| | | | |  | | 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.
| | When Silicon Valley Bank collapsed last March, Rep. Ro Khanna (D-Calif.) fought to rally Washington’s response to the economic calamity unfolding in his district. Who’s the representative for New York Community Bancorp., the latest regional lender that’s alarming investors? The Office of the Third Congressional District of New York, recently vacated by George Santos. The former Republican lawmaker was expelled from Congress in December after a series of scandals, including lying about his biography and being hit with criminal fraud charges. His district included Hicksville, New York, where NYCB is based. "It's sad that they don't have someone that can work with them and for them because some folks just think they get to recall elections,” Santos told MM Wednesday. The downfall of Santos deprived the New York bank of a potential conduit in Washington at a critical moment. The lender is fighting to tamp down concerns among investors and policymakers about its exposure to souring commercial real estate loans. The struggle, playing out as its share price tanks, is reviving fears of broader banking system instability less than a year after SVB’s collapse. Others in New York’s congressional delegation are beginning to sound the alarm and trying to focus the government’s attention. A spokesperson for the office formerly occupied by Santos told our Jasper Goodman that “we don’t have any political say with this situation” without a member in place. The special election for the seat is Feb. 13. To be sure, Santos’ influence was hobbled well before his ouster from Congress, raising doubts about how useful he would have been to the lender and its customers if he were still in the seat. Part of his embellished biography included claims about working for Wall Street banks. Santos said his office had outreach to NYCB after he was elected but that the relationship was impacted as his scandals came to light. He said there was “always somewhat of a line of communication.” (The bank did not respond to a request for comment.) “If I were there, I would be in [House Financial Services Chair] Patrick McHenry’s office and [Ways and Means Chair] Jason Smith’s office trying to figure out crafty ways that we can avoid another chain of events that took place in 2023,” Santos said, referring to last year’s regional banking problems. “There’s so many creative ways we can do it. I’m not saying government should be bailing out banks, but there’s ways we can do it to facilitate certain relief measures, and we should be working on it.”
| | | | 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. | | | | | Rep. Ritchie Torres, a Bronx Democrat, is trying to bring some urgency to the issue in the absence of Santos, including raising it with Treasury Secretary Janet Yellen at a Tuesday hearing. She’s expected to face further questions when she appears before the Senate today. Torres argues the fate of the $111 billion bank is a broader economic concern beyond the former Santos district. It’s an echo of last year’s Silicon Valley Bank collapse, when Khanna urged the government to intervene to protect its tech company customers and their employees. “A failure at NYCB would destabilize not only the banking system but also the largest multifamily housing market in the country,” Torres told MM, referring to the bank’s role as a major housing lender. “It’s an issue that extends far beyond New York Three.” Torres, a fierce critic of Santos, said it’s no problem that he’s gone. “It’s better to have no representation than George Santos,” he said. “He was too distracted by his own scandal to focus on stability in the banking system.” Happy Thursday — What’s the real story on NYCB and the state of the banking system? Send tips to zwarmbrodt@politico.com.
| | A message from Chime: Tired of overdraft fees? Learn how Chime is different.
Chime is expanding banking with no overdraft fees to everyday people. Cost is a barrier to many, which is why Chime never charges overdraft or monthly fees — and there are no minimum balance requirements for our checking and savings accounts. We reach customers traditional banks don't, can't or won't and are helping everyone unlock financial progress. Learn more. | | | | | Yellen testifies at Senate Banking at 9 a.m. … HP CEO Enrique Lores speaks at the Economic Club of Washington, D.C. at 12:30 p.m. The latest on NYCB: Per CNBC, the bank spent the last day trying to soothe skittish investors. It promoted Chair Alessandro DiNello to a more hands-on role, disclosed that its deposits are stable and said it has ample resources to cover the flight of uninsured deposits. Shares jumped by 6 percent after falling by more than 50 percent since last week. Bloomberg reports that the bank has been reaching out to investors for capital to finance a large portfolio of residential mortgages and is exploring the sale of about $1 billion in recreational vehicle and marine loans. Eleanor Mueller and Jasper Goodman have a look at the escalating response from Congress. Sen. Jack Reed (D-R.I.) told Eleanor that he plans to ask Yellen about the situation when she testifies at Senate Banking today. "We've been obviously very interested in the commercial real estate market because of diminished need for office space by companies," he said. MM has a first look at the political and policy impacts to watch from Federal Financial Analytics. A few highlights:
- The bank reported deposit inflows but what they are and how long they last is uncertain. A big factor: The government will likely be hard-pressed to do anything resembling a bailout or a systemic designation.
