I listened to an Executive Briefing about the Iranian Nuclear Deal reached this weekend. and will report in the next memo.
Dr. Boaz Ganor (Boaz is a friend and expert on counter-terrorism.) , of the Interdisciplinary Center Herzliya, and Avi Dichter, former director of Shin Bet and former minister in P.M. Netanyahu &; P.M. Olmert’s governments, will both speak about the repercussions of the deal.
WJC President Ronald S. Lauder will report on conversations he has had with German Foreign Minister Westerwelle, who was present at the negotiations in Geneva, and others.
WJC Israel Chairman Shai Hermesh will also contribute.
The Executive Briefing was held on Tuesday 26th November, at 9 a.m. (New York)
I understand every generation faces new threats some because of technology, some because of the breakdown in morality etc.
The consequence is that we are increasingly criminalizing more and more aberrant behaviour.
Several examples:
a) Some states are seeking to criminalize women who are pregnant and who are taking harmful narcotic type drugs.
b) Some states have proposed criminalizing bullying.
In the corporate world the Obama Administration has done some bullying of its own extracting enormous penalties from banks accused of criminal behviour. (See 1 below.)
The consequence of all of this criminalization is unknown but when authorities have the right to bring suits which include jail sentences freedoms are also threatened. Bureaucratic over reach lends itself to abuse and we have seen plenty evidence of this from Obama appointees. I believe this is a very dangerous trend and more so when you have a president who has proven to be power hungry, operates outside the constraints of The Constitution and is a prevaricated liar.
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DUH! (SEE 2 below.)
The eagerness of Western companies to do business in Iran reminds me of American scrap dealers selling steel to Japan which came back in the form of bombs on Dec. 7.
This is why, no matter what Iran does by way of fudging on the agreement they reached, there will be no reinstatement of sanctions unless Congress gets very tough. (See 2a and 2b below.)
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Siegel is good! (See 3 below.)
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Dick
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1) J.P. Morgan Lawyer Criticizes Big Bank Fines
By
Stephen Cutler isn't backing down.
As J.P. Morgan Chase JPM +0.92% & Co.'s top lawyer took the stage on Friday for a panel discussion in New York, he was confrontational as regulators Daniel Stipano of the Office of the Comptroller of the Currency and Deb Morris of the Consumer Financial Protection Bureau sat just to his right.
"At what point does this stop?" he said, referring to record-setting fines for J.P. Morgan and other large banks. "We should all be concerned," he added, "because at a certain point people become immune to the numbers."
Mr. Stipano said the government's application of fines in legal settlements is "more art than science." He said the OCC is exploring ways to improve its calculations. An OCC spokesman declined further comment.
It was surprising to hear J.P. Morgan's general counsel raise such questions just three days after the announcement of the bank's $13 billion settlement with the Justice Department and other agencies over soured mortgage securities.
A person familiar with Mr. Cutler's thinking said he wanted to prompt a discussion about how regulators exercise their power in the future. The comments weren't the product of any personal frustration, the person said.
Acquiescence doesn't come easily to Mr. Cutler, a hard-nosed litigator still remembered for his pursuit of corporate wrongdoing while chief of enforcement for the Securities and Exchange Commission from 2001 to 2005.
But the 52-year-old Mr. Cutler met his match in the bank's battle with the Justice Department. He advised J.P. Morgan Chairman and Chief Executive James Dimon that the New York company couldn't afford to play an extended game of chicken, people close to the talks recall.
The reason: The U.S. government could potentially put the bank out of business with an indictment.
Instead, last week's settlement carried a record penalty and kept open the threat of a criminal investigation. People close to J.P. Morgan believe additional charges for selling shoddy mortgage securities are less likely.
Mr. Cutler "followed the defense playbook by making a lowball offer initially" and asking for a release from criminal liability, said Michael Bresnick, who oversaw the government investigation when he was head of the Obama administration's financial-fraud enforcement task force.
J.P. Morgan's top lawyer was "rebuffed at every turn," added Mr. Bresnick, now a partner at law firm Stein, Mitchell, Muse & Cipollone LLP in Washington.
