| | | | | |  | | By Sam Sutton | | | 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. Indian Prime Minister Narendra Modi’s swing through the East Coast included a joint address to Congress, a state dinner and a landmark agreement with President Joe Biden covering everything from semiconductor and defense investments to space exploration. One area where U.S. investors had hoped for more movement? Capital markets. For months, groups like the U.S.-India Business Council and Nasdaq — whose Executive Vice Chair Ed Knight, a former top official at Treasury, is interim chair of USIBC’s board — have been publicly encouraging Indian officials to lower barriers that would allow Indian companies to list on U.S. stock exchanges. As venture capitalists poured cash into fast-growing tech companies, investors argued that letting Indian start-ups swim in massive pools of capital available through international exchanges would boost valuations and strengthen the country’s economy. “From our perspective, it's potentially a win-win because it would result in capex [capital expenditures] in India,” USIBC’s President Atul Keshap, a former diplomat and charge d'Affaires at the U.S.’s India mission, told MM on Thursday. While officials signed off on a plan that would allow that to occur in early 2020, it was reportedly shelved by the Indian government last year when markets teetered following Russia’s invasion of Ukraine. As the Biden administration moves to bolster ties with India — which has remained neutral on Russia-Ukraine — proponents argued that increasing the flow of capital from U.S. investors would help cement a critical economic and political relationship. Still, Indian leaders “are certainly cognizant that they need to very carefully build up the primacy of Mumbai and of the Indian financial markets,” Keshap said. He added: “They're being very careful and very prudent because they know that there are a lot of marbles at stake and they've got to get it right.” IT’S FRIDAY — Send tips, gossip and suggestions to Sam at ssutton@politico.com and Zach at zwarmbrodt@politico.com.
| | | | A message from Electronic Payments Coalition: STOP THE BIG-BOX BAIT AND SWITCH: Big-box retailers, led by Walmart and Target, want a massive handout from Congress. Retail giants are lobbying for legislation that would create harmful credit card routing mandates. This would add billions of dollars to the bottom lines of mega-retailers every year while eliminating almost all the funding for popular consumer credit card rewards programs, weakening cybersecurity protections, and reducing access to credit, particularly for Americans most in need. www.stopthebigboxbaitandswitch.com | | | | | | Treasury Secretary Janet Yellen and French President Emmanuel Macron have a news conference at 5:40 a.m. … S&P PMIs for June will be released at 8:30 a.m. … Cleveland Fed President Loretta Mester speaks at 1:40 p.m. … Who’s your tailor? — Our Victoria Guida: “FDIC Chair Martin Gruenberg on Thursday said a forthcoming proposal that will raise capital requirements on the largest banks might also be applied to lenders with between $100 billion and $250 billion in assets. In a speech at the Peterson Institute for International Economics, Gruenberg said bank regulators will be proposing ‘in the near term’ a rule implementing the latest international standards finalized at the Basel Committee on Banking Supervision. His comments suggest the agencies are likely to apply that rule to banks in the same size category as Silicon Valley Bank, which collapsed earlier this year.” Suffice it to say, the banking trades weren’t pleased. “While asking banks of any size to hold even more capital will come at a cost to the economy, broadening the scope of these complex standards designed for internationally active banks to smaller institutions will make it particularly difficult for midsize and regional banks to provide credit to consumers and businesses during times of economic stress,” American Bankers Association President and CEO Rob Nichols said in a statement. How long? — Also from Victoria: “Federal Reserve Chair Jerome Powell on Thursday said the central bank’s interest rate hikes still have more work to do, pointing to evidence that the policy moves haven’t had their full impact on inflation.” — The NYT’s Eshe Nelson: “The Bank of England raised interest rates half a percentage point on Thursday, a larger-than-expected move.” More Modi — Our Jonathan Lemire and Jennifer Haberkorn: “Biden is happy to throw Modi an esteemed dinner. And bite his lip about human rights.” — The guest list at the state dinner included no shortage of Wall Street corporate luminaries, including General Catalyst Chair (and former American Express CEO) Kenneth Chenault, Citi CEO Jane Fraser, Apple’s Tim Cook, Nasdaq President and CEO Adena Friedman, Discover Financial Services CEO and President Roger Hochschild, Honeywell CEO Vimal Kapur, former Visa CEO Alfred Kelly, Anand Mahindra, WalMart CEO Doug McMillon, Proctor & Gamble’s Jon Moeller, former PepsiCo CEO Indra Nooyi, Deven Parekh of Insight Partners, Google CEO Sundar Pichai, Deloitte CEO Punit Renjen, Nat Simons and FedEx CEO Rajesh Subramaniam
