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Presented by Ripple: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | |  | | By Kate Davidson and Aubree Eliza Weaver | Presented by Ripple | 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. IT’S ALL HAPPENING — The last time the Community Reinvestment Act saw a major overhaul, Apollo 13 was the big summer blockbuster, TLC’s “Waterfalls” dominated the airwaves and a gallon of gas cost an average of $1.15. The long wait is over. The country’s top bank regulators took the first step Thursday toward modernizing the landmark anti-redlining law for the first time in nearly 30 years. We asked our Victoria Guida for her takeaways on the highly anticipated revamp. She tells MM: “Some interesting context about this proposal is that it’s the first relevant regulatory move the Federal Reserve has made in a while, since it doesn’t have a vice chair for supervision. That’s because CRA is part of a different portfolio than classic supervision and regulation, and Lael Brainard has been the point person on it for years.
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Federal Reserve Governor Lael Brainard has been the Fed's point person on a revamp of the Community Reinvestment Act. | Drew Angerer/Getty Images | “Another (related) point of note: This proposal is incredibly mature for a regulation put out only a year into an administration. The reason: The staffs at these agencies (as well as Brainard and Acting FDIC Chair Marty Gruenberg) have been working on CRA reform for years, and it’s clear that work has gone to good use in this latest draft. “Sen. Pat Toomey (R-Pa.) and Patrick McHenry (R-N.C.) expressed reservations about some of the more Democratic pieces of the proposal (it would provide incentives for investing in poor communities to help people deal with the fallout of climate change). But bank trade associations expressed some early optimism about the proposal, as did community groups. Maybe everyone just wants this to be done!” Tougher, but not a deal blocker — Capital Alpha’s Ian Katz says that, at first blush, the proposal is more rigorous on banks than is the current law. But that could be outweighed by the improved clarity lenders will get from the updated rules. “CRA can be important in the context of M&A, since bad CRA grades preclude deals from getting done,” Ian writes. “But it’s hard to imagine the new CRA being so tough that it becomes a deal blocker.” The basics — Under the new rule, large banks would have the responsibility to lend to people with lower incomes not only in areas around their physical branches but also in places where they have a concentration of mortgage and small business loans. They will also be evaluated based on their lending nationwide. The agencies will accept public comments on the proposal until Aug. 5. “This is the first time in decades we have made substantial changes to the CRA regulation,” Brainard, who was recently confirmed by the Senate as vice chair of the Fed, said in a statement. “It is essential to get reform right.” HAPPY JOBS DAY — It’s the first Friday of the month again, and the Labor Department releases its updated jobs data at 8:30 a.m. Economists expect that employers added 400,000 new jobs in April, in line with the 431,000 increase the month before, and they forecast that the jobless rate edged slightly lower, to 3.5 percent from 3.6 percent. One point to keep in mind: The labor market has been on fire for months, with average monthly job gains around 600,000 over the past six months. The last time the unemployment rate was this low, in December 2019, monthly job gains averaged about 150,000 over the previous six months — and were considered very strong. That is to say, we won’t be surprised to see the numbers start to creep down. Exactly when that happens and to what degree will depend on how many more workers that employers can draw from the sidelines — labor-force participation is still below its pre-pandemic levels, though it’s made a rapid recovery since last fall. But declining job gains won’t necessarily be a sign of a weakening market; rather, it’s what you’d expect to see when the labor market is as tight as it is. IT’S FRIDAY — We made it! Enjoy that weekend and don’t think about next week’s CPI report. (Yet.) Have tips, feedback or story ideas? Please pass them along: kdavidson@politico.com or @katedavidson, or aweaver@politico.com or @aubreeeweaver.