The Justice Department's lead negotiator on the case, Associate Attorney General Tony West, praised Mr. Cutler. "Steve is a worthy adversary," said Mr. West. "He and his team are talented professionals."
The stress and hours have taken a toll on Mr. Cutler, people close to him say. He is often in the office at 6:45 a.m. and typically works 12-hour days.
Mr. Cutler has fought big cases for the government and against it. While at the SEC in 2003, he took on J.P. Morgan, which he accused of helping Enron Corp. commit fraud. J.P. Morgan executives saw the probe as a misguided response to a political frenzy, but the bank decided to pay a $135 million fine rather than fight.
In a press release at the time, Mr. Cutler said the financial penalty was "a reminder that you can't turn a blind eye to the consequences of your actions." Mr. Cutler became J.P. Morgan's top lawyer in 2007.
Mr. Cutler was a key part of the team that approved the 2008 purchases of Bear Stearns Cos. and Washington Mutual Inc. WMIH +0.88% 's banking operations. The hurried acquisitions gave J.P. Morgan immediate benefits but saddled the company with lawsuits and investigations, including the bulk of the $13 billion settlement announced last week.
At Washington Mutual, J.P. Morgan lawyers believed late changes to the final agreement allowed the bank to recover any future legal liabilities from a Federal Deposit Insurance Corp. receivership that liquidated the thrift in 2008.
The FDIC disagreed. J.P. Morgan agreed not to go after the receivership for any part of the $13 billion deal announced. The bank still might tangle with the FDIC over costs of future cases.
In the Bear Stearns and Washington Mutual deals, the "general counsel's office underestimated the risk they were taking on," said Charles Peabody, a partner at Portales Partners, a New York research firm.
Until early 2013, Mr. Cutler also was in charge of J.P. Morgan's compliance department, a part of the company that monitors adherence to laws and regulations. J.P. Morgan has said it made mistakes with mortgage foreclosures, credit-card collections and derivatives trading. Earlier this year, J.P. Morgan's head of compliance began reporting to another top executive. Mr. Cutler endorsed the move, said a person familiar with his thinking.
Mr. Dimon has defended the job done by Mr. Cutler. "Steve's the best at what he does, and we're lucky to have him," J.P. Morgan's CEO said recently, according to a person familiar with the conversation.
Mr. Cutler is worried about the recent escalation in fines for the largest U.S. banks, airing his views at Friday's panel discussion, which was hosted by trade group The Clearing House.
"I can probably think of about 13 billion reasons why I am here," he joked. "Let me start by saying how handsome Dan Stipano is," referring to the OCC official. The audience laughed at both quips.
Mr. Cutler later turned to Mr. Stipano and Ms. Morris on the subject of how federal overseers handle privileged bank information and said: "I would ask both of you to think about what it might be like to be in my shoes." Mr. Stipano replied: "I can't give legal advice to your clients, Steve."
J.P. Morgan's top lawyer also expressed concern about what he saw as duplicative behavior by multiple regulators.
"There has to be a better way to allocate government resources," he said, calling for a task force to study the issue.
—Julie Steinberg contributed to this article.
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2)CNN Poll: Obama's Honesty and Trustworthiness Numbers Take a Huge Hit
By Daniel Doherty |
Unkept promises and managerial incompetence seem to have taken their toll on this White House. For the first time ever, a CNN poll finds that more than half of Americans don’t believe President Obama is “honest and trustworthy,” while only four in ten Americans say he is an effective manager-in-chief of the federal government:
Either way Obamacare is the chief culprit for the president’s sinking personal approval ratings. Americans probably don’t like being lied to, of course, but -- as the pollsters imply -- if the White House was a bit more, shall we say, competent, perhaps his approval numbers wouldn’t be as low as they currently are:
Bill Clinton might have been a liar, in other words, but the man could govern. Hence why his approval ratings never fully imploded, despite revelations he carried on an extra-marital affair during his presidency.
