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| | NEW YORK — It’s cold, gray and rainy in Manhattan, but the post-election forecasts coming from the leaders at top U.S. banks call for clear skies and sun. There was little public hand-wringing about the potential effects of Donald Trump’s trade and immigration policies among the luminaries at Goldman Sachs’s annual financial services conference this week. As bank and asset management CEOs pitched investors on their plans for 2025, they focused on the benefits they expect to see from light-touch regulation, tax cuts and a better deal-making environment in Trump’s second administration. — Wells Fargo CEO and President Charlie Scharf said the incoming administration’s focus on “ensuring that a broad group of Americans — both individuals and companies — are successful, paints a very, very good picture for our clients and then ultimately for us.” — Bank of America Chair and CEO Brian Moynihan said favorable regulatory changes, including with regard to mergers and acquisitions in financial services, will give companies certainty to be “a little more aggressive as rates come down.” — U.S. Bank Chair and CEO Andrew Cecere attributed a recent surge in bank stocks to “the potential for more rational regulation” under Trump after the “intense” period that followed the collapse of Silicon Valley Bank and the sale of First Republic. “The things that are being contemplated – tax policy, regulatory policy — generally positively impact the banking system because they positively impact the economy,” Cecere said. “Generally speaking, the tone is positive.” That’s what was said onstage. But privately? “Privately, some of these banks are saying: Look, I think one of the risks is interest rates just don’t come down as much as people think,” Richard Ramsden, a managing director at Goldman Sachs who oversees its Big Bank investment research unit, told MM. Bankers are starting to reckon with the possibility that key parts of Trump’s agenda could create impediments for Federal Reserve policymakers as they weigh additional rate cuts next year. If borrowing costs remain higher for longer, it would dash some of the optimism that’s coursed through corporate America since Trump’s election to a second term. Ramsden, who led many of the discussions onstage at the Goldman event, said banks are increasingly concerned that inflation will prove stickier than many people assumed when there was a more “benign view” about the Fed’s rate path earlier this year. The Labor Department on Wednesday reported that inflation climbed by an annual rate of 2.7 percent in November. While the report bolstered the case that Fed Chair Jerome Powell will announce a quarter-point reduction to rates next week, the elevated rates could slow the pace of future cuts. (Your MM host had more on that earlier this week.) Alternatively, borrowing costs could remain high if Trump’s “tariff policies, or some of the immigration policies, end up being more inflationary than the market currently believes. And that — I think — is actually quite a significant risk,” Ramsden said Of course, the material impact of those proposals is difficult to forecast in the absence of concrete policy. Put another way, as Citi’s CFO Mark Mason put it during a session on Tuesday, the U.S. has shifted from an era of “political uncertainty to policy uncertainty.” The pro-growth sentiments conveyed onstage at the Goldman event — which are also on display as stock indices continue to climb and executive surveys convey optimism — obscure some of the challenges that could occur if an emboldened Trump delivers on many of the promises he made during the campaign. It’s THURSDAY — Well, hopefully the rain clears up tomorrow. Thoughts? Questions? Tips? Email Sam at ssutton@politico.com.
