| | | | |  | | 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.
| | Good economic news has been piling up. But a data point that holds sway over most others might be a bit of a buzzkill this morning. The personal consumption expenditures price index, which the Labor Department will release at 8:30 a.m., is expected to show that inflation accelerated last month. A slice of the index excluding food and energy — the Federal Reserve’s preferred gauge for inflation — is seen rising by 0.4 percent from December, according to a Bloomberg survey of economists. That would be the second such increase in a row, and the most it’s gone up in a year. While many economists expect rising prices to trend downward this year, it’s a reminder that the path to resolving one of America’s most impactful economic burdens won’t be neat and tidy — and that inflation could unexpectedly pick back up. “The risk that it stops declining — or reaccelerates — is worth monitoring since the U.S. economy continues to surprise to the upside,” Bank of America economists wrote in a note to clients ahead of Thursday’s PCE report. If January data pans out as expected, it justifies cautious signals that Fed officials have been sending about the timing of interest rate cuts, especially with the economy otherwise looking stronger than expected. Wall Street appears to have finally succumbed to Fed messaging, with market expectations for the first cut now coalescing around June. Fed Governor Michelle Bowman, one of the central bank’s more hawkish voices, said in a speech Tuesday that she still sees a number of risks that could stoke inflation. They include geopolitical conflicts as well as labor market tightness that could drag up the costs of services. “At its current setting, our monetary policy stance is restrictive and appears to be appropriately calibrated to reduce inflationary pressures,” she said. A pickup in inflation will also put fresh pressure on President Joe Biden to outline some kind of response at next week’s State of the Union address. The White House has been wrestling with how to deal with the issue in the speech. The underlying tension is that there’s little he can do to bring down prices. Republicans are ramping up their inflation attacks on Biden and will likely get more ammo today. Senate Minority Leader Mitch McConnell this week gave a floor speech focused on prices. He cited polling that shows Americans are persistently dissatisfied with the economy, despite stunning growth and jobs numbers. “This is the Biden economy,” said McConnell, who announced Wednesday that he won't run for another term as leader. “This is Bidenomics in action. And bizarrely, this is what the Biden administration has decided to spin as a roaring success.” Happy Leap Day — Send tips to zwarmbrodt@politico.com.
| | | | A message from Electronic Payments Coalition: CRS: UNCLEAR IF DURBIN-MARSHALL CREDIT CARD BILL WOULD HELP EITHER CONSUMERS OR SMALL BUSINESSES The independent Congressional Research Service (CRS) released one of many reports questioning whether the Durbin-Marshall Credit Card Bill would help consumers or small businesses. CRS echoed an earlier report by the Richmond Fed noting that consumers failed to see any meaningful cost savings because of similar legislation imposing routing mandates and price caps on debit card interchange. Learn more HERE. | | | | | PCE is out at 8:30 a.m. ... Atlanta Fed President Raphael Bostic gives a fireside chat at the Atlanta Fed’s banking outlook conference at 10:50 a.m. The SEC climate rule: It’s happening! — The SEC is planning to vote next Wednesday on a landmark rule that would force public companies to disclose climate-risk information to investors. The agency has taken two years to re-tool its original proposal, and the finished product is expected to be significantly scaled back amid looming threats of industry litigation. Some news on how Capitol Hill will respond: Rep. Bill Huizenga, who chairs the House Financial Services oversight subcommittee, plans to introduce a resolution to block the rule as soon as it’s finalized, a GOP House aide tells our Eleanor Mueller. The Michigan Republican has led a year-long investigation into the rule. What are you watching for when the SEC seals the deal? What impact will the rule really have? In the big picture, what does the Biden administration have to show for its climate finance push? Send thoughts to MM. On a related note, outgoing U.S. climate envoy John Kerry accused asset managers of “turning away from science” after a handful of major U.S. firms stepped back from an industry climate group, the FT reports. Shutdown averted? — Congressional leaders struck a deal to postpone government funding deadlines until later in March, as they close in on a broader agreement on money for agencies. The post-McConnell era — Our Congress team has an insider’s guide to the looming battle to succeed Mitch McConnell as the Senate’s next GOP leader. Time to get up to speed on the “Three Johns.” EU wants Russian assets for ammo — European Commission President Ursula von der Leyen is proposing that the EU use profits from frozen Russian assets to fund Ukraine's war effort. Treasury Secretary Janet Yellen said earlier this week that finding a way to unlock the funds is “necessary and urgent.”
