Posts Tagged ‘Trump administration’

Trump Rescinds Obama Transgender Bathroom Rules

February 23, 2017

Education, Justice departments say local school districts and state governments should have ‘primary role’ in setting policy

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A bathroom sign in Durham, North Carolina, protests a 2015 law restricting transgender bathroom access.

The wall Street Journal
Updated Feb. 22, 2017 10:43 p.m. ET

WASHINGTON — The Trump administration on Wednesday formally withdrew Obama administration rules granting transgender individuals access to the sex-segregated facilities of their choice, including bathrooms.

In an official letter to the civil-rights divisions of the departments of Justice and Education, Acting Assistant Attorney General for Civil Rights T.E. Wheeler and Acting Assistant Secretary for Civil Rights Sandra Battle wrote that the administration was withdrawing the Obama rules because they didn’t “contain extensive legal analysis or explain how the position is consistent with the express language of Title IX, nor did they undergo any formal public process.”

They added that former President Barack Obama’s rules had set off “significant litigation,” in particular as courts differed over the definition of the term “sex.” The letter also emphasized the agencies’ preference that states and local school districts be given a “primary role” in setting education policy.

Last year, the Obama administration had warned states, including North Carolina, that such requirements violated the Civil Rights Act, which broadly bars discrimination on the basis of sex. The guidance staked a position in a contentious debate about transgender rights, including whether schools and states can require people to use sex-segregated facilities, including bathrooms, that correspond to the sex on their birth certificates.

An expanded version of this report appears on

Ukraine leader praises ‘effective’ dialogue with Trump

February 22, 2017


© AFP | Ukraine President Petro Poroshenko (left) claims he had a “very important meeting” with US Vice President Mike Pence in Munich, on February 18
KIEV (AFP) – Ukrainian President Petro Poroshenko said Wednesday he has had two “very effective” conversations with US counterpart Donald Trump and was confident of building strong relations with Washington.Much of Ukraine’s establishment had feared that Trump’s unexpected rise to power and praise for Russian President Vladimir Putin would come at their country’s expense.

Kiev and its allies accuse Moscow of sparking and backing a 34-month war in Ukraine’s separatist east aimed at keeping the ex-Soviet republic under its thumb — a charge that Russia denies.

Poroshenko told a meeting of Ukraine’s top brass that he “had two very effective conversations with US President Donald Trump.”

Poroshenko added he had a “very important meeting” with US Vice President Mike Pence on the sidelines of this weekend’s Munich Security Conference.

He said he also spoke by phone with US Secretary of State Rex Tillerson.

“At the moment, I am happy how we are building bridges (with Washington), and how our dialogue is working out for the best with the US administration,” Poroshenko said.

Trump had previously shown a certain lack of knowledge about Ukraine — particularly Russia’s annexation of Crimea in March 2014 — and heaped repeated praise on Putin.

But Russia’s media has in recent days scaled back fawning coverage of the US leader.

Some analysts believe that Putin is unsure about what precise international course the new US leader intends to take.

Ukraine’s former pro-Russian president Viktor Yanukovych, who was toppled by a 2014 pro-European uprising, on Wednesday released a letter to Trump urging the US leader to “take urgent and exhaustive measures” to end the separatist conflict in eastern Ukraine.


Fed Minutes Could Offer Hints on Timing of Rate Rises, Balance Sheet Moves

February 22, 2017

Minutes also could show how central bankers view recent data showing rising inflation


Updated Feb. 22, 2017 5:59 a.m. ET

The Federal Reserve left interest rates unchanged at its Jan. 31-Feb. 1 meeting, issuing a statement that skirted any signals about the timing of future rate increases, the central bank’s plans for its portfolio of assets or its take on the Trump administration’s fiscal policies. Minutes from that meeting, set for release at 2 p.m. EST Wednesday, could offer details of any internal discussions of these issues and others. Here’s what to watch:


A March Signal

Since the meeting, Fed officials have sounded increasingly comfortable about raising rates, perhaps as soon as the next gathering, on March 14-15. Philadelphia Fed President Patrick Harker said a move in March is possible, and Dallas Fed chief Robert Kaplan said rates should rise “sooner rather than later.” Chairwoman Janet Yellen said last week the Fed would consider raising rates “at our upcoming meetings,” a phrase that left open the possibility of a March move without committing to one. The minutes could offer a better sense about policy makers’ readiness to raise rates next month.

Balance Sheet Blues

What to do about the Fed’s roughly $4.5 trillion portfolio of assets, or balance sheet, has become one of the year’s biggest questions. Some officials have hinted at a willingness to begin shrinking the balance sheet in the near future, but the February meeting statement didn’t address the topic. Speaking before Congress last week, Ms. Yellen said she was unwilling to use the balance sheet as a monetary policy tool, a contrast with some ideas floated by some of her colleagues. The minutes could shed light on the internal debate among officials about the future of the Fed’s portfolio.

Fiscal Policy

The meeting statement made no mention of the economic and monetary consequences of the Trump administration other than a nod to improving consumer and business sentiment readings. Minutes from the Fed’s December meeting indicated officials were split over how to incorporate possible fiscal policy changes into their forecasts. The minutes to be released Wednesday could show whether officials have come to some sort of consensus over how to factor possible tax and spending changes into their monetary policy decision-making.

Is Inflation for Real?

