The strike that could derail Christmas

By Kate Davidson and Sam Sutton

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 .

American businesses are already facing a lackluster holiday shopping season. A costly shutdown of the nation’s freight rail network this December would be downright disastrous.

Retail trade groups are stepping up pressure on Congress to intervene before a potential strike next month, after Monday’s split vote by two of the largest unions on a contract agreement. A key part of the message: It’s not just bad for business but for consumers grappling with still-elevated inflation.

“A strike would cause enormous disruption to the flow of goods nationwide, the effects of which would ripple through the supply chain and the U.S. economy at large,” the Retail Industry Leaders Association said in a statement.

Said the National Retail Federation: “American businesses and families are already facing increased prices due to persistent inflation, and a rail strike will create greater inflationary pressures and will threaten business resiliency. Congress must intervene immediately to avoid a rail strike and a catastrophic shutdown of the freight rail system.”

MM checked in with POLITICO labor reporter Eleanor Mueller, who tells us Democrats are still reluctant to intervene ahead of a Dec. 4 deadline. If it comes to that, union officials are hoping lawmakers will impose the terms of tentative agreements that the unions reached separately with employers, rather than the set of recommendations put out by the president’s emergency board in September.

What’s next? Negotiations are continuing and a vote could be called again before Dec. 5, when the earliest cooling off period ends, our Alex Daugherty and Tanya Snyder report. If the parties can’t come to an agreement, Congress will likely be forced to step in.

The president of the largest freight rail union told Eleanor Monday night he is skeptical he’ll be able to reach a new agreement with carriers in time to prevent a strike — and predicts Congress will likely soon intervene.

But the effects of the showdown could be felt even before an actual strike or lockout happens.

Shippers are beginning to make plans to work around a potential work stoppage , Tanya also reported, and railroads could start restricting shipments right after Thanksgiving to ensure that volatile materials aren’t sitting unsupervised on idled rail cars for long periods in case of a shutdown. That’s what happened several days before a potential strike in September.

Reminder: A railroad strike could cost the U.S. economy more than $2 billion a day, according to the Association of American Railroads.

IT’S TUESDAY — Have tips, story ideas or feedback? You know what to do: kdavidson@politico.com and ssutton@politico.com .

PROGRAMMING NOTE: We’ll be off for Thanksgiving this Thursday and Friday but back to our normal schedule on Monday, Nov. 28.

POLITICO APP USERS: UPGRADE YOUR APP BY DECEMBER 19! We recently upgraded the POLITICO app with a fresh look and improved features for easier access to POLITICO's scoops and groundbreaking reporting. Starting December 19, users will no longer have access to the previous version of the app. Update your app today to stay on top of essential political news, insights, and analysis from the best journalists in the business. UPDATE iOS APP – UPDATE ANDROID APP .

Kansas City Fed President Esther George speaks at 2:15 p.m.

GOP TAX OVERSIGHT — Don’t expect Republicans and Democrats to get together and pass many tax bills next year, but there will be a whole lot of oversight, our Brian Faler writes. He details five areas Republicans are likely to focus on next year when it comes to tax oversight.

TIGHTEN UP — WSJ’s Ian Talley: “U.S. officials are jetting around the globe in a quiet diplomatic push to get Russia’s major trading partners to enforce sanctions and trade controls , as exports to the country pick up after diving in the weeks following Moscow’s invasion of Ukraine.

“The U.S. and its allies claimed early successes in their international pressure campaign, which disrupted Russia’s military supply chains and pitched its economy into a steep contraction. But so-called sanctions leakage—in which weak enforcement enables banned finance and trade to flow—is undermining the campaign, aiding Russia’s economy and potentially prolonging the war, according to senior Western officials.”

FLOOD INSURANCE — Our Katy O’Donnell: “The Federal Housing Administration will start accepting private flood insurance policies on mortgages it backs, HUD said Monday.

“FHA requires flood insurance on mortgages in FEMA-designated special flood hazard areas. It previously accepted insurance obtained only through the FEMA-run National Flood Insurance Program. The new policy will take effect Dec. 21 and apply to insurance policies that conform to FHA requirements, the agency said in a Mortgagee Letter Monday .”

TIGHTER AND TIGHTER — Bloomberg’s Rich Miller: “The Federal Reserve isn’t the only one tightening credit. Commercial banks are too. And that spells trouble for the US economy . The proportion of US banks tightening terms on loans for medium and large businesses and for commercial real estate rose last quarter to levels usually seen during recessions, according to a Fed survey of lending officers released earlier this month.”

RAMPING UP — WSJ’s Summer Said and Benoit Faucon: “Saudi Arabia and other OPEC oil producers are discussing an output increase , the group’s delegates said, a move that could help heal a rift with the Biden administration and keep energy flowing amid new attempts to blunt Russia’s oil industry over the Ukraine war.”