| | | | SUBSCRIBE TO POWER SWITCH: The energy landscape is profoundly transforming. Power Switch is a daily newsletter that unlocks the most important stories driving the energy sector and the political forces shaping critical decisions about your energy future, from production to storage, distribution to consumption. Don’t miss out on Power Switch, your guide to the politics of energy transformation in America and around the world. SUBSCRIBE TODAY. | | | | | | | | | Did you get my WhatsApp? — CNBC’s Dan Mangan: “The Securities and Exchange Commission fined the broker-dealer subsidiary of JPMorgan Chase $4 million for accidentally deleting about 47 million emails from early 2018, according to an administrative order Thursday.” Head spinning outbound — As the Biden administration contemplates new restrictions on outbound investments, California State Teachers’ Retirement System CIO Christopher Ailman — who oversees a $310 billion portfolio and is among the longest tenured state investment officials in the country — is raising red flags over how those guardrails might be structured. “It's very clear that the capital markets become the front edge in a geopolitical conflict and that we can have our capital shut down and locked into a country if we're not careful,” he said during an SEC Investor Advisory Committee meeting on Thursday. As major private equity and venture firms navigate their exposure to geopolitical risk — Sequoia Capital announced it was splitting off its Chinese investment arm earlier this month — establishing definitions for what will be subject to outbound review will “matter a great deal,” Ailman said. Biden officials have already said that they envision a policy where regulators could review and deny U.S. financing for Chinese advanced microchips, artificial intelligence and quantum computing. Establishing guardrails around those technologies is difficult, Ailman said. Siri and Alexa – voice-activated programs offered by Apple and Amazon, respectively – arguably include some form of AI, and It’s “very tough” for institutional investors and firms to know “what technology could move from being useful and probably a consumer approach to suddenly being a threat to the US government,” Ailman said.
| | | | A message from Electronic Payments Coalition:   | | | | | Spending nip/tuck — Our Caitlin Emma: “Senate appropriators approved funding totals for a dozen fiscal 2024 spending bills along party lines on Thursday … Lawmakers on both sides of the aisle lamented the inadequacy of the funding levels, constrained by the budget caps set under the bipartisan deal limit deal, and stressed that congressional leaders will have to reach an agreement in the coming months to provide more emergency cash for Ukraine, border security efforts and other issues.” — Meanwhile, over in the House: “Appropriators approved the Financial Services spending bill in subcommittee Thursday to fund the Treasury Department, the IRS and the judiciary,” Our Jennifer Scholtes reports. The bill “would reduce funding by 7 percent below current levels, when counting offsets.” Flood insurance reauthorization — From Zach: “Sens. Bob Menendez (D-N.J.) and Bill Cassidy (R-La.) are trying to jumpstart Congress’s overdue work on reauthorizing the National Flood Insurance Program with a bill that would seek to contain premium increases triggered by a recent FEMA revamp.”
| | | | 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. | | | | | | | | | Audited three failed banks — Bloomberg’s Amanda Iacone: “Big Four accounting firm KPMG has been buffetted by one of the biggest economic stories of the year —and has been pilloried for giving clean audit opinions for three banks that collapsed amid the interest rate crisis that’s threatened the regional banking sector.” CRE — Bloomberg’s John Gittelsohn: “US office buildings are unlikely to regain their peak pre-pandemic values until at least 2040 as demand for desk space weakens, according to a forecast by Capital Economics.” — Bloomberg’s Jennifer Surane and Ambereen Choudhury: “Citigroup Inc. has begun telling managers to let staffers know they’ll face consequences if they don’t comply with policies for office attendance.” Mom said go to law school — The WSJ’s Cara Lombardo: “While bankers used to make multiples of what lawyers did, the lawyers have been zooming ahead, thanks to stagnant banker pay for all but the very top performers and changing dynamics at law firms. The trend took hold well before the recent slowdown in deal making dented banker pay.”
| | | | A message from Electronic Payments Coalition: CONGRESS: DON’T FALL FOR THE BIG-BOX BAIT-AND-SWITCH: Despite vigorous lobbying from mega-retailers and their special interest allies, credit routing mandates are deeply unpopular—among both Democrats and Republicans. Credit card routing mandates would allow big-box stores like Walmart and Target to process credit card transactions based solely on what is cheapest for them without regard to the value that consumers derive from rewards and many other benefits. Proposed legislation would pump billions of dollars into large companies already valued at hundreds of billions of dollars, while squeezing out local mom-and-pop shops and eliminating popular credit card rewards programs. Last year, Congress wisely rejected a similar Big-Box Bill, and they should do so again. Congress must protect consumers, preserve the integrity of the payment ecosystem, and reject this detrimental and unnecessary government intervention. www.stopthebigboxbaitandswitch.com | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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