Inflation, measured by the Fed’s preferred personal-consumption expenditures price index, has been rising, moving up by 1.6% on the year in December. But it is unclear how much of that increase reflects a short-lived bump from the uptick in oil prices and how much of it is due to underlying strength in the economy. The minutes could help us understand how Fed officials are interpreting recent inflation numbers.

Lurking Dangers

The economy’s recent strong patch and talk about the Trump administration’s fiscal priorities — such as tax cuts and spending boosts — have bred speculation that the economy could perform better than expected this year. But that doesn’t mean there aren’t threats still abroad. Although the Chinese economy seems more stable than it did this time last year, it still is grappling with a credit boom. And the eurozone could see new waves of volatility as Greece launches another round of debt negotiations. Do Fed officials see any lurking dangers on the international scene? The latest statement didn’t say, but the minutes might.


Conservative Pundit Sebastian Gorka Brings ‘Global Jihadist Movement’ Theory Into White House

February 21, 2017

Critics say policy addressing terrorism primarily as a religious problem reinforces notion that U.S. is at war with Islam

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Updated Feb. 21, 2017 12:28 a.m. ET

In the days before President Donald Trump signed the Jan. 27 executive order blocking immigrants and refugees from seven majority-Muslim countries, only a small circle of advisers reviewed the document.

One was Sebastian Gorka, a terrorism researcher and conservative pundit who has gone on to become the administration’s most visible and passionate defender of the ban and increasingly its go-to spokesman on national security issues.

“I’m not going to comment on whose hand was holding the pen,” Mr. Gorka said in an interview, declining to spell out whether he helped draft the immigration order. “I was asked to look at the executive order before it was signed by the president.”

The ban didn’t target Muslims, Mr. Gorka said in its defense, but focused on seven countries that “represent the hotbed of primary jihadi activity today.”

That jihadist activity has been the focus of Mr. Gorka’s work for more than two decades. In blog posts and articles on Breitbart News and elsewhere, in TV appearances and lectures, as well as in a book published last year, he has described a theory of terrorism that he calls the “global jihadist movement,” which he says takes its marching orders from the Quran and from manifestos by militants and terrorist leaders.

Mr. Gorka has now taken that view into the center of power at the White House, where he is part of the new White House Strategic Initiatives Group. He said he reports to Jared Kushner , Mr. Trump’s adviser and son-in-law; Reince Priebus, the White House chief of staff; and Steve Bannon, the president’s chief strategist.

The Strategic Initiatives Group has been described by some U.S. officials and experts as a parallel National Security Council, writing executive orders with relatively little input from policy officials and subject matter experts. This organization has posed an impediment to Mr. Trump’s efforts to fill the position of national security adviser , with at least two candidates turning down the job because the president wouldn’t give them control over staffing, according to current and former officials familiar with the matter.

Mr. Gorka is a rhetorical pugilist, and his eagerness to confront the Obama administration’s counterterrorism policies has made him a fixture on conservative talk shows and a frequent lecturer to law enforcement and military groups. He attracted the attention of the Trump campaign, which paid him $8,000 in 2015 for policy consulting, federal records show.

But Mr. Gorka also has turned some leading counterterrorism experts and scholars against him because of what they see as his singular focus on Islam as the motivation for terrorism.

“I don’t see him in the mainstream of counterterrorism scholars, and he would also make himself out not to be in the mainstream,” said Clinton Watts, a fellow at the Foreign Policy Research Institute and a former Army officer and FBI special agent. To Mr. Watts and some other experts, Mr. Gorka has bundled disparate groups working at cross-purposes—including Islamic State, al Qaeda, the Muslim Brotherhood, Hamas and Hezbollah—under his single umbrella of global jihad.

In Mr. Gorka’s worldview, they say, violence is a feature of Islam, not a bug. And his insistence that U.S. policy address terrorism primarily as a religious problem, rather than as the result of overlapping factors such as poverty, social immobility, or lack of education, will reinforce the notion that the U.S. is at war with Islam, an idea that two previous presidential administrations strove to combat, his critics say.

To Mr. Gorka’s supporters, that focus on the religious roots of terrorism is precisely what’s been lacking for nearly a decade.

“What he does focus on, which is 180 degrees from the last administration, is the war of ideas,” said James Carafano , a national security expert at the Heritage Foundation who said he has known Mr. Gorka for about 15 years. “I think the notion that we can fight the ideology without discussing and referencing the religion is kind of ridiculous. It’s like combating communism without discussing Karl Marx,” Mr. Carafano said.

The jihadist movement, Mr. Gorka writes in his book “Defeating Jihad: The Winnable War,” includes terrorist groups with different goals that hail from different religious sects. But they share “a vision of the future world that is exclusive and absolutist,” he writes. “Either the whole planet is under their control or they have lost. There is no middle ground.”

“America and her allies are in a war with people who do what they do to please their God and obtain salvation by serving him as warriors,” Mr. Gorka wrote in a 2015 post for Breitbart, a site popular with the alt-right, a loose agglomeration of far-right groups that embrace tenets of white supremacy or say they reject mainstream conservatism.

The art of the North Korean deal

February 21, 2017

SEOUL • United States President Donald Trump’s surprisingly restrained reaction to North Korea’s latest ballistic missile test has left many observers wondering what his next move will be.

Mr Trump has publicly declared that North Korea’s goal of developing a nuclear-capable missile that can reach the US “won’t happen”. But what, specifically, will he do to prevent it?

Some might advise the Trump administration to launch pre-emptive strikes on North Korea’s nuclear facilities.

