| | | | | |  | | By Ben White and Aubree Eliza Weaver | Presented by U.S. Bank | Editor's Note: Morning Money is a free version of POLITICO Pro Financial Services' morning newsletter, which is delivered to our subscribers each morning at 6 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day's biggest stories. Act on the news with POLITICO Pro. | | | The story on Michael Barr — The Biden administration still plans to nominate University of Michigan professor and Obama/Clinton administration veteran Michael Barr to serve as Comptroller of the Currency, a key bank regulatory job. But they have not done so yet in part because of some heavy pushback from the left over his ties to former Treasury Secretary Tim Geithner (viewed as too friendly to Wall Street) and his consulting work for a couple of fin-tech firms. The OCC is indeed a big job and has a poor reputation as a captured regulator in the pocket of banks. But there is little or no reason to think Barr would be anything like a shill for industry. He's worked on issues of racial justice and social equity since college at Yale University and grad school at University of Oxford when he protested apartheid in South Africa. He later worked on small business lending and other capital access issues in South Africa during the Clinton administration. He also opened the Office of Community Development at Treasury, worked to protect the Community Reinvestment Act, expanded the Earned Income Tax Credit and helped design the Community Development Financial Institutions Fund, among other things. The big knock is he was opposed to the Volcker Rule under Dodd-Frank, which is not actually true. And he has consulted for a couple of fin-tech firms but generally to help them reach the under-banked and speed up payments that are currently woefully slow. Sen. Elizabeth Warren (D-Mass.) has been a big fan and mento. So is former CFPB Director Rich Cordray. MM has given airtime to Barr's critics and supporters of law professor Mehrsa Baradaran, an expert on the racial wealth gap, for the job. And we are happy to give more. But it's an interesting early test for the Biden White House on whether they are willing to stand up to activists on the left and select the person they think is actually best for the job. Biden still wants to go bi-partisan on stimulus — Another big question roiling the young administration is whether to do some kind of bipartisan deal on stimulus or simply look to jam as much as they can into the economy through budget reconciliation. They could also do some version of both. But the president clearly wants to try and make an across-the-aisle deal as among his first legislative achievements. Via our Burgess Everett : "Biden has agreed to hear out a group of Republicans senators who made a last-ditch effort Sunday to engage him on the next coronavirus relief package. "After 10 Republican senators requested a meeting with Biden to begin bipartisan negotiations on the next coronavirus relief bill, White House press secretary Jen Psaki said on Sunday night that the president had agreed to their ask. Biden spoke to Maine Sen. Susan Collins (R-Maine) 'and invited her and other signers of the letter to come to the White House early this week for a full exchange of views,' Psaki said." GOOD MONDAY MORNING — Welcome to February! Many of us in the Northeast are getting slammed by winter storm Orlena. Feel free to come over and shovel for me. Free cocoa available. Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben . Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver. | | A message from U.S. Bank: Relationships may look different now, but they matter more than ever. That's why we've been partnering with local organizations to empower those who know their communities best.
Like in Arizona, where we helped the Hispanic Chamber of Commerce support a local photographer who lost 90% of his income due to COVID-19.
When the photographer reached out to say thank you, we gave him more business – by hiring Everardo ourselves. Learn more. | | | | | | WHAT'S DC GOING TO DO ON GAMESTOP? — Via CapAlpha's Ian Katz: "It's still unclear whether the SEC will be able to build a market manipulation case. We expect the agency to explore and eventually approve tougher requirements on brokerage disclosures to customers, including making it clearer that firms can halt trading in stocks. "We also expect tougher capital obligations for brokers. But both of those developments, especially new capital rules, would likely take many months and might not happen this year.Congress will talk a lot about the trading frenzy, giving hedge funds a verbal beating. Lawmakers will introduce bills, but we're skeptical that anything significant will become law – unless the extreme volatility intensifies and extends to more stocks." WARREN/SANDERS WEIGH IN — Our Myah Ward: "Sen. Elizabeth Warren on Sunday said the GameStop saga is just the latest 'ringing of the bell' that there are problems on Wall Street — one the Securities and Exchange Commission needs to fix. … "Warren blamed Reagan-era SEC changes that she said allowed companies to purchase their own stock and manipulate stock prices. She said the SEC has some pending rules on stock manipulation but needs to examine the role companies and hedge funds are playing in the markets. … Asked on ABC's 'This Week' to respond to Robinhood's move, Sen. Bernie Sanders (I-Vt.) reiterated his view that Wall