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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. | | | The bizarre debt limit debacle — Pause for a moment this morning to contemplate that Congress is flirting with both a government shutdown next week and a debt limit scare next month despite full Democratic control in Washington. The party could, if it wanted, quickly dispose of any debt limit crisis by suspending or raising the borrowing limit on its own. Democrats don’t want to do this because of the perceived political risk of such a vote and because a good chunk of recent debt stems from tax cuts and spending hikes under Republican president Donald Trump. The truth of the matter is there should be no political risk associated with allowing Treasury to pay for spending and tax cuts already approved by Congress and protecting markets and the full faith and credit of the United States. And given that Democrats propose to spend over $4 trillion more under reconciliation and the bipartisan infrastructure bill it seems bizarre they would stumble over hiking the debt limit. And worries over the politics of it seem more associated with the tea party era of a decade ago than the current moment, where neither party worries too much about deficits or long-term debt. And yet Democrats are beginning to freak out Wall Street over the matter. Via our Heather Caygle, Sarah Ferris, and Jennifer Scholtes: “Democratic leaders are racing to project momentum on turbulent negotiations over President Joe Biden's social spending plans as Congress hurtles toward critical deadlines next week. So far, though, those last-ditch efforts to tout unity are only fueling more confusion. “Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer … delivered a cryptic announcement that they had agreed to ‘a framework’ of options to pay for their social spending ambitions, raising questions in all corners of the party about precisely who had signed off, on what and for how much. … “Even with next week's vote looming, Democrats’ path forward is still murky at best, with moderates and progressives locked in a public standoff over Biden’s two spending priorities. GOOD FRIDAY MORNING — Happy weekend, everyone. 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. | | | | | | President Biden meets with Narendra Modi, Prime Minister of the Republic of India and then with Modi, Scott Morrison MP, Prime Minister of Australia and Suga Yoshihide, Prime Minister of Japan. Biden then heads to Camp David for the weekend. MM EXCLUSIVE: TIME FOR A CRYPTO SRO? — Via our Kellie Mejdrich: The Association for Digital Asset Markets (ADAM) CEO Michelle Bond plans to pledge support on her Twitter page [@michellebond111] this morning for the creation of a standard setting and rulemaking body to oversee digital assets, known as a self-regulatory organization, which would require action from Congress. It’s the latest sign that crypto interests are working to get a better handle on interactions with regulators. “ Legislative steps are a natural and necessary next step…Taking this action would expand consumer protection and market integrity practices in the digital asset securities and commodities markets. This falls squarely in line with ADAM’s mission of promoting market integrity and best practices,” Bond will say in a Twitter thread describing the proposal. INDIA MEETING PREP — Our Nahal Toosi: “India’s prime minister is in Washington this week for a coveted White House meeting. But Narendra Modi’s Hindu nationalism and his country’s backsliding on human rights and democracy are creating a problematic alliance for … Biden. “Modi, a favorite friend of former President Donald Trump, will meet Biden on Friday along with the leaders of Australia and Japan. The four countries make up the “Quad,” a grouping Biden is trying to elevate in a broader effort to stand up to China. While the members of the Quad all are democracies, India’s was recently downgraded from “free” to “partly free” by Freedom House, which slammed Modi’s government for everything from harassment of journalists to attacks on non-Hindus.” NEW FROM BROOKINGS — Brookings Aaron Klein has a new report out Friday on “Can Fintech Improve Health,” arguing that digital money is the new divide in accessing technology. Brookings is also hosting an event on it at 2 p.m. with Klein, Jen Tescher, Brian Knight, Makada Henry-Nicole, moderated by Ylan Mui. | | | | 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. | | | | | | | | STOCKS RISE, ERASING MOST WEEKLY LOSSES — AP’s Damian J. Troise and Alex Veiga: “Stocks on Wall Street were broadly higher in afternoon trading Thursday, erasing weekly losses for most of the major indexes. The rally extends the gains from a day before, when the Federal Reserve signaled it may begin easing its extraordinary support measures for the economy later this year. … “Nearly every stock in the S&P 500 rose. It’s now up 0.6 percent for the week and has recovered from a from a sharp sell-off on Monday. The turnaround is more pronounced within the Dow, which is now up 0.8 percent for