| | | | |  | | By Kate Davidson and Aubree Eliza Weaver | 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. As momentum builds for some kind of boycott of Russian oil, one of Ukraine President Volodymyr Zelenskyy's top economic advisers is making the stakes clear: Banning Russian oil imports could end the war in Ukraine, he says. Your MM host spoke for nearly an hour yesterday with Oleg Ustenko, who is working from an undisclosed location in Ukraine, sleeping a few hours at a time in between meetings with the president, media hits and op-ed writing in which he urges the West to ratchet up its pressure on the Kremlin. "I know that it's going to be costly for everybody," Ustenko said of a full energy import ban. "But the price we are paying here in Ukraine is with our lives, with the lives of our people, with our destroyed cities, with our destroyed villages, with raped women and killed kids. For all our people who are hidden underground like we are in the Middle Ages." "We are already paying the price," he added. Ustenko expanded on his op-ed published Monday in the L.A. Times, in which he and MIT Professor Simon Johnson called on the U.S. to not only ban oil imports but also impose secondary sanctions prohibiting any firm doing business in dollars from facilitating purchases of Russian oil anywhere in the world. In addition, they argued, the U.S. should encourage Europeans to use less gas, pushing daily gas payments as low as possible. From our story last night: "Without much-needed revenue from oil and gas — which is responsible for an outsize share of Russia's revenue — the government would quickly begin to run large deficits that it won't be able to finance, Ustenko said, thanks to Western sanctions that have largely disconnected the country from global financial markets. Eventually, Putin would run out of money to finance his military campaign and be forced to stand down, he said." "They will not be equipped financially to continue war with Ukraine, and eventually they will need to stop it," Ustenko said. A successful strategy depends on other countries, such as Saudi Arabia, ramping up oil production, which Ustenko sees as likely in the medium term, though he acknowledged energy prices could initially spike. U.S. officials have signaled they are open to a potential ban, but European leaders are much cooler to the idea. But a key question for the Biden administration is how U.S. consumers would react to higher prices at the pump. A new Quinnipiac University national poll found 71 percent of Americans — 82 percent of Democrats and 66 percent of Republicans — said they would support a ban on Russian oil even if it meant higher gas prices in the U.S. (How much higher, the poll did not specify.)
| | | | HAPPENING TODAY, INTERNATIONAL WOMEN'S DAY, AN IMPORTANT CONVERSATION ON THE WOMEN IN AFGHANISTAN: Join Women Rule editor Elizabeth Ralph for a panel discussion on the future for Afghan women. Guests include Hawa Haidari, a member of the Female Tactical Platoon; Cindy McCain, U.S. ambassador to the United Nations Agencies for Food and Agriculture; Roya Rahmani, Afghanistan's first female ambassador to the U.S.; and Sen. Jeanne Shaheen (D-N.H.). Learn how female Afghan veterans are planning their futures, what the women still in Afghanistan face, and what the U.S. can do to help. REGISTER HERE. | | | | | WHITE HOUSE READY TO RELEASE CRYPTO EO — From our Sam Sutton and Victoria Guida: "President Joe Biden will sign an executive order as soon as midweek to marshal resources across the government to develop a sweeping plan to oversee cryptocurrencies, including whether the U.S. should issue a fully virtual version of the dollar, according to two people familiar with the document." The details: The long-awaited order will call on federal agencies to complete a series of studies over the next nine months. Biden will direct federal agencies to collaborate on analyzing the merits of a so-called central bank digital currency, which would be issued by the Federal Reserve. The potential arrival of a digital dollar would have significant consequences for global payment systems, domestic commerce and the banking industry. The U.S. is playing catch-up : While Biden's order will stop short of directing policy, it's an important step toward providing clarity for an industry that has already disrupted traditional banking and payment systems. Still, it may face resistance from many in the industry, who argue that the whole point of cryptocurrency is to avoid government control, Sam and Victoria report. "This is the starting gun," one person with direct knowledge of the order's contents said in an interview. IT'S TUESDAY — Do you think the Biden administration should ban Russian oil imports and impose broader, secondary sanctions? What will higher oil prices mean for consumers, businesses and U.S. growth? Will Americans accept the tradeoff to help Ukrainians? We want to know what you think: kdavidson@politico.com, aweaver@politico.com or find us on Twitter @katedavidson, @aubreeeweaver.