But this is a dangerous and ineffective option, because North Korea would then likely retaliate against South Korea. South Koreans do not want to risk a war, so a US-provoked attack by North Korea would be catastrophic for the US-South Korean alliance.

Moreover, North Korea recently developed missiles with solid-fuel engines, which can be stowed away until just before they are launched, making it technically difficult to identify the right targets – and the right times to strike them.

Another possible response to the North Korean threat is tougher international sanctions, including secondary boycotts. But sanctions that are strong enough to make North Korea’s “Young General” Kim Jong Un think twice about his latest provocations will require China’s cooperation, and securing it will not be easy.

Earlier this month, North Korea tested a new ballistic missile.

North Korea’s latest ballistic missile is an ICBM. AFP photo


Chinese leaders might interpret overly aggressive secondary boycotts as being aimed not only at North Korea, but at China, too. And with the Communist Party of China’s 19th National Congress looming later this year, President Xi Jinping will not want to be perceived as giving in to US pressure.

We know from more than two decades of nuclear diplomacy with North Korea that, to achieve a positive outcome, the Trump administration will have to resolve two fundamental dilemmas.

And while past political leaders have preferred to sweep them under the carpet, Mr Trump’s unique, untraditional leadership and negotiating style could enable him to make progress where his predecessors did not.

The first dilemma concerns China. Any diplomatic effort to denuclearise North Korea must also alleviate China’s geostrategic concerns about the future of the Korean peninsula. For centuries, China has feared that the peninsula could become part of a chain of encirclement, or serve as an invasion route. In 1592, Japanese general Toyotomi Hideyoshi invaded the Korean kingdom to establish a beachhead for invading China. In response, China, under the Ming Dynasty, fought alongside Korea against the Japanese army.

Three centuries later, China’s Qing Dynasty fought the Sino-Japanese War of 1894 to prevent Japan from dominating Korea. And again, in the winter of 1950-1951, Chinese Communist Party chairman Mao Zedong intervened in the Korean War when the US Army crossed the 38th Parallel and advanced towards China’s border.

China’s current leaders share their forbears’ strategic concerns about the Korean peninsula, which explains their unwillingness to fully meet US demands for action against North Korea.

China simply does not want to run the risk of its North Korean buffer state imploding as a result of sanctions. And, because they understand China’s strategic imperative, North Korea’s leaders have felt free to develop their country’s nuclear programme.

Mr Trump and Mr Xi have had their first phone conversation, and may soon meet in person. My hope is that Mr Trump will live up to his reputation for boldness, and propose a grand bargain with China that alleviates its geostrategic worries about the Korean peninsula.

Unless the North Korea problem is separated from the strategic competition between the US and China, diplomatic efforts will continue to fail. So, Mr Trump could promise China that his administration will not seek regime change in North Korea, and instead offer security guarantees if North Korea denuclearises.

Alternatively, he could offer to withdraw the US’ new Thaad (Terminal High Altitude Area Defence) anti-missile system – to which China has objected – from South Korea as soon as North Korea scraps its nuclear programme.

Mr Trump could then demand that, in exchange, China cooperate wholeheartedly on sanctions and other efforts to persuade North Korea to abandon its nuclear ambitions. With such a deal in place, China’s existing proposal – denuclearisation alongside a peace treaty to bring a formal end to the Korean War – would become achievable.

But assuaging China’s strategic concerns brings us to the second dilemma at the heart of the current impasse: North Korea’s own security. In the brutal world of international relations, a small, weak and isolated country like North Korea can feel threatened by its neighbours even when they mean it no harm. To compensate for its perceived vulnerability, it strengthens its military and acquires powerful deterrents such as nuclear weapons. But this becomes a vicious circle, because its neighbours interpret its actions as a provocation, and start to feel threatened themselves.

Former US president Bill Clinton acknowledged this problem and tried to address it. Under the 1994 Geneva Agreed Framework, the Clinton administration succeeded in freezing North Korea’s nuclear activities for several years, by promising to improve US-North Korea relations. And although Mr George W. Bush’s administration consigned North Korea to its “Axis of Evil”, it also recognised the North’s security dilemma and tried to address it through the Six-Party Agreement on Sept 19, 2005.

Critics of this approach think that the US has bought the same horse twice and should focus on sanctions, while waiting for North Korea to make the next move.

But sanctions are not effective without robust Chinese support. And North Korea has taken advantage of the diplomatic pause in recent years to develop its nuclear and missile technologies. As a result, we are in a worse place now than when we started.

During his presidential campaign, Mr Trump said he would “have no problem” speaking to Mr Kim. He now has a chance to do just that, by exploring the possibility of a comprehensive deal with North Korea, based on a US security guarantee and economic incentives.

But Mr Trump should go down this road only if he is also willing to address China’s strategic concerns.

If he can strike simultaneous deals with China and North Korea, even his harshest critics will recognise his masterstroke.


•Yoon Young Kwan, South Korea’s former foreign minister, is Professor Emeritus of international relations at Seoul National University.

A version of this article appeared in the print edition of The Straits Times on February 21, 2017, with the headline ‘The art of the North Korean deal’.

