| | | | |  | | By Sam Sutton | | 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.
| | Consumer Bankers Association President and CEO Lindsey Johnson is ready for the Joe Biden era of bank regulation to come to an end. “The political apparatus within the agencies themselves has really kind of taken on a life of its own,” she told MM. “They’re [taking] these political messages, backfilling that with regulatory proposals that really stand to de-bank Americans.” Policies like the Federal Reserve’s plan to dial back debit interchange fees would limit access to free checking products, she said. And the Consumer Financial Protection Bureau’s crackdown on overdraft penalties “threatens to undo a lot of the innovation that we’ve seen banks, and big banks in particular, bring to the table.” With a new administration incoming, the CBA — whose board is stacked with the retail and consumer banking chiefs of institutions like JPMorgan Chase, Citigroup and Capital One — is rolling out a policy agenda so it can get its members “at the table, and not on the menu — like we’ve been over the last four years,” Johnson said. The retail banking group’s “Vision for America” is in keeping with broader industry efforts to influence Kamala Harris and Donald Trump as they speedrun through a presidential campaign that’s been heavy on vibes and light on policy specifics. The overarching themes of CBA’s agenda aren’t controversial: Americans should have access to financial services, a healthy financial foundation and be able to enjoy the benefits of a well-regulated financial services industry. The accompanying position stake direct aim at key components of the White House’s financial services agenda, including policies that Harris has endorsed as part of her own campaign. That risks putting the banking group at odds with the vice president should she win, particularly if Harris follows through on a pledge to crack down on so-called junk fees that she says banks and other companies have “used to pad their profits.” The White House’s attempts to address bank charges are part of its broader efforts to bring down costs for American households. Biden has said that its efforts to limit credit card late fees could save consumers $10 billion per year. Similarly, the CFPB says that its recent overdraft rule proposal could erase $3.5 billion in annual penalties. Banks have bristled at claims that those penalties are “junk.” And “we don’t think that Vice President Harris, her administration, has to take on that same tack” as Biden on bank regulation, Johnson said. Harris’s commentary about helping low-and-moderate income households is “directly aligned with things that the banking industry does on a daily basis,” Johnson said — offering specific praise for the vice president’s plan to offer $25,000 tax credits to first-time homebuyers. Still, whether Harris’s agenda ultimately aligns with what CBA has envisioned for the next administration will come down to personnel. Johnson said it’s incumbent on the Harris campaign “to make sure that we aren't just seeing a Biden 2.0." The presence of “moderating influences” — she namechecked the vice president’s brother-in-law and Uber’s Chief Legal Officer Tony West — or possible appointment of Republican cabinet officials would be “huge.” When asked if CBA had any concerns about Trump’s economic agenda, Johnson said the former president’s approach should offer more opportunities for coordination “and not just blaming different industries” for inflation. It might also open the door for more conversations about how regulatory pressures can drive up costs, she said. In his first term, Trump “brought in people who were very serious individuals. They understood policy, they understood banking. They were not friends of banks, but they definitely understood the consequences of getting it wrong,” she said. “My hope is that he is going to take that similar tack.” IT’S FRIDAY — Your host is off today and has an 8:30 tee time. But if you’ve got thoughts, you should email me at ssutton@politico.com.
| | | | A message from Synchrony: Your refrigerator is on the brink. Your child needs braces. Your car could use new tires. Credit plays an important role in our everyday lives. Access to credit is critical for Americans to get the things that matter, while helping build healthy credit history necessary for reaching long-term financial goals. Learn more about how access to credit can transform lives. | | | | | Philadelphia Fed President Patrick Harker will speak at Tulane University event at noon … JPMorgan Chase CEO Jamie Dimon speaks at the Atlantic Festival at 9 a.m. and a National Black MBA Association event at noon … FTC Commissioner Lina Khan will speaks at a Council on Foreign Relations event at 5 p.m. It’s not “Mission Accomplished” but… — President Joe Biden may have finally gotten the economy he wanted. But any political spoils will go to his successor, your host reports alongside Jonathan Lemire. Federal Reserve Chair Jerome Powell’s decision to lower interest rates by half of a percentage point on Wednesday represented a turning point in the economy’s long-fought battle against inflation. Surging prices and high interest rates were a major reason why voters have given Biden such weak marks on the economy, which pushed down his approval ratings and set the stage for his eventual exit from atop the Democratic ticket. Biden on Thursday said he was not declaring victory now that inflation has faded and lower borrowing costs have finally arrived. Still “it’s important that the country recognize this progress,” Biden said in a speech at the Economic Club of Washington D.C. “Because if we don’t, the progress we’ve made would remain locked in fear and a negative mindset that has dominated our economic outlook since the pandemic began.” — Meanwhile, at the Atlantic Festival, Treasury Secretary Janet Yellen said the Fed’s rate cuts were a “very positive sign” for the U.S. economy, Michael Stratford reports. A soft landing, Yellen said, is “exactly what we’re seeing.” — The messaging coming from the White House is in direct odds with what Trump has been telling voters on the campaign trail, Victoria Guida reports. The former president and his allies are using the size of the cuts to argue that the economy is much weaker than Harris, Biden or Democrats have let on. “The decision by the Fed shows the economy and the job market are in very bad shape,” Brian Hughes, a senior adviser to the Trump campaign, said in a statement to POLITICO. “The Fed has started cutting rates this aggressively this close to a presidential election” because the U.S. is headed for a recession, he said. But it’s not just Democrats saying the economy’s solid footing. Powell on Wednesday repeatedly emphasized that the U.S. is in “good shape” and growth continues “at a solid pace.” — Trump leaned harder into the political angle on Thursday night: "The country is doing badly, so you need the cut in one sense. In another sense it really is a political move," he said during an appearance on Newsmax. The former president added that "most people" thought the Fed would reduce rates by a quarter-of-a-percentage point, "which probably would’ve been the right thing to do. It’s a political move to try to keep somebody in office but it’s not going to work because the inflation has been so bad.” “Price control” arguments in 3, 2, 1… — Trump’s shift into populist financial services policy now includes limits on the interest rates that credit card companies can charge consumers, Stratford reports. “While working Americans catch up, we’re going to put a temporary cap on credit card interest rates,” Trump said at a rally Wednesday night. “We’re going to cap it at around 10 percent. We can’t let them make 25 percent and 30 percent.”
