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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 | | | 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. | | | Washington policymakers have signaled for months that they take a skeptical view of special purpose acquisition companies following an explosion of deals earlier this year. Now, they’re cracking down in perhaps the most high-profile way possible. The SPAC taking former President Donald Trump's social media startup public said Monday it is under investigation by federal regulators , our Katy O’Donnell reported. Digital World Acquisition Corp. said in a public filing that it had received “preliminary, fact-finding inquiries” in late October and early November from the Financial Industry Regulatory Authority related to a review of trading that preceded the Oct. 20 announcement it was merging with Trump Media. The company also said it received a request from the SEC for information and documents in early November. | | | | 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. | | | | | Not a surprise: The move followed a request from Sen. Elizabeth Warren (D-Mass.) for the SEC to look into the Trump SPAC merger. In a letter to Chair Gary Gensler , Warren said Digital World may have violated securities rules by failing to disclose discussions it was reportedly having about merging with Trump Media & Technology Group. And it isn’t only Trump. Electric-vehicle startup Lucid Motors Inc. said in a regulatory filing Monday that it received a subpoena from the SEC requesting documents related to a $24 billion SPAC deal to take the company public last summer. Also in the news yesterday was BuzzFeed’s wild public debut following its SPAC merger. The stock briefly spiked more than 35 percent in the morning, before closing down 11 percent. SPACs — shell companies that acquire private firms for the purpose of selling shares on stock exchanges — have prompted questions from regulators about what value they add to investments, and whether consumers understand the risks involved. The involvement of celebrity backers, from Steph Curry and Serena Williams to Sammy Hagar and Jay-Z, has shined a spotlight on the blank-check companies and led to even more regulatory scrutiny. If regulators want to deter certain behavior, it makes sense they would start by going after the big fish, said Stephen Pavlick, a policy analyst at Renaissance Macro. “The ones that have a high-profile sponsor are the right targets,” Pavlick said. “The SEC is looking for these big game trophies to go after, and clearly there’s no bigger elephant in the jungle than Trump.” (In an odd twist, Rep. Devin Nunes (R-Calif.) separately announced Monday he was resigning from Congress and would become CEO of the new firm, Trump Media & Technology Group, in January.) Samir Kapadia, government relations representative for the SPAC Association, said the recent moves by the SEC and FINRA reflect the pressure all SPACs, not just the former president’s, have gotten from Capitol Hill this year. Democrats on the House Financial Services Committee have advanced two bills that would impose new requirements on SPACs, but those measures are unlikely to garner the bipartisan support necessary to clear the Senate. That means lawmakers are looking to regulators, and in particular the SEC, to take action where they cannot. That the SEC’s move came on the heels of Warren’s letter “is indicative of the close relationship Congress and federal agencies have over regulating SPACs,” Kapadia said. “The SPAC Association was formed for that purpose — to work with regulators to identify challenges and clear inconsistencies so the industry can provide growing companies access to capital.” IT’S TUESDAY — Only two days in and we already have the Tweet of the week, from Bloomberg’s Tracy Alloway: “Just saw someone describe crypto as ‘Mary Kay for young men’ and now I’m dying.” (If Mary Kay is crypto, does that mean SPACs are Arbonne?) Please email your tips, feedback, suggestions, holiday gift ideas to kdavidson@politico.com or aweaver@politico.com, or hit us up on Twitter @katedavidson or @aubreeeweaver. | | | | A message from ExxonMobil: We’re committed to reducing emissions to help society achieve net zero. Steps we take today help drive tomorrow’s climate innovations. We recently announced new GHG emission reduction plans for 2030 consistent with Paris Agreement pathways – expected to reduce absolute corporate-wide emissions by ~20%, compared to 2016. We also plan to maintain our annual capital spending of $20-$25 billion - with potential to double earnings and cash flow by 2027 versus 2019. Learn more at exxonmobil.com. | | | | | | WSJ CEO Council featuring CEA Chair Cecilia Rouse at 9:25 a.m., Commerce Secretary Gina Raimondo at 10:30 a.m., SEC Chair Gary Gensler at 10:55 a.m. … Senate Banking nomination hearing on Export-Import Bank, FHFA inspectors general nominees at 10 a.m. … CFPB Director Rohit Chopra speaks to the National Association of Attorneys General at 1 p.m. SENATE GOP REJECTS DEBT LIMIT FIX ON MUST-PASS DEFENSE BILL — Our Marianne LeVine and Burgess Everett: “Senate Republicans are rejecting a proposal floated by congressional Democratic leaders to attach a debt limit fix to the annual defense policy measure — typically treated as a must-pass bill. “Senior Democrats are discussing combining the two items in a single legislative vehicle in a bid to end their partisan skirmish with upper-chamber Republicans who have refused to help them adjust the nation's borrowing limit. But the Senate GOP largely poured cold water on the idea Monday and warned that the move would endanger the defense bill.” FINCEN PLOTS REAL ESTATE RULES TO FIGHT MONEY LAUNDERING — From Katy again: “The Financial Crimes Enforcement Network is beginning work on a potential rule that would crack down on money laundering in the U.S. real estate market, the agency said Monday. “FinCEN issued an advance notice of proposed rulemaking and asked for public feedback on what the regulations should look like. FinCEN Acting Director Himamauli Das said in a statement that increasing transparency in the real estate sector would curb the ability of corrupt officials