President Trump’s Foreign Policy Failures Are Alarming Europe — Time to Formulate a Long Term Strategic Vision — A “Trump Doctrine”

February 21, 2017
Clockwise from top left: A US and a EU flag side by side, a tank in east Ukraine, an anti-Brexit protest in the UK, German troops travelling for a Nato exercise
Mr Trump’s comments on Nato and Brexit have unsettled allies in the EU. Photos by Getty and AP
By James Stavridis
Admiral Stavridis was the 16th Supreme Allied Commander at NATO and is Dean of the Fletcher School of Law and Diplomacy at Tufts University
Feb 20, 2017

In the Bible’s Book of Exodus, the Egyptian Pharaoh sends his massive army in pursuit of fleeing Israelis until the sea closes over them with disastrous result: “And the Egyptians pursued, and went in after them to the midst of the sea, even all Pharaoh’s horses, his chariots, and his horsemen” (Exodus 14:23). At the moment, it feels as though U.S. foreign policy is a bit like the Egyptian army, charging into a highly dangerous situation, with waves about to come crashing down and little thoughtful leadership on display.

At the prestigious Munich Security Conference, for example, European anxiety over U.S. erratic foreign policy choices thus far was on constant display. Europeans over the weekend cited Trump’s highly ambivalent commentary on Russian aggression, the potential jettisoning of the two-state solution in Israel, and the dramatic volte-face on challenging China’s “one-China” policy. The Europeans were particularly rattled by a sense that support to NATO was purely transactional — essentially conditional based on how much they chipped into the alliance coffers.

German Chancellor Angela Merkel gave by far the best speech at the conference, providing a firm argument against the idea that Europe is the only beneficiary of the trans-Atlantic relationship. Her point, well phrased from a platform that included unpersuasive canned statements from new U.S. Secretary of Defense Jim Mattis and U.S. Vice President Mike Pence (both of whom declined to answer questions from the floor), was logical and well-received: the U.S. benefits greatly from the trans-Atlantic relationship. She is correct.

While personally moderating a key panel at the Munich Security Conference on the future of the alliance that included Defense Ministers from five NATO nations (the U.K., France, Netherlands, Canada and Turkey), I could feel the nervousness in their voices.


Europe represents the best pool of partners we have in the world. They share our values; are situated in a critical geostrategic region between the U.S., Russia, the Middle East and Africa; are a fundamental part of our economy (with $4 trillion annually crossing the Atlantic); collectively have the second largest defense budget in the world (behind only the U.S.) as NATO partners; and have exceptional technology sharing to offer us in Internet, artificial intelligence, medicine and other cutting-edge 21st century sectors. They should meet the 2% of GDP goal for military spending, and are working to get there — but overall, they are crucial to our global security strategy. At the moment they are confused and bruised, and the foreign policy of the U.S. feels incoherent. What should we do?

First, the Trump Administration desperately needs to get the interagency policy in gear. Far from the “well-oiled machine” described by the President, it is badly out of sync and clearly misfiring. The new National Security Adviser who replaces the disgraced General Mike Flynn will have his hands full and must have the authority to pick his own team, starting with the crucial deputy job. We need to have a regular schedule of Deputy and Principal Committee meetings, which thus far have not been convening. What is said at the U.N. by Ambassador Nikki Haley, for example, must line up with presidential tweets and press conferences. The glaring disconnects are becoming extremely noticeable and are discouraging to our closest allies while providing ammunition to anti-U.S. narratives.

Second, political operatives like Steve Bannon should not be formal appointees to the Principals Committee. More than one European pointed out that having a purely political voice in that body is not so far from the Soviet system of having a political officer in every security unit — remember the commissar on board the defecting Russian submarine in The Hunt for Red October? Captain Ramius had to eliminate him in order to execute his plan. The President certainly deserves the advice of people he trusts — but that can come offline, not amid the deliberations.

Third, the second- and third-tier appointees in the national-security space have to be prioritized and moved forward immediately. The Democrats have a significant responsibility to ensuring this happens, but most observers believe that much of the fault is in a disorganized transition team. We cannot construct let alone execute complex foreign and security policy with only Mattis, Secretary of State Rex Tillerson and Secretary of Homeland Security John Kelly — they need talented and experienced teams around them.

Fourth, we need to rehearse for the obvious potential crises. Has the new team gamed out what we will do in the case of another North Korean nuclear test? An Iranian provocation on the waters of the Arabian Gulf against a U.S. warship? A major terrorist incident here in the U.S. by the Islamic State? Another Russian cyberintrusion, perhaps against our financial system? All of these are hardly black swans — we know they are coming. Have we thought through roles, responsibilities and responses? Probably not, and it is time to do so with the new hands on the team.

Fifth, and most importantly, the Trump team has to lay out some basic and fundamental strategic principles as they construct a coherent world view and ultimately a full blown international security strategy. A few good starting points would include: making NATO and Europe the centerpiece of our global relationships in Eurasia; strengthening our relationships with Japan and South Korea; replacing the defunct Trans-Pacific Partnership with a web of bilateral relationships quickly before China steals a march on us; working to bring the Sunni Arab world and the Israelis closer together in creating a bulwark against Iran; improving our increasingly fraught relationship with Mexico and building ties with Colombia (an emerging powerhouse in Latin America); focusing on India as a potential long range partner and counterweight to China; and confronting Russian aggression with international pressure.

Right now, the plan seems to echo the Pharaoh’s approach — charge full speed at the nearest problem. But, quite predictably, the waves will come crashing down soon. A better approach would be to map out a coherent course, build a solid team, and marshal our friends and allies. We are galloping all too swiftly into danger.

Photos at top:


The Opinion Pages | OP-ED CONTRIBUTORS

Why the World Needs a Trump Doctrine

Washington — The global order is in disarray. The world is sliding into significant disorder with no international structure capable of handling the kinds of problems that are likely to erupt almost simultaneously. To compound it all, chaos among the major powers could generate truly disastrous consequences.

