Presented by Stop the Deficit Squawks: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy.
| | | | |  | | By Zachary Warmbrodt | Presented by Stop the Deficit Squawks | 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. Washington is obsessed at the moment with near-term financial threats like the debt ceiling and banking instability. But Commodity Futures Trading Commission Chair Rostin Behnam is eyeing a plan to address a problem centuries in the making: climate change. Behnam told me on the sidelines of last week’s Milken Institute conference that he’s weighing new policies to shore up trading tied to voluntary carbon offsets — a type of credit that corporations buy and sell to manage their climate footprints. The carbon offsets market is seen as a critical tool to help mitigate greenhouse gas emissions. But it’s been dogged by credibility and transparency concerns. It’s unclear to what extent the offsets — like those tied to maintaining forests — can be trusted. Behnam — who began pushing for climate-risk oversight of financial markets before it was in vogue — is now considering laying out carbon offsets policy potentially in the form of guidance or an advisory. It could help reassure companies that have opted to stay on the sidelines because they don’t trust the market. The CFTC can’t directly regulate offsets trading. But it can police for fraud and manipulation thanks to its jurisdiction over futures contracts tied to the credits. So a move by the CFTC would have downstream effects. “If we can send a signal through some sort of regulatory action to the underlying market participants that this is what we expect in order for our markets to not be readily susceptible to fraud or manipulation, that will in theory raise the bar of how they conduct themselves and what rules they require of their market participants,” he said. The timing and exact form of the policy are TBD. “They're hard legal questions,” he said. “We're thinking about it and we're trying to come up with something as quickly as possible." It’s Monday — It’s good to be back after guest hosting Global Insider last week. Thank you to everyone who made contact while Sam and I were at Milken. Keep in touch: Zach Warmbrodt, Sam Sutton.
| | | | A message from Stop the Deficit Squawks: The Committee for a Responsible Federal Budget is helping MAGA extremists push us toward a catastrophic default on U.S. debt. CRFB praised Kevin McCarthy’s Default on America bill that risks 800,000 jobs and would kick Americans off their health care, all while protecting wealthy tax cheats from paying what they owe. CRFB doesn’t care about a strong economy or fiscal responsibility – they care about their wealthy donors. There’s nothing “responsible” about CRFB. | | | | | | Monday … The Fed releases its survey of bank lending at 2 p.m. … Tuesday … President Joe Biden and congressional leaders discuss the debt limit at the White House … Wednesday … April CPI is out at 8:30 a.m. … The House Financial Services and Agriculture committees hold a joint crypto hearing at 9:30 a.m. … Thursday … G-7 finance ministers meet in Japan … Senate Banking votes on Jared Bernstein’s nomination to lead CEA and holds a cannabis banking hearing at 9:45 a.m. … House Financial Services has a hearing on GAO’s review of Silicon Valley Bank and Signature Bank at 10 a.m. … Friday … Fed Governor Philip Jefferson is on a monetary policy panel at a Hoover Institution conference at 7:45 p.m. Debt limit state of play — Ahead of Biden’s Tuesday meeting with congressional leaders, Treasury Secretary Janet Yellen downplayed the use of the 14th Amendment to override the debt limit when the U.S. runs out of cash to pay its bills in early June. On ABC’s “This Week,” she warned of a “constitutional crisis.” Sen. Mike Lee said on Fox News that 43 Senate Republicans including Minority Leader Mitch McConnell signed a letter calling for spending cuts in exchange for raising the government’s borrowing authority. Banks bounce back — Regional lenders that were pummeled in the stock market last week experienced a huge rebound Friday. According to Bloomberg, PacWest shares soared by 82 percent and Western Alliance shares rose by 49 percent. The bounce came as analysts began warning that the sell-off – fueled by fears of further banking instability — had gone too far. It also followed banking industry calls for the government to scrutinize short sellers. The Fed will provide fresh intel on the state of bank lending this afternoon, when it releases its latest Senior Loan Officer Opinion Survey on Bank Lending Practices — also known as SLOOS.
| | | | A message from Stop the Deficit Squawks:   | | | | | Buffett looks less bullish — The FT reports that Warren Buffett’s Berkshire Hathaway sold billions of dollars in stock and invested little in U.S. shares during the first three months of the year. At Berkshire’s annual shareholder conference this weekend, Buffett noted that the company was just beginning to feel the effects of the slowing economy. He expects earnings to fall at a majority of businesses this year. Buffett also said incentives in bank regulation are “so messed up” and that Berkshire was being cautious in the sector.
| | | | GET READY FOR GLOBAL TECH DAY: Join POLITICO Live as we launch our first Global Tech Day alongside London Tech Week on Thursday, June 15. Register now for continuing updates and to be a part of this momentous and program-packed day! From the blockchain, to AI, and autonomous vehicles, technology is changing how power is exercised around the world, so who will write the rules? REGSITER HERE. | | | | | | | | | China retools AI push thanks to U.S. sanctions — WSJ reports that Chinese tech companies are looking for ways to develop artificial intelligence without advanced chips subject to U.S. restrictions. The work “could allow Chinese tech firms to both weather American sanctions and make them more resilient to future restrictions.” G-7 prep — Yellen’s meeting with G-7 finance ministers in Japan later this week will be “compressed” as she multi-tasks the debt ceiling stalemate. According to Reuters, Yellen plans to tell her counterparts that the U.S. banking system remains sound and that the global economic outlook is better than it was in the autumn.
| | | | 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. | | | | | | | | | Denise Pizano Reyes is now legislative affairs specialist at the CHIPS Program Office of the Commerce Department … Scott Luginbill has joined Penta as vice president of policy insiders.
| | | | A message from Stop the Deficit Squawks: The Committee for a Responsible Federal Budget claims to be for fiscal responsibility, but their actions tell a radically different story. CRFB is helping MAGA extremists push us toward a catastrophic default on U.S. debt, risking a recession that would skyrocket unemployment, wipe out retirement savings, and increase everyday costs for families. CRFB actually praised Kevin McCarthy’s extreme demands, taking his side in this reckless hostage taking exercise. CRFB called McCarthy’s Default on America Act “reasonable” even though it risks throwing eight hundred thousand Americans out of work, and would kick Americans off their health care, and gut nutrition assistance, all while protecting wealthy tax cheats from paying what they owe. CRFB doesn’t care about a strong economy or fiscal responsibility – they care about their wealthy donors. There’s nothing “responsible” about The Committee for a Responsible Federal Budget. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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