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| | A new round in the seemingly never-ending fight between Donald Trump and government ethics watchdogs is breaking out — this time, over his nearly $2 billion stake in Trump Media & Technology Group. The GOP nominee swore last week that he has no plans to cash out of his nearly 115 million shares in the publicly traded parent company of Truth Social, the social media site. Trump, the company’s majority shareholder, and a number of other insiders have been barred from selling for months under the terms of a prohibition that is set to expire on Thursday. His announcement was immediately met with cheers by MAGA investors who are believed to account for a sizable portion of Trump Media’s shareholder base. But Trump’s position in the company is spurring a familiar outcry from watchdogs who are worried that corporate interests or foreign actors could try to curry favor with the former president by buying stock in Trump Media or advertising on Truth Social. “It’s a huge potential conflict of interest,” said Dylan Hedtler-Gaudette, director of government affairs for the Project on Government Oversight, in an interview. “It’s all the same problems, but I’d say ratcheted up a bit from last time.” Ethics questions have dogged the Trump business empire ever since its billionaire leader came to Washington in 2017. When elected, Trump retained ownership over his vast web of properties but turned the management of the Trump Organization over to his sons. Still, throughout his time in office, Trump was consistently hit with attacks about his ties to the business. His luxury hotel in the nation’s capital — located just blocks away from the White House at a building leased from the federal government — became the subject of particular concern. Now, the attention is increasingly turning toward his and his family’s newer business ventures. In addition to Trump Media, ethicists have warned that World Liberty Financial — a cryptocurrency venture involving Trump’s eldest sons, Donald Jr. and Eric — could pose a conflict of interest as Trump courts the industry’s support before November. Spokespeople for the Trump campaign and Trump Media did not respond to requests for comment. Owning the shares itself would not violate any ethics laws, according to Richard Painter, who was the chief White House ethics lawyer under President George W. Bush. But the Trump-Truth Social nexus raises a broader concern about the blurring lines between government and media, Painter said. “This is a potentially dangerous situation,” he said. “The government shouldn’t be controlling the press, [and] that’s where we are in social media.” Trump Media, in the meantime, just keeps facing more pressure from Wall Street. The company’s stock has long been viewed as akin to a meme stock that trades on vibes rather than its underlying business. And of late, the vibes haven’t been great. Shares in the company, which trade under the ticker “DJT,” fell more than 3 percent in trading Wednesday in the final run-up to the lock-up’s expiration — extending a weeks-long slide. And while Trump has said he has no plans to sell, other major investors whose shares are freeing up haven’t and could soon flood the market with more. IT’S THURSDAY — And there’s no shortage of news. Planning to tune into the latest round of Kalshi v. CFTC today? (See below.) If so, give me a shout: dharty@politico.com. And as always, Sam can be found at ssutton@politico.com.
| | | | A message from Synchrony: Small and mid-sized businesses, from auto shops to home contractors to veterinarians and more, rely on consumer financing to serve their customers and keep their businesses running. Credit continues to be a critical piece of the American economy. For 100 years, Synchrony has continued to connect tens of millions of people and thousands of businesses to fuel economic growth. Credit is key for businesses and the economy; learn more here. | | | | | The Center for American Progress will hold a conference on the state of U.S. housing, starting at 9 a.m. Sen. Tina Smith, (D-Minn.), Rep. Alexandria Ocasio-Cortez (D-N.Y.) and CFPB Director Rohit Chopra are among the speakers … The Atlantic Festival begins at 9 a.m. House Minority Leader Hakeem Jeffries (D-N.Y.), Treasury Secretary Janet Yellen, Small Business Administration Administrator Isabel Guzman and Rep. Nancy Pelosi (D-Calif.) are scheduled speakers … Existing home sales data for August will be out at 10 a.m. … President Joe Biden will speak at the Economic Club of Washington D.C. at 12:45 p.m. Fed opts to go bold — The Federal Reserve unveiled a half-percentage point cut to interest rates Wednesday, “a clear sign that officials believe they are winning the battle against inflation,” Victoria Guida reports. “The central bank’s decision to act more boldly is an effort to prevent a further rise in joblessness, a key fight that will determine what kind of economy the next president inherits,” Victoria reports. “And Fed officials offered more good news on that front: They projected four rate cuts next year and two more the year after, with inflation returning to the central bank’s 2 percent target by the end of 2025.” “The U.S. economy is in good shape,” Fed Chair Jerome Powell said during his press conference. “Inflation is coming down. The labor market is in a strong place. We want to keep it there.” — As the Fed monitors the labor market closely, Powell at his press conference said healthy job growth depends in part on the number of workers joining the workforce each month, Victoria adds. "If you're having millions of people come into the labor force, and you're creating 100,000 jobs, you're going to see unemployment go up," he said. "So it really depends on what's the trend underlying the volatility of people coming into the country." The Fed chief added that immigration has played a role in the rising unemployment rate, which is the ratio of people looking for work compared to the