| | | | |  | | By Eleanor Mueller | | Presented by |  | | | 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. With help from Jasper Goodman, Zachary Warmbrodt, and Daniel Lippman
| | It’s a wild day to be a crypto lobbyist. The industry’s most vocal allies are descending on Capitol Hill as the House votes on whether to buck President Joe Biden on digital assets custody, and CFTC Chair Rostin Behnam testifies in the Senate on regulatory reform. Off the Hill, progressive Rep. Ro Khanna (D-Calif.) is hosting a crypto roundtable with Mark Cuban and industry representatives like Blockchain Association’s Kristin Smith and Kraken’s Marco Santori as well as Coinbase’s Paul Grewal and Crypto Council for Innovation’s Sheila Warren, people briefed on the meeting told MM. Biden senior adviser Anita Dunn and White House chief of staff Jeff Zients were also invited, per those briefed. Neither will be in attendance due to scheduling conflicts, another person briefed on the meeting told MM. All people were granted anonymity to discuss private conversations. Just hours later, pro-crypto House Democrats are expected to again break with Biden as they vote in favor of overruling his veto of a resolution that undoes SEC guidance opposed by the industry. Crypto says the SEC policy makes it harder for them to get banked because it directs financial institutions to mark digital assets as liabilities on their balance sheets. To be sure, the override faces long odds. Allies need two-thirds of the chamber — way beyond the margins they saw the first go-around. Backers are already formulating a plan B. Sponsor Mike Flood (R-Neb.) told our Jasper Goodman that he wants to mark up a related bill that undoes the SEC guidelines through “a regular piece of legislation” and attach that to a must-pass package — thus taking the pressure off Democrats to split with the president. Wednesday’s resolution "is probably not the vehicle that the Democrats want to resolve it on," Flood said. "What I keep hearing the Democrats saying is that there's a pathway to getting this resolved without offending their president's veto message." The bill’s supporters are pushing for a committee vote as soon as this month, a House aide told MM. Crypto advocates will likely raise the issue to lawmakers over a series of meetings today organized by Stand With Crypto and covered first in MM. The group tells MM that it is expecting more than two dozen grassroots supporters and business owners for its fly-in, which will target swing states like Georgia after hosting on-the-ground events like its Atlanta rally with former Mayor Keisha Lance Bottoms (now a senior adviser to Biden’s campaign). Across the Hill, Behnam will address Senate Agriculture members as Chair Debbie Stabenow (D-Mich.) looks to advance legislation that would overhaul how the CFTC regulates digital assets. Stabenow convened committee Democrats Monday night to strategize how to get the bill to a markup, which she says she wants to happen this summer — but has yet to win over ranking member John Boozman (R-Ark.). The industry will be watching closely today for any indication of what Stabenow’s bill could look like, as well as where Boozman stands. A new poll out today from crypto venture capital firm Paradigm found that more than 1 in 10 Republicans who do not plan to vote for former President Donald Trump say they are more likely to vote for him due to his support of crypto. Trump’s campaign released a policy platform earlier this week that calls for an end to “Democrats’ unlawful and unAmerican Crypto crackdown.” IT’S WEDNESDAY. And we’re baking in the D.C. heat. Send Hill tips (and iced coffee recs) to emueller@politico.com and @eleanor_mueller. As always, you can find our usual MM host, Sam Sutton, at ssutton@politico.com and @samjsutton.
| | | | A message from the Electronic Payments Coalition: GUARD YOUR SMALL BUSINESS: AMERICANS LOSE WHEN POLITICIANS CHOOSE
Credit cards help local businesses by lowering operating costs, financing major purchases and offering rewards like cashback, which can be reinvested back in the business or passed along to employees. Credit cards are essential to commerce and provide benefits to businesses and their customers. Oppose the Durbin-Marshall Credit Card Bill mandates which put corporate mega-stores before Main Street businesses. Take action now to GUARD YOUR CARD! | | | | | Behnam testifies before Senate Agriculture at 10 a.m. … Federal Reserve Chair Jerome Powell testifies at House Financial Services at 10 a.m. … Treasury Undersecretary for International Affairs Jay Shambaugh will discuss U.S.-China economic relations at the Council on Foreign Relations at 12 p.m. … The Treasury Department’s Financial Literacy and Education Commission will meet to discuss financial and consumer fraud at 1 p.m. … Chicago Fed President Austan Goolsbee and Fed Gov. Michelle Bowman will speak at a Chicago Fed event on the childcare industry at 1:30 p.m. … Fed Governor Lisa Cook speaks at the Australian Conference of Economists at 7:30 p.m. Powell’s high-wire act flies under D.C.’s radar — Powell will testify on the Hill for the second time today — not that much of Washington is paying attention, as the capital remains preoccupied with Biden’s struggle to stay atop the Democratic ticket. Powell, who appeared before Senate Banking Tuesday, will address House Financial Services this morning as part of his twice-annual report to lawmakers. His remarks come as the central bank fields growing lawmaker scrutiny over how, and when, it will start to cut interest rates — particularly before November, as Wall Street expects. In one