| | FIRST IN MM: Marshall’s swipe fee ad — Sen. Roger Marshall (R-Kan.), who recorded an unusual radio ad paid for by the Merchants Payments Coalition demanding that people call Congress to pass the Credit Card Competition Act, has received tens of thousands of dollars from members of that coalition, Daniel Lippman reports. Marshall is the top Republican sponsor of a bill targeting credit card swipe fees and told Punchbowl News on Wednesday that he was not sure which ad the publication had asked him about. Marshall has received a number of donations from several members of the coalition this cycle, including $5,000 from the National Restaurant Association’s PAC, $6,500 from the National Retail Federation’s PAC, $5,000 from the Asian American Hotel Owners Association PAC, $5,000 from the National Association of Convenience Stores PAC, $6,500 from the International Franchise Association’s PAC, $5,000 from the National Grocers Association’s PAC and $2,000 from the Retail Industry Leaders Association’s PAC, according to FEC records. Although it’s unclear if this ad would present a violation, guidance from the Senate ethics committee states that senators are prohibited from “any outside activities which could represent a conflict of interest or the appearance of a conflict of interest.” “Senator Marshall promoting his legislation to lower American’s credit card swipe fees is not scandalous nor surprising to anyone,” a spokesperson for the Kansas Republican told Daniel. Doug Cantor, an executive committee member of the Merchants Payments Coalition, said in a statement: “We’re pleased to see that Sen. Marshall is supporting his own bill. There’s nothing unusual or different about that. There’s hundreds of members of our coalition and they support lots of members of Congress. There’s nothing unusual about that either.” No love for ESG in this House — The House on Thursday passed several GOP-led bills that would restrict financial industry practices tied to climate and social goals, Jasper Goodman reports. The legislation is unlikely to become law this year, but it’s part of a broader Republican effort to discourage investment practices seen as hostile to fossil fuels or aligned with progressive policies.
| | | | A message from Synchrony:   | | | | | FIRST IN MM: SEC, get some control of that CAT — Healthy Markets Association is calling on the SEC to get a better hold on the reins of the Consolidated Audit Trail, or CAT, Declan Harty reports. Led by CEO Tyler Gellasch, the institutional investor group filed a rulemaking petition Thursday warning that the massive trading surveillance system’s “flawed structure, governance, and funding model have rendered it too costly, too risky, and too susceptible to legal challenge.” So, Gellasch wrote, the SEC should take ownership of the system, set up a new means to fund it and cut the exchanges’ access to CAT data off, among other changes. The petition lands at a critical moment for the CAT’s future. Conservatives have recently launched a legal campaign to knock down the system, while Ken Griffin’s Citadel Securities and the American Securities Association have sued over who will pay for it. And while Gellasch agrees with many of the criticisms, the former SEC official adds that the CAT’s future is too important to leave up to the courts. “The CAT can’t simply be turned off without incurring significant costs, uncertainty, and catastrophic risks to our markets,” Gellasch wrote. An SEC spokesperson declined to comment. Waiting on the courts to rule — Political gamblers will need to wait a little while longer for an answer on the fate of financial exchange startup Kalshi’s election-betting markets, Declan reports. A panel of three appellate court judges in Washington grilled attorneys for Kalshi and the CFTC on Thursday over the markets, which briefly launched last week before the court issued a temporary stay. But the court did not rule on the CFTC’s push to keep trading on hold until its appeal can play out.
| | | | A message from Synchrony: Your refrigerator is on the brink. Your child needs braces. Your car could use new tires. Credit plays an important role in our everyday lives. Access to credit is critical for Americans to get the things that matter, while helping build healthy credit history necessary for reaching long-term financial goals. Research shows that nearly 50 million Americans do not have access to credit. By looking at data beyond credit scores, Synchrony can make smart decisions about how much credit to extend and to whom. Responsible access to credit helps Americans build a pathway to financial mobility. Learn more about the importance of providing access to credit. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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