| | | | |  | | By Adam Behsudi and 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.
| | One big prize remains in the West’s efforts to punish Russia: using the nearly $300 billion in Russian state assets that have been frozen in other countries to help Ukraine. The bad news is that the outright seizure of those funds by tmhe U.S. or other G7 nations, which aren’t officially at war with Moscow, is fraught with legal uncertainty, geoeconomic consequences and could get mired in congressional dysfunction. The good news is that officials at the center of the talks are starting to be more open about other options. “There are many proposals that are being considered,” Deputy Treasury Secretary Wally Adeyemo told reporters last week. “Everything from seizing those assets to thinking about how you can take some of the windfall profits that the firms that are holding those assets may be earning and giving them to the Ukrainians to thinking about ways to use the assets as collateral.” Adeyemo cautioned that any decision would be made “in collaboration and in coalition” with G7 allies. The U.S. is limited in what it can do, given that the vast majority of those assets reside in Europe and the bulk of those are being held by Euroclear, a Belgian-based financial clearing house. “What you heard a year and a half ago was ‘hell no.’ Now, you’re hearing, ‘let’s find a way to figure this out,’” said Clay Lowery, a former National Security Council and Treasury official now at the Institute of International Finance.
| | | | 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. | | | | | The European Union earlier this month adopted a law that would require Euroclear and similar entities to hold any revenue they gain off Russian sovereign assets. In 2023, Euroclear reported interest earnings of €4.4 billion from Russia-sanctioned assets. Brad Setser of the Council on Foreign Relations estimates that if invested right, the interest earned off the roughly $280 billion in assets could generate $9-10 billion per year, “which is real money for Ukraine.” The other option under discussion at the G7 would allow countries to use frozen Russian state assets as collateral to take out loans to aid Ukraine. Russia already warned that this could invite years of litigation. U.S. lawmakers on both sides of the aisle are still eyeing the seizure option. Last month, the Senate Foreign Relations Committee approved a bill that would allow the U.S. to confiscate Russia’s assets. Some worry that the bill and the administration’s broader efforts to “unlock the economic value of those sovereign assets,” as Adeyemo put it, could conflict with its efforts to get Congress to approve $60 billion in funding for Ukraine. The political risk is that U.S. lawmakers who oppose giving Ukraine more taxpayer money may have another reason to say no. “What I do worry about is that it takes away momentum to do something that’s kind of right in front of us, which is in Congress,” Lowery said. Happy Monday — More to come on the intersection of Ukraine and Wall Street. Working on or hearing something you want to flag? Send 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. | | | | | Monday … New home sales data for January is out at 10 a.m. Tuesday … Treasury Secretary Janet Yellen holds a press conference before the G20 finance ministers meeting in Brazil at 7:15 a.m. … Apollo CEO Marc Rowan speaks to the Economic Club of Washington, D.C. at 8 a.m. … Fed Vice Chair for Supervision Michael Barr gives a speech on counterparty credit risk at 9:05 a.m. … The Conference Board reports on February consumer confidence at 10 a.m. … World Bank deputy chief economist M. Ayhan Kose speaks at the Peterson Institute at 1 p.m. Wednesday … Revised GDP for Q4 is released at 8:30 a.m. … Sen. Tim Scott hosts a roundtable with Black investors and business owners in the Senate Banking hearing room at 3 p.m. Thursday … 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. Friday … Government shutdown deadline (here's the latest on that) … Updated consumer confidence from the University of Michigan is released at 10 a.m. … Fed Governor Christopher Waller talks about global quantitative tightening at the U.S. Monetary Policy Forum at 10:15 a.m. … Yellen appears at a press conference with Chile’s minister of finance at 2:45 p.m. … Fed Governor Adriana Kugler gives a speech on the central bank’s dual mandate at 3:30 p.m.
