News: Congress is back. Big financial policy moves are coming.

Monday, November 11, 2024

Congress is back. Big financial policy moves are coming.

Nov 11, 2024

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QUICK FIX

Lawmakers return to Washington this week with a series of immediate decisions to make on policy squabbles and leadership fights that have major consequences for finance.

MM today has a quick rundown on what you should watch during the remaining weeks of this “lame duck” Congress and how President-elect Donald Trump’s red wave is set to shake up key Capitol Hill committees.

The lame duck: Republican lawmakers will need to decide in the coming days if they’ll try to jam through new China investment restrictions and cryptocurrency legislation during the end of this session. As with all calculations at the close of this Congress, GOP lawmakers will have to take into account Trump’s wishes and whether it’s worth trying to negotiate better deals next year.

China policy has a real shot at getting done. House Republicans have been ramping up work to resolve disagreement between China hawks and business-friendly members over how to curb U.S. capital from flowing to America’s biggest geopolitical rival.

"We've had different drafts that have been circulated to the working group, and have gotten feedback on this,” China Select Committee Chair John Moolenaar (R-Mich.) told our Jasper Goodman. “I anticipate when we get back … those discussions will continue hopefully to finalizing the final product."

Rep. Andy Barr (R-Ky.), who has also been part of the negotiations, told your host that he hopes a proposal will start circulating this week.

“There's already some bicameral conversations going on about the product that is emerging from our work,” he said.

The prospects for crypto in the lame duck were always less bright, and Tuesday’s elections probably made things worse. Already, some Republicans are suggesting that they should press pause until next year when they won’t have to negotiate as much with Democrats.

"Why wouldn't we wait for something better?" Rep. Bill Huizenga (R-Mich.) told your host.

Separately, Senate Democrats will have to decide whether to push through a host of nominees, including FDIC chair pick Christy Goldsmith Romero. In addition, bank regulators are expected to testify before Senate Banking on Nov. 19 and House Financial Services on Nov. 20, according to Hill aides.

Leadership: House and Senate Republicans this week are set to choose their conference leaders for the next Congress. In the House, the decisions could impact who’s in charge of House Financial Services, where Barr and Rep. French Hill of Arkansas are seen as frontrunners if the GOP maintains control of the chamber as expected.

The House GOP steering committee isn’t expected to hear presentations from committee chair candidates until the week of Dec. 2, followed by decisions on who gets gavels shortly after.

Hill is the committee’s vice chair and has been a key player in Congress on issues like crypto — the committee’s biggest legislative lift — and the bank failures of March 2023. Barr, a committee leader on bank regulatory issues, has built his pitch on being able to bridge the free-market and populist wings of his party.

The views of conference leaders will be key when the GOP steering panel weighs committee chairs. Hill was a close ally of ousted Speaker Kevin McCarthy and voted “present” for current Speaker Mike Johnson in conference before supporting him on the floor. A senior House GOP aide said Barr has closer ties with Majority Leader Steve Scalise of Louisiana, who the aide said has praised Barr’s proposed framework for running Financial Services. Barr also hosted Scalise for a Kentucky fundraiser in September. (Rep. Maxine Waters of California is set to remain the top Democrat on Financial Services no matter what.)

In the Senate, Sen. Tim Scott of South Carolina has a lock on becoming Senate Banking chair, and he’s also aiming to lead the Senate Republicans’ campaign arm. Sen. Elizabeth Warren of Massachusetts is expected to become the panel’s top Democrat, unless Sen. Mark Warner of Virginia goes for it.

Committee rank-and-file: A number of current and incoming lawmakers are eyeing several open spots on House Financial Services and Senate Banking, according to more than a dozen aides and lobbyists.

Among those interested in House Financial Services are Reps. Maria Salazar (R-Fla.) and Jonathan Jackson (D-Ill.), as well as Reps.-elect Troy Downing (R-Mont.), Brandon Gill (R-Texas) and Nellie Pou (D-N.J.). Sen. Pete Ricketts (R-Neb.) and Sens.-elect John Curtis (R-Utah) and Bernie Moreno (R-Ohio) are eyeing Senate Banking.

“As an entrepreneur who has a deep understanding of the Banking Committee, Bernie feels he could add value to that committee,” Moreno spokesperson Reagan McCarthy said.

