That World's News

U.S. President Donald Trump signs an executive order rolling back regulations from the 2010 Dodd-Frank law on Wall Street reform at the White House in Washington, U.S.

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President Donald Trump has pledged to do a "big number" on the Dodd-Frank financial overhaul law, which raised banks' capital requirements, restricted their ability to make speculative bets with customers' money and created consumer protections in the wake of the financial crisis.

In February, Trump ordered Treasury Secretary Steven Mnuchin to review the law and report back within 120 days, saying his administration expected to be cutting large parts of it.

But the Treasury Department is still filling vacancies after the transition from the Obama administration and there are not enough officials to get the full review done by early June, three sources said.

A Treasury spokesperson dismissed the idea the report that would be broken up because the department is short-handed, saying the reach of the project could require several separate reports, as permitted under the executive order.

"Treasury has an entire team dedicated to reviewing the financial regulatory rules and will begin reporting our findings to the president in June," the department spokesperson said.

"Given the volume and scope of the issues we are reviewing that involve potential changes to the financial regulatory system, we are carefully considering the best options to begin rolling them out in the most effective and responsible manner," the spokesperson said.

The Treasury Department will first report back on what banking rules could be changed, including capital requirements, restrictions on leverage and speculative trading.

Examinations of capital markets, clearing houses and derivatives as well as the insurance and asset management industries and financial innovation and banking technology will come later, the sources said.

It could be several months until these other stages of the financial reform review are completed, some of the sources said.

The piecemeal approach could create challenges for some sectors if parts of the report are significantly delayed. The report has been highly anticipated, as it marks the new administration's most detailed foray into outlining what it wants to do with financial rules.

Trump previously has spoken only in broad terms about easing regulation surrounding lending.
 
Any efforts to rework existing regulations or craft new legislation will be a lengthy and contentious process, something that banking lobbyists have said will make any delay to the administration's initial findings costly for businesses eager for regulatory relief.

Former BlackRock Inc executive Craig Phillips is leading the administration's plan for financial deregulation. Alongside other Treasury officials, he is soliciting feedback from banking industry groups and executives for how banking policy should be shaped.

The change in the timing of the Treasury report comes after Trump ordered a separate review of some key planks of the Dodd-Frank financial reform law.

In April, Trump signed a pair of executive orders directing a review of two additional regulatory powers - orderly liquidation authority, which allows regulators to step in and wind down a failing financial institution, and systemic designation, in which certain large firms may be deemed critical to the overall health of the financial system, meriting stricter oversight.

The findings from those reviews are not expected until October.

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Source : Reuters

Total sales for the group rose 12.7 per cent mainly as a result of the Argos contribution. Getty

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Sainsbury's has warned over a "challenging" market and price pressures as it posted a 8.2 per cent decline in annual profits.

The retailer posted pre-tax profits of £503m for the year to 11 March, down from £548m the previous year.

Like-for-like sales for the full year were down 0.6 per cent.

Retailers are expected to have a difficult year amid cost rises due to the post-Brexit slump in the value of the pound.

Sainsbury's, the UK's second biggest supermarket, on Wednesday said the impact of cost pressures remains "uncertain" but added it was "well placed to navigate the external environment".

Mike Coupe, group chief executive of Sainsbury's, said: "This has been a pivotal year and we have made significant progress delivering and accelerating our strategy. Sainsbury’s Group offers customers market-leading product choice, value and convenience, whenever and wherever they shop with us.

"Food is the core of our business and we are committed to helping customers live well for less. Our food business remains resilient in a challenging market and we continue to innovate in quality and to invest in price."

Mr Coupe added the group was "pleased" with its progress so far since buying Argos last year, having already opened 59 Argos Digital stores in its supermarkets, which he said were performing well.

Total sales for the group rose 12.7 per cent mainly as a result of the Argos contribution.

Sainsbury's is also accelerating plans to open 250 Argos Digital stores.

Shares in Sainsbury's fell by more than 2 per cent in morning trading on the FTSE 100.

John Ibbotson, director of the retail consultancy Retail Vision, said that for the "embattled" Sainsbury's, the Argos acquisition is "looking more inspired by the day" but his should not distract from the weaknesses in the core Sainsbury’s grocery business.

“The convenience and online offerings are a bright spot in an otherwise challenging picture. Food price inflation has slashed margins and Sainsbury’s continues to lose market share to both Tesco and Morrisons.

“The brand’s much-vaunted turnaround plan has been slower to show results than those of its rivals, who have successfully staunched their losses with aggressive price cuts and structural reforms.

“Argos has so far proved an effective ‘get out of jail' card for Sainsbury’s. But with inflation biting into consumer spending and the latest retail sales figures showing that the consumption boom is waning, Sainsbury’s must get its core business in order before it comes off its catalogue crutches."

