| | | | | |  | | By Zachary Warmbrodt and Aubree Eliza Weaver | Presented by the Consumer Data Industry Association | 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 5:15 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.
| | | Coinbase goes full galaxy brain — Coinbase, the big U.S. cryptocurrency exchange, is once again swinging for the fences as it faces off against Washington policymakers. After publicly shaming the SEC for allegedly challenging its now-canceled lending service, the company is proposing a novel solution to the sector's growing regulatory obstacles — scrap the old rules, create all-new policies for crypto and designate a single agency to supervise the industry. Why this won't work — Coinbase's plan is essentially a crypto-utopian pipe dream that has no chance of being enacted. Several regulators across different agencies already have a piece of the action, and as one veteran, plugged-in lobbyist told MM Thursday, they largely don't like crypto and see it as a threat. Ask anyone who has argued in vain that the SEC and CFTC should be merged as a single regulator, because why should the U.S. have separate financial markets agencies? Policymakers are not in the business of giving up power. Or ask SEC Chair Gary Gensler — the most crypto-savvy regulator in D.C. and the biggest headache for Coinbase. He specifically warned lawmakers last week against creating a new agency or carving out crypto from existing securities law, which he said would "undermine 90 years of economic success." Why it matters — The big idea is still worth noting because it reveals the wide gulf that even the most well-heeled crypto firms face when it comes to constructively engaging with policymakers. A crackdown is rapidly approaching, and it's clear many in the industry won't take it lying down. "The job of regulation should never be to freeze us all in a moment of time," Coinbase chief policy officer Faryar Shirzad says, as reported by our Kellie Mejdrich. "The U.S. has an extraordinary history of accommodating innovation and getting the best of it." HAPPY FRIDAY — Safe travels if you're departing Washington after an exciting week of IMF-World Bank meetings and all the fun on the sidelines. Send tips and crypto beef to Zach (zwarmbrodt@politico.com) and Aubree (aweaver@politico.com).
| | | | A message from the Consumer Data Industry Association: On-time payments of rent, telephone and utility bills are indicators that a consumer is able to manage credit responsibly, even if the person is credit invisible or has a thin credit file. That's why the credit bureaus are working to bring more of this type of data into credit files; it creates a pathway for more consumers to enter the mainstream credit system. Learn more. | | | | | | CEA member Heather Boushey and BIS general manager Agustín Carstens speak at the Institute of International Finance conference … House Financial Services holds a hearing on exclusionary zoning at 12 p.m. … The IMF will host a seminar on "The Digital Money Revolution" at 1:30 p.m. … WHITE HOUSE DECLARES CLIMATE CHANGE A SYSTEMIC RISK — From Lorraine Woellert for POLITICO Pro: "The Biden administration on Friday declared climate change a threat to the stability of the financial system and released a plan to protect the economy, businesses and the savings and retirement accounts of average Americans. … "The White House said in its report that climate change poses 'serious and systemic risks to the U.S. economy and financial system.' "'The term 'systemic risk' carries a lot of weight,' White House climate adviser Gina McCarthy told reporters. 'Its inclusion in this road map reflects our belief that many financial models and investment portfolios still rely on outdated assumptions of climatic stability.'" INFLATION THREATENS DEMOCRATS' CONTROL OF WASHINGTON — POLITICO's Megan Cassella: "Americans are likely to face higher prices on everything from gasoline to groceries well into next year — threatening to turn a simmering economic issue into a major political one. … That prospect has heightened concern among Democrats about the potential political fallout, and the administration has scrambled to address some of the root causes even as officials argue that there's little they can do to resolve them on their own." WHITE HOUSE BETS MCCONNELL WILL CAVE ON DEBT CEILING — POLITICO's Christopher Cadelago: "Senate Minority Leader Mitch McConnell may be insisting that he won't help President Joe Biden and Democrats solve a debt ceiling impasse again. … Inside the White