| | A message from Ripple: Ripple is helping build the future of global finance. We're doing for value what the internet did for information: enabling its instant and seamless flow around the world. Using the power of blockchain and cryptocurrency, we enable financial institutions and other businesses to unlock economic opportunity, gain business advantage and drive U.S. innovation—all while supporting their compliance efforts. Learn more about a U.S.-based crypto innovator: realvaluerightnow.ripple.com | | | | | | April jobs report released at 8:30 a.m. … New York Fed President John Williams speaks at 9:15 a.m. … St. Louis Fed President James Bullard and Fed governor Chris Waller speak at the Hoover Institution at 7:15 p.m. CHATTING WITH EX-IM’s RETA JO LEWIS — Your MM host had the chance to sit down with new Export-Import Bank President and Chair Reta Jo Lewis this week at the Milken Institute Global Conference in Los Angeles. Some key takeaways: — One of Lewis’s top priorities is to compete strategically with China : “We know that China has been making massive investments. They have three [export credit agencies] and America has the Ex-Im. I believe strongly, we believe strongly, we can be competitive.”
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New Export-Import Bank President and Chair Reta Jo Lewis was sworn by Vice President Kamala Harris on Feb. 16. | Drew Angerer/Getty Images | — The bank is looking at more ways to help support Ukraine in its eventual rebuilding effort. Lewis met with the Ukrainian prime minister when a delegation came to D.C. for the IMF/World Bank spring meetings last month: “It’s going to have to take all of us in the U.S. government working in collaboration together to be able to put forth ways to support them.” — She doesn’t see the bank’s new domestic financing initiative as displacing Ex-Im’s traditional role financing exports: “I see it as a complement. … It gives us an ability to help in the shoring up of our supply chains.” “We've seen very good support for this particular initiative through a lot of different stakeholders. And we are assuring them that we're going to keep the same stringent ways of reviewing any of those applications that come in for net profit before financing.” — She hopes they can get Owen Herrnstadt confirmed to Ex-Im’s board as soon as possible (he was nominated as a director in August): “We are working closely with the White House … It’s now, trying to get a vote. Everyone has said it’s a priority.” She had no new details about a potential nominee to fill the board’s other vacancy.
| | | | 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. | | | | | FIRST IN MM: ADVOCATES URGE BANKS TO SUPPORT SEC CLIMATE RULE — Bank on our Future, a coalition of climate advocacy groups, is asking some of the biggest banks to go on the record in support of the SEC’s climate disclosure proposal. In a new letter, the group is asking members of the Net Zero Banking Alliance — including the six biggest U.S. banks — to make clear whether they support the new proposed climate disclosures, and whether they intend to weigh in before the SEC’s comment period closes on May 20. (A number of trade groups and lawmakers on both sides of the aisle have asked the SEC to extend the comment period.) "We are sending these letters as an official reminder to the lead NZBA banks that they have committed to supporting this kind of baseline policy,” Kathleen Brophy, senior strategist at The Sunrise Project, told MM. “To be silent now is to be complicit with an aggressive opposition campaign by industry and trade groups meant to weaken the rule or get rid of it altogether.” Among the banks that received the letter: Bank of America (which has expressed preliminary support for the SEC proposal), Citigroup, Morgan Stanley, Wells Fargo, JPMorgan Chase and Goldman Sachs. CANNABIS CRIME WAVE BOOSTS BANKING PROSPECTS ON CAPITOL HILL — Our Natalie Fertig: “A fresh wave of robberies and deaths tied to cannabis shops may shift the outlook on Capitol Hill for legislation that would make it easier for cannabis companies to open bank accounts and apply for small business loans.” GOLDMAN, JPMORGAN WEIGH COVERING ABORTION TRAVEL — Bloomberg’s Sridhar Natarajan and Max Abelson: “Goldman Sachs Group Inc. and JPMorgan Chase & Co. are discussing extending abortion benefits to cover travel after an internal debate was reignited this week by the leak of a draft Supreme Court ruling to overturn Roe v. Wade. The finance giants could follow the lead of Citigroup Inc. and pay travel expenses for employees seeking to end pregnancies away from states with restrictive abortion laws, according to people with knowledge of the discussions.” WARREN QUESTIONS FIDELITY’S PLAN TO PUT BITCOIN IN 401(K)S — WSJ’s Anne Tergesen: “Sens. Elizabeth Warren of Massachusetts and Tina Smith of Minnesota raised questions about a plan by Fidelity Investments to let investors put bitcoin in their 401(k)s in a letter to the company’s chief executive, arguing that crypto might be too risky an investment for retirement savers.”
