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Presented by Sallie Mae®: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | | |  | | By Ben White and Aubree Eliza Weaver | Presented by Sallie Mae® | Editor’s Note: Morning Money is a free version of POLITICO Pro Financial Services' morning newsletter, which is delivered to our s each morning at 6 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. | | | Just a couple things for Dems to do — The House and Senate return this week and there is ... let’s see here ... STILL no clear plan to keep the government open and raise the debt limit, never mind green-lighting President Joe Biden’s massive $3.5 trillion spending package that encompasses much of his first term legislative agenda. MM continues to believe Dems will find a way to at least avoid shutdowns or a real debt limit scare but the time to get it done is growing quite short and intra-party squabbles threaten everything. Via our Marianne LeVine, Sarah Ferris, and Heather Caygle: “[F]or all of the party’s awareness of what it needs to do, Democrats are uncertain about how to get it all done. The coming three-week legislative sprint will test their slim majorities … Biden’s domestic policy chops, with dwindling days to avoid a government shutdown and defuse a politically toxic battle with Republicans over the nation’s borrowing limit. “Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer are also under intense pressure to deliver on the lifeblood of Biden’s agenda: a multitrillion-dollar social spending package and a bipartisan infrastructure bill, which could both see floor votes in the coming weeks … “Across the Capitol, Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) have said they will not support legislation that costs $3.5 trillion, setting up a skirmish with progressives who say that top line number is already a compromise. Some Democrats fear those two moderates may not be willing to support the final bill at all.” Never mind on immigration fix — Via Marianne : “The Senate parliamentarian on Sunday rejected Democrats’ push to include a pathway to legal status in their social spending plan, a blow to the party’s efforts to enact immigration reform. “In the decision, a copy of which was obtained by POLITICO, the parliamentarian determined that the Democrats’ proposal is ‘by any standard a broad, new immigration policy’ and that the policy change ‘substantially outweighs the budgetary impact of that change.’” GOOD MONDAY MORNING — Nice to be back with you after a little health break. Thanks to Victoria Guida et al for stepping up in our stead. Email me on bwhite@politico.com and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on aweaver@politico.com and follow her on Twitter @AubreeEWeaver. | | A message from Sallie Mae®: College financing can be complicated. Thankfully, students don’t have to go at it alone. Sallie Mae is an education solutions provider here to make sense of it all. From finding scholarships and completing the FAFSA®, to understanding loan choices and repayment options before borrowing, Sallie Mae is here to make sense of a complicated system. Why? Because when students are informed about their choices, they’re in a better position to succeed. See how Sallie Make makes sense of college financing. | | | | | | House and Senate are back with clock ticking to government funding running out at the end of the month and a debt limit hike that’s needed by sometime next month … FOMC announcement on Wednesday at 2:00 p.m. not expected to include formal announcement of asset purchase tapering timetable but should at least nod to something coming in November, giving the central bank a little time to see if the Delta wave fades and econ data snaps back … Fed prep — Via Pantheon’s Ian Shepherdson: “The argument for the Fed to announce tapering this week is straightforward. If you believe, as we do, that the spread of the Delta Covid variant nationally has already passed its peak, then the recent softening in some of the economic activity data will prove temporary. “Both household and business confidence can reasonably be expected to rebound as cases fall, and private sector spending will re-accelerate. … At the same time, inflation is elevated, though the rate excluding the Covid-sensitive components has merely returned to its pre-pandemic level … But the key point is that the deflationary threat initially posed by the pandemic is over.” Pressing the Fed — Financial reform group Better Markets sent a letter to the Fed and plans a press release on Monday “seeking the full disclosure of all Fed officials and staff who had access to material nonpublic information and who traded during the pandemic as well as independent investigations by DOJ, SEC and the Fed IG into any violations of law. From the letter : “In 2020, as hundreds of thousands of Americans were dying and tens of millions were being thrown out of work due to a catastrophic pandemic that gripped the country with fear, some of the most senior officials at the U.S. central bank, the Federal Reserve System, were making dozens of multi-million-dollar trades, seeking to profit on the disaster. “That alone should disqualify them from their positions. But their conduct is much worse than that. They did that at a time when the Fed was (1) dropping interest rates to near zero, (2) flooding the financial system with trillions of dollars, and (3) creating numerous programs to support various financial products and markets, all of which impacted the value of most if not all financial assets, including those being traded by those Fed officials.” | | | |   | | | | | | COVID VACCINES BOOST THE GLOBAL ECONOMY, BUT MAY NOT CURE IT — WSJ’s Paul Hannon: “The global recovery is slowing as Covid-19 resurges, spurring governments to try to raise vaccination rates in hopes of fueling stronger economic growth. "The thinking is, first, that vaccinations will ease consumers’ worries about infection, prompting them to spend more on travel, dining out, going to concerts and other activities that involve proximity to other people. Second, reduced Covid-19 case counts would mean fewer government shutdowns of ports, factories and other operations critical to global supply chains.” YELLEN RENEWS CALL TO RAISE DEBT LIMIT TO AVOID ‘CATASTROPHE’ — Bloomberg’s Tony Czuczka: “Treasury Secretary Janet Yellen renewed her call for Congress to raise or suspend the U.S. debt