House, aides don't view McConnell's insistence as a hard 'no.' Instead, they consider the recent vote in the Senate to raise the debt limit for two months a harbinger for the future, underscoring that Republicans could easily join Democrats through regular order if need be." | | | | THE MILKEN INSTITUTE GLOBAL CONFERENCE 2021 IS HERE: POLITICO is excited to partner with the Milken Institute to produce a special edition "Global Insider" newsletter featuring exclusive coverage and insights from one of the largest and most influential gatherings of experts reinventing finance, health, technology, philanthropy, industry and media. Don't miss a thing from the 24th annual Milken Institute Global Conference in Los Angeles, from Oct. 17 to 20. Can't make it? We've got you covered. Planning to attend? Enhance your #MIGlobal experience and subscribe today. | | | | | TREASURY DROPS HINTS ON STABLECOIN REPORT — From our Victoria Guida on POLITICO Pro: "A top Treasury Department official on Thursday said a soon-to-be-released report on stablecoins will devote particular attention to risks that could arise if such cryptocurrency assets become a widely used payment method. … 'If they are used widely for payments, they could offer a payment system that is more efficient, more inclusive, more robust,' [Treasury Under Secretary for Domestic Finance Nellie Liang] said. 'On the other hand, there could be risks if some of them aren't addressed adequately.'" ICYMI: BIDEN BANKING NOMINEE CALLS OUT CRITICS — From the FT's Kiran Stacey and Stefania Palma: "Joe Biden's pick to head up a major US bank regulator has hit back at her critics in Congress and Wall Street, accusing some of them of singling her out for being a woman and a minority candidate. … 'I am an easy target: an immigrant, a woman, a minority,' [OCC nominee Saule Omarova says]. 'I don't look like your typical comptroller of the currency, I have a different history. I am easy to demonise and vilify.'" Coinbase react — From Better Markets president and CEO Dennis Kelleher: "The naked brazenness of Coinbase is nothing more than the latest attempt of the financial industry to use the claim of 'innovation' as a shield against scrutiny and a sword against existing regulations. Claiming that a newly created crypto-only regulator, which would almost certainly be industry captured, would better balance Coinbase's regulation minimization/profit maximization goals with investor protection than the SEC is beyond laughable." From Klaros Group partner Jonah Crane, a former Obama Treasury official (Klaros consulted for Coinbase in the past): "What Coinbase gets right is that they recognize, in so many words, that existing regulations are not technology neutral. They are built around, and therefore lock in, certain market structures and functions. Crypto and blockchain, uniquely among financial innovations of the past several decades, present the opportunity to radically rethink market structures. We don't need to start from scratch or create a new agency to do that, but we do need new thinking and a more engaged Congress for sure." What do you think about the Coinbase plan? Let us know. | | | | A message from the Consumer Data Industry Association:   | | | | | | STOCKS SURGE — Reuters' Caroline Valetkevitch: "The S&P 500 jumped on Thursday, its biggest daily percentage advance since early March, as companies including Morgan Stanley and UnitedHealth climbed following strong results, while data on the labor market and inflation soothed fears over the outlook for higher rates." BIG BANKS REPORT STRONG EARNINGS — NYT's Lananh Nguyen: "Five of the nation's biggest lenders — JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Morgan Stanley — have beaten quarterly earnings expectations this week. Alongside solid profits, industry leaders provided rosy predictions for a continuing economic rebound from the pandemic, even in the face of continued uncertainty about the spread of the coronavirus, rising inflation and persistent supply-chain headaches." What do bank earnings tell us about the economy? — WSJ's David Benoit, Ben Eisen and Orla McCaffrey: "Wall Street is booming, or at least parts of it are. Merger mania and stock trading lifted the big U.S. banks' third-quarter results. On Main Street, banks are still hunting for bigger loan growth, but many customers are spending more after holding out last year." Wells Fargo regulatory fixes might take years — Bloomberg: "Wells Fargo & Co. is making headway at resolving various regulatory concerns including an asset cap imposed by the Federal Reserve, while still facing years of work on the issues, Chief Financial Officer Mike Santomassimo said. "'We see the progress,' Santomassimo said Thursday in a Bloomberg Television interview. 