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Presented by the American Bankers Association: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | | |  | | By Katy O'Donnell and Aubree Eliza Weaver | | | 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 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.
| | | 125 Democrats urge Pelosi, Schumer to protect housing funds — Congressional Democrats are ratcheting up pressure on House and Senate leaders to preserve hundreds of billions of dollars in housing funds at risk of elimination from their sweeping social spending package as the leaders seek to pare down the massive bill. New York Democrat Rep. Ritchie Torres led 125 lawmakers in sending a letter to House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer on Monday urging them to keep $90 billion for rental assistance, $80 billion for public housing repairs and $37 billion for the National Housing Trust Fund in the final version of the bill. Democrats across the ideological spectrum of the caucus — from the head of the Congressional Progressive Caucus to members of the moderate New Democrat Coalition — signed on to the letter, indicating broad support across the party for keeping the majority of the more than $300 billion in housing funds approved by the House Financial Services Committee last month. Committee Chair Maxine Waters has vowed to fight to protect housing aid in the bill and last week said she received assurances from President Joe Biden that the White House also wants to preserve it. But industry lobbyists and housing advocates worry that their programs could be in trouble, as White House and congressional negotiators try to cut the $3.5 trillion package nearly in half. Advocates are warning that doing so would amount to nixing racial equity from the bill. “While congressional leaders continue to negotiate the size and scope of the economic recovery package, it is critical that any cuts made to the overall package do not come at the expense of affordable, accessible homes for America’s lowest-income and most marginalized people,” the lawmakers wrote in the letter, a copy of which was shared with POLITICO. Read more from Megan Cassella here. IT’S TUESDAY — Send any tips to me at kodonnell@politico.com or @KatyODonnell_ and to Aubree Eliza Weaver at aweaver@politico.com or @AubreeEWeaver. | | A message from the American Bankers Association: America’s banks firmly believe that everyone should pay their taxes, but a proposal in Congress would force banks to provide details to the IRS on what’s going in and out of almost every bank account in the country. This dragnet of data collection raises serious questions about Americans’ right to privacy. Learn more about the issue and take action here. | | | | | | The Census Bureau releases the monthly new residential construction report for September at 8:30 a.m. … Senate Banking holds a hearing on sanctions policy with Deputy Treasury Secretary Wally Adeyemo at 10 a.m. SEC GAMESTOP REPORT SIGNALS ROBINHOOD WILL FACE MORE HEAT — Our Kellie Mejdrich: “Securities and Exchange Commission staff said Monday in a long-awaited report on the GameStop stock trading tumult that game-like features used by Robinhood and other online brokerages warranted further scrutiny by regulators. Agency officials said in the report — which dissected January's flood of trading in so-called meme stocks and the impacts of the volatility — that the agency should consider whether things like celebratory animations used to create positive feedback lead investors to trade more than they would otherwise. They said that incentives triggered by payment for order flow — the practice in which wholesale trading firms pay brokerages to execute their customers' orders — may cause broker-dealers to find novel ways to increase customer trading, including through digital engagement techniques.” The SEC also praised the equity market structure and absolved short sellers — Reuters’ Katanga Johnson and Chris Prentice: “The U.S. markets functioned well during January's GameStop volatility, while short selling was not the main cause of the unprecedented rise in the 'meme stock,' according to a long-awaited Securities and Exchange Commission report. The report published on Monday provides a post-mortem into how amateur traders using commission-free retail brokerages drove shares in GameStop and other popular meme stocks to extreme highs, squeezing hedge funds that had bet against them.” | | | | 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 our West Wing Playbook newsletter, 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. | | | | | SURVEY: SUPPLY-CHAIN BOTTLENECKS, ELEVATED INFLATION TO LAST WELL INTO NEXT YEAR — WSJ’s Gwynn Guilford and Anthony DeBarros: “Uncomfortably high inflation will grip the U.S. economy well into 2022, as constrained supply chains keep upward pressure on prices and, increasingly, curb output, according to economists surveyed this month by The Wall Street Journal. The economists’ inflation projections are up dramatically from July, while short-term growth outlooks are lower.” REGIONAL FED ANALYSIS SUGGESTS BIDEN’S STIMULUS IS TEMPORARILY STOKING INFLATION — NYT’s Jeanna Smialek: “Inflation is likely getting a temporary boost from the $1.9 trillion coronavirus relief package that the Biden administration ushered in early this year, new Federal Reserve Bank of San Francisco research released on Monday suggested. “The analysis may add fuel to a hot debate in Washington over whether the administration’s policies are contributing to a spike in prices. Critics of the government spending package that was signed into law in March, including former Treasury Secretary Lawrence H. Summers, have said it was poorly targeted and risked overheating the economy. Supporters of the relief program have said it provided critical aid to workers and businesses still struggling through the pandemic.” U.S. REVIEWS SANCTIONS POLICY, WARNS OF THREAT FROM CRYPTO — Reuters’ Daphne Psaledakis and Matt Spetalnick: “President Joe Biden's administration on Monday announced a set of recommendations to revamp its use of economic sanctions to make them a more effective tool of U.S. foreign policy but warned that more had to be done to protect against the threat posed by the rise of