ceiling, saying the government will otherwise run out of money to pay its bills sometime in October. Writing in a Wall Street Journal op-ed, Yellen said ‘the overwhelming consensus among economists and Treasury officials of both parties is that failing to raise the debt limit would produce widespread economic catastrophe.’” But does the Fed have a game plan? — Reuters’ Ann Saphir: “Treasury Secretary Janet Yellen says failure to raise the U.S. debt limit could lead to the unthinkable: a default on government payment obligations. That's an outcome the White House on Friday warned could plunge the economy into recession. If the impasse in Congress over the$28.5 trillion debt limit isn't resolved before an October deadline, what would the Federal Reserve — the backstop for U.S. financial markets as the lender of last resort — be prepared to do? “As it turns out, Fed Chair Jerome Powell may already have something of a game plan. The country faced a similar crisis over the debt limit in 2011 and again two years later, and at an unscheduled October 2013 meeting, Fed policymakers — including Powell, who was then a Fed governor, and Yellen, who was the Fed's vice chair — debated possible actions in response.” | | | | STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down and who really has the president's ear in West Wing Playbook, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today. | | | | | HOW ACCOUNTING GIANTS CRAFT FAVORABLE TAX RULES FROM INSIDE GOVERNMENT — NYT’s Jesse Drucker and Danny Hakim: “For six years, Audrey Ellis and Adam Feuerstein worked together at PwC, the giant accounting firm, helping the world’s biggest companies avoid taxes. In mid-2018, one of Mr. Feuerstein’s clients, an influential association of real estate companies, was trying to persuade government officials that its members should qualify for a new federal tax break. "Mr. Feuerstein knew just the person to turn to for help. Ms. Ellis had recently joined the Treasury Department, and she was drafting the rules for this very deduction.” THE TAPER THAT WILL REALLY BITE INTO GROWTH ISN’T THE FED’S — Bloomberg’s Rich Miller: “In the coming Year of the Taper, it’s the fiscal version that will really bite. The chatter in U.S. financial markets is all about the Federal Reserve’s yet-to-be-announced reduction of its bond purchases. That’s obscuring something important: the already-under-way cutback of the federal government’s budgetary support — which is likely to have a much bigger impact on economic growth next year.” BANKING LOBBY GROUPS OPPOSE PROPOSED TAX REPORTING LAW — Reuters: “The largest U.S. banking lobby groups banded together on Friday to make another push to kill a proposed bank account reporting law being drawn up as part of the congressional reconciliation package. “In a letter to U.S. House of Representatives Speaker Nancy Pelosi and House Minority Leader Kevin McCarthy , the lobby groups said the proposal would create ‘reputational challenges’ for large financial services firms, increase the cost of tax preparations for Americans and small businesses, and create serious ‘financial privacy concerns.’ ‘We urge members to oppose any efforts to advance this ill-advised new reporting regime,’ the groups said in the letter.” WHY THE WORLD BANK IS UNDER FIRE OVER A SET OF RANKINGS — AP’s Paul Wiseman: “Under fire for allegations that it bowed to pressure from China and other governments, the World Bank has dropped a popular report that ranked countries by how welcoming they are to businesses. "The report is important to many companies and investors around the world: They use the World Bank’s ‘Doing Business’ report to help decide where to invest money, open manufacturing plants or sell products. Eager to attract investment, countries around the world, especially developing economies, have sought to improve their rankings in the World Bank’s report.” CHINE DEFENDS TECH CRACKDOWN IN MEETING WITH WALL STREET CHIEFS — Bloomberg’s Sridhar Natarajan and Coco Liu: “China’s top regulators defended their market-roiling crackdown on various industries in a meeting with Wall Street executives, while reassuring them the stricter rules aren’t aimed at stifling technology companies or the private sector. “China Securities Regulatory Commission Vice Chairman Fang Xinghai said recent actions were to strengthen regulations for companies with consumer-facing platforms, and improve data privacy and national security, according to a person familiar with the talks, who asked to not be identified because the meeting was private. Fang defended the moves such as those aimed at the education and gaming industries as meant to reduce social anxiety.” BANKS STRIKE BACK, BUT RETURNS REMAIN STRONG WITH FINTECH — WSJ’s Telis Demos: “Some financial-technology lenders are in the process of bankification, with both models seeming to be working for investors right now. Home-improvement lender GreenSky’s agreed-upon sale to Goldman Sachs is the latest in a series of similar moves for nonbank lending companies. “Several notable digital lending companies that began with some form of partnership, wholesale funding or marketplace model are in some stage of shifting into a banking model. LendingClub acquired Radius Bancorp and became a bank, and SoFi Technologies is seeking to become one. Square now has its own banking license that it can use to issue business loans.” | | | | Be a Policy Pro. POLITICO Pro has a free policy resource center filled with our best practices on building relationships with state and federal representatives, demonstrating ROI, and influencing policy through digital storytelling. Read our free guides today . | | | | | | | A message from Sallie Mae®: Higher education is the foundation for success and when students and families succeed, Sallie Mae succeeds. As an education solutions provider offering private student loans and financial resources, we want to help make sense of college financing for students and families. We believe that responsible lending encourages responsible borrowing, which is part of the reason why less than 2% of our loans default annually. More than half of our customers choose to make payments while in school, and our average loan is paid off by within seven years. With a free suite of financial education tools and planning resources, families can make informed choices with confidence. 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