| | | | |  | | By Zachary Warmbrodt | | | 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. “Bailout” is a dirty word in politics, especially when it comes to big banks. But Democrats are starting to argue that the government’s most recent intervention to avert a financial collapse might not be so bad for President Joe Biden — it might even make for good messaging. Initial polling suggests that voters are comfortable with how Biden and regulators responded to the failures of Silicon Valley Bank and Signature Bank by rescuing their depositors. (The polls were conducted before three Biden-appointed officials were grilled this week over how and why regulators dropped the ball before the banks failed.)
- A Morning Consult poll found that a majority of voters support the rescue plan, despite seeing it as a bailout. A CBS/YouGov survey showed that 51 percent of Americans thought the Biden administration was handling U.S. banking issues well.
- "The public seems quite supportive of the actions we’ve taken,” one administration official said this week. “But I think the key is to make sure we’re not in that position again."
Sen. Elizabeth Warren (D-Mass.) outlined for MM how Biden’s response could bolster his standing with voters. She said Biden has been a “steady hand through this financial crisis, and it reinforces the steadiness of his approach internationally.”
- “He’s made clear his fury over the need to backstop high-flying corporate CEOs, and he wants laws to hold them accountable,” Warren said. “That works in his favor politically as well as being the right answer economically.”
- “Biden makes clear with everything he does that he wants to put government on the side of working people,” she said. “Even this bank rescue was framed in terms of small businesses making payroll and people not getting laid off. That’s right in Biden’s wheelhouse.”
It’s giving Democrats new material to make the argument that an assertive role for government can be a force for good in the economy. In this case, well-heeled venture capitalists were begging for help from Washington.
- “Just as there are no atheists in foxholes, it appears that when there is a bank crash, there are no libertarians in Silicon Valley,” Senate Banking Chair Sherrod Brown (D-Ohio) said at a hearing Tuesday on SVB’s failure.
Many Republicans on Capitol Hill have been careful about bashing Biden’s handling of the situation, but some are already kicking the tires on how to respond. SVB’s failure was triggered by its mismanagement of rising interest rates, and that dovetails into broader GOP criticism that Biden’s policies helped fuel inflation that necessitated the rate hikes. (White House officials would counter that looser regulation under Trump precipitated the banking problems.)
- “At the core of it, people understand the impact that persistently high inflation is having not only on their family and on their family budget, but also causing economic instability in other areas as well,” Rep. Bryan Steil (R-Wis.) told MM.
To be sure, Biden probably won’t get a big boost in the polls from the SVB episode but it appears for now that it’s at least not hurting.
- “I don’t think people are running around saying, thank goodness that Janet Yellen and the FDIC sprung into action and did what was necessary,” Sen. Brian Schatz (D-Hawaii) told MM. “They’re mostly just glad that things appear to be stable now.”
And as Schatz made clear, we’re not out of the woods yet.
- “I’m hesitant to declare victory because nobody knows exactly what’s going to happen in markets. Don’t get me wrong, they did a great job. I just don’t know that this is going to be part of their reelection strategy.”
Happy Thursday – Do you have a plan to revamp deposit insurance? Let us know at zwarmbrodt@politico.com and ssutton@politico.com.
| | A message from Intuit, serving more than 100 million customers worldwide with TurboTax, Credit Karma, QuickBooks, and Mailchimp: With Intuit TurboTax, our customers save both time and money thanks to proven tax software that helps millions of taxpayers maximize their refunds and file confidently. We interviewed real TurboTax customers to find out why they use it every tax season. Here's what they said. | | | | | | HUD Secretary Marcia Fudge, Acting Comptroller Michael Hsu and NY DFS Superintendent Adrienne Harris speak at the NCRC Just Economy conference in the morning … Former FDIC Chair Sheila Bair speaks and Treasury Secretary Janet Yellen receives the Paul A. Volcker award at the NABE conference in Washington … Biden’s World Bank pick set to win job — Bloomberg reports that Ajay Banga appears to have a lock on becoming the next head of the World Bank, with no country publicly offering another candidate. White House eyes tougher midsize bank rules – WaPo and WSJ report that White House officials are discussing a plan to urge regulators to impose new regulations on midsize banks, in response to the failures of SVB and Signature Bank. Republicans are beginning to push back. Sen. Thom Tillis (R-N.C.) told our Eleanor Mueller: “They're trying to escape the fact that they were sitting over an administration for the last two years that utterly failed its supervisory functions of Silicon Valley Bank.” A flurry of deposit developments –
- Eleanor scoops that Rep. Ro Khanna (D-Calif.) is working with Senate Republicans on a bill that would establish a temporary government guarantee for uninsured deposits in payroll accounts.
- Fed Chair Jerome Powell told House Republicans in a private meeting Wednesday that lawmakers should evaluate how the U.S. insures bank deposits, Eleanor reports.
- “He thought it merited review, given the changes in the way that funds can move in and out of bank accounts pretty quickly," Rep. Andy Barr said of Powell’s comments.
- Eleanor also caught Senate Banking Chair Brown who said he’s considering a hearing on deposit insurance changes.
| | | | GO INSIDE THE 2023 MILKEN INSTITUTE GLOBAL CONFERENCE: POLITICO is proud to partner with the Milken Institute to produce a special edition "Global Insider" newsletter featuring exclusive coverage, insider nuggets and unparalleled insights from the 2023 Global Conference, which will convene leaders in health, finance, politics, philanthropy and entertainment from April 30-May 3. This year’s theme, Advancing a Thriving World, will challenge and inspire attendees to lean into building an optimistic coalition capable of tackling the issues and inequities we collectively face. Don’t miss a thing — subscribe today for a front row seat. | | | | | | | | What we learned at Wednesday’s House SVB hearing –
- Small banks appeared to be big winners, Victoria Guida and Sam report.
- Fed Vice Chair for Supervision Michael Barr said he’s only considering increasing capital standards for larger lenders — a comment applauded by the Independent Community Bankers of America.
- In a similar vein, FDIC Chair Martin Gruenberg suggested he's open to letting smaller institutions bear less of the burden for replenishing the deposit insurance fund. Community banks don’t want to pay for SVB’s losses.
- Barr raised questions about the efficacy of the current U.S. approach to bank regulation. He said the practice of applying different rules based on size and activities is "not sensitive to rapid growth” — a key question when it comes to oversight of midsize banks.
- On cryptocurrency, Gruenberg said the agency will send about $4 billion of Signature’s crypto business deposits back to customers by early next week.
Spotted outside the hearing: Former committee member and one-time White House chief of staff Mick Mulvaney.
| | | |   | | | | | | Traders bet SEC will lose Ripple case — Markets Insider reports that the price of the cryptocurrency XRP hit a five-month high on speculation that the SEC will lose its court battle with Ripple over whether XRP is a security.
| | | | JOIN POLITICO ON 4/5 FOR THE 2023 RECAST POWER LIST: America’s demographics and power dynamics are changing — and POLITICO is recasting how it covers the intersection of race, identity, politics and policy. Join us for a conversation on the themes of the 2023 Recast Power List that will examine America’s decision-making tables, who gets to sit at them, and the challenges that still need to be addressed. REGISTER HERE. | | | | | | | | London loses lead as top financial center — FT: “London and New York have tied for the top spot, according to ... benchmarking data by the [City of London's] governing body, but this marks the first year that the UK capital has not been the clear leader as other financial centres have grown faster.” People moves — Ashley Lewis has joined the Public Company Accounting Oversight Board as deputy director of the Office of Communications and Engagement. She was previously a senior vice president at Edelman and communication director for the Senate Banking Committee.
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