| | | | A message from Ripple:   | | | | | | WAGES CAN’T KEEP UP WITH SPIKE IN HOUSING PRICES — NYT’s Gregory Schmidt: “Soaring housing prices are outpacing wage growth in cities around the world , putting the squeeze on countless would-be homeowners. According to a new analysis of the global housing market by Online Mortgage Advisor, a Britain-based service that matches brokers with home buyers, many cities were less affordable for local workers in 2021 than they were in 2017. And the 10 cities that experienced the biggest drop in affordability were all in the United States, with Cleveland leading the pack.” MILLIONS RETIRED EARLY DURING THE PANDEMIC, BUT MANY ARE NOW RETURNING TO WORK — Washington Post’s Abha Bhattarai: “Millions of older Americans stopped working during the pandemic, far more than usual, stoking fears that the workforce had been permanently altered, but the country is close to closing the gap in early retirements, according to new data. An estimated 1.5 million retirees have reentered the U.S. labor market over the past year, according to an analysis of Labor Department data by Nick Bunker, an economist at Indeed. That means the economy has made up most of the extra losses of retirees since February 2020, a Washington Post analysis shows.” BIDEN ADMIN LAUNCHES PLAN TO REFILL EMERGENCY OIL RESERVE — CNN’s Matt Egan: “The Biden administration plans to seek bids this fall to buy 60 million barrels of crude oil as the first step in a years-long process aimed at replenishing America’s emergency oil reserve, an Energy Department official told CNN.” CLARIDA: RATES MUST RISE TO AT LEAST 3.5 PERCENT — Bloomberg’s Rich Miller: “The Federal Reserve will need to raise short-term interest rates to at least 3.5 percent to bring surging inflation under control, former Vice Chairman Richard Clarida said. ‘Expeditiously ‘getting to neutral’ will not be enough this cycle to return inflation over the forecast horizon back to the 2 percent longer-run goal,’ he said in remarks prepared for delivery to a Hoover Institution conference on Friday.”
| | | | INTRODUCING DIGITAL FUTURE DAILY - OUR TECHNOLOGY NEWSLETTER, RE-IMAGINED: Technology is always evolving, and our new tech-obsessed newsletter is too! Digital Future Daily unlocks the most important stories determining the future of technology, from Washington to Silicon Valley and innovation power centers around the world. Readers get an in-depth look at how the next wave of tech will reshape civic and political life, including activism, fundraising, lobbying and legislating. Go inside the minds of the biggest tech players, policymakers and regulators to learn how their decisions affect our lives. Don't miss out, subscribe today. | | | | | | | | Stocks closed sharply lower on Wall Street Thursday as worries grow in markets that the higher interest rates the Federal Reserve is using in its fight against inflation will slow the economy. — AP’s Damian J. Troise and Alex Veiga Boeing Co. is expected to move its headquarters to Arlington, Va., from Chicago, people familiar with the matter said, a shift that would place the aerospace company’s senior executives closer to key government decision makers in the nation’s capital. —WSJ’s Andrew Tangel and Doug Cameron Wall Street’s dealmakers may see bonuses for 2022 drop as much as 40 percent as initial public offerings and underwriting businesses continue to slow. — Bloomberg’s Jennifer Surane Bank of America said Thursday that consumers' debit and credit card spending rose across all income brackets in April, although spending levels for lower-income customers appeared to flatten out in recent weeks. — Reuters’ Elizabeth Dilts Marshall
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