| | | | | |  | | By Jasper Goodman and Zachary Warmbrodt | Presented by Structured Finance Association | 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. House Republicans have turned hostile toward Wall Street money managers that embrace climate and social investing goals, accusing the firms of imposing political agendas on corporate America. But that hasn’t stopped the same GOP lawmakers from tapping the financial giants for campaign cash. According to an MM analysis, Reps. Andy Barr (R-Ky.), Bill Huizenga (R-Mich.) and Blaine Luetkemeyer (R-Mo.) — three leading lawmakers in the GOP fight against environmental, social and governance-focused investing — have cumulatively taken just over $200,000 from the PACs of the “Big Three” asset managers: BlackRock, Vanguard and State Street. Each lawmaker continued to receive contributions from at least one of the firms this year, as they ramped up industry scrutiny with a series of anti-ESG hearings at the House Financial Services Committee this month. Members of a Financial Services Committee ESG working group led by Huizenga have collectively taken in more than $160,000 from the three firms over their careers. “It is their choice as to whether they are going to use their employees’ contributions to support that or not,” Huizenga told MM. “I am fine either way. It’s not going to impede the way that I’m going to do business.” Barr has called on the firms to “stop this nonsense of politicizing capital allocation through ESG,” and has legislation to back it up. Huizenga led work on a report that called for greater oversight of BlackRock, State Street and Vanguard, and this week he sent letters to their CEOs raising concerns about their “significant influence.” Luetkemeyer has warned that the companies have “an alarmingly high concentration of unchecked voting power” in shareholder matters and has proposed legislation that would require them to vote in accordance with the instructions of their customers. “My job is to represent the people of the sixth congressional district of Kentucky — not asset managers, not banks,” Barr told MM. To be sure, MM has noted that House Financial Services Republicans have in some ways spared the asset managers from even harsher scrutiny, compared to legislative attacks the firms face from state GOP officials. But both Huizenga and Barr left the door open in interviews this week to pressing the money managers further. Former Republican National Committee chair Michael Steele warns that the anti-ESG push could jeopardize the GOP’s relationship with business allies. “You alienate folks unnecessarily,” he told MM. “Not only are you alienating a BlackRock, for example — who has been a very strong supporter of Republican candidates and Republican Party policies for a number of years — but you’re also alienating those who invest in those companies.” Happy Friday — A big thanks to Jasper for helping out with today’s MM, and stay tuned for more. As always, please send tips to zwarmbrodt@politico.com.
| | | | A message from Structured Finance Association: Did you know? Securitization serves all kinds of markets, even those traded on iTunes! Music royalties from artists like Miles Davis, Otis Redding, James Taylor, Phil Collins, R.E.M, Stevie Nicks, Isaac Hayes, Cyndi Lauper, and Pink Floyd are secured by bonds issued by members of the Structured Finance Association. Learn more at www.structuredfinance.org. | | | | | Coming soon: D-Day for bank capital — The Federal Reserve and FDIC plan to vote next Thursday on a proposal that would hike capital requirements for the largest banks, in a move that’s sure to set off months of lobbying and Capitol Hill scrutiny. Regulators are also planning a series of additional measures to ratchet up oversight of regional lenders, following the failures of Silicon Valley Bank, Signature Bank and First Republic. ICYMI, the Fed on Thursday also launched a long-awaited instant payment system that Victoria Guida reports will eventually help shorten the time that people and businesses have to wait for funds to reach their bank accounts. Larry Summers slams Biden administration M&A crackdown — The former Treasury secretary said in a Bloomberg Television interview that the administration’s new overhaul of antitrust rules “seems almost like a war on business.” “These guidelines — by moving away from an emphasis on lower prices for consumers to broader abstractions — are a substantial risk,” he said. “I wish that this stepping back and offering merger guidelines had been taken as an opportunity to rationalize the policy.” Trump-linked SPAC settles with SEC — Our Declan Harty reports that a blank-check company attempting to combine with former President Donald Trump’s social media startup has agreed to settle fraud charges from the SEC, resolving one of the biggest question marks hanging over the deal. The company, known as DWAC, agreed to a cease-and-desist order and will pay $18 million in penalties, if the transaction with Trump Media & Technology Group closes
