| | | | | |  | | 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. Senate Banking Chair Sherrod Brown — the progressive who will have to fight for his political survival in red Ohio next year — just pulled off one of the biggest Capitol Hill stunners in recent memory. Brown, in cooperation with GOP presidential candidate Sen. Tim Scott, rallied every one of his committee Democrats and all but two Republicans on Wednesday to support a bill that would ratchet up penalties for the executives of failed banks, increase Federal Reserve transparency and put new restrictions on acquisitions by megabanks. It’s Congress’s first big legislative response to the economic turmoil triggered by Silicon Valley Bank, Signature Bank and First Republic. Brown struck a deal after navigating a host of obstacles on the left and the right. Sen. Elizabeth Warren, who with Sen. J.D. Vance (R-Ohio) wanted tougher provisions on clawing back executive pay, called it a “reasonable compromise.” The banking industry has concerns – including on how the executive penalties would impact recruitment – but has yet to signal that it will ramp up a big opposition campaign. It sounds like the needle has been threaded. Committee aides worked until the wee hours Wednesday morning as Brown incorporated several changes sought by other Democrats and Republicans. The merger restrictions, for example, were a Vance ask. The Fed transparency measure came from Sens. Kyrsten Sinema, Cynthia Lummis and Thom Tillis.
| | | | 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. | | | | | For longtime Brown-watchers, it’s another example of his underappreciated pragmatic streak. Remember the Brown-Johanns insurance capital bill that became the first big change to Dodd-Frank? (Doesn’t everyone?) “There are 23 members of the committee,” Brown told MM. “Almost every one of them came forward with ideas, with amendments. That’s what makes this complicated. That’s one of the joys of this job, is how do you put together the interests of everybody and keep enough people happy to pass it, but always with the goal in mind of making sure we hold these executives — who were overcome by their greed and incompetence — accountable.” Now, House Republicans will have to decide whether they want to stand in the way when the bill heads their direction, riding on whatever vehicle that may be. They’re not that interested in cracking down on bank executive pay and would rather tighten the screws on bank supervisors. Brown and Scott’s last-minute addition of the Fed reporting obligation, which we previewed in MM, may help check that box. We’re still not quite hearing “hell no” from senior GOP House members. Rep. Andy Barr, the Kentucky Republican who leads work on bank regulatory issues at House Financial Services, captured the sentiment in a brief interview after Wednesday’s 21-2 Senate Banking vote. Barr told MM he doesn’t think executive compensation problems were at the heart of recent bank instability. His view is that it’s probably best for the private sector to make decisions on pay. He said competitive compensation is key to recruiting competent bank management. “I'm open to considering proposals,” he said. “This is kind of a distraction from the core issues here.” BUT, he added: “I was interested to hear that vote tally.” Happy Thursday – What do you think of the Brown-Scott banking bill? Let us know: Zach Warmbrodt, Sam Sutton.
| | | | 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 | | | | | Senior SEC officials testify at House Financial Services hearings at 9 a.m. and 10:30 a.m. … FDIC Chair Martin Gruenberg discusses Basel III capital standards at the Peterson Institute at 9 a.m. ... Fed Chair Jerome Powell testifies at Senate Banking at 10 a.m. Watch out, Wall Street: The House is about to have ‘ESG month’ – House Financial Services Republicans are planning to devote July to scrutinizing the ESG investing movement, with an agenda that will likely showcase conservative tensions with the country’s biggest money managers. Barr dubbed it “ESG month” at a press conference Wednesday. He said it will include hearings plus a “menu of bills” that the committee will consider. “We’re tracking toward a markup of these anti-ESG bills toward the end of July,” he said. Barr and other Republicans touted the planned anti-ESG push shortly after winning back the House last year. But the Financial Services Committee has prioritized other issues until now. At the heart of the tension: Republicans argue that climate and social goals in corporate America threaten returns to individual investors and U.S. energy production. Corporate leaders like BlackRock CEO Larry Fink argue that it’s not political — it’s capitalism. A preview of the House GOP’s rebuttal: “What you will hear from asset managers a lot of times is, this is actually capitalism, this is driven by markets, that there is an appetite for ESG investing and therefore this is why we’re doing it,” Barr said. “The truth is there is some appetite among institutional investors, pension funds in blue states, European asset managers, and this has kind of migrated over to the United States. But the truth is this is not a market-driven, market-demanded product, by and large, for the retail investors in this country.” Barr, one of the lead Republicans in the effort, is reintroducing a bill with Rep. Rick Allen (R-Ga.) that would require investment advisers and retirement plan sponsors to prioritize financial returns over environmental, social and governance factors. The American Petroleum Institute is among the groups backing the bill. Republicans want to rein in the SEC via government funding — House GOP appropriators Wednesday unveiled a plan that would cut the SEC’s budget by $150 million and prohibit it from pursuing several planned regulations, including climate risk disclosures and a sweeping revamp of stock trading. It will likely amount to nothing more than a messaging and lobbying exercise. Democrats are pledging to fight the funding bill, which also covers the Treasury Department, the IRS and the judiciary.
| | | | A message from Electronic Payments Coalition:   | | | | | Powell roundup — Fed Chair Jerome Powell testified in the House Wednesday and covered the economy’s most pressing issues — plus his long-time allegiance as a Deadhead. “I’ve been a Grateful Dead fan for 50 years,” Powell said. He added that a recent concert put on by the group’s surviving members — where he was spotted by Punchbowl’s Jake Sherman — was “terrific.” On the prospect of further rate hikes after this month’s skip — or whatever you want to call it — Powell said, “Given how far we’ve come, it may make sense to move rates higher but to do so at a more moderate pace.” On inflation, Powell said the process of getting it back down to 2 percent “has a long way to go.” How Biden’s new Fed picks are faring — Sam reports that President Joe Biden’s three latest Fed nominees faced minimal resistance from Republicans on the Senate Banking Committee Wednesday as they navigated questions about rising prices, the labor market and uncertainty in the banking sector. The nominees are Fed Gov. Philip Jefferson, tapped for vice chair; Fed Gov. Lisa Cook, nominated for a full 14-year term; and World Bank U.S. representative Adriana Kugler, who is being vetted for a seat on the Fed board.
| | | | 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. | | | | | | | | BlackRock gives hope for Bitcoin — CoinDesk reports that the price of Bitcoin has jumped – breaking $30,000 for the second time this year — following a recent series of “tradfi” moves into digital currency, including BlackRock’s application to launch a Bitcoin ETF. Another possible factor: Powell said Wednesday that the crypto industry "appears to have some staying power.”
| | | | 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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