total workforce. Therefore, more migrants looking for work increases the rate. "We understand there's been quite an influx across the borders, and that has actually been one of the things that's allowed the unemployment to rise," he said. "And the other thing is just the slower hiring rate, which is something we also watch carefully." — While the cut was virtually a given, how far the central bank would go was up in the air leading into the Fed’s announcement. And once it was announced, some GOP lawmakers were not pleased. From Sam Sutton and Jasper Goodman: “The hefty half-point rate cut announced by Powell was larger than what many Republicans would have liked. Rep. Bill Huizenga, who sits on House Financial Services, said he expected the Fed to reduce borrowing costs by its usual quarter-of-a-percentage point.” “The closer we get to the election, and the higher that number goes, I think the more likely it looks political,” Huizenga said. — Biden’s remarks at the Economic Club of D.C. this afternoon will also have a rate angle. In addition to spotlighting efforts to extend the child tax credit and boost the supply of housing, Biden will speak to the “hard-won progress” that’s been attained now that lower interest rates are poised to make mortgages and other loans more affordable, National Economic Council Director Lael Brainard told reporters on Wednesday. Inflation “is now at the same level as the month before the pandemic began. Now, interest rates are following inflation down as well — lowering costs for American consumers,” she said. No endorsement for you, or you — The International Brotherhood of Teamsters is not wading into the November fray after all, Nick Niedzwiadek, Brittany Gibson and Holly Otterbein report. The labor union’s decision to not issue a decision, they added, marks a blow for Vice President Kamala Harris, who has vowed to continue Biden’s labor-first agenda. Trump called it “a great honor” on Wednesday.
| | Let’s try this again? — A week-long pause in trading on the first federally regulated election betting markets in the U.S. could come to an end today — or get pushed even further out, your host reports. The CFTC and Kalshi, the financial exchange operator behind the markets, are set to square off in a Washington courtroom this afternoon over the agency’s emergency push to halt the markets through an appeal. Kalshi has warned that a further stay would “likely moot the contracts for the 2024 election cycle.” But the CFTC cautions that allowing Kalshi to go forward will clear the way for “a panoply of wagers on the outcome of U.S. elections.” “The focus for me and the agency is dealing with the litigation,” CFTC Chair Rostin Behnam told your host this week when asked about the agency’s pending rule for prediction markets. “Obviously, we’ll adjust as needed, and we respect the decisions of the court. But right now, we’re focused on Thursday.”
| | | | A message from Synchrony:   | | | | | Squabbling over stock trading — Wall Street’s top regulator voted Wednesday on new rules that stand to upheave how stocks are priced and slash exchange fees, a series of changes that SEC Chair Gary Gensler called the “most consequential” to the U.S. equity markets in nearly two decades, your host reports. The changes — approved unanimously by the SEC’s commissioners — were first floated as part of Gensler’s sweeping and controversial overhaul of trading in the stock market. And while many in the financial world like Brad Katsuyama’s IEX Group cheered the move, not everyone is pleased. Nasdaq said the rules “lack foresight and do not consider the intricate dynamics of the equity market.” Powell makes non-interest-rate news — The Fed chair shot down the idea that the central bank would advance on its own a scaled-back plan to hike capital standards for the country’s biggest banks, Michael Stratford reports. In his press conference, Powell said the Fed plans to “move together” on the proposal, known as Basel III endgame, with fellow regulators at the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. He said the goal is to have the process wrapped up “sometime in the first half of next year.” ICYMI: ‘An addiction to overdraft products’ — Aaron Klein, senior fellow at the Brookings Institution, has a new op-ed in American Banker laying out how credit unions “have developed an addiction to overdraft products that mirrors the worst predatory banks.”
| | First in MM: Larry Fink huddles with House Republicans — BlackRock CEO Larry Fink met with the top House Financial Services Republicans on Wednesday, in part to discuss a new fund the world’s largest money manager is launching with Microsoft to build data centers and energy projects to meet the demands of AI, Jasper reports. The meeting included Chair Patrick McHenry and Reps. French Hill, Andy Barr and Bill Huizenga. In addition to the new AI partnership, Huizenga said they discussed the federal deficit and the economic recovery. It came hours before House Republicans passed the first of several measures they are voting on this week aimed at combating environmental, social and governance-minded investing — but the issue didn't come up, according to Huizenga. The anti-ESG push has at times put Republicans at odds with BlackRock and Fink, who promoted ESG efforts but has since stopped using the term.
| | | | A message from Synchrony: Access to credit creates a positive ripple effect for the U.S. economy. Small and mid-sized businesses, from auto shops to home contractors to dentists and veterinarians and more, rely on consumer financing to better serve their customers. Credit helps consumers manage their spend and pay over time, leading to higher customer satisfaction and loyalty.
Credit continues to be a critical piece of the American economy. For nearly 100 years, Synchrony has offered flexible financing for consumers, which in turn, helps business owners sustain and grow their businesses.
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