| | | | |  | | 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.
| | Stock, bond and currency markets have priced in a Donald Trump victory over Kamala Harris next week. But as Hillary Clinton can attest, markets have been wrong before, and even trading savants like Citadel founder and GOP megadonor Ken Griffin are now saying the race is basically a coin flip. There is a difference between what people on Wall Street think will happen and what they want to happen. And this race, which was upended when Joe Biden stepped down from the ticket this summer, created an environment where defined preferences for the financial services industry were at odds. Many industry people prefer low taxes and light regulation, and Trump’s promises to deliver on both helped him rebuild a coalition of donors who had turned their backs on him after the 2020 election and the Jan. 6 riot at the Capitol. Harris — despite the liberal policies she espoused in prior campaigns — has pledged stability and stronger cooperation with the business community, a message that has resonated with leaders at top banks and private equity firms. And that doesn’t even address looming concerns about the peaceful transition of power and potential unrest. To answer these questions, your MM host hit up a few cocktail hours at the Greenwich Economic Forum for a story that’s running this morning through POLITICO Magazine. As one financier put it: “All of us would do better if one side wins,” referring to Donald Trump. “The rest of the country just might crumble around us.” From the story: Greenwich is “a place where you can get glimpses of the fortunes many have at stake. Outside a local museum where attendees gathered for welcome drinks was a 2025 Aston Martin Vantage, available for test drives. Private tours through a gallery with works by Andy Warhol were available upstairs. And beyond the patio at the Delamar Hotel where I spoke to the financier, yachts were moored in the harbor, glinting in the setting sun. “The financier, who was granted anonymity to speak frankly, told me that clients have been inundating her firm with requests for insights into how the election results could affect lending markets or the deal environment. The range of potential outcomes is too wide and depends not only on who’s in the White House but also in control of Congress and regulatory agencies, and on the state of the economy. ‘They truly don’t know,’ she said. ‘No one really does.’” For one thing, it’s not as though a second Trump administration would automatically welcome an era of light regulations for everyone. Dan Zinn, the general counsel and chief of staff at OTC Markets Group, noted that Trump’s Securities and Exchange Commission Chair Jay Clayton took particular interest in reforming markets for over-the-counter securities – including so-called pink sheet stocks. “It turned out to be a benefit for us, and turned out to be a good thing in the end, but was just more involvement with the SEC at that level than we thought we would have” when Trump took office in 2017, he told MM. And while Harris’s campaign has projected stability, her prior positions are still a source of uncertainty for some when it comes to financial regulation. “Some of the indications from her past are a bit worrisome,” said Gregory Lyons, who co-chairs the financial institutions group at the white shoe law firm Debevoise & Plimpton. “It could be pretty bad if she ends up defaulting back to this very, very progressive view of financial services.” IT’S WEDNESDAY — Do you have tips, suggestions or thoughts? Let me know at ssutton@politico.com.
| | A message from the American Bankers Association: The latest polling results are in. Americans are overwhelmingly happy with their bank, according to a new Morning Consult survey conducted on behalf of ABA. Consumers also believe the financial services industry is highly competitive and a source of strength for the economy. And Americans trust banks more than any other industry to keep their data safe. View the infographic to see more from the survey. | | | | | | | The first GDP estimate for the third quarter will be out at 8:30 a.m. … The American Bar Association's Business Law Section holds its 2024 Consumer Financial Services Conference starting at 10:30 a.m. … The SEC holds a closed meeting at 2 p.m. Closing time — Harris delivered her closing argument for the 2024 race at the Ellipse — the same site where Trump held his “Stop the Steal” rally on Jan. 6, 2021. And while she repeatedly hammered at the former president as a “wannabe dictator” who is “consumed by grievance and out for unchecked power,” she spent the bulk of her remarks making an affirmative case for why she should be the president (as opposed to why Trump shouldn’t). Harris has stepped up her attacks on Trump’s authoritarian rhetoric in recent weeks as her polling advantage eroded. Some Democrats have warned that’s a losing strategy — “She still needs to tell them what she’s about, not what he’s about,” one Harris donor told MM over the weekend — and the vice president’s closing argument was an attempt to define herself as a results-focused pragmatist who’s open to feedback. “I’m not perfect. I make mistakes. But here’s what I promise you: I will always listen to you, even if you don’t vote for me,” she said. “I will work every day to build consensus and reach compromises to get things done.” Harris highlighted her background as a prosecutor and state attorney general going after bad actors, including banks. The bulk of her economic message, however, addressed affordability issues that dragged down economic sentiment throughout the Biden administration. She identified policy priorities like the price gouging ban, expansion of the child tax credit, new homeowner assistance and the extension of Medicare coverage to home care. What the Harris campaign is reading — Harris’s brother-in-law and Uber Chief Legal Officer Tony West has played a key role advising the vice president’s campaign. But critics are raising “questions about whether he is shaping her views on powerful corporate interests — including his own, as Harris’s policies in the White House could significantly affect Uber and, indirectly, the value of his stock holdings,” WaPo’s Michael Kranish, Tyler Pager and Cat Zakrzewski. What the Trump transition team is reading — Trump is “cashing in” on new ventures as he seeks a second term in office, Ben Protess, Maggie Haberman and Eric Lipton report for The NYT. And unlike 2017, he’s not making any promises about keeping his business empire separate from the presidency. The Trump Organization has struck deals in Vietnam, Saudi Arabia and the United Arab Emirates over the last year, and those deals would likely be grandfathered into forthcoming restrictions on foreign investment. — Bloomberg’s Bailey Lipschultz: “Shares in Donald Trump’s social media company extended a five-week rally that’s added more than $8 billion in value to a company some expect will benefit sharply if the former president wins next week’s election.” What global investors are reading — Saudi Arabia’s sovereign wealth fund is scaling back its allocation to international investments, a sign that it will direct more funds toward its domestic economy as oil revenue slips, write Ahmed Al Omran and Ivan Levingston for The FT. Still divided — House Republicans remain divided over legislation that would limit the ability of U.S. firms to invest in Chinese companies in the wake of Biden’s executive order, Jasper Goodman and Eleanor Mueller report.
