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Presented by ExxonMobil: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | | |  | | By Kate Davidson 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. | | | With President Joe Biden set to announce his decision on the next Federal Reserve chair any day, the Fed is unlikely to release its much-anticipated report on central bank digital currencies before the end of the year, two people familiar with the matter tell MM. The report, which was initially expected in September then pushed back to November, is being closely watched for details on whether the Fed would issue accounts for consumers to access its digital currency; whether the central bank believes it has the authority to issue the currency without approval from Congress; and how much of an impact such a digital currency would have on the payments system. “These are all questions the next Fed chair will have to answer,” said Aaron Klein, a senior fellow at the Brookings Institution. Fed Governor Lael Brainard, whom Biden has interviewed for the top job, has been one of the most outspoken officials on the possible advantages of establishing a digital currency, which she said could be part of a broader strategy to promote financial inclusion. “Depending on the design, CBDC may have the ability to lower transaction costs and increase access to digital payments,” she said in a May speech. “In emergencies, CBDC may offer a mechanism for the swift and direct transfer of funds, providing rapid relief to those most in need.” Brainard also seems to favor a government option for direct payments to consumers, and less reliance on the private sector, another industry source tells MM, pointing to this quote: “A broader solution to financial inclusion would also need to address any perceived barriers to maintaining a transaction account, along with the need to maintain up-to-date records on active accounts to reach a large segment of the population.” Fed Chair Jerome Powell, who is still viewed as Biden’s most likely choice, has expressed interest in moving forward but hasn’t embraced the idea of a central bank digital currency to the extent Brainard has. He has, however, made clear that he thinks Congress needs to expressly authorize the Fed to issue a digital dollar. | | | | WOMEN RULE: JOIN US WEDNESDAY FOR A TALK ABOUT THE NEW WORLD OF WORK: The way women work, including what is expected and demanded from their workplaces, has been upended. How should businesses, governments, and workers take advantage of this opportunity to rethink what wasn’t working and strengthen working environments for women moving forward? Join the Women Rule community to discuss with leading women and explore how they are seizing the moment. REGISTER HERE. | | | | | The Fed report would follow one from the President’s Working Group on Financial Markets last month that essentially said only Fed-regulated entities should be able to issue stablecoins tied to the dollar — a type of cryptocurrency that regulators worry could become widely used as a payment method because of its technological convenience. The idea of creating a fully digital version of the dollar, motivated by the explosive rise in private cryptocurrencies, has attracted interest from lawmakers on both sides of the aisle because of its potential benefits for consumers who don’t have bank accounts. But it has also sparked strong pushback from banks, who have questioned the benefits and warned about potentially severe negative consequences. A group of House Republicans this week released a list of guiding principles for considering the creation of a digital dollar, and the Joint Economic Committee is holding a hearing tomorrow afternoon on “Demystifying Crypto: Digital Assets and the Role of Government.” The committee’s chair, Rep. Don Beyer (D-Va.), introduced a proposal in July for a regulatory framework for digital assets, including providing the Fed with explicit authority to issue a digital version of the dollar. Meanwhile, our colleague Victoria Guida reports that bank regulators as early as this week will announce findings from a monthslong review of their cryptocurrency policies and pinpoint areas where they will give more guidance to lenders next year, according to people familiar with the matter. IT’S TUESDAY — We’re getting close everybody, we can feel it. (Who else spent last night pondering the definition of “imminent?”) If you know whether we’ll get a Fed chair announcement today, you know what to do: kdavidson@politico.com, aweaver@politico.com, or on Twitter @katedavidson. | | | | A message from ExxonMobil: ExxonMobil is reducing our emissions and advancing lower-carbon technologies that support society’s net-zero goals. Expanding business opportunities in lower-carbon technologies where we have competitive advantages – areas like carbon capture and storage, hydrogen and advanced biofuels, which can make a big difference. Our company is uniquely positioned to continue powering economies around the world, while advancing climate solutions that move us all toward a lower-carbon energy future. Learn more at ExxonMobil.com/Solutions. | | | | | | Census Bureau releases retail sales data at 8:30 a.m. … House Financial Services Committee marks up legislation on special purpose acquisition companies (or SPACs) at 10 a.m. …House Ways and Means oversight subcommittee holds a hearing on opportunity zones at 2 p.m. INFLATION EMERGES AS 2022 CAMPAIGN DIVIDING LINE — From our Megan Cassella: “Tight congressional races across the nation are quickly turning into battlegrounds over a key economic question: whether President Joe Biden’s spending agenda is the chief culprit for inflation concerns gripping the country. “Republicans are latching onto heightened anxiety tied to the nation’s sharpest inflation spike in three decades. Democrats, meanwhile, are scrambling to preempt the attacks by focusing on broader benefits of the multitrillion-dollar packages. The opposing bets on the infrastructure and social spending plans are laying the groundwork for a year of sparring tied to voters’ growing worries about the economy.” HUD WAITS TO ADJUST FHA PREMIUMS AMID HOUSING UNCERTAINTY — From our Katy O’Donnell: “The Federal Housing Administration will take a ‘cautionary