Neil Wilson, senior market analyst, at ETX Capital said the recently-acquired Argos is delivering the top line growth "that keeps the group above water."

"Sainsbury’s sales are declining and it is losing market share. That’s a reflection of the performance of key rivals - Sainsbury’s did very well when Tesco was on its knees but is now facing its own challenges. In particular, as Tesco grows sales again it’s coming at the expense of Sainsbury’s," Mr Wilson said.

Ajit Pai, the F.C.C. chairman, in Barcelona in February. Broadcasters hope that he will let through the kinds of deals that were held up during the Obama administration.

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The media industry has been rife with consolidation in recent years: Cable companies, film studios and telecommunications firms have all been bought and sold at a rapid clip.

Now, local television stations are at the center of the deal-making frenzy.

Last week, a day after the Federal Communications Commission eased regulations over how many stations an owner may have, Sinclair Broadcasting, the largest local broadcast group in the country, said it would buy 14 New York-based stations for $240 million.

The timing of Sinclair’s deal may not have hinged directly on the change, but it demonstrated a demand for broadcast station mergers. Sinclair did not reply to requests for comment.

And now, a bidding war has begun over Tribune Media, the owner of WGN America and, in New York, PIX 11.

The Blackstone Group appears to be working with 21st Century Fox on a bid for Tribune. And Sinclair is also circling that company.

“The F.C.C. has basically said: ‘Game on. We’re going to let you consolidate further than anyone had imagined,’” said Richard Greenfield, a media analyst at BTIG.

Consolidation of local broadcast stations could lead to more expensive fees for consumers as providers pass on ever-higher fees from broadcasters and content creators to subscribers. But to media companies, the mantra of late has been that bigger is better.

For broadcast station companies in particular — including Sinclair, Fox and the Nexstar Media Group — owning more stations increases their power over cable companies, which pay to retransmit the stations.

Fox’s motive for pursuing Tribune, which has more Fox affiliates than any other station owner, largely appears to be blocking a deal with Sinclair. It plans to form a joint venture with the Blackstone Group, an investment giant, in which Blackstone would provide the cash for a deal while Fox would provide its own television stations, according to people briefed on the plans who were not authorized to speak publicly about the matter.

If successful, Fox would then reduce its direct exposure to local television stations, Mr. Greenfield said, while still holding on to a piece — and while stymieing a rival.

Details of the potential joint venture were unclear, as were the precise reasons that Fox was turning to Blackstone. Tribune is a relatively small company, with a market value of about $3.4 billion.

But for companies like Fox and Sinclair, consolidation is also a defensive move, shoring them up at a time when online rivals like Netflix and Hulu are commanding more viewers. Content providers like CBS and the Walt Disney Company are also pushing for bigger fees from broadcasters.

And local television advertising sales, excluding political ads and the Olympics, were roughly flat last year, according to the research from Magna Global, with expectations that 2017 will be even tougher.

Getting bigger through station acquisitions, then, is meant to help these companies drive harder bargains. And smaller operators have emerged as potential takeover targets: The stock prices of two other broadcast companies, E. W. Scripps and Gray Television, are both up sharply this year.

Underpinning broadcasters’ dreams of expansion is the hope that Ajit Pai, the F.C.C.’s new chairman and a Republican, will let through the kinds of deal making that had been held up during the Obama administration.

“Companies are talking about deals now because they have reason to believe the F.C.C. will relax all the ownership rules,” said Paul Gallant, an analyst at Cowen and Company.

The first tangible step came with a 2-to-1 vote by the F.C.C. last week to reintroduce the so-called UHF discount.

Longstanding rules prohibit companies from covering more than 39 percent of American households, but the UHF discount allows station owners to exclude certain stations that operate in ultrahigh frequencies. With the reinstated discount, according to calculations by Fitch Ratings, Sinclair’s household coverage percentage has fallen to about 25 percent, from 38 percent, while Nexstar’s has dropped to 27 percent, from 39 percent, opening the door to new mergers and acquisitions.

“This represents a rational first step in media ownership reform policy allowing free and local broadcasters to remain competitive with multinational pay TV giants and broadband providers,” Gordon Smith, the president of the National Association of Broadcasters, said in a statement.

The F.C.C.’s rule change followed pressure from industry groups. One week before the vote, Mitch Rose, NBC Universal’s senior vice president for government relations, visited the office of the other Republican commissioner on the F.C.C., Michael O’Reilly, urging him to reinstate the UHF discount.

And in February, Tribune Media’s general counsel, Edward Lazarus, met with Mr. Pai’s chief of staff, Matthew Berry, and lobbied for the change in rules.