So far, President Trump has failed to formulate any significant, relevant statements about the global condition. Instead, the world has been left to interpret the sometimes irresponsible, uncoordinated and ignorant statements of his team.

Self-promoters seeking important positions should not be permitted to create the impression that their sometimes simplistic and extremist terminology is becoming national policy. The recent public embarrassment over American policy toward the Kremlin, culminating in the resignation of Michael T. Flynn as national security adviser after just 24 days in the job, speaks for itself.

While we did not support Mr. Trump, he is the president of the United States. He is our president, and we want him to be a success. Right now, he does not look like that to the rest of the world, or to us.

A vulnerable world needs an America characterized by clarity of thought and leadership that projects optimism and progress. “Make America Great Again” and “America First” are all very well as bumper stickers, but the foreign policy of the United States needs to be more than a campaign slogan.

So we would advise the president to give an address that offers a bold statement of his vision, including his determination to provide America’s leadership in the effort to shape a more stable world. This speech should not be a detailed blueprint for American foreign policy, but rather serve as a much-needed reminder that the president of the United States is on watch, is actively engaged and has a sense of historical direction.

What we need to hear from our president is why America is important to the world and why the world needs America. At the same time, he can take advantage of the opportunity to point out what the United States expects from the world.

We may disagree with President Trump on day-to-day decisions, but we urge him to recognize that the ideal long-term solution is one in which the three militarily dominant powers — the United States, China and Russia — work together to support global stability.

Much hinges on the degree to which America and China can engage in successful dialogue. This would open the way for a more serious, strategic Sino-American understanding. That, in turn, could create the basis for a more lasting understanding among all three major powers, since Russia would realize that if it were not included in a Sino-American accommodation, its interests would be at risk.

America must also be mindful of the danger that China and Russia could form a strategic alliance. For this reason, the United States must take care not to act toward China as though it were a subordinate: this would almost guarantee a closer tie between China and Russia.

More immediately worrying is the problem posed by North Korea, which will require increased cooperation among North Korea’s more powerful neighbors, including China and Japan (and potentially Russia), as well as the United States. Isolated American efforts are unlikely to move Pyongyang in a positive direction.

If the United States is to improve its relationship with Russia, it must renew both sides’ acknowledgment that a commitment to abide by law is central to the international order. A superficial show of better relations must not be a cover for deception, maneuvering or violence against weaker neighbors. President Trump’s desire for constructive engagement with Russia is sensible, but there has to be a framework of acceptable conduct that, unfortunately, does not exist at present.

Russia is confronted by non-Russian former Soviet republics like Ukraine and Uzbekistan consolidating their independence, while China’s economic penetration of Central Asia has also reduced Russia’s role in that region. The stakes for all three major powers are high, but so are the potential rewards — and they know it.

In the near term, America should aim for specific regional agreements with partners like Japan and Britain, as these relationships will be essential for managing regional affairs. In this regard, the administration’s steps to reaffirm America’s commitment to defend Japan and South Korea are encouraging. But as the linchpin of NATO, America must also be ready to defend Western and Central Europe.

With his background, President Trump knows the power of business. The United States should make clear to Russia that any military incursion into Europe, including the “little green men” tactics seen at the beginning of the conflict in eastern Ukraine, would incur a punitive blockade of Russia’s maritime access to the West that would affect nearly two-thirds of all Russian seaborne trade.

Given the Trump administration’s abysmal performance so far in installing a leadership capable of strategic decision making, it is crucial that America and the world hear a vision of leadership and commitment from our president. A Trump Doctrine, any doctrine more or less, is sorely needed.

Army Lt. Gen. H.R. McMaster is named President Donald Trump’s national security adviser

February 20, 2017

The Associated Press

Army Lt. Gen. H.R. McMaster has been named President Donald Trump’s national security adviser.

Lt Gen HR McMaster

Gen McMaster was awarded the Silver Star for bravery for his service during the Gulf War. AP photo

He’s replacing former National Security Adviser Michael Flynn, who resigned after reports he misled Trump administration officials about his contacts with Russia’s ambassador to the U.S.

Trump made the announcement while at his Mar-a-Lago estate in Florida, and noted that Lt. Gen. Keith Kellogg, who has been acting NSA since Flynn left, will remain as the chief of staff for the National Security Council.

“That combination is something very, very special,” Trump said of McMaster and Kellogg.

Trump noted that he has “tremendous respect for the people I met with” for the role, including former United Nations ambassador John Bolton, who Trump said is going to work with his administration in a “somewhat different capacity.”

U.S. senators consider sanctions against Iran for missile development

February 19, 2017

U.S. Republican senators plan to introduce legislation to impose further sanction on Iran, accusing it of violating U.N. Security Council resolutions by testing ballistic missiles and acting to “destabilize” the Middle East, a U.S. senator said Sunday.

“I think it is now time for the Congress to take Iran on directly in terms of what they’ve done outside the nuclear program,” Senator Lindsey Graham, a member of the Senate Armed Services Committee, told the Munich Security Conference.

Graham said he and other Republicans would introduce measures to hold Iran accountable for its actions.

Tensions between Tehran and Washington have risen since a Iranian ballistic missile test which prompted U.S. President Donald Trump’s administration to impose sanctions on individuals and entities linked to the country’s Revolutionary Guards.