Lobbyists and aides gaming out the committees are also eyeing several other possibilities, including Sens. Ted Budd (R-N.C.) and Kirsten Gillibrand (D-N.Y.), as well as Sens.-elect Andy Kim (D-N.J.) and Dave McCormick (R-Pa.).

IT’S MONDAY — How are you getting mentally prepared for this week on the Hill? Help your host out at emueller@politico.com and @eleanor_mueller. As always, you can find your regular Morning Money host at ssutton@politico.com and @samjsutton.

A message from America’s Credit Unions and the Independent Community Bankers of America:

CREDIT UNIONS & COMMUNITY BANKS IN All 50 STATES OPPOSE THE DURBIN-MARSHALL CREDIT CARD BILL: America’s approximately 9,000 credit unions and community banks are united in opposition to the Durbin-Marshall Credit Card Bill because credit card routing mandates harm local financial institutions and the communities they serve. Durbin-Marshall jeopardizes access to credit for 140 million credit union and community bank customers. Congress can expect to hear from all 140 million of us this fall.

Driving the Day

Monday…Veteran’s Day

Tuesday…Federal Reserve Governor Chris Waller speaks at The Clearing House Annual Conference in New York City at 10 a.m….Richmond Fed President Tom Barkin speaks at the Baltimore Together Summit at 10:15 a.m….Bank of America CEO Brian Moynihan speaks at Yahoo Finance Invest in New York City at 1 p.m….Minneapolis Fed President Neel Kashkari speaks at Yahoo Finance Invest at 2 p.m….The Senate holds its first votes back at 5:30 p.m….The House holds its first votes back at 6:30 p.m.

Wednesday…Senate and House Republicans hold leadership elections…Former SEC Chair Jay Clayton speaks at the Institute on Securities Regulation in New York City at 9:10 a.m….Trump and Biden meet in the Oval Office at 11 a.m….

Thursday…Federal Reserve Governor Adriana Kugler speaks at the Latin American and Caribbean Economic Association and the Latin American Chapter of the Econometric Society’s annual meeting in Uruguay at 7 a.m. ET…The Labor Department releases inflation data for October at 8:30 a.m….SEC Chair Gary Gensler speaks at the Institute on Securities Regulation at 9:30 a.m….Senate Finance holds a hearing on the nomination of David Johnson as Treasury inspector general for tax administration at 10 a.m…..Federal Reserve Chair Jerome Powell speaks at the Dallas Fed at 3 p.m. ET…New York Fed President John Williams speaks at the New York Fed at 4:15 p.m.

Friday…Sanjay Wadhwa, acting director of the SEC’s division of enforcement, speaks at the Institute on Securities Regulation at 9 a.m….

Wall Street rallies for a Clayton comeback — Bankers and asset managers are coalescing around former SEC Chair Jay Clayton to helm Treasury in a second Trump administration, our Declan Harty and Sam Sutton report.

“‘They’ve seen what he did at the SEC. They’ve seen him very publicly talking about things like corporate governance and public markets and the regulatory environment,’” said one former Trump official. “‘Everyone knows he’s got a great personal relationship with Trump, and all that — I think — plays in favor of Jay.’”

Others in the banking, asset management and trading industries say that “for traditional financial institutions, his resume as a regulator makes him more of a known entity than other potential candidates for the role — including hedge fund financiers Scott Bessent and John Paulson,” Declan and Sam write.

Inside the Transition

Bessent’s roadmap for Trump — Hedge fund manager Scott Bessent, who is among those being floated for Trump’s Treasury secretary, had a column in the Wall Street Journal Sunday outlining next steps for the president-elect’s second administration.

First up: “Reprivatize the U.S. economy through deregulation and tax reform to spur the supply-side growth that he delivered in his first term,” Bessent wrote. “That will be essential to restarting the American growth engine, reducing inflationary pressures, and addressing the debt burden from four years of reckless spending.”

Next: “Reform the Inflation Reduction Act’s distortionary incentives that encourage unproductive investment, which has to be sustained by a lifetime of subsidies.”

Third: “Terming out that debt in favor of a more orthodox borrowing profile may increase longer-term interest rates and will need to be deftly handled. The only way to return to a prudent borrowing strategy without upsetting financial markets is restoring investors’ faith in the economy and preserving the dollar’s global role.”