A few more relevant data points: 56 percent of respondents say the president is not admirable, does not reflect their opinions on "important issues," and perhaps most troublesome of all, does not “inspire confidence.” Ouch. But the numbers aren’t all bad. Six in ten and seven in ten respondents, respectively, say he has “vision” and is “likeable.” But trustworthiness, not likeability, is what inspires confidence -- a trait the president seems to utterly lack nowadays.
2a) Graham: Senate Will Challenge White House on Iran Deal
By Audrey Hudson
Sen. Lindsey Graham said Monday that despite the Obama administration's interim deal with Iran the Senate would pass a bipartisan measure forcing sanctions against the rogue nation until its nuclear capability has been completely dismantled.
According to The Washington Free Beacon, the South Carolina Republican said on CNN's "New Day" that sanctions will come out of Congress in the next couple of weeks to ensure Iran dismantles its reactor rather than suspends construction as the deal requires.
"You stop enrichment, not just pause it," Graham said.
"Right now, the interim deal leaves their capability totally intact. The new round of sanctions will be focusing on the end game, and it is coming soon," Graham said.
Graham is the latest in a growing line of Republicans and Democrats on Capitol Hill who oppose the deal with Iran, which requires the country to curtail its nuclear program in exchange for billions of dollars in aid that would flow without sanctions.
The Obama administration has warned Congress not to move ahead with sanctions, but Graham's statement is the strongest yet that lawmakers are not willing to let the White House deal stand.
"This deal doesn't represent the fact that we are dealing with some of the most thuggish people in the world," Graham said.
2b)U.S. Must Prevent a Nuclear-Capable Iran
Now that the P5+1 has inked an initial agreement with Iran, America must not only ensure full Iranian compliance but also insist that any final deal deny Tehran a nuclear weapons
capability. Tough sanctions legislation passed by Congress and vigorous diplomacy pursued
by the administration have brought Iran to negotiations. However, the initial agreement raises many concerns—including implicit acceptance of Iranian enrichment. Congress has provided the leverage to spur Iran to seek talks; now it must press the administration to negotiate a verifiable agreement that will prevent Iran from ever building nuclear weapons. Congress must also legislate additional sanctions, so that Iran will face immediate consequences should it renege on its commitments or refuse to negotiate an acceptable final agreement. If fully implemented, the agreement will cap parts of Iran’s nuclear
program and provide inspectors greater access to nuclear sites.
• Iran will convert its current stockpile of 20 percent enriched uranium—half into fuel rods, the other half blended down to 5 percent—and commit not to further enrich above the 5 percent level.
• By the end of the six-month period, Iran will cap its stockpile of low enriched uranium at current
levels by beginning the process of converting the material into reactor fuel.
• Iran has also promised no further “advancements” at the Natanz Fuel Enrichment Plant or the
enrichment facility at Fordow.
• The IAEA will undertake intrusive new inspections, including—for the first time—daily
monitoring of Fordow, Natanz and Arak. The IAEA will also gain managed access to centrifuge assembly workshops, uranium mines and centrifuge storage facilities.
But it will allow Iran to continue its nuclear program—in violation of U.N.
Security Council resolutions—while gaining some sanctions relief.
• The deal dismantles none of Iran’s existing program, allowing 9,000 centrifuges to continue operating and an additional 10,000 centrifuges to remain in place. After six months, if no agreement is reached, Iran will remain in a position to double the pace of its enrichment.
• Iran will retain all of its nuclear material and will be able to continue the research and development
aspects of its program. Thus, Iran will retain 5-7 bombs worth of low-enriched uranium.
• The agreement imposes no restrictions on Iran’s nuclear weaponization efforts, beyond Iran’s commitment in the deal not to seek nuclear weapons. Iran thus far has denied inspectors access to key facilities, such as Parchin, where the IAEA suspects nuclear weapons-related experiments have been conducted. • The P5+1 pledges not to seek further reductions in Iranian oil exports, and to permit insurance and shipping companies to facilitate permissible oil sales. The agreement also allows Iran to repatriate
$3-4 billion dollars in oil proceeds held abroad.
