| | | | |  | | By Michael Stratford and 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.
| | Treasury Secretary Janet Yellen sent $20 billion in loan assistance to Ukraine on Tuesday that’ll be repaid with the profits generated by Russian sovereign assets frozen in Western financial institutions. It’s an economic lifeline for a war-torn country and the culmination of months of negotiations by Yellen and U.S. officials with their G7 and European counterparts. But most significantly, it’s one of the few Biden-era policies that the incoming Trump administration won’t likely be able to undo. The U.S. loan is part of a broader $50 billion package that the Biden administration and its G7 allies agreed to advance in October before the U.S. election. The loan from the beginning had always been discussed to lock in long-term Ukraine assistance that’s insulated from electoral politics on both sides of the Atlantic. But the financing took on new urgency now that President-elect Donald Trump, who is deeply skeptical of U.S. help for Ukraine, is preparing to take office. He has not weighed in directly on the U.S. loan to Ukraine, which unlike other assistance to the country won’t be financed by U.S. taxpayers. Yellen spent much of the past year negotiating with G7 officials over the legalities, diplomatic complexities and financial logistics of leveraging Russia’s state assets – which were immobilized at the start of its 2022 invasion of Ukraine. Congress gave the administration the power to seize the small share of U.S.-based assets outright. But that idea was shelved amid opposition by European leaders worried about its legality and possible retaliation by Russia. On Tuesday, Yellen hailed the “creative policymaking and the unity of the G7” in delivering on the plan. The U.S. and its allies, she added, “are sending an unmistakable message of resolve by making Russia increasingly bear the costs of its illegal war, instead of taxpayers in our coalition.” The White House in October had initially said it planned to seek congressional approval to use half the money — $10 billion — for military assistance to Ukraine. But the administration ultimately opted to send the entire $20 billion as economic assistance, which will support things like sustaining emergency services and hospitals. That decision sidesteps the need for Congress to act — and it places all the funding further outside the reach of the incoming Trump administration. The military assistance funding would have stayed in the hands of the U.S. government for longer, casting uncertainty over the money. Instead, Treasury said the U.S. was transferring the full $20 billion to a World Bank financial intermediary fund, which would, in turn, make it available to Ukraine. That would significantly complicate Trump’s ability to claw back the money without putting U.S. taxpayers on the hook. “Nothing is certain in this world, and the Trump administration will be a shareholder at the World Bank and have various areas of leverage over the World Bank,” said Charles Lichfield, deputy director of the Atlantic Council’s GeoEconomics Center. But on balance, he said, the “Trump administration in this scenario has less control over the totality than it would have in the alternative scenario where $10 billion were devoted to military spending.” The Ukrainian government was also a proponent of sending the entire $20 billion to the World Bank, Lichfield said. President Volodymyr Zelenskyy praised the U.S. transfer of the money Tuesday as “a powerful act of justice” that makes clear that “Russia must pay for its brutal war.” Lichfield, who was a proponent of the idea of using Russia’s frozen assets to back a loan to Ukraine, called the overall package a “game-changer” for the country. He said the entire $50 billion G7 loan package amounts to more than half the country’s annual budget. For the Biden administration, he said, the G7 loan marked “a pretty positive part of their legacy for Ukraine.” It’s WEDNESDAY — For all things Treasury, email Michael at mstratford@politico.com. And for economic news and tips, email Sam 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 | | | | | November consumer price index data will be released at 8:30 a.m. … IMF Managing Director Kristalina Georgieva, CFTC Commissioner Kristin Johnson and New York Stock Exchange President Lynn Martin speak at a Reuters leadership summit, beginning at 9 a.m. …SEC Commissioner Hester Peirce delivers remarks on “woke capital and ESG,” and Sen. Cynthia Lummis and House Majority Whip Tom Emmer deliver a Hill briefing for the Competitive Enterprise Institute’s summit on “FinancialWeaponization,” beginning at 9 a.m. … CFPB Director Rohit Chopra testifies at a Senate Banking hearing on consumer protection at 9:45 a.m. … the House Budget Committee holds a hearing on the U.S. fiscal crisis at 10 a.m. …