“Iran is a bad actor in the greatest sense of the word when it comes to the region. To Iran, I say, if you want us to treat you differently then stop building missiles, test-firing them in defiance of U.N. resolution and writing ‘Death to Israel’ on the missile. That’s a mixed message,” Graham said.

Senator Christopher Murphy, a member of the Senate Foreign Relations Committee, told the same panel there was nothing preventing Congress from imposing sanctions beyond those that were lifted as a result of the 2016 nuclear agreement with Iran.

Murphy, a Democrat, told the panel that he had backed the nuclear deal in the explicit understanding that it would not prevent Congress from taking actions against Iran outside the nuclear issue.

“There’s going to be a conversation about what the proportional response is,” Murphy said, referring to Iran’s missile test. “But I don’t necessarily think there’s going to be partisan division over whether or not we have the ability as a Congress to speak on issues outside of the nuclear agreement.”

Murphy said the United States needed to decide whether it wanted to take a broader role in the regional conflict.

“We have to make a decision whether we are going to get involved in the emerging proxy war in a bigger way than we are today, between Iran and Saudi,” he said.

Iranian Foreign Minister Mohammed Java Zarf told the conference earlier on Sunday that Iran did not respond well to sanctions or threats.

(Reporting by Andrea Shalal and John Irish. Editing by Jane Merriman)


Court to Reconsider Authority of SEC Administrative Law Judges

February 19, 2017

Appeal concerns sanctions on securities professional who says SEC judge served in unconstitutional capacity

A federal appeals court will take another look at the powers of administrative law judges who consider Securities and Exchange Commission cases.

A federal appeals court will take another look at the powers of administrative law judges who consider Securities and Exchange Commission cases. PHOTO: ANDREW HARNIK/ASSOCIATED PRESS

A federal appeals court on Thursday threw into disarray a pillar of the Securities and Exchange Commission’s enforcement strategy, saying it would take a new look at the legitimacy of the agency’s in-house court system.

The U.S. Court of Appeals for the District of Columbia Circuit said it would reconsider an appeal that argues the SEC’s use of administrative courts is unconstitutional. The argument was made by Raymond Lucia, a California financial adviser and radio personality who was accused of misleading investors about a strategy he called “Buckets of Money.”

The appeals court’s decision wipes out what had been an earlier SEC victory in the case and creates more uncertainty about the outcome of other lawsuits over the agency’s in-house courts. In August, a panel of judges on the D.C. Circuit dismissed Mr. Lucia’s appeal, which argued the process for hiring administrative-law judges violates a clause of the U.S. Constitution that governs presidential and other appointments. In a separate ruling in December, an appeals court in Denver ruled the in-house courts don’t meet constitutional requirements.

The D.C. Circuit said Thursday it would reconsider Mr. Lucia’s case with a larger roster of judges participating in the review and set a new hearing for May 24. Mr. Lucia is fighting a 2013 decision by an SEC administrative judge that found he committed fraud and permanently barred him from working as a financial adviser. An SEC spokesman declined to comment.

The SEC first sued Mr. Lucia in 2012, saying his claims that he extensively backtested his strategy were false. Mr. Lucia promoted “Buckets of Money” as a way for retirees to earn steady income while using riskier investments to grow their nest eggs.

Mr. Lucia argued the SEC overreached by labeling his conduct as fraud. He also claimed the punishment imposed by the SEC judge—a lifetime ban from the industry—was excessive.

The SEC has been fighting a flurry of legal challenges to its administrative courts, which have seen more action since 2010, when Congress expanded the agency’s discretion to bring claims through the system. The challengers argue the judges should have been appointed by the five members of the commission, who are appointed by the U.S. president, but were instead hired through a personnel office. That violates the Constitution’s appointments clause, they say.

Several lower courts have found the argument persuasive and said the SEC’s use of the courts was “likely unconstitutional.” A loss at the D.C. Circuit likely would prompt the agency to appeal to the U.S. Supreme Court, said Samuel Buell, a professor at Duke University Law School.

The Wall Street Journal has analyzed the SEC’s use of administrative judges in a series of articles. Defendants say the SEC enjoys a home-field advantage in its courts, while the agency argues the judges are independent and especially knowledgeable about market regulations.

The SEC could address the complaints by having commissioners appoint its judges. That would eliminate the problem for any future cases, defense attorneys say. The SEC still could maintain an order isn’t required to hire the judges, protecting itself from pending litigation.

But it isn’t clear the agency’s new leadership wants to do that. Republicans, who will control the SEC under the Trump administration, have been critical of the expanded use of in-house courts. Michael Piwowar, the agency’s acting chairman, warned in a 2014 speech that SEC enforcement attorneys can use the in-house courts to “create new interpretations of the laws or regulations or impose new regulatory requirements.”

Fixing the manner in which administrative judges are appointed might only make it easier to pursue more cases in its administrative courts, Mr. Buell said.

“If that view of the world is getting a hearing in the Trump administration and on the Hill, they might not do anything to fix this,” Mr. Buell said. “And that could lead to a significant shift in the SEC enforcement process—a real cutting back on the availability of administrative proceedings.”

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Trump’s Man for the SEC: Time to Ease Regulation

February 19, 2017

Jay Clayton’s legal work has dealt with some of the biggest challenges agency has faced

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Feb. 19, 2017 7:00 a.m. ET

In late November, Jay Clayton was called by a longtime client seeking advice for how the Trump administration should tackle scaling back rules on Wall Street.