| | Follow-up on the FDIC’s asset management fight — We previewed the growing fight over the Federal Deposit Insurance Corp.’s efforts to tighten its oversight of how giant asset managers invest in banks. Top House Republicans took a more active role in the brawl on Tuesday, Michael Stratford reports. House Financial Services Chair Patrick McHenry (R-N.C.) wrote in a letter to FDIC Chair Martin Gruenberg that the bank regulator’s effort to strike the new agreements with asset managers amounted to an illegal end-run around the rulemaking process. — Meanwhile, prominent watchdog groups like Americans for Financial Reform Education Fund and Public Citizen — along with powerful unions like the AFL-CIO, American Federation of Teachers and Communications Workers of America — have signed a comment letter in support of the FDIC’s proposed rule. Firms like BlackRock and Vanguard have “considerable influence over decisions that impact the policy concerns of the CBCA, including the financial stability of banking institutions, the interests of depositors and the public, the integrity of the Deposit Insurance Fund, and competition,” they wrote.
| | | | A message from the American Bankers Association:   | | | | | GDP — The Commerce Department will release its initial estimate on third-quarter GDP at 8:30 this morning. Economic forecasters expect it to show that the U.S. economy grew at a rate of 3.1 percent between July and September, a healthy number that should affirm Harris’s case that the country withstood inflation without sinking into a slump. Outlook — Leaders on Wall Street are relatively bullish about the state of the economy. Marc Rowan , the Co-Founder and CEO of Apollo Global Management, said at the Future Investment Initiative conference in Riyadh on Tuesday that “we’re all talking about shades of good” when it comes to U.S. prospects. That was reflected in The Conference Board’s latest consumer confidence index for October. The index, which gauges consumer sentiment on business and labor conditions, bounced by more than nine points to 108.7 on Tuesday — the highest reading since March 2021. “Consumers’ assessments of current business conditions turned positive. Views on the current availability of jobs rebounded after several months of weakness, potentially reflecting better labor market data,” Conference Board Chief Economist Dana Peterson said in a statement.. “Compared to last month, consumers were substantially more optimistic about future business conditions and remained positive about future income. Also, for the first time since July 2023, they showed some cautious optimism about future job availability. (More on that below…) Consumer spending was a big driver of economic activity through both the Covid-19 pandemic and its aftermath. There are few signs that will slow. “The consumer is broadly healthy, a tad more discerning than before, and their spending is still growing,” said Citi CEO Jane Fraser at the same event in Saudi Arabia. Still, “a lot of that has been driven by the affluent consumer.” JOLTS — The growing confidence in job availability that was reflected in the Conference Board’s October index is striking given what we’re seeing on job openings in official data. The Labor Department’s Job Openings and Labor Turnover Survey for September, out Tuesday, reflected the lowest number of open positions dropped to the lowest level since early 2021, according to Bloomberg’s Jarrell Dillard.
| | | | REGISTER NOW: Join POLITICO and Capital One for a deep-dive discussion with Acting HUD Secretary Adrianne Todman, Rep. Darin LaHood (R-IL), Rep. Ritchie Torres (D-NY) and other housing experts on how to fix America’s housing crisis and build a foundation for financial prosperity. Register to attend in-person or virtually here. | | | | | | | FIRST IN MM: Could the crypto voter decide the White House? — The crypto industry has already become an unexpected financial force in the November elections. Now, venture capital firm Paradigm is raising the question of whether crypto voters could be a deciding factor, our Declan Harty reports. In its latest poll, Paradigm found that 5 percent of all voters describe themselves as “single issue crypto voters” — a small but potentially potent collective that could prove critical in determining who wins the White House. Oof — A Republican running in a key congressional race failed to disclose her stock holdings, Timmy Facciola reports. Alison Esposito, who’s running to unseat Hudson Valley Democrat Rep. Pat Ryan, included a Vanguard stock brokerage account in her disclosures but failed to provide details on specific stocks.
| | Mara Mellstrom is now an account manager at i360. She most recently was an SVP at Citi and is a Doug Ducey alum and a former House chief of staff.
| | A message from the American Bankers Association: The data tells the story. Americans are overwhelmingly happy with their bank, according to a new Morning Consult survey conducted on behalf of ABA. A strong majority (81%) also recognize that the financial services marketplace is “highly competitive,” and 80% agree they have multiple options when it comes to shopping for a new bank account, loan or credit card. Seven in 10 consumers say our nation’s banks are a source of strength for the U.S. economy and they appreciate the role banks play in supporting the financial needs of individuals, businesses and local communities.
Consumers also credit their bank for protecting them from fraud, and believe the banking industry does more than other industries to protect them. See what else consumers have to say about their banks. View the infographic. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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