POLITICO’s Victoria Guida: “President Donald Trump … announced he intends to nominate House aide James Clinger as a member of the Federal Deposit Insurance Corp. and as chairman of the board once Martin Gruenberg’s term ends in late November.

“Clinger, who recently left the House Financial Services Committee, would serve a six-year term if confirmed. He worked for the committee for a combined 20 years, serving as assistant staff director, senior banking counsel and most recently chief counsel. From 2005 to 2007, in between decade-long stints on the Hill, he served as deputy assistant attorney general” Read more.

CLINGER REACT — Cap Alpha’s Ian Katz: “The choice of Clinger presumably gives committee Chairman Jeb Hensarling and House Republicans an ally at top of one of the key banking regulators. … The FDIC has arguably been the toughest regulator on banks in recent years. Under Clinger, we believe the agency would be more sympathetic than at any time since the financial crisis.

“The FDIC is important not only in its role in deposit insurance and safety/soundness oversight, but along with the Federal Reserve it’s the arbiter of living wills. At times, under Chairman Marty Gruenberg, the FDIC has been tougher in the living will process than the Fed”

NO PONIES FOR WALL STREET — Stan Collender in Forbes: “I’ve had enough of the very carefully worded, overly optimistic analyses coming from Wall Street and elsewhere about the many very positive things … Trump will soon be doing for the U.S. economy.

“Business and the people who invest in it need to stop looking for that pony in the ever-growing pile of you-know-what that’s inside the beltway these days. What it thought the day after Election Day Trump would do this year on the economy not only isn’t going to occur as quickly as expected, it’s increasingly unlikely to happen at all in 2017. And 2018 isn’t looking that promising either” Read more.

ASIAN STOCKS OPEN MIXED — Bloomberg’s Adam Haigh: “Stocks in Asia began the week mixed, while the euro headed higher as projections showed the party of France’s president won a large majority in parliamentary elections.

“The euro climbed against the dollar amid indications that Emmanuel Macron’s party is poised to win the biggest majority in 15 years. The pound slipped with formal negotiations on the U.K.’s exit from the European Union due to start. The kiwi climbed as a gauge of the services industry expanded at a faster pace.” Read more.

MORE ON CLINGER — FT’s Barney Jopson: “Trump has taken a big step towards loosening the shackles on Wall Street by nominating a Capitol Hill aide involved in efforts to rip up the Dodd-Frank act as one of the US’s most powerful bank regulators” Read more.

CEOS HAVE ACCESS, BUT DO THEY HAVE CLOUT? — WSJ’s Vanessa Fuhrmans and Peter Nicholas: “When tech industry executives gather at the White House Monday, brainstorming ways to modernize government will be on the agenda. But on display will be … Trump’s evolving relationship with America’s corporate chieftains. …

“[C]orporate leaders are learning about the limits of their clout. Hopes for an overhaul of the corporate-tax code this year are fading, some executives and corporate lobbyists say, as the White House and lawmakers struggle to reach consensus on a plan that could get through Congress” Read more.

GLOBAL INVESTORS SEE NEW WORRIES IN CHINA — NYT’s Michael Schuman: “While investors have been preoccupied with President Trump and chaos in Washington, nerve-rattling elections in Europe and the uncertainty created by Federal Reserve policy and Britain’s decision to leave the European Union, a once-familiar — and possibly bigger — risk to global markets has been bubbling in the background. China.

“Two years after China first set off investor alarm bells worldwide with a stock market crash, a slumping currency and concerns over rising debt, many investors have put those concerns out of mind. Shares of Chinese companies traded in Hong Kong and other places outside the mainland have surged to their highest levels since the crash, beating markets in other developing countries, as investors embrace China’s thriving technology and consumer scenes.” Read more.

BOND TRADERS COME OUT ON TOP AFTER RATE HIKES — Bloomberg’s Brian Chappatta: “It’s been 18 months since the Federal Reserve’s first post-crisis increase in interest rates. Four hikes in, investors in the $14 trillion Treasuries market are laughing all the way to the bank.

“ … Heading into the U.S. summer doldrums, traders seem almost resigned to the notion that a 10-year yield of 2 percent looks far more achievable than 3 percent. This week brings little in the way of significant U.S. data, leaving strategists at BMO Capital Markets contemplating trading patterns and seasonality that could drive yields even lower.” Read more.

BIG BANKS POISED TO STEP UP PAYOUTS — FT’s Ben McLannahan and Barney Jopson: “Big banks in the US are forecast to step up payouts to shareholders, as they clear the latest round of tests designed to ensure they could withstand a catastrophic shock to the system.

“After six years of annual stress tests, the likes of JPMorgan Chase, Wells Fargo and Goldman Sachs have built capital levels high enough to keep trading through the most severe downturn that the regulator can imagine. The banks have also been given repeat endorsements from the US Federal Reserve for the way they manage their risks.

