News : SBF, Larry Fink and the House GOP agenda with Bill Huizenga

Thursday, December 15, 2022

SBF, Larry Fink and the House GOP agenda with Bill Huizenga

Dec 15, 2022

Presented by American Bankers Association

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Rep. Bill Huizenga is the House GOP's point-man on capital markets, having served as the top Republican on the subcommittee with jurisdiction since 2017. He's making a push to keep that post in the new Congress — despite internal Republican term-limit rules that might get in the way.

MM caught up with the Michigan lawmaker this week for a preview of the incoming majority's plans. He also dished on Sam Bankman-Fried and BlackRock's Larry Fink.

The SBF meeting

I sat with [Sam Bankman-Fried] in my office — by the way he was significantly late.

I'm sitting there listening to him describe what he's doing and asking a few basic questions — and I was confused. I was looking at that going, I can't imagine what this dude's P&L sheet looks like.

Where you've gotten people really all aflutter about him coming in is when they really don't have an understanding of either business or crypto.

I run a couple small, little family companies. But I know how to read a P&L, and it didn't feel right.

The future of incoming Financial Services Chair Patrick McHenry's stablecoin bill, following the FTX crypto meltdown

Patrick and Chair [Maxine] Waters had been making some significant inroads on the stablecoin bill. This has kind of sucked the oxygen out of the room in a way.

Huizenga's pitch to once again chair the capital markets subcommittee

I've been a touch critical of the majority's lack of attention to capital markets and the entrepreneurship side of it. I would love to return the focus to that.

We've got bills lined up we've worked on previously that would be good to go, and I'd love to shepherd that.

But will McHenry enforce term limits? Huizenga is hitting the GOP's six-year cap.

That's part of the ongoing conversation.

[Rep.] Virginia Foxx getting this waiver [to possibly break with a term limit and chair Education and Labor] changes the game a little bit for a lot of people, at least in their minds and my mind.

The GOP cap markets agenda

The biggest change is actual oversight.

[SEC Chair Gary] Gensler has been elusive — but so have his division heads.

We should be demanding more, and I hope my Dem colleagues will join me in that.

BlackRock CEO Larry Fink says "stakeholder capitalism" is not political or woke — it's just capitalism. Are Republicans sacrificing free market ideals by beating up on companies that say it's good business to offer sustainable investment options?

No. Larry Fink's fooling himself and trying to fool others.

The basics of capitalism are the basics of capitalism, and he is trying to mold them and shape them into a social fabric that he wants to see.

This is more about people feeling good at cocktail parties and flying out to their place in Tahoe and whatever else.

No offense, Tahoe — Happy Thursday. Please send tips and season's greetings to zwarmbrodt@politico.com and ssutton@politico.com.

Driving the day … The European Central Bank and Bank of England are set to raise rates … CFPB Director Rohit Chopra's Senate Banking hearing is at 10 a.m. … NCUA's board meets at 10 a.m. …

A message from American Bankers Association:

Don't let big grocery chains and mega-retailers pressure Congress into passing misguided credit card legislation that will put your airline miles and personal data at risk. They want to pad their profits, as consumers struggle with sky high prices. Tell your lawmaker to oppose S. 4674.

Driving the Day

Fed slows hikes but its inflation outlook darkens — POLITICO's Victoria Guida: "Fed officials raised interest rates yet again on Wednesday — and said they are now more pessimistic about what inflation might look like next year, according to widely anticipated projections that central bank policymakers released after their meeting."

— Fed Chair Jerome Powell all but asked traders to take a chill pill following a stock rally this week triggered by signs of easing inflation. Upswings in financial markets can work against the Fed's goals of slowing the economy.

Powell said it is important that financial conditions "reflect the policy restraint we are putting in place to return inflation to 2 percent."

— WaPo ed board wants Fed officials to face tougher ethics rules: "To preserve its position at the controls of the world's largest economy, it should make restoring public trust as high a priority as fighting inflation."

Gary Gensler unveils stock market revamp — Our Declan Harty: "The Securities and Exchange Commission on Wednesday proposed a sweeping slate of rules that would redefine how investors' orders to buy and sell stocks in the U.S. are handled, priced and executed by a long line of financial intermediaries — from the New York Stock Exchange to online brokers like Robinhood to GOP megadonor Ken Griffin's Citadel Securities.