| | | | A message from ExxonMobil: ExxonMobil is committed to playing a leading role in the energy transition. We're advancing climate solutions, including carbon capture and storage, hydrogen and advanced biofuels. And, by 2050, we aim to achieve net-zero emissions (Scope 1 and 2) from our operated assets. We're working with partners to achieve similar results from non-operated assets, and advocating for supportive policies to accelerate the deployment of lower-emission technologies needed to support a net-zero future. Learn more at ExxonMobil.com/Solutions | | | | | | House Financial Services Ranking Member Patrick McHenry speaks at the American Bankers Association conference at 8:30 a.m. … House Financial Services hearing on inflation at 10 a.m. … Senate Banking hearing on mandatory arbitration at 10 a.m. … Public hearing on U.S. Bancorp's proposed acquisition of MUFG Union Bank at 11 a.m. … Consumer Bankers Association holds its CBA Live conference in San Antonio, Texas. DEMS TO TAKE FIRST STEP TOWARD REVIVING PARTY-LINE DOMESTIC AGENDA — Our Marianne LeVine: "Senate Majority Leader Chuck Schumer on Monday gave his first concrete signal of a revival of Democrats' stalled party-line domestic agenda , announcing imminent hearings on proposals to deal with spiking inflation. "Schumer's letter to his colleagues marks a clear step toward a resuscitated spending plan that might be more in line with the parameters set out last week by Sen. Joe Manchin (D-W.Va.), who squashed the party's previous $1.7 trillion signature legislation in December." SCOOPLET: WHITE HOUSE TAKES DEFICIT DATA TO THE HILL — As Schumer moves to revive the administration's agenda, White House officials this week are focusing their message on how the president's agenda will lower prices and raise wages. As part of that push, they plan to highlight recent data with Capitol Hill offices today showing government budget deficits are on the decline so far this fiscal year. (We flagged the improving budget picture for you in MM last month — that's to be expected, as pandemic relief spending fades and the growing economy pushes up federal tax revenues.) The Congressional Budget Office is set to release its monthly budget review today; you can find the most recent report here. The president also plans to meet with business leaders Wednesday to talk about how passing legislation like the Bipartisan Innovation Act could help lower prices by strengthening U.S. supply chains. On Thursday, officials also plan to highlight how the American Rescue Plan has helped reduce middle-class health care costs, and will discuss plans to cut prescription drug costs. — A new report the administration released Monday found employer practices like non-compete agreements and gig work restrict workers' choices and, as a result, stick them with lower wages and worse working conditions, our Eleanor Mueller reported. "The findings in this report represent a shift in the way economists view labor markets," Treasury Secretary Janet Yellen said at the White House on Monday. "Capitalism without competition isn't capitalism; capitalism without competition is exploitation." WHITE HOUSE SPLIT DELAYS PLANS FOR INVESTMENT CONTROLS ON CHINA — Our Gavin Bade: "National security officials, led by national security adviser Jake Sullivan, have been advocating for months for President Joe Biden to issue an executive order that would prohibit many American investments in Chinese technology firms and startups. But the Treasury and Commerce departments are pushing back , said two industry officials with knowledge of the talks, arguing that new rules would dramatically reduce new U.S. business in China and put American firms at a competitive disadvantage." CLOSER TO CLIMATE DISCLOSURE — The Securities and Exchange Commission is expected to begin the process of rolling out its long-awaited rule governing how publicly traded companies must disclose their risks from climate change as soon as Wednesday, two people familiar with the discussions tell our Zack Colman. Zack writes: While the date could slip — it already has multiple times — whatever rule the SEC issues could profoundly alter how companies and investors assess their exposure to the effects of climate change and policies to rein in emissions. "This is the biggest rule I think the SEC has done in quite some time," said Tim Doyle, a senior adviser at the Bipartisan Policy Center's ESG and corporate governance program. Two major issues have bedeviled the SEC decision. One is how to handle "Scope 3" emissions — meaning those associated with the end-use of a product, such as emissions from gasoline rather than emissions from extracting oil. The other is how to assess materiality, which roughly means issues a reasonable investor would want to know that could affect a company's bottom line. One person familiar with the commission's thinking said Scope 3 is likely to be phased in at a later date given concerns about accounting methodology. That's a sizable blow for climate advocates who contend omitting Scope 3 would let some of the biggest contributors to climate change, like oil companies and banks, off the hook for a majority of the planet-heating emissions attributed to them.