“As a result, according to analysts at Goldman, about a dozen of this year’s 34 test-takers will put in requests for payouts in excess of profits — up from a handful last year. Banks returning more than 100 percent of earnings through dividends and share buybacks over the next cycle could include Citigroup and Morgan Stanley, Goldman said.” Read more.

WHAT’S AHEAD FOR THE GLOBAL ECONOMY? — WSJ: “This week, the U.S. will get a read on the housing market with existing- and new-home sales releases, a number of Federal Reserve officials will give their first public comments following the central bank’s decision to raise interest rates, and a purchasing managers index could show the eurozone economy lost some of its momentum in June.” Read more.

CONSUMERS TURN SHOPPING INTO A POLITICAL STATEMENT — FT’s Shannon Bond: “Fifty-seven percent of global consumers buy or boycott products because of a brand’s stance on political or social issues, according to a new survey, a sign of growing pressure on companies to weigh in on hot-button topics from immigration and climate change to transgender rights and fake news.

“Amplified by the megaphone of the internet, consumers have successfully pushed companies including JPMorgan, Coca-Cola, Mercedes-Benz and Delta Air Lines to pull their marketing dollars from controversial television programmes, unsavoury internet content and even a production of Shakespeare’s Julius Caesar.” Read more.

AUTO DEBT REMAINS WELL AFTER REPOSSESSION — NYT’s Jessica Silver-Greenberg and Michael Corkery: “For millions of Americans like Ms. Harris who have shaky credit and had to turn to subprime auto loans with high interest rates and hefty fees to buy a car, there is no getting out.

“Many of these auto loans, it turns out, have a habit of haunting people long after their cars have been repossessed. The reason: Unable to recover the balance of the loans by repossessing and reselling the cars, some subprime lenders are aggressively suing borrowers to collect what remains — even 13 years later.” Read more.

DIGITAL INVESTMENT SERVICES TURN TO NICHES — WSJ’s Anne Tergesen: “As the millennial investor comes of age, two youthful trends are converging: socially responsible investing and robo-advisory services.

“Over the past year, a small but growing number of firms have introduced automated — or ‘robo’ — investment services that include socially responsible investments. Driving the interest is a desire on the part of individuals to spend and invest in ways that are consistent with their values.” Read more.


POTUS Events


President Trump today hosts Panama President Juan Carlos Varela at the White House. He will also meet with technology leaders, including Amazon CEO Jeff Bezos, Apple CEO Tim Cook, PayPal co-founder Peter Thiel, and Google chief Eric Schmidt, who will be at the White House to give advice on ways to improve the government’s use of technology, according to reports.


Floor Action

The Senate meets at 4 p.m. with a 5:30 p.m. confirmation vote on FEMA administrator nominee Brock Long. The House is out but will be back Tuesday.

Senate Republicans are struggling to reach a consensus on their bill to repeal and replace ObamaCare ahead of a looming recess.

GOP lawmakers have spent weeks locked in closed-door meetings, as well as caucus lunches, discussing proposals.

But key policy choices, including what year to end the Medicaid expansion and whether or not to keep some of ObamaCare’s taxes, remain unanswered with less than two weeks until Congress is scheduled to leave town for the July 4th recess.

Conservatives are warning Senate leadership against moving the bill to far to the middle. They’ve specifically taken issue with a longer phase out of Medicaid expansion and keeping in place some of ObamaCare’s taxes for longer than the House bill.

“I think we shouldn’t have new entitlements that will go on forever in a Republican plan to fix healthcare,” Sen. Rand Paul (R-Ky.) told reporters. “We can’t pay for what we already have: Medicare, Medicaid and Social Security.”

Paul, and Sens. Mike Lee (R-Utah) and Ted Cruz (R-Texas) are considered three potential conservative “no” votes, though Cruz has largely held his fire. Both he and Lee are part of the working group convened by Majority Leader Mitch McConnell.

Meanwhile, Sen. Lisa Murkowski (R-Alaska), a moderate Republican and key vote, signaled late last week that she was still undecided on the Senate effort.

“I just truly do not know, because I don’t know where it’s going,” she told reporters.

She separately said in a letter that she’s “committed” to funding Planned Parenthood. The House bill defunds the group for a year.

Senate Republicans are walking a tightrope over the women’s health organization. Both Murkowski and GOP Sen. Susan Collins (R-Maine) oppose cutting off federal funding for the organization.

With 52 seats Republicans could theoretically pass a bill without the two senators, but would need to keep every other member on board and require Vice President Mike Pence to break a 50-50 tie.

Top GOP senators—including Sen. John Thune (R-S.D.), the No. 3 Republican—have expressed optimism that they would be able to vote on their legislation by the July 4th recess.

The move would allow them to use July to hash out differences with the House if the bill passes, or move on to a full calendar of other policy issues if it fails.