• The P5+1 will suspend sanctions targeting petrochemical exports, gold and precious metal trading, Iran’s auto industry and the provision of spare parts for civilian aircraft.
Elements of this agreement raise serious concerns for a final accord.
• The interim agreement does not require that Iran come into compliance with six mandatory U.N.
Security Council resolutions, which demand Iran suspend all enrichment, reprocessing, and heavy water activity and comply fully with IAEA demands. The interim agreement merely states that Iran will “address” U.N. Security Council concerns.
• Instead, the interim agreement stipulates that the final agreement will allow Iran to continue
mutually agreed upon enrichment activities. American officials deny that they recognized any Iranian “right” to enrich, but appear to have conceded as a practical matter that Iran will be allowed some enrichment capacity.
• Allowing Iran to maintain a domestic enrichment capability and its existing nuclear infrastructure raises serious concerns that Iran will be able to resume nuclear-weapons related activities at will.
• The agreement pledges that the P5+1 and Iran will work on resolving prior concerns of the IAEA
with the military character of Iran’s nuclear program, but does not require that Iran satisfactorily
resolve IAEA concerns.
• The agreement also includes an option to extend the negotiating window beyond an initial six month period. This creates the possibility that the initial agreement will become a de-facto final agreement—with Iran receiving more sanctions relief simply to maintain the current deal or in response to additional cosmetic measures.
Congress must pass legislation that will increase the pressure on Iran and
ensure any future deal denies Tehran a nuclear weapons capability.
• The U.S. must ensure that Iran does not acquire a nuclear weapons capability. Any final agreement must deny Iran both uranium and plutonium paths to develop nuclear weapons.
• Congress should establish clear consequences—by legislating additional sanctions—should Iran violate this agreement or fail to agree to an acceptable final deal.
• Congress, working with the administration, must strictly oversee the initial agreement and ensure Iranian compliance. In the event Iran violates the agreement, the administration must revoke all sanctions relief.
• Congress must press the administration to ensure all remaining sanctions are fully enforced. The
U.S. government:
o Must not allow Iran to increase oil sales.
o Must limit repatriation of funds to Iran to the $3-4 billion promised.
o Must sanction companies that seek to re-enter the Iranian economy except for
explicitly permitted activities.
o Must closely monitor the new humanitarian aid channel to ensure its proper use.
o Must sanction those that provide support to sanctioned entities, including the IRGC
and IRISL.
Congressional leaders have voiced concern with the interim agreement.
• “I am disappointed by the terms of the agreement between Iran and the P5+1 nations because it does not seem proportional. … Iran simply freezes its nuclear capabilities while we reduce the sanctions.”
– Sen. Chuck Schumer (D-NY), Vice Chair Democratic Conference Committee
• “We had these guys on the ropes. What I was looking for is an interim deal that went a long
way toward the final deal. This actually leaves in place everything that would allow them to
make a weapon.”
– Sen. Lindsey Graham (R-SC), Ranking Member, Senate Appropriations Foreign
Operations Subcommittee
• “Numerous U.N. Security Council resolutions have called for the full suspension of Iran’s
nuclear activities, so it is troubling that this agreement still permits the Iranians to continue enriching.”
– Rep. Eric Cantor (R-VA), House Majority Leader
• “While I am concerned that this interim agreement does not require Iran to completely halt its enrichment efforts or dismantle its centrifuges, I hope that over the next six months, Iran takes the necessary steps to finally end its quest for a nuclear weapons capability.”
– Rep. Eliot Engel (D-NY), Ranking Member, House Foreign Affairs Committee
• “I have serious concerns that this agreement does not meet the standards necessary to protect the United States and our allies. Instead of rolling back Iran’s program, Tehran would be able to keep the key elements of its nuclear weapons-making capability.”
– Rep. Ed Royce (R-CA), Chairman, House Foreign Affairs Committee
• “[T]he United States must not settle for a comprehensive agreement that fails to end Iran’s capacity to build and deploy a nuclear weapon.”