'It's still a journey from here. And it's going to take several years to complete the work. I'm sure we'll have setbacks along the way, but we can see the significant progress there, and we're very confident in our ability to get it all done.'" | | | | BECOME A GLOBAL INSIDER: The world is more connected than ever. It has never been more essential to identify, unpack and analyze important news, trends and decisions shaping our future — and we've got you covered! Every Monday, Wednesday and Friday, Global Insider author Ryan Heath navigates the global news maze and connects you to power players and events changing our world. Don't miss out on this influential global community. Subscribe now. | | | | | | | | CFPB, FTC TEAM UP IN COURT — From Morning Tech's Benjamin Din: "The FTC, the Consumer Financial Protection Bureau and the North Carolina DOJ are weighing in on a court case that they say misuses Section 230 of the Communications Decency Act, the tech industry's liability shield, to avoid other laws. 'We are concerned that if tech companies circumvent consumer and banking laws, using Section 230 and other tactics, it will give a free pass to some, undermining fair competition,' FTC Chair Lina Khan and CFPB Director Rohit Chopra said in a statement, firing a warning shot to companies to not abuse the protection." 100 GROUPS BLAST IRS REPORTING PROPOSAL — A range of trade groups representing banks, fintechs, retailers and manufacturers are out with a new letter urging lawmakers to halt plans to require banks to report customer account information to the IRS. CLOSE TO 40 PERCENT OF AMERICANS STRUGGLE WITH FINANCES — WSJ's Jennifer Calfas: "Nearly 40 percent of U.S. households said they faced serious financial difficulties in recent months of the Covid-19 pandemic, citing problems such as paying utility bills or credit card debt, according to a recent poll. About one-fifth have depleted all of their savings." FED CHIEFS PLEDGE TO COMPLY WITH ETHICS REVIEW — Reuters: "The U.S. Federal Reserve's regional bank presidents responded to criticism of their ethics rules by Democratic Senator Elizabeth Warren with a joint letter welcoming a review of the matter by the Fed's Board of Governors and pledging to make any changes that result from that process. … Warren's letter followed a furor over the trading activities of [former] Dallas Fed President Robert Kaplan and [former] Boston Fed President Eric Rosengren, who made controversial investments last year as the central bank undertook a rescue of the economy." SEC REVISITS BONUS CLAWBACK RULE — From Kellie on POLITICO Pro: "The SEC on Thursday reopened the comment period for a proposal to crack down on executive bonuses based on inaccurate financial information … 'I believe we have an opportunity to strengthen the transparency and quality of corporate financial statements, as well as the accountability of corporate executives to their investors,' SEC Chair Gary Gensler said in a statement." NOTE ON TUESDAY'S MM — We ran an FT article that referenced the Bloomberg Barclays US Mortgage Backed Securities index. As of August, the Bloomberg Barclays fixed income benchmark indices are called the "Bloomberg Fixed Income Indices."
| | | | A message from the Consumer Data Industry Association: One of the most pressing issues policy makers are trying to solve is how we help consumers with limited-to-no credit history better access fair and affordable financial services.
When people don't have a strong credit history, they're considered "invisible" to banks and others who offer mainstream financial products. This means that if these people want to buy a home, the lender won't know how to assess the borrower's individual risk, because the credit report doesn't include enough information.
Now, there are efforts being made to address this issue. The inclusion of expanded data, like rent and cell phone payments, can help more consumers build robust credit files. Some companies also offer products that allow people to opt into certain kinds of "cash flow" information that can help build a credit score. Additionally, new credit scoring models can factor in this data to help broaden access to financial services. Learn more. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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