But: Saudi Arabia on Monday said that OPEC+ was sticking with oil output cuts and could take further measures to balance the market amid falling prices, denying a report it was considering boosting output, according to state news agency SPA, Reuters reported.

GLORI-DIED — WSJ’s AnnaMaria Andriotis and Rachel Louise Ensign: “The Texas startup that sought to build a conservative banking alternative is shutting down . GloriFi has laid off most of its employees and told them that it is closing up shop, according to people familiar with the matter and emails to employees reviewed by The Wall Street Journal.”

TROUBLE AHEAD – Bloomberg: “Digital-asset brokerage Genesis is struggling to raise fresh cash for its lending unit , and it’s warning potential investors that it may need to file for bankruptcy if its efforts fail, according to people with knowledge of the matter.”

TRADFI FEELS THE HEAT — Whatever market contagion was unleashed by FTX’s bankruptcy has so far spared traditional financial institutions. But lawmakers are starting to crack down on banks and asset management firms that are dabbling in crypto: From Sam: “Senate Democrats on Monday urged federal bank regulators to scrutinize crypto investment products offered by fintech lender SoFi, as lawmakers ramp up oversight of the ailing digital asset market. Senate Banking Chair Sherrod Brown (D-Ohio) led the request in a letter signed by Sens. Jack Reed (D-R.I.), Chris Van Hollen (D-Md.) and Tina Smith (D-Minn.).”

— Also from Sam: “Sens. Dick Durbin (D-Ill.) and Elizabeth Warren (D-Mass.) on Monday warned Fidelity Investments against letting 401(k) investors put their money in Bitcoin , citing the implosion of FTX as an example of why digital assets are too dangerous for retirement accounts.”

THE MONEY INCINERATOR — Forbes’s Jeff Kauflin: “In a motion filed yesterday in the Delaware district court, the bankruptcy pros now managing Bankman-Fried’s companies said that the entities’ 2021 tax returns collectively showed a net operating loss carryover of $3.7 billion. “

STUCK — WSJ’s Caitlin McCabe and Rachel Louise Ensign: “Customers of beleaguered crypto exchange FTX are losing hope they will ever see their money again. The company’s massive financial problems began spilling into the open early this month, and FTX was quick to halt withdrawals from its international unit. American customers had hoped they might be luckier, but many of them haven’t been able to get their money out either .”

BITCOIN ETF CRATERING — Bloomberg’s Katherine Greifeld: “Cascading crypto blowups have only exacerbated problems for Grayscale’s $10.5 billion Bitcoin fund. The Grayscale Bitcoin Trust (ticker GBTC) closed a record 45% below the value of its underlying coins on Friday, according to Bloomberg data.”

Andrew Guggenheim is now managing director and associate general counsel on SIFMA’s state government relations team. He previously was a VP and senior counsel at the American Bankers Association. (h/t Daniel Lippman)

Jenna Valle-Riestera is now a spokesperson at the Treasury Department. She previously was press secretary for the Senate Judiciary Committee under Chair Dick Durbin(D-Ill.). (h/t Lippman)

GO INSIDE THE MILKEN INSTITUTE FUTURE OF HEALTH SUMMIT: POLITICO is featuring a special edition of our “Future Pulse” newsletter at the 2022 Milken Institute Future of Health Summit from Dec. 6 to 8. The newsletter takes readers inside one of the most influential gatherings of health industry leaders and innovators solving the biggest global health issues to ensure a healthier, more resilient future for all. SUBSCRIBE TODAY TO RECEIVE EXCLUSIVE COVERAGE .

China is turning to an old friend in corporate America to bolster communications with the U.S., as President Xi Jinping tries to stabilize the bilateral relationship while gearing up for greater competition between the two powers. — WSJ’s Lingling Wei and Charles Hutzler

The US is stocking up on Brazilian orange juice after Hurricane Ian and disease devastated citrus groves in Florida, the top producing state for the popular breakfast beverage. — Bloomberg’s Dayanne Martins Sousa

Russian companies reduced their foreign currency loans by $7.4 billion last month and have also cut forex holdings on the accounts by $11.1 billion, the central bank said on Monday. — Reuters’ Elena Fabrichnaya

Follow us on Twitter

Mark McQuillian @mcqdc Kate Davidson @KateDAvidson Aubree Eliza Weaver @aubreeeweaver Ben White @morningmoneyben Victoria Guida @vtg2 Katy O'Donnell @katyodonnell_ Zachary Warmbrodt @Zachary Sam Sutton @samjsutton

Follow us

To change your alert settings, please log in at https://www.politico.com/_login?base=https%3A%2F%2Fwww.politico.com/settings

This email was sent to by: POLITICO, LLC 1000 Wilson Blvd. Arlington, VA, 22209, USA

Please click here and follow the steps to .