But McConnell has yet to publicly commit to a timeline, and Sen. John Cornyn (R-Texas), the No. 2 Senate Republican, has pointed to the August recess as the caucus’s self-imposed deadline.

Democrats are also stepping up their attacks on the GOP healthcare bill, dinging Republicans for refusing to discuss the yet-written legislation in public.

Minority Leader Chuck Schumer (D-N.Y.) sent a letter to McConnell late last week, requesting an all-senators meeting so the two sides could “come together to find solutions to America’s challenges.”

“Please accept our invitation to sit down together in the old Senate Chamber so we can hear your plans and discuss how to make healthcare more affordable and accessible,” Schumer wrote.

Democrats also introduced legislation that would block Republicans from bringing their ObamaCare repeal and replace legislation up for a vote under reconciliation—the fast-track progress that lets its pass by a simple majority—without first giving it a hearing.

Gianforte takes office

Republican Greg Gianforte will take the oath of office on Wednesday afternoon, a month after he assaulted Ben Jacobs, a reporter for The Guardian, the night before a special election.

He’ll be sworn in as a House member just over a week after pleading guilty to the assault. Gianforte was sentenced to 40 hours of community service and 20 hours of anger management counseling, along with a $385 fine.

Gianforte had already pledged to donate $50,000 to the Committee to Protect Journalists while issuing a full apology to Jacobs.

His swearing-in will take on added significance after last Wednesday’s shooting at the GOP baseball practice in Alexandria, Va.

Lawmakers have been calling for greater political civility in the aftermath of a gunman shooting four people, including House Majority Whip Steve Scalise (R-La.).

Scalise remains in the hospital and is expected to remain there for weeks as he recovers from multiple surgeries since a bullet pierced his hip.

Gianforte said in an interview with the Associated Press on Friday that lawmakers are obligated to tone down the partisan rancor.

“I believe that good things can come out of bad,” Gianforte said. “It’s important to make sure we reach out to all parties and hear their voice. I think the other parties have an obligation, as well, to be respectful and in that dialogue.”

Gianforte’s campaign initially issued a statement describing the altercation as “aggressive behavior from a liberal journalist.” But he later apologized at his campaign victory rally the next day after winning the special election over Democrat Rob Quist.

Gianforte is sure to attract massive media interest as soon as he steps into the Capitol Hill complex on Wednesday.

Capitol Hill is a uniquely accessible place for journalists, who are authorized to freely roam just about anywhere on the campus. They congregate outside the House and Senate chambers during votes, and walk up to lawmakers making their way inside to ask questions on behalf of the public.

Gianforte will be closely watched on how he handles the crowds of reporters that are sure to gather around him, put their recorders near his face and ask relentless questions.

Some Democratic lawmakers and the Democratic Congressional Campaign Committee have called on the GOP to refuse to let Gianforte be sworn into office after he admitted to a crime.

But GOP leaders have shown no indication they would refuse to let Gianforte into their ranks.

Russia probe

For the third week in a row, a witness will be called before Congress to testify publicly about Russia’s interference in last year’s election.

Former Homeland Security Secretary Jeh Johnson will appear before the House Intelligence Committee on Wednesday to discuss Russian efforts to breach U.S. election systems.

Johnson’s testimony will come after Attorney General Jeff Sessions, former FBI Director James Comey and the heads of the nation’s security agencies appeared before the Senate Intelligence Committee this month.

The House and Senate Intelligence Committees are conducting two separate investigations into Russia’s election meddling.

The House Appropriations Committee, meanwhile, will also hold a hearing that could result in questions about the FBI’s investigation into Russia’s role in the election and potential ties with President Trump’s campaign.

Acting FBI Director Andrew McCabe will appear before an Appropriations subcommittee to testify about the agency’s budget, but is sure to get questions about the Russia probe.

In the Senate, the Intelligence Committee plans to host a hearing also on Wednesday about potential cyber threats in the 2018 and 2020 elections. That hearing will feature testimony from DHS and FBI officials leading cyber and intelligence divisions.

Workforce development, environmental processes

The House is slated to consider legislation by Rep. Carlos Curbelo (R-Fla.) to create grants for states to conduct projects that help low-income individuals enter the workforce.

Curbelo introduced the bill with Illinois Democrat Danny Davis, which should pave the way for a bipartisan vote this week.

“Poverty is an issue that affects each our districts. We need innovative solutions that can help get people on track to a brighter future,” Curbelo said as the House Ways and Means Committee considered the legislation last week.

Floor consideration of both bills comes after Trump signed an executive order last week aimed at expanding apprenticeships to help people with job training. The order directs the Labor Department to create new rules allowing companies, industry groups and unions to make their own programs to be approved by the agency.

Lawmakers will also consider legislation to streamline the process for utility companies to remove trees near transmission lines as a way to limit the risk of wildfires and streamlines agency coordination for reviews to construct new surface water storage projects.

About Thomas Krebs

Securities litigation, regulation and compliance attorney.