– Rep. Nita Lowey (D-NY) , Ranking Member, House Appropriations Committee
Congressional leaders have called for new sanctions to be ready if a final
agreement is not reached or if Iran violates the agreement.
• “Until Iran has verifiably terminated its illicit nuclear program, we should vigorously enforce existing sanctions. I do not believe we should further reduce our sanctions, nor abstain from preparations to impose new sanctions on Iran should the talks fail.”
– Sen. Robert Menendez (D-NJ), Chairman, Senate Foreign Relations Committee
• “I am concerned this agreement could be a dangerous step that degrades our pressure on the Iranian regime without demonstrable actions on Iran’s part to end its pursuit of a nuclear weapons capability. … I will continue working with my colleagues in Congress to keep the pressure on the Iranian regime, including by action on additional sanctions.”
– Sen. John McCain (R-AZ), Member, Senate Foreign Relations Committee
• “I think it’s now time for Congress to weigh in because I think people are very concerned that the interim deal becomes the norm, and that’s why I’ve crafted legislation to hold the
administration and the international community’s feet to the fire…”
– Sen. Bob Corker (R-TN), Ranking Member, Senate Foreign Relations Committee
• “I believe the Senate should move forward with the sanctions bill the House recently passed—and include a provision enabling the President to delay their implementation while Iran’s compliance with yesterday’s agreement proceeds and is verified.”
– Rep. Steny Hoyer (D-MD), House Democratic Whip
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3)Wharton's Jeremy Siegel: Bull Market Isn't Over, Dow Will Hit 18,000
The bull stock market still has plenty of life left in it, says renowned market guru Jeremy Siegel, finance professor at University of Pennsylvania's Wharton School.
"My data shows that the fair market value based on current [projections of future] earnings for the Dow [Jones Industrial Average] is probably around 18,000," he told CNBC. That would represent a 12 percent gain over Monday morning's level of 16,096.
"Now, it doesn't mean we're going to get there right away or we're going to get there in a straight line," Siegel said. He noted that the stock market has gone a long stretch without a 10 percent correction (more than two years).
"But I don't think this bull market is over yet. I still think there's good gains to come," Siegel said.
As for earnings increases, they have totaled 10 to 12 percent this year, "which is pretty good in a very slow economic growth situation," Siegel said. GDP growth averaged 2.1 percent for the first three quarters of 2013.
Current projections call for earnings growth of 8 percent next year. So, "if we have a little speed-up in economic growth, . . . it [earnings] could go higher," Siegel said.
"We have had disappointments through the last few years from earlier projections. [But] 2013 could be one year where we come closer to what analysts are expecting."
Jonathan Golub, chief market strategist at RBC Capital Markets, also expresses optimism for stocks. While he's not expecting this 26 percent jump for the Dow to repeat next year, "stocks at this level still look relatively cheap," he told CNBC.
The current levels of bond yields imply a price-earnings ratio of 16 to 18, but the market only stands at 15, Golub says.
"I do think there's definitely upside here," he said. "I think it's not only going to be multiples [expanding], but earnings are likely to be better in 2014 than this year. And you're seeing a number of indicators that the economy is picking up from a low base."
As for the possibility of a market correction, "what you find is that there are a number of things which cause big corrections, but they tend to be things like recessions or oil shocks and not simply that the market got ahead of itself," Golub said.
The outsized gains for some technology stocks, biotechnology stocks and others don't create a concern, he says.
"This year actually looks very normal in terms of a concentration of leadership. So there's nothing which looks like a bubble in this year. Could we get there? Maybe, but it's not a 2014 event. It'll be much further out."
As a whole, major stock-market strategists, who tend to be bullish, forecast very tempered gains for next year.
Of nine analysts who already have offered their 2014 predictions, the average is an increase of 4.1 percent from Friday's close, according to Birinyi Associates, The Wall Street Journal reports.
"It's very unlikely that next year will be a year like this," David Bianco, Deutsche Bank's chief U.S. equity strategist, told the paper.
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