| | | | 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. | | | | | | | | Another Republican opposes bank CEO bill — Sen. Tommy Tuberville (R-Ala.) plans to announce in an American Banker op-ed today that he opposes the bipartisan bank executive accountability bill by Senate Banking Chair Sherrod Brown (D-Ohio) and Sen. Tim Scott (R-S.C.). Tuberville is the third senator to come out against the legislation, which Senate Banking approved last month in a 21-2 vote. The proposal would allow regulators to claw back compensation from the leaders of failed banks. Tuberville will argue in the piece that the bill unnecessarily and unacceptably expands the power of federal regulators, a spokesperson said. Cannabis banking vote looks unlikely — It was never a sure thing, but don’t bet that the Senate Banking Committee will vote on a cannabis banking bill before August recess. The idea behind the proposal, which has been kicking around Congress for several years, is that banks need legal protections to serve marijuana businesses in states where the drug is legal. Brown has been urging Sen. Steve Daines (R-Mont.) to deliver more Republican supporters. It doesn’t sound like he got what he wanted. “Ask Daines,” Brown told Eleanor Mueller when she asked whether a vote would happen this month. “That’s my answer.” Could this be the end of the road? It’s hard to see the Republican House taking the lead, and previous attempts to attach it to must-pass bills have failed.
| | | | JOIN 7/27 FOR A TALK ON WOMEN LEADERS IN THE NEW WORKPLACE: In the wake of the pandemic, U.S. lawmakers saw a unique opportunity to address the current childcare system, which has become increasingly unaffordable for millions of Americans, but the initial proposals went nowhere. With the launch of the Congressional Bipartisan Affordable Childcare Caucus in May, there may be a path to make childcare more affordable. Join Women Rule on July 27 to dive into this timely topic and more with featured speakers Rep. Nancy Mace (R-S.C.), Rep. Ro Khanna (D-Calif.) and Reshma Saujani, Founder & CEO of Moms First and Founder of Girls Who Code. REGISTER HERE. | | | | | More deposit insurance also looks unlikely — Eleanor reports that Brown and Scott at a hearing Thursday signaled a cautious approach to raising deposit insurance limits in the wake of this year’s banking jitters, as urgency fades more than four months after SVB’s collapse. “It feels to me like a lot of the energy around the FDIC in terms of reform has kind of dissipated a little bit,” Sen. Mark Warner (D-Va.) said at the hearing. J.D. Vance didn’t get the memo. The Ohio Republican released a bill that would insure all deposits in accounts used for payroll at banks with less than $225 billion assets, as well as all credit unions. House Republicans take next step on crypto vote — Republicans on the House Financial Services and Agriculture committees Thursday introduced an updated version of their bill to split oversight of crypto between the SEC and the CFTC, ahead of votes next week. The lawmakers, who first circulated a draft in June, released updated bill text and a new section-by-section summary.
| | | | A message from Structured Finance Association:   | | | | | Bernanke: Fed may have one rate hike left — Former Fed Chair Ben Bernanke said Thursday that next week’s expected quarter-point interest rate increase may be the central bank’s last in its current fight against inflation, Bloomberg reports. Bernanke said he sees inflation falling “more durably” to the 3 percent to 3.5 percent range over the next six months “We’ll get down to three, three plus [percent inflation] by early next year and then I think the Fed will take its time trying to get down to its 2 percent target,” Bernanke said.
| | | | A message from Structured Finance Association: Safety in numbers is true in finance like everywhere else. When loans are pooled together into a bond, the bond’s value stays stable even if a few of the bundled loans aren’t repaid on time. The risk of default is reduced. Structured finance is all about packaging loans together to reduce overall risk and in that way lower the cost of financing for borrowers. This process, called securitization, allows banks to sell loans and to make new loans at prevailing market rates. The result: A dynamic – and safer – financial services system for everyone. Thanks to years of experience and market reforms, the benefits are widespread for lenders, savers, and consumers. The Structured Finance Association represents every participant in the securitization market. Find out more at www.structuredfinance.org. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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