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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. | | | Here comes the Fed — Not at all clear that Fed Chair Jerome Powell and the central bank will send a clear signal this afternoon on plans to begin trimming asset purchases, though Wall Street expects at least a commitment to give more formal guidance in November. Powell and his FOMC colleagues remain in a tight spot. Declines in Delta infections and a likely improvement in economic data later this month suggest that the central bank may be significantly behind in withdrawing emergency stimulus. But continued uncertainty over the fiscal picture — notably the debt limit and government funding — urge continued caution. There is also the not insignificant matter of Powell hoping for renomination as chair by President Joe Biden later this fall. The last thing the Fed chair wants to do is appear at all hawkish to senior White House advisers who will help Biden make what remains a fairly close call. Then there is the continued risk of a housing bust in China with attendant contagion risk for global banks. Pantheon’s Ian Shepherdson: “[I]t seems reasonable to expect Chair Powell to drop some pretty unsubtle hints that a decision in November is a good bet. … “We suspect his remarks will be sprinkled liberally with caveats, because neither he nor anyone else knows for sure what will happen to the Covid situation over the next six weeks, and a resolution to the debt ceiling is yet to be reached too, but the Fed's intention will be clear. " China risk remains — Cumberland’s David Kotok emails: “I don’t think Evergrande is a one-off. There are other property companies in China with similar issues. … “China real estate bubble risk is not known. Global GSIB banks and derivatives notional books are opaque so cross border contagion risk is unknown. History. Thai baht in 1997 initially dismissed as a one-off. Bear Stearns in 2007 initially dismissed as a one-off. You never see just one cockroach. Also, this shock comes in the middle (it’s not over) of the pandemic.” GOOD WEDNESDAY MORNING — 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. | | | | | | Fed makes its announcement and offers new economic projections at 2:00 p.m. with Powell presser at 2:30 p.m. … President “will convene a virtual COVID Summit on the margins of the United Nations General Assembly.” … In the afternoon, Biden will meet with members of the House and Senate to discuss the bipartisan Infrastructure Investment and Jobs Act and his Build Back Better agenda … Joint Economic Committee has a hearing at 2:30 p.m. on “Examining the Economic Benefits of Electrifying America's Homes and Buildings” HOUSE MOVES FORWARD ON DEBT LIMIT PLAN — Our Caitlin Emma, Andrew Desiderio and Heather Caygle: “The House passed a fiscal rescue package Tuesday night intended to prevent a government shutdown at month’s end and a U.S. debt default in the coming weeks — if only Senate Republicans would go along. “Succeeding in a 220-211 vote, the stopgap funding bill now heads to the Senate, where GOP leaders say their ranks will sink the plan because it includes a waiver of the nation’s borrowing cap. If Senate Republicans stick to their threat, top Democrats will be forced to scrap the debt remedy or risk a federal funding lapse in less than 10 days. “Unlinking the two issues would ease passage of the funding patch, but Democrats are so far unwilling to forfeit the leverage that comes from tying a government shutdown to the economic fallout next month, as the Treasury Department nears its breaking point on the debt limit.” | | | | 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. | | | | | SOME SENATE REPUBLICANS WORRIED ABOUT FISCAL RISKS — Our Burgess Everett and Marianne LeVine: “Lisa Murkowski isn’t fully comfortable with her fellow Republicans’ stance on the debt ceiling, which could risk a U.S. debt default or a government shutdown. She recognizes, however, that she’s something of a unicorn. … “The moderate senator is one of a handful of Republicans who are uncomfortable — or undecided — on how to handle a bill that would avert a shutdown on Oct. 1, supply disaster relief money and lift the debt ceiling through the 2022 election. Regardless of where they come down, it’s not going to be enough to hand Democrats a lifeline: Republicans are certain to filibuster the bill once it passes the House, according to interviews with a dozen GOP senators on Tuesday.” FUND GROUP SLAMS TAX PROPOSAL — Our Kellie Mejdrich: “A top representative for the mutual fund industry … slammed a proposal from Senate Finance Chairman Ron Wyden that would change the tax treatment of in-kind redemptions for regulated investment companies — a category that includes ETFs and mutual funds — as part of the $3.5 trillion budget reconciliation bill.” | | | | 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 . | | | | | | | | MAJOR INDEXES END MIXED ON WALL STREET — AP’s Damian J. Troise and Alex Veiga: “A late-afternoon burst of