- Details about NYCB's reliance on Federal Home Loan Banks will be key. The FHFA – the agency overseeing the FHLBs — is taking a sterner view of troubled bank advances than it once did.
- GOP lawmakers may focus on the FDIC’s decision to sell Signature Bank’s assets to NYCB, given it had yet to integrate Flagstar Bank and already had significant concentrations in New York-area commercial real estate. It could feed into Republicans’ push to force out FDIC Chair Martin Gruenberg.
| | | | A message from Chime:   | | | | | Gensler staying put? — SEC Chair Gary Gensler told our Declan Harty that he "absolutely" plans to stay on as Wall Street's top regulator should President Joe Biden win a second term in November. “We're not doing things against the clock,” he said. “There are things that will naturally roll into next year, if [I'm] here. If it's somebody else that's got this great office, then god bless and godspeed. New money laundering rules for real estate — Per Declan, Treasury's Financial Crimes Enforcement Network plans to require certain attorneys, title insurers and escrow agents to alert regulators about all-cash sales or transfers of residential real estate property to entities or trusts. A senior FinCEN official told reporters that the plan would help "curb the flow of dirty money.” MM first look: CFTC panel eyes market tweaks — The CFTC’s Global Markets Advisory Committee, sponsored by Commissioner Caroline Pham, is issuing recommendations on policies for U.S. Treasury markets, repo and funding markets and commodity markets. They include streamlining swap data reporting and expanding cross-margining in Treasury trading, following the SEC’s Treasury clearing rule. Pham said the recommendations “will promote access to markets and competition while safeguarding financial stability.”
| | | | Happy talk on stablecoins — Rep. Maxine Waters, the top Democrat on House Financial Services, told Eleanor that negotiators are "very, very close" to reaching an agreement on stablecoin legislation. Talks imploded last year amid disagreement over the role of the Federal Reserve. But Waters indicated that progress has been made toward addressing Democrats' concerns.
| | | | YOUR GUIDE TO EMPIRE STATE POLITICS: From the newsroom that doesn’t sleep, POLITICO's New York Playbook is the ultimate guide for power players navigating the intricate landscape of Empire State politics. Stay ahead of the curve with the latest and most important stories from Albany, New York City and around the state, with in-depth, original reporting to stay ahead of policy trends and political developments. Subscribe now to keep up with the daily hustle and bustle of NY politics. | | | | | | | | A boost from immigration — The Congressional Budget Office reported that a surge of immigration that will expand the labor force is expected to boost GDP by about $7 trillion and raise federal revenue by $1 trillion above where they would be otherwise from 2023 to 2034, Grace Yarrow reports. CBO also said the federal budget gap is expected to top $1.6 trillion this year and grow by another $1 trillion over the next decade. Despite ballooning interest costs, the estimates were still lower than last year’s thanks in part to last summer’s bipartisan debt limit deal, greater economic output and stagnant government funding in fiscal 2024, Caitlin Emma reports. Where the trade deficit’s growing — Per Doug Palmer and Paroma Soni, the combined U.S. goods trade deficit with Canada and Mexico hit $220 billion in 2023, up from $85 billion in 2017 — the year Donald Trump took office and forced the two countries into a renegotiation of NAFTA.
| | A message from Chime: Chime is expanding banking with no overdraft fees to everyday people. Cost is a barrier to many, which is why Chime never charges overdraft or monthly fees — and there are no minimum balance requirements for our checking and savings accounts. We reach customers traditional banks don't, can't or won't and are helping everyone unlock financial progress. Learn more. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
No comments:
Post a Comment