and criminals to launder proceeds of their ill-gotten gains.” OCC WARNS OF SURGING BUSINESS DEBT AS FED WEIGHS RATE HIKES — Our Victoria Guida: “The Office of the Comptroller of the Currency on Monday said it’s closely watching the massive buildup of corporate debt as a potential risk to the banking system, as debate intensifies over how quickly the Federal Reserve might raise borrowing costs next year. “The OCC said in its semiannual risk report that debt has begun to climb more quickly after borrowing by businesses slowed last year as firms paid down credit lines and saw their Paycheck Protection Program loans forgiven.” — The OCC also urged firms to be vigilant as ransomware attacks rise. From Reuters’ Pete Schroeder: The OCC “said banks must have in place ‘robust’ systems to identify threats and vulnerabilities in their technology, and should back up key systems and records in isolation to guard against hackers looking to disrupt systems for a payout.” | | | | A message from ExxonMobil:   | | | CRYPTO Q&A — Circle chief strategy officer Dante Disparte sat down with AP’s Chris Rugaber to talk stablecoins and the heightened regulatory focus on digital currencies . “Our company is comprehensively licensed across the U.S., comparable to major payments companies that we compete with. What we have also signaled is the intention of becoming a digital commercial bank … So we’re in broad agreement on the direction of these innovations.” HOW HIGH-INCOME BUSINESS OWNERS ALREADY CIRCUMVENT THE SALT CAP: WSJ’s Richard Rubin: “Congressional Democrats are debating whether increasing the $10,000 cap on the state and local tax deduction would benefit the rich too much, but some of America’s top earners—including private-equity managers and law firm partners — are already legally circumventing the cap on much of their income. “That is because state governments and the Trump administration blessed a cap workaround for owners of closely held businesses that is proliferating around the country. So far, about 20 states have enacted versions of it, including New York, California, Connecticut, New Jersey and Illinois.” | | | NYT’s Neil Irwin is joining Axios as its chief economics correspondent starting Jan. 3, he announced on Twitter Monday. Irwin says he’ll produce reporting and analysis on the economy, markets, policy and how they all intersect. Hannah Lang has joined Reuters as a fintech correspondent. Lang worked most recently at American Banker, where she covered the Fed and financial regulation. | | | | 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. | | | | | | | | HIGH INFLATION, FALLING UNEMPLOYMENT PROMPTED POWELL’S FED PIVOT — WSJ’s Nick Timiraos: “Just four weeks ago, the Federal Reserve set in motion carefully telegraphed plans to gradually wind down a bond-buying stimulus program by June. Officials are making plans to accelerate the process at their policy meeting next week, ending it by March instead. The abrupt shift opens the door to the Fed raising interest rates next spring rather than later in the year to curb inflation, marking a significant policy pivot by Chair Jerome Powell shortly after President Biden offered him a second four-year term leading the central bank.” NYSE SHAKES UP LEADERSHIP — Bloomberg’s Katherine Doherty: “Intercontinental Exchange Inc. announced a series of leadership changes, including naming Lynn Martin as president of the New York Stock Exchange to replace current head Stacey Cunningham. “Martin, 45, will become the third woman to lead the New York Stock Exchange after Cunningham steps aside and joins the board of directors, the company said in a letter sent to employees Monday. ICE also named Sharon Bowen as the first female chair of NYSE, replacing Jeff Sprecher, ICE’s current chair and chief executive officer. Martin will officially step into her new role as president on Jan. 3, according to a posting on the company’s website.” CHINA INCREASINGLY OBSCURES TRUE STATE OF ECONOMY TO OUTSIDERS — WSJ’s Liza Lin and Chun Han Wong: “China’s Communist Party has long maintained tight control over information, and the effort has intensified under leader Xi Jinping. The country has become increasingly opaque over the past year, even as its presence on the world stage grows. “A new data-security law has made it harder for foreign companies and investors to get information, including about supplies and financial statements. Several providers of ship locations in Chinese waters stopped sharing information outside the country, making it hard to understand port activity there. Chinese authorities have restricted information on coal use, purged documents related to political dissent cases from an official judicial database, and shut down academic exchanges with other countries.” BITCOIN PLUNGED IN WEEKEND TRADING — NYT’s Matt Phillips: “Prices for Bitcoin, the largest cryptocurrency, plunged suddenly over the weekend, sinking nearly 20 percent amid a broad investor retreat from risky assets. After hitting a high of more than $68,000 in early November, the price for the popular trading vehicle had been sliding for most of the month. Bitcoin sat at roughly $53,500 at the end of the standard trading session in the United States on Friday.” | | | | A message from ExxonMobil: At ExxonMobil, we’re committed to playing a leading role in the global energy transition and helping society achieve its net zero ambitions. We’ve been reducing GHG emissions in our own operations for years and recently announced $15 billion in lower-emission investments through 2027. During that time, we also plan to maintain annual capital investments at $20-$25 billion, with the potential to double earnings and cash flow - while also reducing emissions. Our newly established Low Carbon Solutions business is advancing climate solutions like carbon capture and storage, hydrogen and biofuels. We are focused on reducing emissions at-scale across essential, high-emitting sectors like heavy industry, manufacturing and power generation. And by 2030, we expect to reduce our absolute corporate-wide GHG Scope 1 and 2 emissions by ~20%, compared to 2016 levels. Learn more at ExxonMobil.com. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