buying on Wall Street faded in the final minutes of trading Tuesday, leaving the major stock indexes mixed. The S&P 500 slipped 0.1 percent after spending much of the day wavering between small gains and losses. “The modest pullback followed the benchmark index’s biggest drop in four months a day earlier. Roughly 66 percent of stocks in the S&P 500 fell, with industrial, communication and financial companies accounting for much of the drop. Bond yields mostly rose. The price of U.S. crude oil also rose.” BIDEN ADMIN COMBATS RANSOMWARE WITH CRACKDOWN ON CRYPTO PAYMENTS — NYT’s Alan Rappeport, Andrew E. Kramer and David E. Sanger: “The Biden administration took action on Tuesday to crack down on the growing problem of ransomware attacks, expanding its use of sanctions to cut off digital payment systems that have allowed such criminal activity to flourish and threaten national security. “The Treasury Department said it was imposing sanctions on a virtual currency exchange called Suex, in the administration’s most pointed response to a scourge that has disrupted U.S. fuel and meat supplies this year, when foreign hackers locked down corporate computer systems and demanded large sums of money to free them.” WALL STREET’S MESSAGE ON EVERGRANDE: CHINA HAS IT UNDER CONTROL — Bloomberg’s Richard Frost: “Wall Street analysts are putting their faith in the Chinese Communist Party. After a harrowing Monday that saw risky assets tumble globally on fears of a collapse in China Evergrande Group, some of the world’s biggest banks and money managers raced to assure investors that this is no Lehman moment. “The message from firms including Citigroup Inc., Fidelity International Ltd. and AllianceBernstein Holding LP: Evergrande may indeed default, but Chinese authorities will take steps to prevent the property giant’s crisis from destabilizing the financial system and the economy.” GENSLER COMPARES STABLECOINS TO ‘POKER CHIPS’ — The Washington Post’s Tory Newmyer: “Securities and Exchange Commission Chairman Gary Gensler is making clear he is no fan of stablecoins, describing the increasingly popular cryptocurrency whose value is frequently pegged to the U.S. dollar as a danger to investors with questionable long-term viability. “‘These stablecoins are acting almost like poker chips at the casino right now,’ Gensler said Tuesday during a ‘Washington Post Live’ interview. Without stronger oversight, the top Wall Street regulator said, ‘people get hurt.’ The digital assets have taken center stage in an intensifying debate over Washington’s role in regulating the crypto industry.” | | | |   | | | | | | FED FACES CALLS TO REMOVE OFFICIALS OVER TRADES THEY MADE WHILE SETTING POLICY — WSJ’s Michael S. Derby: “Two advocacy groups said two senior Federal Reserve officials who traded stocks and other investments while setting monetary policy should lose their jobs, while a former senior Fed adviser said one of the men should be fired and the other should take leave pending an investigation. "Federal Reserve Bank of Dallas President Robert Kaplan Federal Reserve Bank of Boston leader Eric Rosengren actively traded in markets in 2020, a year dominated by major Fed interventions to help save the economy during the coronavirus pandemic, according to financial disclosure forms recently made available by their banks. The Fed said after the disclosures it would review its rules around trading rules by officials.” WHITE HOUSE: DEBT LIMIT IS NOT A PARTISAN ISSUE — Reuters: “President Joe Biden's administration will continue to argue that the U.S. debt limit is not a partisan issue and push Republicans and Democrats to vote to raise it, White House press secretary Jen Psaki said on Tuesday. “Congress faces a Sept. 30 deadline to approve stop-gap funding that would avert partial government shutdowns with the start of the new fiscal year on Oct. 1. ‘We will continue to make the case that it should be’ raised, Psaki told reporters on board Air Force One. ‘It is not a partisan issue to want to protect the full faith and credit of the United States, and... we will continue to press for bipartisan support for moving forward.’” FREDDIE FINDS HOME APPRAISALS IN BLACK, LATINO AREAS MORE LIKE TO FALL SHORT — WSJ’s Orla McCaffrey: “Homes in Black and Latino neighborhoods appraise for less than their agreed-upon purchase price more often than in white areas, according to new research from government-backed mortgage giant Freddie Mac. “About 15.4 percent of single-family properties in majority-Latino census tracts and 12.5 percent of homes in majority-Black areas appraised lower than their contracted price between 2015 and 2020, Freddie Mac researchers found. The rate in white neighborhoods was 7.4 percent.” TRANSITIONS — Lee Brenner is now head of public policy for digital assets at Goldman Sachs. He most recently helped lead global public policy and external affairs for Facebook Financial. | | 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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