sign of the tough spot that Powell is in this election year, Sen. Kevin Cramer (R-N.D.) on Tuesday said he fully supports Fed independence from politics — then advised the Fed chair against cutting interest rates before November. Rep. Andy Barr (R-Ky.) echoed that point. “I want [Powell] to reiterate that the Fed's monetary policy trajectory is going to be data dependent and not political,” Barr told reporters. “Everybody wants a rate cut. … But I think a September rate cut will not be perceived as apolitical.” Powell walked the line carefully on his first go-around on the Hill, telling senators that “the labor market appears to be fully back in balance,” but he did not want "to be sending any signals about the timing of any future actions.” In Rayburn, the hubbub over Biden’s future bled into Treasury Secretary Janet Yellen’s testimony. She faced questions on the president’s mental acuity when she testified before House Financial Services on Tuesday. Inflation won’t be the only topic of discussion in the House hearing today. Rep. Bill Foster (D-Ill.) told MM that he also wants to ask Powell about so-called living wills, or big banks’ plans for how they would restructure without disrupting the financial system if they went bankrupt, as well as Ukraine funding. And lawmakers are certain to seek more clarity on regulators’ plans for overhauling capital requirements after Powell told Senate Banking that they are “very close” to reaching a consensus. “Vice Chair for Supervision [Michael] Barr has held a series of discussions with the other bank regulatory agencies around potential changes to the original proposal,” Powell said at Senate Banking. “I’m pleased to say that we’ve made quite a bit of progress on those.” Expect House Financial Services ranking member Maxine Waters to again hit Republicans on the Heritage Foundation’s Project 2025, as she did during Yellen’s hearing.
| | | | A message from the Electronic Payments Coalition:   | | | | | Fintech leaders in town — MM caught up with Financial Technology Association CEO Penny Lee as the group’s members gather in Washington this week. The trade represents companies including PayPal, Intuit, Stripe, Block, Chime and Klarna. The association rolled out a new “Future of Finance” policy agenda before with officials from the White House, the Treasury Department, the Federal Reserve, the FDIC and Congress. One of FTA’s priorities on the Hill is laying the groundwork for legislation that would let non-bank firms access Fed services. The group is also trying to get feedback on the issue from the Fed itself. Its pitch is that such a change would reduce costs for customers, enable faster payments and make it easier for consumers and businesses to move money. “That is something we know that will likely require a statutory change,” Lee said. “So we have begun those conversations on Capitol Hill. One, what does the pathway look like? Does it require a payment charter? Does it require certain other statutory changes to be able to allow that to happen?” Data in distress — Republican spending bills could jeopardize federal data gathering relied upon by the Fed, the Associated Press’ Mike Schneider reports. Language in the legislation would limit agencies to two contacts for the census, the American Community Survey, and the Current Population Survey — which helps determine the monthly unemployment rate. That could leave out as many as 17 million households.
| | | | Understand 2024’s big impacts with Pro’s extensive Campaign Races Dashboard, exclusive insights, and key coverage of federal- and state-level debates. Focus on policy. Learn more. | | | | | | | | | Fed second-guesses surcharge — The central bank is weighing changes to additional capital requirements for global systemically important banks dubbed the G-SIB surcharge, Reuters’ Pete Schroeder reports. Sources told Schroeder that the Fed is considering adjusting how it calculates the requirement “for economic growth,” which “would reduce the banks' systemic scores and resulting capital surcharge.” Though nothing has been decided, the conversations are proof of how the conversation over capital rules has opened the door for banks to press for related concessions.
| | | | A message from the Electronic Payments Coalition: CONGRESS: OPPOSE THE DURBIN-MARSHALL CREDIT CARD BILL
Credit cards are a staple for millions of Americans, providing secure payments, fraud protection, and valuable rewards helping to pay for everyday purchases. The Durbin-Marshall Credit Card Bill threatens to dismantle these benefits, forcing our credit cards onto untrusted networks. Mega-stores like Walmart and Target stand to gain billions, while Americans lose the convenience, security, and rewards millions of hardworking families rely on to pay for everyday purchases. Congress: oppose the Durbin-Marshall Credit Card Bill. Learn more and GUARD YOUR CARD! | | | | | Second-rate second quarter — Analysts expect banks to report weaker profits in the second quarter thanks to high interest rates, Reuters’ Saeed Azhar and Niket Nishant report. That’s because banks are likely setting aside more money to cover losses on commercial and industry and commercial real estate loans, the analysts said. That development could be offset somewhat by an uptick in mergers and acquisitions.
| | Shannon Richards is taking on a new role managing the schedule for Deputy Treasury Secretary Wally Adeyemo, according to an internal memo our Daniel Lippman obtained. She most recently worked for Treasury Assistant Secretary for Intelligence and Analysis Shannon Corless.
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