cryptocurrencies. Following a broad review launched shortly after Biden took office in January, the U.S. Treasury Department unveiled a revised framework intended to take a more surgical approach to sanctions instead of the blunt-force method favored by his predecessor, Donald Trump.” | | | | A message from the American Bankers Association:   | | | | | | BITCOIN FUNDS REACH THE MASSES; EXPERTS SAY IT’S DANGEROUS — From our Kellie Mejdrich: “The Securities and Exchange Commission is beginning to bless the first widely available investment funds that track Bitcoin, opening a rift with watchdog groups who argue increased exposure to the volatile market puts consumers at risk. The SEC has signaled that it won't block industry proposals to launch exchange-traded funds based on Bitcoin futures contracts as regulatory deadlines come to pass this month. When the first fund begins trading on the New York Stock Exchange early this week, it will be a landmark moment for the booming cryptocurrency market. The emerging controversy around the SEC's approval of the funds underscores the broader political tensions that regulators are facing as they grapple with how to impose safeguards on the red-hot market. The funds would address growing demand from investors who want exposure to the rising value of Bitcoin.” DOLLAR FIRMS AS INFLATION, RATE HIKE EXPECTATIONS PUSH UP BOND YIELDS — Reuters’ Karen Brettell: “The dollar gained slightly on the day on Monday as Treasury yields rose on expectations the Federal Reserve will need to hike interest rates sooner than previously expected to quell rising price pressures. Market participants expect the U.S. central bank will need to act as inflation looks to be stubbornly persistent and unlikely to fade anytime soon. “Global increases in inflation are also increasing expectations that rate hikes will need to be global, as New Zealand faced its highest price pressures in a decade and after Bank of England Governor Andrew Bailey sent a fresh signal that the central bank was gearing up to raise interest rates as inflation risks mount.” WARREN DOESN’T GET FED TRADING BAN PROPOSAL BY DEADLINE REQUESTED — WSJ’s Michael S. Derby: “Regional Federal Reserve Banks haven’t presented Sen. Elizabeth Warren with a plan to ban stock trading by senior central bankers as the Democrat from Massachusetts requested last month. Ms. Warren had written to the 12 bank presidents on Sept. 16 asking for the ban, following disclosures that the leaders of the Dallas and Boston Fed banks had been trading stocks and other investments even as they helped set the nation’s monetary policy. Both officials later resigned. The senator had asked for a response by Oct. 15 on plans for a trading ban, followed by its implementation within 60 days of her letters.” | | | | BECOME A GLOBAL INSIDER: The world is more connected than ever. It has never been more essential to identify, unpack and analyze important news, trends and decisions shaping our future — and we’ve got you covered! Every Monday, Wednesday and Friday, Global Insider author Ryan Heath navigates the global news maze and connects you to power players and events changing our world. Don’t miss out on this influential global community. Subscribe now. | | | | | INTERNAL TRIBUNE FINDS WORLD BANK MISHANDLED SEXUAL HARASSMENT CLAIMS — WSJ’s Santiago Perez: “The World Bank failed to protect two young employees who filed sexual-harassment allegations against a veteran, high-ranking official who is now a presidential candidate in Costa Rica, according to findings released by the bank’s internal labor tribunal. The World Bank Administrative Tribunal found that senior management under bank President David Malpass and his two predecessors didn’t adequately sanction Rodrigo Chaves. He was demoted — but not fired — despite a documented pattern of harassment that lasted at least four years and involved six women, according to case-related documents that were reviewed by The Wall Street Journal.” STOCKS WOBBLE — AP’s Damian J. Troise: “Stocks wobbled to a mixed finish on Wall Street Monday as the market’s momentum slowed down following its best week since July. The muted trading comes ahead of a busy week of corporate earnings that could help investors find a smoother path ahead for stocks after weeks of choppiness. Investors are also trying to figure out how the broader economy will continue its recovery with COVID-19 lingering as a threat, while businesses and consumers face rising inflation. The S&P 500 rose 15.09 points, or 0.3%, to 4,486.46, with stocks roughly split between gainers and losers. The benchmark index has been choppy for weeks. It rose 1.8% last week for its best week since July, though it shed 2.2% just two weeks prior. The Dow Jones Industrial Average fell 36.15 points, or 0.1%, to 35,258.61. The Nasdaq rose 124.47, or 0.8%, to 15,021.81.” WALL STREET TREASURY BULLS BACK DOWN — Bloomberg’s Hema Parmar: “Wall Street strategists who thought the coast was clear for bets on lower Treasury yields are abandoning ship after the market moved against them in a global bond selloff. Those at Toronto-Dominion Bank and Barclays Plc reversed course on recommendations to buy five- and three-year notes, respectively, as Treasury yields extended their recent climb. Yields on the securities rose nearly seven basis points Monday to the highest levels since at least March 2020.”
| | A message from the American Bankers Association: A proposal in Congress would force financial institutions to provide details to the IRS on the inflows and outflows of any bank account worth $600 or more. While supporters say the proposal is aimed at reducing the tax gap by targeting wealthy tax cheats, this data dragnet would actually capture information from almost everyone with a bank account, not just those suspected of tax avoidance.
Everyone should pay their fair share of taxes, but this proposal goes too far and raises serious questions about Americans’ right to privacy—while damaging the hard-earned trust between banks and their customers. Tell Congress to oppose this misguided proposal and demand that the IRS focus on tax cheats, not all taxpayers.
It’s not too late to protect your financial data. Learn more about the issue and take action here. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