Who’s out — Trump said Saturday that he will not ask his former Secretary of State Mike Pompeo and U.N. ambassador Nikki Haley to join his Cabinet, our Eric Bazail-Eimil and Daniel Lippman report.

Rumors that former U.S. Trade Representative Robert Lighthizer will return to head the agency are also “totally untrue,” our Gavin Bade was told Friday.

Bureaucrats eye the exits — Civil servants and political appointees are “bracing for a wave of departures from key federal agencies in the coming months, amid fears that the next president will gut their budgets, reverse their policy agendas and target them individually if they do not show sufficient loyalty,” Nahal Toosi, Chelsea Cirruzzo, et al report.

Blue states gird for battle — Democratic governors are already preparing lawsuits and legislation to thwart Trump’s agenda, our Lisa Kashinsky and Rachel Bluth report.

A message from America’s Credit Unions and the Independent Community Bankers of America:

On the Hill

Waiting on a majority — House Republicans have the inside track on keeping the House — but no one’s exhaling yet.

The right currently holds 213 seats — two short of the majority — while the left holds 203. There are 19 races left uncalled.

Much of the wait comes down to California, which takes longer to count its ballots than most states. As of Saturday, the state had nearly 5 million uncounted ballots, the Washington Post’s Laura Meckler and Andrew Jeong report.

Lawmakers game out Trump’s tariffs — Sen. Rick Scott (R-Fla.), who’s among those vying for Senate majority leader, said on Fox News “Sunday Morning Futures” that Trump will “most likely” need Congress to pass his tariffs, CNBC’s Greg Iacurci reports.

Former Sen. Pat Toomey of Pennsylvania warned in an interview that enacting Trump’s tariffs will result in a “severe recession” that could spark backlash from GOP lawmakers, our Ari Hawkins reports.

“Businesses will close, people will be laid off, and Congress will hear very loudly from those folks,” Toomey told Ari.

Never a dull moment — Some House Republicans are mulling ways to push back on House Speaker Mike Johnson’s keeping his job during leadership elections this week, our Olivia Beavers and Jordain Carney report.

“Johnson is expected to easily clear the majority hurdle needed to become the speaker nominee in that meeting on Wednesday. But conservatives could field a candidate to run against him for the speaker nod, or may try to oppose him or vote present in the secret ballot.”

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.

In the markets

Another good day for Bitcoin — Bitcoin hit $80,000 for the first time this weekend after Trump won Nevada and Arizona, the Financial Times’ Suzi Ring, Philip Stafford and Joshua Franklin report.

“Bitcoin, among the riskiest of risky assets, is having its moment in the sun,” said Eswar Prasad, an economics professor at Cornell University. “The regulatory clouds are lifting. Financial conditions are becoming looser, and US macroeconomic prospects continue looking bright.”

Fly Around

— “Rest of World’s Growth Is at Trump’s Mercy,” from the Wall Street Journal

— “Harris Had a Wall Street-Approved Economic Pitch. It Fell Flat,” from The New York Times

— “Americans deliver message to Democratic Party: The economy isn’t working,” from the Washington Post

— “The Trump-Whim Economy Is Here,” from The Atlantic

— “ Young Black and Latino men say they chose Trump because of the economy and jobs. Here’s how and why,” from the Associated Press

A message from America’s Credit Unions and the Independent Community Bankers of America:

CREDIT UNIONS & COMMUNITY BANKS IN All 50 STATES OPPOSE THE DURBIN-MARSHALL CREDIT CARD BILL: The Durbin-Marshall Credit Card Bill would create harmful new routing mandates on credit cards that would put consumer data and access to credit at risk. The threat of Durbin-Marshall to small financial institutions is so clear that America’s approximately 9,000 credit unions and community banks across America are opposed to the bill. Credit unions and community banks also see through the so-called “carveout” for smaller banks, an unworkable policy designed to disguise the negative impact of this legislation. Our message to Congress is simple: on behalf of 140 million credit union and community bank customers in all 50 states, commit to opposing the Durbin-Marshall Credit Card Bill. Lawmakers who choose not to support their local financial institutions can expect to hear from our 140 million customers this fall.