approach’ to changing mortgage insurance premiums for government-backed loans, HUD officials said Monday, as hundreds of thousands of borrowers remain behind on payments during the pandemic. “HUD updated Congress on the status of FHA's Mutual Mortgage Insurance Fund in a report Monday. The department said the fund in fiscal 2021 increased its overall capital ratio by about 1.9 percentage points, ending at 8 percent. Officials on a call with reporters chalked up the increase to strong national home price appreciation.” CBO TO SCORE BIDEN’S SOCIAL SPENDING BILL BY FRIDAY — From our Caitlin Emma: “The Congressional Budget Office expects to release a score for President Joe Biden’s social spending package by the end of the day on Friday, at latest. Certainly by the end of Friday we'll have the entire estimate,’ CBO Director Phillip Swagel said Monday during an event hosted by Yahoo! Finance and the Bipartisan Policy Center.” REALTORS PLAN MORE FEE TRANSPARENCY AMID DOJ PRESSURE — From our Leah Nylen: “The National Association of Realtors voted Monday to make real estate agents disclose their compensation in listings, part of an effort to increase transparency for consumers amid an ongoing federal antitrust probe.” FED WATCH: BIDEN’S FED CHAIR PICK IS IMMINENT, BROWN SAYS — Bloomberg’s Steve Dennis, Jennifer Jacobs, Nancy Cook and Saleha Mohsin: “Senate Banking Chairman Sherrod Brown said he was told by White House officials to expect an ‘imminent’ announcement about President Joe Biden’s pick to chair the Federal Reserve. “‘I hear it’s imminent,’ Brown, an Ohio Democrat, said Monday in a brief interview at the Capitol. ‘I’m not going to speculate who I think it might be now. I assume the decision’s been made and they haven’t announced it, but I don’t even know that,’ he said.” —ICYMI: WSJ’s Nick Timiraos and Ken Thomas explore what a Powell or Brainard pick for Fed chair would mean. What caught our eye? This nugget: “Mr. Biden met each candidate separately for interviews on Nov. 4, and he was joined in the Oval Office for those meetings with only one other adviser, National Economic Council Director Brian Deese, according to people familiar with the matter.” POST RECOVERY? FED, ELECTED OFFICIALS CHALLENGED TO DEFINE NEW NORMAL — Reuters’ Howard Schneider: “After the deployment of three vaccines and two rounds of government spending since, some measures of the economy have now hit pre-pandemic levels - and shifted the challenge for policymakers from battling a health crisis to determining which remaining problems are still rooted in the pandemic and which may need longer-term solutions.” INFLATION PROMPTS GROWING CHORUS TO CALL ON FED TO SPEED TAPER — Bloomberg’s Molly Smith: “A growing chorus of market watchers is saying the Federal Reserve may have to speed up its reduction of asset purchases in light of the fastest inflation in 30 years. The calls, ranging from former New York Fed President Bill Dudley to St. Louis Fed President James Bullard, are coming at a tricky time for the central bank , which only announced plans to reduce its bond-buying program less than two weeks ago, while noting it could tinker with the $15 billion monthly tapering pace if warranted.” —Jason Furman, former chair of President Barack Obama’s Council of Economic Advisers who is close with the Biden White House and Fed officials, said in a WSJ op-ed Monday that the Fed needs to ditch the wishful thinking and start taking real steps to combat price pressures: “The central bank should express a more realistic understanding of inflation and firm up monetary policy by tapering its asset purchases more quickly. The Fed should set the default expectation that the federal-funds rate will be on an upward path starting in the first half of 2022 and that if employment or inflation is much lower than expected, the hikes will be slowed or canceled.” HOW AMERICA’S PANDEMIC ECONOMIC RESPONSE FOUGHT THE LAST WAR — NYT’s Neil Irwin: “Key policymakers in Congress, two presidential administrations and the Federal Reserve were determined to avoid repeating missteps that had prolonged the problems of a decade ago. The good news is they succeeded. The bad news is that it increasingly appears they were, in key respects, fighting the last war. Their focus on the challenges of the last crisis has fueled some of the challenges of this crisis.” | | | | A message from ExxonMobil:   | | | | | | Kara Calvert is joining crypto exchange Coinbase as its senior director of public policy for North America. Calvert joins Coinbase after nearly 13 years as a partner at Franklin Square Group, which was the first outside firm Coinbase hired and which has lobbied for Coinbase since 2017. Calvert is an Information Technology Industry Council and Mike Enzi alum. (h/t Daniel Lippman) | | | | 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. | | | | | | | | MUNI BOND PRICES RALLY AFTER INFRASTRUCTURE BILL — WSJ’s Heather Gillers: “Municipal bond prices rallied over the past two weeks as investors abandoned hopes for a flurry of new bonds from Congress’s $1 trillion investment in U.S. infrastructure. … The municipal market has largely been left out of the infrastructure package signed by President Biden Monday, as well as Democrats’ follow-up social-spending and climate proposal, disappointing investors looking to buy new bonds and local governments trying to manage their debt loads.” BEIJING STOCK EXCHANGE LAUNCHES WITH SOME MAJOR FIRST-DAY GAINS — WSJ’s Anniek Bao: “The Beijing Stock Exchange opened for trading Monday, marking the debut of a venue that China hopes will channel funds into innovative smaller companies, as it tightens its grip on companies seeking listings overseas. The new exchange in the Chinese capital complements stock markets in Shanghai and Shenzhen, mainland China’s main financial centers.” WALL STREET FINALLY GETTING ACCESS TO CHINA, BUT FOR HOW LONG? — NYT’s Lananh Nguyen: “For decades, American banks have been eager to expand their business in China, the world’s second-largest economy. They’re finally getting their way — just as a spiraling corporate debt crisis threatens to rock the country’s financial system and China’s central government takes a stronger hand with big businesses.”
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