Mr. Pai has long been critical of strict broadcast ownership rules. He has said that online media companies such as Google, Facebook and Netflix are competing for audiences that were once served only by television. He has also been skeptical of rules against broadcast ownership limits, given that the agency has approved mergers in competing industries, including Charter’s purchase of Time Warner Cable and AT&T’s purchase of DirecTV.

At the annual National Association of Broadcasters convention in Las Vegas last week, Mr. Pai announced his intention to re-examine other media ownership rules. Broadcasters hope that one limit that may be removed is a prohibition on owning more than two stations in a local market.

Consumer groups and Democrats in Congress and at the F.C.C. warn that the changes will lead to great industry consolidation, giving a few companies great influence over news and public opinion.

The action “will actually harm the public interest, by reducing diversity, competition and localism,” Mignon Clyburn, the sole Democrat at the F.C.C., said after the UHF discount vote.

In a letter to Mr. Pai last month, Democratic House members argued against both the UHF discount and a union of Sinclair and Tribune. Such a merger, they contended, could lead to higher cable fees because Sinclair charges cable companies more than Tribune does to retransmit its broadcasts.

“These were mergers that could never have been contemplated a year ago,” Mr. Greenfield, of BTIG, said of the deals that might blossom under the new F.C.C. “You’re enabling the impossible in many ways, so people are saying, ‘Let’s take a shot at this.’”

The South Korean firm facing China's wrath

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White House national security adviser Lt. Gen. H.R. McMaster told his South Korean counterpart that the U.S. would continue to bear the cost of the system, according to a statement Sunday from the office of the South Korean president.

McMaster was responding to the controversy Trump stirred up last week with South Korea, a key U.S. ally in Asia.

"I informed South Korea it would be appropriate if they pay" for the Terminal High Altitude Area Defense (THAAD) system, Trump said in an interview with Reuters on Thursday. "That's a billion-dollar system." 

The deployment of THAAD has already proved unpopular with many South Koreans and hurt the country's relations with China. The South Korean Defense Ministry has repeatedly said the country will provide the land but won't foot the bill for the system, which is designed to protect against the threat of missiles from North Korea.  


McMaster's reassurances to to Kim Kwan-jin, the South Korean director of national security, that the U.S. would stick to the existing deal appeared to contradict Trump's remarks. But in an interview Sunday with Fox News, McMaster denied that suggestion.

"That's not what it was," he said. "What I told our South Korean counterpart is until any renegotiation, that the deal is in place. We will adhere to our word."

McMaster said the Trump administration plans to renegotiate the U.S.'s defense relationships with South Korea and "all of our allies ... we need everybody to pay their fair share."

But the South Korean Defense Ministry isn't interested in going back to the table on the THAAD issue.

"I don't believe this is a matter that can be renegotiated," spokesman Moon Sang-gyun said Monday.

South Korea already helps pay for the cost of the roughly 28,500 U.S. troops currently stationed in South Korea, contributing nearly 1 trillion won ($880 million) every year.

The existing agreement over those terms expires at the end of 2018, and negotiations over its renewal are expected to start around the end of this year.

Donald J. Trump atop Trump Tower ahead of the building’s “topping-off” ceremony on July 2, 1982. Mr. Trump brings his career perspective in real estate to the tax overhaul question, as well as a substantial financial interest in the outcome.

[accordion] [item title="TRUMP AND TAXES"]James B. Stewart’s “Common Sense” columns have examined President Trump’s tax returns and his tax plans for America.[/item] [item title="Scraps from Mr. Trump’s tax filings."]“Flimsy and incomplete as they are, those leaked returns nonetheless contain some startling revelations.”[/item] [item title="Capitol Hill united on Mr. Trump’s taxes."]“‘Trump’s scheming on his taxes has put a spotlight on a tale of two systems,’ Senator Ron Wyden said.”[/item] [item title="Closing Mr. Trump’s loopholes."]“The self-proclaimed billionaire says he alone can fix the ‘unfair’ tax code. So it seems only fair to ask: How?”[/item] [item title="Mr. Trump’s giant tax shelter."]“He racked up losses so huge in the 1990s that he wouldn’t have had to pay income tax on nearly $1 billion.”[/item] [item title="Even more real estate tax breaks?"]“It’s hard to imagine a tax code more favorable to real estate developers than the one we already have. Mr. Trump has come up with one.”[/item] [/accordion]

Workers removing signs from the Trump Plaza casino in Atlantic City in 2014. Those with an interest in preserving the interest deduction include big developers, small builders, brokers and contractors.

President Bill Clinton, accompanied by Vice President Al Gore, signing 1993 legislation that restored real estate tax breaks lost in the tax overhaul of 1986.