| | The Trump bump — Trump’s election to a second term has sparked optimism among corporate leaders that lower taxes and lighter regulations are on the horizon. In a fourth-quarter survey of top CEOs released on Tuesday by the Business Roundtable, which represents the CEOs of 200 of the largest companies in the U.S., top executives were the most bullish they’ve been in two years. The survey, conducted post-election, found that expectations for sales, corporate spending and employment over the next six months had all surged. The BRT’s overall index climbed above its long-term average for the first time since mid-2022. Cisco CEO Chuck Robbins, who chairs the Washington-based industry group, attributed the growing enthusiasm to the incoming administration and Congress’s consideration of “measures that can protect and strengthen tax reform, enable a sensible regulatory environment, and drive investment and job creation.” — Speaking at the Goldman Sachs Financial Services Conference, JPMorgan Chase’s CEO of Consumer and Community Banking Marianne Lake said “confidence is moving higher” among the bank’s corporate clients. While there is still uncertainty when it comes to how the incoming administration will implement its trade and immigration agenda, those represent economic “headwinds, not derailers,” she said. — The NFIB’s Index of Small Business Optimism also rose above its historic average in November, which was “clearly a response to the presidential election,” the group said in a report. — Goldman Sachs CEO David Solomon, speaking at a Reuters event, said the new Trump administration “appears to be one that’s going to be running a growth-y playbook, which will be good for Goldman Sachs,” per Bloomberg’s Sridhar Natarajan. Counterpoint — President Joe Biden warned in a speech on Tuesday that Trump’s tax and tariff policies represent a “major mistake” that will weaken the economy, Adam Cancryn reports. “By all accounts, the incoming administration is determined to return the country to another round of trickle-down economics,” Biden said. —Incoming Roosevelt Institute President and CEO Elizabeth Wilkins, a former top adviser to FTC Chair Lina Khan and Biden’s first White House chief of staff, Ron Klain, told MM that while the incoming administration might align with the left on certain policies, “the roots of neoliberalism are strong. The roots of laissez-faire and trickle down economics in the Republican Party are very, very strong,” she said. “We need to be vigilant if they’re committed to that process.” — “Companies feel the squeeze as Republicans intensify attacks on ESG, DEI,” by Jordan Wolman
| | | | 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. | | | | | | | | Incoming — Eleanor Mueller reports that Senate Majority Leader Chuck Schumer on Tuesday evening named newly sworn-in Democratic Sens. Adam Schiff of California and Andy Kim of New Jersey to Senate Banking ahead of a committee vote on President Joe Biden's nominees to SEC and FSOC. Options for SAFE Banking get slimmer — An effort to attach the cannabis banking bill to a continuing resolution to keep the government funded is over. A Democratic source closely involved in the negotiations confirmed for POLITICO on Tuesday that Speaker Mike Johnson and Leader Mitch McConnell “strongly rejected it” after Schumer pushed for it during CR negotiations this week. The stopgap spending bill is already facing big problems, as leaders continue to fight over billions of dollars in disaster aid. Given the impending shutdown deadline of Dec. 20, it isn’t particularly surprising that leaders refused to open the door to another add-on that could face opposition from some lawmakers, especially Republicans. The National Defense Authorization Act, meanwhile, cleared its first hurdle on Tuesday, but without the cannabis banking bill in tow. There are still some remaining arguments to be had on the NDAA over things like medical treatment for transgender children — and there’s a slim chance some nimble negotiating could get the banking text added as an amendment — but with deadlines looming the chances are not strong. — Natalie Fertig Waters holds onto Financial Services title — Democrats on Tuesday gave Rep. Maxine Waters the nod to stay on as ranking member of House Financial Services — a job she's held for more than a decade, Eleanor reports. The California Democrat, 86, has said she wants to advance legislation that would boost the supply of affordable housing — her signature cause — plus work across the aisle on GOP priorities like preventing banks from cutting off certain businesses. All will hinge on Waters' relationship with the next chair, whom House Republicans plan to nominate Thursday. "I don't want to call names, but there are some that I know I could work with better," Waters said in September. Rep. Sean Casten was more blunt Tuesday: "I think it's easier to see a collaboration with French" Hill (R-Ark.), the Illinois Democrat said in an interview. Reps. Andy Barr (R-Ky.), Bill Huizenga (R-Mich.) and Frank Lucas (R-Okla.) are also competing for the job. Oversight of Trump's finances will be another main focus. Waters has said that the committee has "a lot of information" about the president-elect's ties to Deutsche Bank that "has never gotten touched." Trump's newly minted cryptocurrency venture is another likely target. Avert disaster — Ten days before the Dec. 20 deadline, lawmakers are still sparring over the details of a disaster aid package that’s expected to be attached to a stopgap funding bill to keep the government running through the early days of Trump’s second term, Katherine Tully-McManus reports. Update on the outbound fight — Jasper Goodman: “Sen. John Cornyn (R-Texas) took aim at House Minority Leader Hakeem Jeffries on Tuesday for blocking a provision that would restrict U.S. investments in China from being included in a must-pass defense policy bill, but said the New York Democrat has ‘come back to the negotiating table’ in recent days.”