the week after having been down 1.9 percent for the week as of Tuesday.” DOLLAR SLUMPS AS RISK APPETITE REBOUNDS — Reuters’ Saqib Iqbal Ahmed and Chuck Mikolajczak: “The dollar fell across the board on Thursday as improved risk sentiment in global financial markets wiped out its gains in the previous session after the U.S. Federal Reserve flagged plans to dial back its stimulus this year. “Investors' risk appetite improved after Beijing injected fresh cash into its financial system ahead of an $83.5 million bond coupon by embattled property giant Evergrande, at risk of becoming one of the world's largest-ever corporate defaults.” | | | |   | | | | | | POWELL OPENS DOOR TO TOUGHER REGS AS RENOMINATION DECISION LOOM — Reuters’ Lindsay Dunsmuir: “Even as Federal Reserve Chair Jerome Powell predictably dodged the latest question over his future as head of the central bank, his signal of openness to Democratic demands for tougher regulation of Wall Street under a new regulatory chief may assuage what critics see as a weak point in his leadership. “At a press conference on Wednesday following the Fed's latest meeting at which policymakers kept interest rates near zero as the U.S. economy continues to heal from the COVID-19 pandemic, Powell was unequivocal when asked how much he would defer to a new vice chair for supervision expected to be named this fall to oversee bank regulation.” FED OFFICIALS SEE ‘TRANSITORY’ INFLATION LASTING QUITE A WHILE — WSJ’s Greg Ip: “All year the Federal Reserve’s message on inflation has been consistent: This year’s surge is transitory, and inflation will soon return close to the central bank’s 2 percent target. Yet look more closely, and it is clear officials are turning less sanguine — and that explains growing eagerness to start raising interest rates. “Last September, long before the supply bottlenecks emerged, the median forecast by Fed officials was for core inflation (which excludes food and energy) in 2022 of 1.8 percent. Every few months since then they have nudged that up, and in the forecasts released Wednesday they see core inflation next year at 2.3 percent.” BIDEN’S OCC PICK WORRIES BANKS ARE GETTING TOO POWERFUL — NYT’s Emily Flitter: “President Biden has chosen Saule Omarova, a Cornell Law School professor, to lead the Office of the Comptroller of the Currency, the regulator overseeing the largest U.S. banks, the White House announced on Thursday. “If confirmed, Ms. Omarova, who grew up in what is now Kazakhstan, will be the first woman and the first nonwhite person to serve as comptroller of the currency. The agency, which has about 3,500 employees, is charged with setting policy around the businesses that banks engage in — from traditional ones like mergers and lending to newer efforts like cryptocurrency.” | | | | 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 . | | | | | JOBLESS CLAIMS TICK UP FROM NEAR A PANDEMIC LOW — AP’s Paul Wiseman: “The number of Americans applying for unemployment aid rose last week for a second straight week to 351,000, a sign that the delta variant of the coronavirus may be disrupting the job market’s recovery, at least temporarily. “Thursday’s report from the Labor Department showed that jobless claims rose by 16,000 from the previous week. As the job market has strengthened, unemployment aid applications, which generally track layoffs, have tumbled since topping 900,000 early this year, reflecting the economy’s reopening after the pandemic recession. The four-week moving average of claims, which smooths out week-to-week swings, registered its sixth straight drop — to a pandemic low of 336,000.” SEC SUES MUNI ADVISERS IN FIRST CASE OVER BANK FEE SPLITTING — Bloomberg’s Martin Z. Braun: “A firm that advises charter schools on bond issues was sued by the Securities and Exchange Commission for allegedly making an undisclosed fee-splitting agreement with an underwriter, in what the agency said was its first case of enforcing code-of-conduct rules ushered in after the 2008 financial crisis. “Choice Advisors LLC and its two principals, Matthias O’Meara and Paula Permenter, failed to disclose to their clients the conflicts of interest associated with ‘the illicit arrangement or their relationship’ with an investment bank where they previously worked, the SEC said in a statement. Fee-splitting arrangements are prohibited in any bond deal where the municipal adviser provides advice to clients of the underwriter.” U.S. AND EUROPEAN ECONOMIES SLOWED BY DELTA VARIANT — WSJ’s Jason Douglas and Amara Omeokwe: “The U.S. and European economies slowed in September as supply-chain bottlenecks and worries over the Delta variant weighed on businesses, adding to signs the global economy is experiencing a soft patch amid an uneven recovery, purchasing managers’ surveys showed. “Manufacturing and services businesses in both the U.S. and Eurozone reported slower growth in activity this month, although the pullback was more pronounced in Europe.” | | 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. Learn more. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