Street's business model is 'fraud'" | | | | THE UNOFFICIAL GUIDE TO OFFICIAL WASHINGTON: Washington hasn't slowed down in 2021. A new administration and Congress are off and running, and our new Playbook team is two steps ahead of the pack to keep you up to speed. The new Playbook foursome of Rachael Bade, Eugene Daniels, Ryan Lizza and Tara Palmeri is canvassing every corner of Washington, bringing you the big stories and scoops you need to know—and the insider nuggets that you want to know—about the new power centers and players. "This town" has changed. And no one covers this town like Playbook. Subscribe today. | | | | | Mohamed A. El-Erian on Bloomberg Opinion: "What has been colorfully, and not that inaccurately, labeled as the uprising of the little guys reflects the confluence of information platforms, data, and easy-to-use products and trading apps — all of which have been helping the more general phenomenon of democratizing finance." HERE COME THE HEARINGS — Our Zachary Warmbrodt, Kellie Mejdrich, and Victoria Guida: "The frenzy surrounding the trading of GameStop stock is triggering Washington's most intense scrutiny of Wall Street in more than a decade, teeing up hearings and investigations that threaten brokers and hedge funds at the center of the turmoil." THE NEXT ROUND BEGINS — Via Reuters: "Wall Street is gearing up for another week of market mayhem, with signs that the retail frenzy that pumped up the stock prices of the likes of GameStop Corp and AMC Entertainment Holdings Inc is spreading to other assets. "Some of Wall Street's largest hedge funds are still licking their wounds after retail traders sought to drive up the prices of stocks that were heavily bet against, resulting in large losses for major investors. Melvin Capital, a hedge fund at the center of the GameStop drama, lost 53% in January but received commitments for fresh cash from investors in the last days of the month." | | | |   | | | | | | NEW TODAY — Via SIFMA on a new infrastructure push: "As part of SIFMA's Muni Month we will advocate for changes which would allow for increased infrastructure spending: Secure the passage of legislation to permit issuers to advance refund their municipal debt on a tax-exempt basis" and more. ALSO NEW TODAY — Third Way has a new strategy memo out today examining the use of the budget reconciliation process. TREASURY MARKET SET FOR A RESPITE — Bloomberg's Liz McCormick and Christopher Condon: "The world's biggest bond market is set to get a reprieve from the past year's torrid onslaught of ever-increasing auction sizes. "Most Wall Street dealers predict Treasury Secretary Janet Yellen's debt managers will hit the pause button for the next few months, after the department hoisted long-term auctions to unprecedented sizes the last three quarters to finance pandemic relief. Officials will announce their issuance plans on Feb. 3." | | | | JOIN TUESDAY - THE FUTURE OF AMERICAN ENERGY: President Joe Biden is pushing for an ambitious agenda to tackle the climate crisis amid a gridlocked Washington. Biden's signature plan "Build Back Better" includes a $400B investment in clean energy research, establishing a new agency to focus on climate, among other initiatives. Join POLITICO for a virtual conversation to explore policy proposals and practices to help communities with economies that rely on fossil fuels to navigate the energy transition. REGISTER HERE. | | | | | THREE REASONS WHY A 'PERFECT STORM' IS HITTING MARKETS — CNBC's Stephanie Landsman: "PNC Financial's Amanda Agati sees three reasons for the market's speculative craze: No commission trading, low interest rates and another round of stimulus checks. "Together, the firm's chief investment strategist calls them a 'perfect storm.' 'The rise in no commission trading, a la Robinhood and a number of retail trading apps, has no doubt added fuel to this fire,' she told CNBC's 'Trading Nation' on Friday. 'Also, the low interest rate environment that we continue to find ourselves in really has made the cost of significant risk taking pretty reasonable.'" WHAT'S DRIVING EVERYTHING FROM A MARKET FRENZY TO AN EMBRACE OF DEFICITS? — WSJ's Greg Ip: "The Wall Street bulls embracing sky-high stock values and the Washington pols embracing big deficits may be ideological opposites, but they have something important in common. Both draw sustenance from near-zero interest rates which make stocks more valuable and debt more supportable. "And both risk taking this basically sound logic to extremes. The rally in everything from big tech stocks to Tesla Inc. to bitcoin are all manifestations of what Wall Street calls 'TINA' for 'there is no alternative': when bank deposits pay nothing and government bonds next to nothing, investors will grasp at almost anything in search of a return." BANKS BRACE FOR TOUGHER RULES UNDER BIDEN — WSJ's Andrew Ackerman and Orla McCaffrey: "After the 2008 financial crisis, regulatory reform efforts sought to make the system safer. "This time, the goal will be to make it fairer. In keeping with President Biden's focus on helping minorities and people with low and moderate incomes — groups hit hardest by the coronavirus-induced downturn — financial regulators are expected to emphasize racial equity as they focus on consumer protection and expanding access to financial services." | | A message from U.S. Bank: At U.S. Bank, community matters.
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