| | | | |  | | By Kate Davidson and Aubree Eliza Weaver | Presented by United We Succeed | 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.
| | | BOSTIC TO THE BOARD? NOT SO FAST — Would Atlanta Fed President Raphael Bostic be a likely contender for the Fed vice chair for supervision job? A number of you have shared your thoughts on the pros and cons. Yesterday we heard from another source: The Atlanta Fed. " President Bostic has not talked to anyone in the administration about the vice chair for supervision position," a spokesperson for the regional bank said in an email to MM. Would he be interested in the job? The spokesperson declined to say. Asked about the possibility of joining the administration, Bostic said in December he hadn't spoken with the White House, adding, "I've got lots on my plate." "I don't know what the White House is thinking about in terms of positions they might put in front of me," he said at a conference hosted by Reuters. "But they're all important jobs and I'd have to just take them as I had a chance to consider that. But ultimately right now I'm just focusing on what I need to do" on monetary policy. Moving from a regional bank to the Fed board would mean a big pay cut — Bostic made $417,700 in 2020 leading the Atlanta Fed, according to the Fed's annual financial reports, while Fed governors made $197,300. He would also have to relocate to Washington. And then there's that whole confirmation process, which has lately proved, to put it mildly, unpleasant for those who choose to go through with it. Is anyone raising their hand for that? And is the White House ready to throw another name out there just yet after Sarah Bloom Raskin withdrew her nomination under bipartisan fire from senators over her views on climate regulation? "It's an important role and he will nominate someone to fill the position," White House press secretary Jen Psaki said at a Wednesday press briefing. (She did not provide a timeline). Meanwhile, the Senate Banking Committee voted Wednesday to advance President Joe Biden's four remaining Fed picks to the Senate floor, including Chair Jay Powell and Governor Lael Brainard.
| | | | A message from United We Succeed: Proposed new regulations on credit cards would cause millions of low-income and minority Americans to lose access to credit. Research shows that similar regulations on debit cards cost low-income consumers about $160 per year. Furthermore, all credit card users, including individuals and small businesses, would see their points and perks slashed if these regulations pass. Congress should leave credit cards alone! Learn more. | | | THE FED'S BAZOOKA — Fed officials see an economy growing slower and prices rising much faster this year than expected just a few months ago, as Russia's invasion of Ukraine collides with the central bank's plan to battle searing hot inflation. But Powell made clear Wednesday, he does not see the U.S. headed toward a recession any time soon. In fact, he thinks the economy is so strong that it can flourish — not simply withstand – higher interest rates this year and next, even as supply chain and trade disruptions stemming from the war in Eastern Europe threaten to undercut economic activity. But there are big risks , especially for inflation — Officials acknowledged it's going to take years for the pace of price increases to come back to normal. And while inflation is expected to improve this year, it likely won't be enough to help the White House before the 2022 congressional midterms, our Victoria Guida (with an assist from your MM host) reported Wednesday. "They should be on notice that they're on the clock here," Skanda Amarnath, executive director of progressive advocacy group Employ America, said of the Biden administration. "Jay Powell and the Fed are on a course to keep raising rates until the economy enters recession or inflation comes down. The White House should be thinking about all the ways they can help bring inflation down." The Fed's battle plan started to come into sharper focus yesterday, with new forecasts from central bank officials on the expected path for rates, jobs, inflation and growth. The details:
- Officials expect to raise interest rates as many as seven times over the next nine months, including the quarter-percentage point increase on Wednesday, the first such move in more than three years.
- Officials also pulled forward their plans for rate increases, penciling in four more moves next year, rather than spreading them out over 2023 and 2024 as they previously expected.
- They also expect the federal-funds rate to remain higher in 2024 than where they see it settling over the long-run — that is, they expect rates to restrain growth, rather than support it.
In short: "It looks like they took out the bazooka," said Beth Ann Bovino, chief U.S. economist at S&P Global. Again, will that help or hurt the White House? Inflation has been eating into Americans' paychecks for the better part of a year, a problem that will no doubt be exacerbated by energy price spikes following the war in Ukraine. The Fed may be ready to do what it takes to rein in inflation, but are Americans ready for the higher interest rates and slower growth that come with it? "Higher interest rates are certainly scary," Bovino says. "But when I think about the impact of higher inflation on people's pocketbooks, on the feeling that that dollar isn't giving you much, I probably would choose higher interest rates over inflation." Either way, they open the White House up to renewed criticism from Republicans that pandemic relief spending last year has fueled rampant inflation — and now, with it, higher borrowing costs and slower growth. IT'S THURSDAY — Happy Saint Patrick's Day! You can have your soda bread, we'll be celebrating with chocolate Guinness cake, thank you very much. (And a wee glass of Powers for good measure.) Got a tipsy tip? Send it to our colleague Katy O'Donnell, who'll be helming the ship on Friday, along with Aubree Weaver: kodonnell@politico.com, aweaver@politico.com, or on Twitter @katyodonnell_ and @aubreeeweaver.