"The four proposals up for consideration … represent the most ambitious campaign to overhaul the rules underpinning the stock market since 2005, when the agency modernized market regulations for the new age of electronic trading."

Vanguard gets a pass in Texas after leaving climate group — FT: "Texas legislators have excused Vanguard from being grilled on its investment practices at a hearing on environmental, social and governmental investment factors, a week after the asset management giant quit the main global financial alliance on tackling climate change. …

"Thursday's [Texas Senate] hearing is due to hear testimony from Dalia Blass, BlackRock's head of external affairs; Lori Heinel, State Street's global chief investment officer; and Lorraine Kelly, the global head of investment stewardship at the proxy advisory firm Institutional Shareholder Services."

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Crypto

Elizabeth Warren's latest crypto target is money laundering — Sen. Elizabeth Warren (D-Mass.) has a new bill that would impose a suite of financial crime safeguards on cryptocurrency trading, including Know-Your-Customer requirements for digital asset wallet providers and miners. Warren is proposing the legislation with Sen. Roger Marshall (R-Kan.).

— Crypto think tank Coin Center says the bill is "the most direct attack on the personal freedom and privacy of cryptocurrency users and developers we've yet seen."

Takeaways from the Senate's FTX hearing — The Senate Banking Committee didn't have SBF or John Ray at its FTX hearing Wednesday. What crypto watchers got were clues from lawmakers on the direction of policy, Sam reports.

— Senate Banking Chair Sherrod Brown called for a comprehensive framework that "looks at crypto products for what they are, not what crypto executives want them to be."

— Several Democrats — including Sens. Jon Tester of Montana and Mark Warner of Virginia — said that extending new regulations to crypto businesses could bring some of the market's risks into the financial system, potentially exposing banks, asset managers and retail investors to new bubbles.

— Sen. Kyrsten Sinema (I-Ariz.) echoed criticism from crypto-friendly House members who have blasted federal regulators for not doing more to stop crypto scams before they explode.

Will a harsh Bahamas jail make SBF accept extradition? — Bloomberg: "Despite its bucolic name, Fox Hill is known for overcrowding, poor nutrition, inadequate sanitation and substandard medical care, according to a 2020 US State Department report. The report described rat and maggot infestation as well as tiny cells with only buckets for toilets.

"People familiar with the matter said Bankman-Fried, 30, currently has his own room in the medical block of Fox Hill's maximum security unit, where he will remain until his Feb. 8 extradition hearing."

A message from American Bankers Association:

Regulatory Corner

Rohit Chopra gets a preview of the GOP House — POLITICO's Katy O'Donnell: "Republicans hammered CFPB Director Rohit Chopra on Wednesday over his efforts to shape industry behavior outside of the formal regulatory process, signaling a stormy two years ahead for the consumer bureau chief under a GOP House majority.

"'You can look forward to a few more of these invitations next year,'" Rep. Patrick McHenry (R-N.C.), the incoming chair of the Financial Services Committee, told Chopra during the panel's oversight hearing."

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Fly Around

The never-ending scandal: AIG unit files for bankruptcy amid crisis-era bonus spat — FT: "AIG is trying to limit bonus payments to former executives by placing into bankruptcy the unit that triggered one of the biggest bailouts of the 2008 financial crisis."

Florida lawmakers pass insurance overhaul — WSJ: "Florida lawmakers approved sweeping changes to state law to address a worsening property-insurance crisis, including adding $1 billion to a state-run reinsurance program to ease a burgeoning private-sector shortage of the crucial backup coverage."

Goldman bankers face bonus cut — FT: "Goldman Sachs is considering shrinking the bonus pool for its more than 3,000 investment bankers by at least 40 per cent this year, as chief executive David Solomon tries to control costs with deeper cuts than many of its Wall Street rivals."

A message from American Bankers Association:

Big grocery chains and mega-retailers are pressuring Congress to pass legislation that will harm consumers. These businesses enjoy record profits on record prices. Now they're demanding all the benefits of our modern payments system without helping pay for it. Their so-called Credit Card Competition Act would in fact reduce choices for consumers, jeopardize the security of their sensitive data, and eliminate popular credit card reward programs like travel points that drive the nation's tourism industry. Recent survey data show that 94% of consumers value the convenience of their credit cards and 90% value their credit card rewards. Ask your lawmaker to stand up for American consumers and oppose this misguided legislation.