Mr. Clayton, a partner at Sullivan & Cromwell LLP who has represented Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc., dashed off an email explaining how government could promote growth by easing what he considered unnecessary regulations on raising capital, according to a person familiar with the matter. The correspondence was shared with Trump advisers, who were impressed and asked if there might be a position that would interest him. Mr. Clayton replied: “SEC chairman.”

Shortly after a late-December meeting with then-President-elect Donald Trump in Mar-a-Lago, Fla., he was offered the job.

Through his memo and subsequent meetings, the person said, Mr. Clayton assured the Trump team he shared their fear that public markets have become much less attractive than private fundraising channels, including mutual funds that pour millions into startups that are far from going public.

He “gets big corporations and the need for raising capital,” said Robert Evans III, a partner at Shearman & Sterling LLP who has known Mr. Clayton through legal circles. “It’s a welcome change from having somebody with an enforcement bent running the commission.”

Mr. Clayton would replace Mary Jo White, a former U.S. attorney chosen by President Barack Obama for her reputation as an aggressive prosecutor. By comparison, Mr. Clayton, a lawyer who has guided dozens of firms through stock sales and mergers, has written that federal foreign-bribery investigations unfairly shackle U.S. companies in their pursuit of growth overseas.

Mr. Clayton, 50, is expected to testify as soon as March 2 before the Senate Banking Committee, which must advance his nomination to the full Senate. Democrats, including Sen. Sherrod Brown, of Ohio, the panel’s ranking member, have said they are skeptical that a lawyer with career ties to Wall Street will share their desire for tough enforcement deals and strict rules intended to prevent another credit crisis.

Mr. Clayton’s wife, Gretchen Butler Clayton, has worked at Goldman Sachs since February 2000, though she plans to resign if the Senate confirms her husband, according to a person familiar with the matter. A financial adviser to wealthy households and high net-worth individuals, she also plans to sell stock she owns in the firm if Mr. Clayton is confirmed, the person said.

A big question facing Mr. Clayton is his stance on the 2010 Dodd-Frank financial overhaul law that aimed to rein in bank risk-taking after the financial crisis. Even if Republicans in Congress don’t succeed in their goal of repealing major sections of Dodd-Frank, the deliberations would provide Mr. Clayton with enough political cover to pursue other priorities such as easing corporate disclosure requirements. The agency’s acting chairman, Republican Michael Piwowar, already has frozen action on unfinished Dodd-Frank rules.

Mr. Clayton worries that certain rules, including some from the congressional response to the Enron Inc. accounting scandal, have become too burdensome for small companies trying to raise capital, according to a person familiar with his thinking.

“He’s very practical,” said Richard Truesdell, a partner at Davis Polk & Wardwell LLP, who joins Mr. Clayton at an exclusive monthly dinner club of top Wall Street lawyers to compare notes on legal issues. “The key insight that Jay can bring is, in the real world, what is the impact?”

Mr. Clayton has spoken with friends about what they call the “Tom Wolfe theory of contagion risk management,” a reference to “The Bonfire of the Vanities,” a novel in which a chain of tragic and life-altering events emanate from one character’s fateful decision. He also has discussed “Antifragile,” a book by Nassim Taleb that argues companies and individuals should learn to withstand volatility and unexpected shocks, said David Lawrence, a former Goldman Sachs executive who is a friend of Mr. Clayton’s.

Those themes help explain Mr. Clayton’s view that cybersecurity needs more attention and coordination between companies and governments, Mr. Lawrence said.

“A big theme that I worked on with Jay is resiliency and continuity, because bad things will happen and some can be foreseen but some are unpredictable,” Mr. Lawrence said.

Mr. Clayton’s work has touched some of the biggest crises and challenges the SEC has faced, from the cataclysmic failure of Lehman Brothers Holdings Inc. in 2008 to the blockbuster 2014 initial public offering of Alibaba Group Holding Inc., the biggest IPO ever in U.S. markets.

In the Alibaba deal, Mr. Clayton advised underwriters that sold the firm’s stock to the public. The offering was a high-stakes affair for the SEC, which pressed the Chinese company to reveal more about its complex business and leadership structure—and is now, according to the company, probing the firm’s accounting practices. Alibaba’s bylaws allow a group of partners, including its founder Jack Ma, to nominate a majority of its board.

“It’s a company that has very limited voting rights for its investors,” said Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, referring to Alibaba. “It’s fair to ask, if he’s going to head the SEC, what are his views on that?” In recent years, the agency has required firms to detail in their public filings any deviations from one vote per share.

Mr. Clayton, who teaches a course on mergers and acquisitions at his alma mater, the University of Pennsylvania Law School, co-authored a 2012 paper that urged the U.S. government provide taxpayers with an annual report on the state of its finances—by adopting the “10-K” format that public companies must use under SEC rules.

“The annual reporting requirements imposed upon our public companies to protect and inform their shareholders should be extended to our government,” Mr. Clayton and his four co-authors wrote. “Our citizens—the shareholders in our great democracy—deserve a candid and accessible assessment of where we stand that comes directly from our leaders.”

Write to Dave Michaels at


By Kara Scannell in New York
Financial Times (FT)

When the US financial system came crashing down in 2008, Walter “Jay” Clayton, the man who has been nominated as the top US markets watchdog, had a front-row seat.

He first advised the board of Bear Stearns in its fire sale to JPMorgan Chase, and then helped Lehman Brothers Holdings in its ill-fated attempted to find a saviour before filing for bankruptcy protection.

He has also been there for celebratory moments, helping Goldman Sachs secure a $5bn investment from Warren Buffett’s company and advising Alibaba on its record 2014 initial public offering.