| | A message from Capital One: Capital One recently announced our historic, five-year, $265 billion community benefits plan in connection with our proposed acquisition of Discover to advance economic opportunity and financial well-being. This plan is twice as large as any other community commitment developed in connection with a bank acquisition and demonstrates that the combined Capital One and Discover will create an opportunity to provide more lending, investment, and services for underserved communities than either institution would undertake individually. Important information: CapitalOneDiscover.com | | | | | | The Center on Budget and Policy Priorities holds a discussion on “Rental Assistance at 50: Looking Forward After a High-Stakes Election” at 9 a.m. … The Peterson Institute for International Economics holds a virtual discussion on “U.S.-China Relations and Economic Outlook” at 9 a.m. … The Cato Institute holds a briefing on tax cuts at 12 p.m. … Treasury holds a virtual meeting of the Federal Advisory Committee on Insurance at 1 p.m. Gavel Race at Financial Services — GOP lawmakers will decide this afternoon who gets to chair the committee that oversees Wall Street, the Federal Reserve and cryptocurrency, Eleanor Mueller reports. Reps. Andy Barr of Kentucky, French Hill of Arkansas, Bill Huizenga of Michigan and Frank Lucas of Oklahoma will present to a select group of colleagues, known as the steering committee, in alphabetical order midday. Afterward, steering committee members will vote by private ballot on who gets to replace retiring Chair Patrick McHenry of North Carolina. “As a lawyer, you make a moral argument, or you make your closing statement to a jury,” Barr, an attorney, said in an interview Wednesday night. “You feel good about it, you’ve submitted your case, you’ve done the best you can. Let the chips fall.” All four have outlined policy goals that, like McHenry’s, focus on rolling back regulations in favor of placing as few restrictions on the private sector as possible. And all four are well-regarded within the conference. “These guys are people who have, through their efforts, earned the respect of everybody on the committee and the colleagues in the House,” Rep. Blaine Luetkemeyer (R-Mo.), who was viewed as McHenry’s most likely successor until he announced his retirement, said in an interview. Though Lucas is the most senior, it’s expected to come down to Barr, Hill or Huizenga. Barr, who chairs the financial institutions subcommittee, is widely seen as the frontrunner. Hill, a former banker who served as McHenry’s point guard on crypto legislation as his digital assets subcommittee chair, is another top candidate. Aides and lobbyists say Huizenga, who has chaired three subcommittees, could give both a good run. “He’s a good team player,” Rep. Lisa McClain, a fellow Michigander who chairs the House Republican Conference, said in an interview. “He understands not only the job, but also the people.” Huizenga and Lucas have kept their presentations close to their chest. But materials passed out to steering committee members by Barr and Hill provide clues as to how theirs might go. Barr’s is centered on his ability to bring together the party’s populist and free-market contingents; Hill’s highlighted his resume plus the creation of new committee roles. Both are touting their ties to Trump. Members said they expect steering committee members to vote multiple times before they can select a winner. They’ll drop the candidate with the lowest votes from the ballot with each round. “I don’t see how it can be over with on the first ballot,” Lucas told our Jasper Goodman. “Four good people, I wouldn’t be surprised if it goes a full three ballots.” For further reading, check out our POLITICO Pro interviews with Barr in November, July and February; with Hill; with Huizenga; and with Lucas. Scrapped — Senate Banking Chair Sherrod Brown of Ohio punted a planned committee vote on President Joe Biden’s nomination of Caroline Crenshaw to stay on as a commissioner at the SEC, Eleanor Mueller reports. When he attempted to reschedule the vote off the Senate floor via unanimous consent, he was blocked by GOP members. — Brown predicted Wednesday that President-elect Trump will use Crenshaw’s seat on the SEC to install his pick for chair if Democratic lawmakers fail to advance her nomination. “That’s why Republicans worked so hard to block it,” the Ohio Democrat told Eleanor.
| | | | A message from Capital One:   | | | | | Double Dare — CFPB Director Rohit Chopra suggested to lawmakers on Wednesday that he would not resign when Trump takes office next month, Katy O’Donnell reports. “As you know, we serve and are confirmed for a five-year term,” Chopra responded. “The president can remove us at any time, any day — we obviously completely respect that right.” Fifth Circuit — Declan Harty reports that a federal appeals court struck down the SEC’s approval of Nasdaq listing rules aimed at promoting diversity on corporate boards. In a 9-8 decision, the New Orleans-based Fifth Circuit Court of Appeals ruled Wednesday that the Nasdaq proposals “cannot be squared” with federal securities laws — a major win for the conservative advocacy groups that had challenged the rules. Not everyone’s whistling a cheerful tune — PNC CEO Bill Demchak had a sober take on how the Trump administration might approach bank regulation. “I think people are a little bit too excited … that they’re just going to let everybody run free here,” he said at the Goldman conference, per Banking Dive’s Caitlin Mullen. “I don’t see that at all.”