| | | | A message from Electronic Payments Coalition:   | | | | | First in MM: Tillis, Hickenlooper push electronic delivery — Sens. Thom Tillis and John Hickenlooper are introducing legislation that would force the SEC to make it easier for firms to send disclosures to investors electronically. Fidelity, Charles Schwab, SIFMA and the Investment Company Institute back the bill. House fintech vote scrapped — Eleanor reports that the House plans to go home after today’s government funding vote, forcing Financial Services Chair Patrick McHenry to pare back a planned markup. The committee will no longer vote on a big earned-wage access bill that MM has been previewing. The panel is expected to proceed with a resolution that would block SEC crypto custody guidelines, plus a handful of housing measures. Rep. Wiley Nickel, a Democrat who backs the resolution to undo the SEC crypto policy, said in an interview that he expects as many as three members on his side will vote for it. In a twist, the committee is planning to use an electronic voting method for the first time, according to Huizenga. Each member will have a fob to press, and tallies will show up on screens in real time. "It'll be a complete and utter goat rodeo, I'm sure, the first time," said Huizenga. But, he added, “it’s awesome.” Cap One-Discover deal prompts Dems to seek M&A revamp — Eleanor reports that Rep. Maxine Waters is leading more than a dozen House Financial Services members in calling for regulators to overhaul how they review bank mergers.
| | | | CONGRESS OVERDRIVE: Since day one, POLITICO has been laser-focused on Capitol Hill, serving up the juiciest Congress coverage. Now, we’re upping our game to ensure you’re up to speed and in the know on every tasty morsel and newsy nugget from inside the Capitol Dome, around the clock. Wake up, read Playbook AM, get up to speed at midday with our Playbook PM halftime report, and fuel your nightly conversations with Inside Congress in the evening. Plus, never miss a beat with buzzy, real-time updates throughout the day via our Inside Congress Live feature. Learn more and subscribe here. | | | | | | | | Stabenow revives crypto push — Our Meredith Lee Hill scoops that Senate Agriculture Chair Debbie Stabenow is diving back into negotiations on crypto legislation, amid an impasse in farm bill talks. The Michigan Democrat said in an interview that top lawmakers in both chambers are exploring efforts to advance legislation in the coming months. The Agriculture Committee is involved because it has jurisdiction over the CFTC, which Congress is considering giving greater crypto powers. Stabenow is also exploring a bill to reauthorize the CFTC. Stabenow took a stab at legislation to expand the CFTC’s crypto authority a couple years ago but it lost momentum after the collapse of FTX, which was a lobbying force behind it. The watchdog group Better Markets, which was highly critical of Stabenow’s legislation from a consumer protection perspective, is speaking out against the bill’s revival. “The CFTC must receive a very substantial, multiyear increase in funding that would enable it to undertake any additional responsibilities before any legislation expanding the duties of the CFTC are considered,” Better Markets CEO Dennis Kelleher said in a press release the group is releasing today. “Moreover, notwithstanding numerous very serious concerns, if Congress decides to enact any legislation regulating the crypto industry, it must carefully ensure that the CFTC and the SEC each fully retain their current jurisdiction and authority to regulate and police the commodities and securities markets, which have well-served Americans, the financial system, and the economy for many decades.” Bitcoin surges, Coinbase glitches — CNBC reports that the Coinbase exchange suffered a problem Wednesday that led many users to see a zero balance when opening their accounts. It came as the price of Bitcoin topped $60,000 for the first time since 2021. Gemini will give back $1B — Declan Harty reports that Gemini Trust is pledging to return at least $1.1 billion to customers of a now-defunct crypto lending product, as part of a settlement with the New York Department of Financial Services. The company is led by Tyler and Cameron Winklevoss.
| | | | A message from Electronic Payments Coalition: CRS QUESTIONS WHETHER DURBIN-MARSHALL CREDIT CARD BILL WOULD HELP ANYONE AT ALL Every member of Congress should read the CRS analysis which discusses the impact this legislation could have for small businesses and American families. Report after report has plainly demonstrated that consumers and small businesses did not save any money when Congress passed the 2010 Durbin Amendment, imposing new mandates on debit cards. Now, a decade later, why would anyone assume a monumental restructuring of our nation’s secure, worry-free credit card system would yield different results? After considering the facts, the only logical solution would be to strongly OPPOSE the Durbin-Marshall Credit Card Bill. Click HERE to learn more. | | | | | A CFPB data crackdown — Katy O’Donnell reports that the CFPB plans to propose a rule this year to restrict activities by data brokers under the Fair Credit Reporting Act. The bureau announced the plan as the Biden administration rolled out a data protection executive order. Top SEC official to exit — Declan reports that SEC Investment Management Director William Birdthistle will leave the agency on March 8. He’s led work on a broad slate of new rules, including a revamp of private fund regulations. Buyback pressure — A coalition of consumer and labor groups is urging the SEC to re-propose its stock-buyback rule after a federal court struck it down last year. Americans for Financial Reform Education Fund, the AFL-CIO and Better Markets are among the organizations making the case in a new letter to SEC Chair Gary Gensler today.
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