Now Donald Trump, US president, has selected this low-key attorney with a gold-plated roster of clients and an impressive golf game to head the Securities and Exchange Commission.

That raises the question of how Mr Clayton will use his behind the scenes knowledge: as a friend of Wall Street or investor advocate.

“One of the things that give me hope is that he is a highly skilled corporate attorney who really knows securities laws,” said James Angel, a professor at Georgetown University, who does not know Mr Clayton personally. “The question is, what is he going to do with his knowledge?”

Mr Clayton is a pillar of the New York establishment, having spent his entire career at Sullivan & Cromwell, the “white shoe”, or prestigious, law firm where he serves as a trusted tactical adviser for his clients, rather than a headline-grabbing rainmaker.

Early indications are that he will be more focused on working with financial services groups and more interested in easing rules than handing out record punishments.

That shift in emphasis is typical when the chairmanship of the five-member commission moves from being a Democratic appointee to a Republican, but it would mark a change for the agency — under the Obama administration, the two SEC chairmen spent much of their time on enforcement and writing tighter rules in the wake of the financial crisis and the passage of the 2010 Dodd-Frank financial reform act.

Mr Clayton declined to comment for this article, but people familiar with his thinking say he is likely to start by easing capital-raising rules.

Groups including the Chamber of Commerce have argued that tight regulations enacted since 2002 make it unattractive for companies to go public and they cite the drop in initial public offerings: in 2015 there were 152 IPOs, down from 845 in 1996.

Mr Clayton understands the importance of “raising capital inexpensively in this country and the importance of having markets that are fair, accessible and well regulated”, said Matthew Biben, a law school classmate and a litigator at Debevoise & Plimpton.

“I don’t think he will shirk from enforcement when necessary, but I don’t think he’ll seek it out to make a name for himself either.” He is also expected to align with a prominent Republican party line of thinking that securities enforcement should focus on investigating individuals, and weigh up corporate fines against shareholder harm, said a person familiar with the matter.

Mr Clayton knows first hand the struggles of small businesses.

He grew up near Hershey, Pennsylvania, where his father worked for a time at the chocolate company.

The family later settled outside Philadelphia, where his parents operated several small companies, including a logistics and steel warehousing business that initially prospered and then struggled as the local economy changed.

In ninth grade, Mr Clayton met his future wife Gretchen, who now works as a private wealth manager at Goldman Sachs.

She plans to resign from her position if he is confirmed by the Senate as SEC chairman, a person familiar with their thinking said. He studied and played soccer at Lafayette University before transferring to the University of Pennsylvania, where he earned a degree in engineering.

After studying economics at the University of Cambridge in the UK, he returned to Penn for law school. It was then that he developed the seeds of a serious golf game, which began as a hobby with his grandfather.

He has played at some of the top private clubs in the New York area, and came second at the club championship tournament at the Baltusrol Golf Club, where his handicap is an enviable 3.5.

After working as a clerk for a federal judge, Mr Clayton joined Sullivan & Cromwell, where he spent the next two decades working from its Washington DC, London and New York offices.

As a lawyer, he started out by helping companies raise money, but he has since emerged as a go-to adviser for financial institutions. While representing Ally Financial as part of a national mortgage settlement with state and federal authorities, he worked alongside Rodgin Cohen, a heavyweight in the legal community who straddled the role advising the government and financial institutions during the crisis.

“He’ll understand the business side but he’ll also understand the importance of his role as a regulator making sure the playing field is level and no one gets a short-cut simply because they belong to any special class of people,” said Cyrus Vance, the district attorney for Manhattan, who has known Mr Clayton for years.

If confirmed, Mr Clayton will take office at a time when partisan tensions are high and the Trump administration has publicly committed itself to rewriting Dodd-Frank. “The present moment is a delicate one,” Mary Jo White, the departing SEC chairman, warned in a recent speech.

“The post-crisis commission has been revitalised and remains the investor’s strongest advocate, but it is more susceptible than ever to the erosion of its expertise and authority by the partisan tides.”

Lawyers who have worked with Mr Clayton say he has talents the SEC needs: someone who can manoeuvre politically who has a deep understanding of corporations. “He’s really very smart, extremely thoughtful, and very reasonable. He knows the markets and I think he’ll be a very good leader,” said Andrew Ceresney, a former SEC enforcement director under the Obama administration.

Mr Clayton has donated to more Republicans than Democrats but did not give to Mr Trump’s campaign, according to the Center for Responsive Politics. He was asked by a long-time client to offer suggestions to the Trump transition team and responded with proposals to make US equity markets more open and to promote growth by reducing regulatory barriers.

That led to a meeting just before Christmas with Mr Trump at his Mar-a-Lago estate in Florida and an official offer followed.

Low-key attorney is pillar of the establishment

● Grew up outside Hershey and then in Philadelphia, Pennsylvania

● Attended Lafayette College, University of Pennsylvania, and University of Cambridge

● Clerked for US District Judge Marvin Katz in Pennsylvania

● Joined Sullivan & Cromwell in 1995

● Advised: Ally Financial on its IPO and in a mortgage settlement with state authorities; Bear Stearns’ sale to JPMorgan; Barclays’ purchase of Lehman Brothers assets; British Airways’ merger with Iberia; Eni in an overseas corruption probe; Goldman Sachs on a variety of transactions; the IPOs of Alibaba, Oaktree Capital and Och-Ziff

The Financial Times Limited