| | | | Billions in spending. Critical foreign aid. Immigration reform. The final weeks of 2024 could bring major policy changes. Inside Congress provides daily insights into how Congressional leaders are navigating these high-stakes issues. Subscribe today. | | | | | | | | Silicon Valley hits the Pentagon — Trump has chosen high-profile investors and tech executives to spearhead military policymaking in his second administration. As Paul McLeary and Jack Detsch report, some of the executives who are in the mix for top jobs “have investments and stakes in multiple companies working with the Pentagon and will need to determine how they detangle a web of potential conflicts of interest.” — In West Wing Playbook: Jasper Goodman, Alice Miranda Ollstein, Eli Stokols, Megan Messerly and Ben Johansen report: “Trump has appointed a raft of rich business people and investors — including several billionaires and multiple Wall Street executives with complex financial interests — to fill out top roles in his administration, raising a vast array of potential conflicts of interest that could span the federal government and complicate Senate confirmations.” [Edit note: Link will have the updated, syndicated playbook at 6:30 p.m.] Speaking of influence… — Here’s who was spotted at Coinbase’s holiday bash: Rep. Wiley Nickel (D-N.C.), Rep. Nikki Budzinski (D-Ill.), Rep. Eric Sorensen (D-Ill.), Rep. Mike Levin (D-Calif.), Rep. Mary Peltola (D-Alaska), Rep. Yadira Caraveo (D-Colo.), Rep. Mark Takano (D-Calif.), Rep. Jimmy Gomez (D-Calif.), Rep. Jimmy Panetta (D-Calif.), Rep. Ritchie Torres (D-N.Y.), Majority Whip Tom Emmer (R-Minn.), Rep. Dan Meuser (R-Pa.), Rep. Andy Barr (R-Ky.), Rep. Mike Lawler (R-N.Y.), Rep. Lance Gooden (R-Texas), Rep. Nicole Malliotakis (R-N.Y.), Rep. Andrew Garbarino (R-N.Y.) as well as former Rep. Carlos Curbelo (R-Fla).
| | | | Write your own chapter in the new Washington. From the Lame Duck Congress Series to New Administration insights, POLITICO Pro delivers intelligence across 22+ policy areas to help you anticipate and navigate change. Discover how a Pro subscription empowers you. Learn more today. | | | | | | | | Final US-China confabs set —Treasury Under Secretary for international affairs Jay Shambaugh is meeting his Chinese counterpart, Vice Minister of Finance Liao Min, today during a gathering of the U.S.-China Economic Working Group, Morning Trade impresario Ari Hawkins has learned. The meeting comes at a delicate time between the world’s two largest economies. The Biden administration has sought to level-set with Chinese officials ahead of Donald Trump’s second term, which is expected to include massive tariffs on Beijing. The gathering will take place on the sidelines of the four-day G20 Deputies Meeting in Johannesburg, which is expected to include discussions focused on global economic growth, food security, and data governance. U.S. officials will raise the issue of Chinese firms’ support for Russia’s war on Ukraine and press Beijing on recent export controls it placed on critical minerals. They will also target China’s overcapacity in sectors such as steel production and its macroeconomic imbalances, which could result in negative spillovers for other economies according to a Treasury spokesperson. Ties between the two countries have come under strain in recent days. On Wednesday, the Office of the U.S. Trade Representative announced increased tariffs on imports of tungsten, solar wafers and polysilicon from China. China has responded with its own export controls on gallium, germanium and antimony–minerals used to produce semiconductors and other technologies. Pitch for cooperation: “The United States and China are the two largest economies on the globe, and the American people expect that we should be able to communicate directly with Chinese officials on both areas where we agree and especially on areas where we don’t,” Shambaugh said in remarks, sent to Morning Trade. — Ari Hawkins
| | A message from Capital One: Capital One recognizes the critical role small businesses play in their communities. We have long been committed to empowering underserved entrepreneurs, helping to ensure that small business owners have equal access to critical resources. As part of our proposed acquisition of Discover, our community benefits plan commits over $15 billion to small businesses and businesses in low- and moderate-income communities to improve access to credit and capital.
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