| | | | 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 big econ upgrade — Professional forecasters surveyed by the National Association for Business Economics are sharply raising their projections for U.S. growth, in the latest sign of the economy’s unexpected strength. The group’s median outlook has real GDP increasing by 2.2 percent in 2024, up from a 1.3 percent forecast in December. They're also raising the estimate for average monthly job gains to 129,000 from 55,000. As for the Fed, a little over half of the forecasters expect the first rate cut in June. They see inflation continuing to decelerate this year and hitting the Fed’s target in 2025. Goldman Sachs economists on Friday likewise said they believe the Fed will start cutting in June, rather than May, based on recent comments from Fed officials. Chair Jerome Powell and co. may get another reason to take their time thanks to Thursday’s PCE report. Bloomberg says it's expected to show U.S. inflation in January rose by the most in a year. A tighter SEC climate rule — Declan Harty and Jordan Wolman report that the SEC is expected to pare back a planned climate-risk disclosure mandate for public companies, in a move that could be a big victory for business groups and a new aggravation for progressives. In the latest unreleased draft of the rule, the SEC has dropped a mandate that large companies report "Scope 3" information about emissions generated by suppliers and customers. The agency is also likely to ease proposed reporting requirements related to direct emissions and energy usage. Trump policy preview — With former President Donald Trump all but clinching the GOP nomination, a small army of POLITICO reporters and editors has a breakdown of the ways his second term is expected to make his first look relatively tame. The piece digs into a range of policy areas, including abortion, climate, foreign affairs and crypto. As Republican former House Speaker Newt Gingrich puts it: Trump’s second term would be “dramatically more comprehensive and more aggressive and more determined to profoundly change the establishment.”
| | | | A message from Electronic Payments Coalition:   | | | | | First look: Economic freedom by the numbers — The Heritage Foundation is out with its annual ranking of the world’s most free economies. The top five: Singapore, Switzerland, Ireland, Taiwan and Luxembourg. The U.S., which Heritage describes as “mostly free,” comes in at No. 25. “Restoring the U.S. economy to ‘free’ status will require significant changes to reduce the size and scope of government,” the conservative think tank said in the report. Trade on the rocks — Our Doug Palmer and Camille Gijs have a dive into the struggles of the World Trade Organization in an era of resurgent protectionism. The group will try to hash out deals this week on fish, digital trade and food security. Failure could further erode confidence in the WTO's ability to create new trade rules. “You could put the world's greatest matchmaker, arbiter and negotiator in charge of the WTO right now and I don't think much could happen,” said Rufus Yerxa, a former U.S. trade official and WTO deputy director. First in MM: A Capitol Hill warning for USTR — House Small Business Chair Roger Williams is demanding that U.S. Trade Representative Katherine Tai provide details about her decision to drop U.S. digital trade demands before this week’s WTO meeting. In a letter to Tai, Williams questions why the SBA didn’t play a bigger role in the decision. Rethinking the SPR — Daleep Singh, who is rejoining the White House, writes in a new FT piece with Employ America’s Arnab Datta about how the Strategic Petroleum Reserve should be revamped as the “Strategic Resilience Reserve” with a flexible mandate to address future commodity shocks. They say the SRR could follow the Fed’s approach to financial stability, “aiming to prevent crises, and reducing harm when they occur.”
| | CFTC official eyed for Treasury — Daniel Lippman and Declan Harty report that CFTC Commissioner Kristin Johnson is a contender for assistant Treasury secretary for financial institutions, which focuses on banking and insurance. An SEC exit — Kevin Carson, who most recently served as chief counsel in the SEC Office of Legislative and Intergovernmental Affairs, is joining SIFMA’s federal advocacy team as managing director and associate general counsel. Before the SEC, he was a chief counsel to Sen. Joe Manchin.
| | Legal moves — The Energy Department will temporarily suspend its mandatory survey of crypto miner energy use following an industry lawsuit, Reuters reports. Separately, a federal judge signed off on Binance's $4.3 billion plea deal with the Justice Department, per CoinDesk. Crypto org staffs up — The Cedar Innovation Foundation, a pro-crypto advocacy group that’s ramping up spending on the 2024 election, has tapped Colin McLaren to be its engagement director. McLaren was previously with FTI Consulting.
| | | | 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. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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