| | | | A message from ExxonMobil:   | | | | | | MCHENRY READIES CRYPTO REGULATION PLAN — Our Zachary Warmbrodt sat down with the North Carolina Republican to talk about his stablecoin proposal. "He wants to build off existing state-based regulation of digital currencies and establish what would in essence be a federal option for crypto startups," Zach writes. SENIOR DEM WARNS AGAINST TOUGH CRYPTO CLAMPDOWN — Sen. Ron Wyden (D-Ore.) tells the FT's Kiran Stacey: "There is obviously a debate [about stricter regulation] but I want to be on the side of the innovator . When I think about crypto I think about remittances, or somebody who has a kid 1,000 miles away and wants to get them help in an emergency, rather than going through scores of banks, credit card companies." NOT HAPPENING — Our Sam Sutton writes: The Financial Crimes Enforcement Network isn't seeing much evidence of Russian oligarchs using crypto to bypass sanctions, according to a statement released by Treasury on Monday . Russia's emergence as a hotbed for ransomware attacks and other crypto scams led many to speculate that digital assets could offer new avenues for sanctioned institutions to undermine restrictions. "Although we have not seen widespread evasion of our sanctions using methods such as cryptocurrency, prompt reporting of suspicious activity contributes to our national security and our efforts to support Ukraine and its people," Acting Director Him Das said.
| | | U.S. TREASURYS REGAIN FAVOR — WSJ's Sam Goldfarb: "Russia's invasion of Ukraine and hints of slowing wage growth have driven money back into U.S. government bonds in recent days, dragging down longer-term interest rates and providing some relief to investors buffeted by declines in riskier assets." — Stocks fell sharply on Wall Street Monday after another big leap for oil prices threatened to squeeze inflation's grip on the global economy, AP's Stan Choe and Alex Veiga reported. — And a key gauge of funding stress in the credit markets surged, a signal that banks are girding themselves for potential disruptions amid geopolitical turmoil, Bloomberg's Alex Harris wrote.
| | | NO INFLATION RELIEF IN SIGHT — Reuters' Lindsay Dunsmuir: "Russia's invasion of Ukraine has dashed any hope U.S. consumers might have had for relief from sky-rocketing inflation, with gasoline prices in the last week surging by the most in nearly 17 years and costs of other goods like food ready to march higher as well. "Even before the invasion, the U.S. inflation report for February was set to show prices rising at their fastest pace in 40 years. The data, due to be released on Thursday, will likely show only a preliminary impact from the swelling in U.S. oil prices, which briefly climbed above $130 a barrel on Monday, but the spike is expected to drive overall inflation higher in coming months." — But any pullback would depend on these sectors, WSJ's Gwynn Guilford and Peter Santilli write.
| | | | 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. | | | | | U.S. consumer borrowing rose in January at the slowest pace in a year as households paid down credit-card balances that swelled during the holiday-shopping season. — Bloomberg's Reade Pickert The auto assembly lines going quiet in Germany, Britain and Austria may foreshadow a fundamental reordering of the global economy that Russia's invasion of Ukraine will accelerate. — NYT's Jack Ewing U.S. airlines are unlikely to raise fares enough to completely offset jet-fuel costs that are at their highest levels in more than a decade, pulling the industry's shares down the most in the S&P 500. — Bloomberg's Mary Schlangenstein
| | | | A message from ExxonMobil: ExxonMobil is committed to playing a leading role in the energy transition and advancing climate solutions while continuing to power economies around the world. We're investing $15 billion in lower-emission technologies, including carbon capture and storage, hydrogen and advanced biofuels, through 2027. By 2050, we aim to achieve net-zero emissions (Scope 1 and 2) from our operated assets, backed by a comprehensive approach with detailed emission-reduction roadmaps. And where we are not the operator, we're also working with partners to achieve similar results and help them reach their emission reduction goals. We're advocating for supportive policies, such as a price on carbon, which can help reduce costs and drive new markets to accelerate deployment of key lower-emission technologies needed to support a net-zero future. Learn more about our plans and how our strategy is resilient under the International Energy Agency's Net Zero Emissions by 2050 scenario at ExxonMobil.com/Solutions | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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