| | | | SUBSCRIBE TO NATIONAL SECURITY DAILY : Keep up with the latest critical developments from Ukraine and across Europe in our daily newsletter, National Security Daily. The Russian invasion of Ukraine could disrupt the established world order and result in a refugee crisis, increased cyberattacks, rising energy costs and additional disruption to global supply chains. Go inside the top national security and foreign-policymaking shops for insight on the global threats faced by the U.S. and its allies and what actions world leaders are taking to address them. Subscribe today. | | | | | | | | February housing starts data at 8:30 a.m. … February industrial production data at 9:15 a.m. … IRS Commissioner Rettig testifies before House Ways and Means at 10 a.m. … Senate Banking hearing on the role of digital assets in illicit finance at 10 a.m. CHINA FINDS ITSELF IN A TRICKY POSITION — STUCK BETWEEN THE WHITE HOUSE AND THE KREMLIN — Our Phelim Kline: "It's been a good couple decades for China. When the U.S. invaded Afghanistan in 2001 — turning its attention to war and nation-building in Central Asia — China's economy was roughly the size of Indonesia's today. Now it's 18 times larger, nipping at the heels of the U.S. for the outright title of the world's biggest." TREASURY SHIFTS $377M AMONG STATES AS PANDEMIC HOUSING AID DRIES UP — NYT's Glenn Thrush: "The Biden administration has clawed back $377 million in federal emergency housing aid from states and counties, most of them controlled by Republicans, and redirected the cash to states that have been clamoring for more help, including New York, California and New Jersey."
| | | HOW HIGHER INTEREST RATES WILL AFFECT AMERICANS' FINANCES — AP's Christopher Rugaber: "Americans who have long enjoyed the benefits of historically low interest rates will have to adapt to a very different environment as the Federal Reserve embarks on what's likely to be a prolonged period of rate hikes to fight inflation. Record-low mortgage rates below 3 percent, reached last year, are already gone. Credit card interest rates and the costs of an auto loan will also likely move up. Savers may receive somewhat better returns, depending on their bank, while returns on long-term bond funds will likely suffer." POWELL: FED COULD FINALIZE BALANCE SHEET PLAN IN MAY — Reuters' Jonnelle Marte: "Federal Reserve policymakers have made "excellent progress" on their plan for reducing the central bank's nearly $9 trillion balance sheet, and could finalize details at their next policy meeting in May, Fed Chair Jerome Powell said on Wednesday." MAJOR BANKS RAISE BASE LENDING RATE AFTER FED'S RATE MOVE — Reuters: "Big U.S. banks said on Wednesday they were raising their base lending rates by a quarter of a percentage point each, hours after the U.S. Federal Reserve increased its benchmark interest rate in a bid to contain stubbornly high inflation. Citigroup Inc, Wells Fargo & Co, JPMorgan Chase & Co and Bank of America Corp said they were each lifting their base rates to 3.5 percent from 3.25 percent, effective Thursday." Meanwhile, interest-rate forecasts from Fed officials sparked a mixed reaction from U.S. bond markets Wednesday, suggesting that investors still have questions on how much the central bank will actually tighten monetary policy. — WSJ's Sam Goldfarb
| | | | A message from United We Succeed:   | | | | | | FISHING EXPEDITIONS — Our Sam Sutton writes: Bipartisan members of the House Blockchain Caucus are demanding the SEC provide information about how it's using the enforcement and examination divisions to gather information about blockchain and cryptocurrency businesses. "Those authorities are better suited to the SEC's divisions charged with seeking public commentary as part of the rulemaking process," a group of eight lawmakers led by Rep. Tom Emmer (R-Minn.) wrote in a letter to SEC Chair Gary Gensler on Wednesday. The group went on to add that the agency's use of investigative units to solicit info from "unregulated" cryptocurrency and blockchain industry participants might violate the Paperwork Reduction Act. Gensler has repeatedly asserted that most crypto assets fall under SEC oversight. The agency has pursued dozens of enforcement actions around digital assets over the last decade. UKRAINE — From Coindesk's Eliza Gkritsi: "Ukrainian President Volodymyr Zelenskyy legalized crypto in the country, signing into law a bill on virtual assets, amid a frenzy of digital asset donations to support the country's defense against a Russian invasion." DOWN IN THE MINES — From Bloomberg's Crystal Kim: "Crypto miners are hunkering down for a possible squeeze as rising costs, swinging Bitcoin prices, and now a war in Ukraine threaten to erode the industry's substantial profit margins. Companies are tapping debt markets, shoring up balance sheets and credit lines, and even filing to sell shares in order to raise more cash."
| | | | STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president's ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today. | | | | | | | | Megan Haberle has joined the National Community Reinvestment Coalition as senior director of policy. Haberle was previously senior policy counsel at the NAACP Legal Defense Fund, and deputy director at the Poverty & Race Research Action Council.
| | | The extent to which new trade restrictions hinder Russia's abilities will depend on whether companies around the globe follow the rules. — NYT's Ana Swanson "The IMF's executive board has suspended the ceremonial role of 'dean,' which was held by Russia's representative Aleksei Mozhin, following pressure from top shareholders at the multilateral lender including the US, UK and Canada." — FT's Colby Smith and James Politi The world's largest cryptocurrency exchange Binance has beengranted a licence to conduct some operations in Dubai , the company said on Wednesday, from where it plans to carry out regional business. — Reuters' Lisa Barrington Buried in a filing released Tuesday night, Citi disclosed it will now cover travel costs for employees seeking an abortion after several states including Texas implemented or proposed a near-total ban on the procedure. — Bloomberg's Matthew G. Miller and Shelly Hagan
| | | | A message from United We Succeed: Big retailers are pressuring Congress to regulate credit cards in a way that would unfairly punish consumers and put their private financial information at risk. These proposed changes would be especially tough on Americans in low income and minority communities. When Congress voted to impose similar regulations on debit cards, consumers were promised lower prices. It didn't happen. Instead of any consumer benefits, many low income and minority Americans lost access to the banking system. If these regulations were expanded, millions could lose access to credit. Community banks and credit unions rely on revenue from card programs to serve low income and rural communities. These proposed regulations put those programs at risk. They would also threaten the security of credit cards by introducing alternative networks to process transactions - all without the consumers' knowledge. Congress must not make the same mistakes with credit cards! Learn more. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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