| | | | A message from Capital One:   | | | | | Cleanup on aisle 24.6 — US District Judge Adrienne Nelson found in favor of the US Federal Trade Commission’s bid to block Kroger’s $24.6 billion acquisition of Albertsons, Marcia Brown reports. After Khan — Trump said he would replace FTC Chair Lina Khan with Andrew Ferguson, John Hendel reports. Ferguson would not require Senate confirmation since he already sits on the commission. Like Gail Slater, Trump’s pick to lead the Justice Department’s antitrust division, and incoming Federal Communications Commission Chair Brendan Carr, Ferguson has been skeptical of Big Tech firms. — Trump also announced his intention to appoint Mark Meador, an antitrust attorney and former adviser to Sen. Mike Lee of Utah, to the commission. — Tom Barrack, a billionaire real estate investor and longtime Trump booster, was named as the president-elect’s pick to serve as ambassador to Turkey. Two years ago, Barrack was acquitted on charges that he used his personal access to Trump to secretly promote the interests of the United Arab Emirates. Goldman CFO weighs in on Basel III endgame — Goldman Sachs CFO Denis Coleman, speaking at the bank’s financial services conference in Manhattan on Tuesday, said the revised Basel III rule put out by Federal Reserve Vice Chair for Supervision Michael Barr earlier this year was “was headed in the right direction, but we do not think went far enough.” Barr has already told Congress that banking regulators won’t move forward with the re-proposal before Trump’s inauguration, but Coleman said “more progress is needed there.” — The NYT’s Erin Griffith and David Yaffe-Bellany: “How Crypto Insiders Turned ‘Debanking’ Into a Political Storm”
| | Scott Bessent deep-dive: The New York Times’s Jesse McKinley examined Trump’s Treasury nominee as someone who emerged as an unlikely loyalist and close economic adviser to the president-elect: “A capitalist with a soft spot for royalty. A deep-rooted Southerner with a fondness for stylish New York locales. A gay man, married with children, who has embraced a Republican Party that has sometimes vilified elements, and individuals, of the L.G.B.T.Q. movement.” Meanwhile, Bessent’s nomination continues to be smooth sailing on Capitol Hill. He won the backing Tuesday of Sen. Mike Crapo, the incoming chair of the Senate Finance Committee, who will oversee his confirmation hearing. Yellen said Tuesday that she had also spoken to her likely successor before the Thanksgiving holiday. She said she stressed to Bessent the importance of expertise of Treasury’s career civil servants.
| | | | 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. | | | | | | | | First 100 days — The Financial Technology Association sent a letter to Trump’s transition team today asking the incoming administration to appoint “innovation-focused” regulators who will curb regulatory overreach and strengthen collaboration between banks and fintechs. Au revoir — Paul Krugman, the Nobel Prize-winning economist and longtime opinion columnist for The New York Times, ran his final column on Tuesday. “We may never recover the kind of faith in our leaders — belief that people in power generally tell the truth and know what they’re doing — that we used to have. Nor should we. But if we stand up to the kakistocracy — rule by the worst — that’s emerging as we speak, we may eventually find our way back to a better world.”
| | A message from Capital One: Capital One’s community benefits plan, as part of our proposed acquisition of Discover, announces a commitment of over $35 billion supporting affordable housing for low- and moderate-income communities and individuals, representing a nearly 30% increase over our planned activities, as well as over $5 billion supporting solutions to challenges LMI communities face, including employment, food accessibility, healthcare, education, and public infrastructure.
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