Portions of Mr. Trump’s 1995 tax returns leaked to The Times show that he took full advantage of the provision. That year he recorded a loss of nearly $16 million from “rental real estate, royalties, partnerships, S corporations, trusts, etc.,” which are the forms in which Mr. Trump holds most of his assets. That was more than enough to entirely offset his $3.4 million in business income, $7.4 million in interest and $6,000 in wages and salaries.

Mr. Trump hasn’t addressed this loophole since becoming president. But closing it would be hard to reconcile with his earlier comments. In 1991, he testified in Congress that the 1986 Tax Reform Act “was an absolute catastrophe for the country, for the real estate industry,” and pleaded to restore the passive loss tax break. In a 1999 op-ed piece in The Wall Street Journal, Mr. Trump called the 1986 act “one of the worst ideas in recent history,” and said eliminating the ability to deduct passive losses was one of the “follies” that had “sent the real estate market though the windshield.”

Trump Tower in New York City. Many of Mr. Trump’s ideas on ways to change taxes would enhance benefits to developers like himself.

(Whether Mr. Trump would still qualify as an active real estate investor now that he is in the White House and has handed over management of his business interests to his sons is an open question. Ordinarily an investor has to spend 750 hours a year working in real estate to qualify, which would be hard to reconcile with Mr. Trump’s presidential duties.)

Another loophole for real estate developers is the so-called like-kind exchange provision, which allows real estate investors to defer or even eliminate capital gains tax by using the proceeds from a sale to reinvest in a similar property (which does not have to be all that similar — just about any real estate can be exchanged, even an apartment complex for vacant land).

Since Mr. Trump has not released his tax returns, the public doesn’t know whether and to what extent he benefits from the provision, but nearly all real estate developers use like-kind exchanges to avoid capital gains tax. The Real Estate Roundtable strongly backs the provision. Mr. Trump hasn’t said whether he would retain it. But it is another special-interest loophole that nearly all tax experts would eliminate.

The Tax Foundation estimates that taxing like-kind exchanges would generate $92 billion in additional revenue over 10 years.

Advocates of a tax overhaul often point to the 1986 act as a model for a comprehensive approach that ushered in a long period of economic growth. Given the power of the real estate lobby, “presidential leadership was crucial,” said Leonard E. Burman, director of the Urban-Brookings Tax Policy Center and a professor at the Maxwell School of Syracuse University.

Reagan made tax reform a central campaign theme and mustered bipartisan support in Congress. “Reagan didn’t get into the details,” Mr. Burman said. “But he made the calls, he gave the speeches, and he got people excited about the idea of fixing our broken tax system.”

“It’s hard to imagine President Trump doing that,” he said. “Because at the end of the day, the existing tax code is great for people like him.”

Serge Chistov, investor in the Honest Marijuana Company in Colorado, (left) with grower Stephen Boone, isn't afraid of Attorney General Jeff Sessions.

The Attorney General recently appointed a task force to review "existing policies" for marijuana and to "ensure consistency" with the anti-drug policy of the Trump administration.

Separately, White House press secretary Sean Spicer has said to expect "greater enforcement" of federal marijuana laws.

Steve Rusnack, owner of the Full Bloom Cannabis dispensary in Fork Kent, Maine, sells medical marijuana and would like to expend into recreational now that it's been legalized by the state. But he's concerned about the possibility of a federal crackdown.

"If I start seeing DEA agents locking down recreational businesses out West, I'm going to stick with medical," said Rusnack. "I've got a family. I don't want to get locked up."

Maine is one of five states, along with California, Nevada, Alaska and Massachusetts, that voted to legalize recreational marijuana last year. State lawmakers still have to work out regulations, and local jurisdictions also have to set tax rates and make zoning decisions as to where the dispensaries will be located.

Marijuana investors, farmers and retailers typically start out with medical and then branch into recreational as their states legalize that, too. Many of them are pushing ahead, undeterred by Trump. Zach Lazarus, COO of the Green Alternative Medical Marijuana Dispensary in San Diego, and Priscilla Vilchis, CEO of Premium Produce, a medical marijuana company in Nevada, both said they're going to start selling recreational cannabis in accordance with state laws.

Business is booming, and it's expected to grow. New Frontier Data, which analyzes the cannabis industry, projects that it could top $21 billion in annual sales by 2020 and employ 300,000 workers nationwide.

"Can we put the genie back in the bottle? Most people would say no," said Giadha Aguirre De Carcer, the firm's founder and CEO.

Justin Olsen of New World Organics, a medical marijuana dispensary in Maine, is watiing to see what the Trump administration does before expanding into recreational.