The Sherrod Brown Show

From: POLITICO's Morning Money - Thursday Dec 08,2022 01:01 pm

Dec 08, 2022

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The Georgia runoff just made Sherrod Brown’s life easier.

After two years of a grinding, 50-50 Senate split, the Senate Banking chair is sketching out an agenda reshaped by the power that comes with true majority control.

MM interviewed the progressive Ohio Democrat this week about his plans, including his relationship with key Republicans he’ll have to work with to get things done.

“Everything can be smoother and more efficient,” he said of Democrats’ new majority. “By definition, conservatives want to stop, slow down, block things, say no.”

At the top of his agenda are cryptocurrency and housing — two of the most vexing economic problems for policymakers today. An outlook memo that the committee will circulate Thursday also highlights plans to reauthorize the National Flood Insurance Program, improve climate-related disclosure requirements and work with the Biden administration and the CFPB to ease medical debt burdens.

On housing, Brown wants to find ways to expand supply, in part by removing barriers to affordable homes. On crypto, he has just started to seek feedback on what could be a sweeping digital currency regulation bill.

His memo describes plans to work with regulators and lawmakers to design a “comprehensive regulatory framework for crypto that protects our national security and puts consumers — not the crypto industry — first.”

“We’re really serious about crypto and what we do to empower the regulators — if they need more empowering to do this,” he told MM.

The majority means it would be easier for Brown to advance nominees through his committee and issue subpoenas, an oversight tool the panel rarely uses.

One lingering vacancy that Brown may need to fill is a permanent Comptroller of the Currency. Michael Hsu holds the bank regulation role on an acting basis.

Sen. Elizabeth Warren (D-Mass.) told MM this week that she wants President Joe Biden to nominate someone to lead the OCC. Some progressive activists want Hsu replaced.

“I’d like to see someone full-time in that position,” Warren said. “There are some important changes to be made at the OCC and it takes a director with a long-term commitment to make that happen.”

Sen. Tim Scott (R-S.C.) will replace retiring Sen. Pat Toomey (R-Pa.) as the ranking Republican on Brown’s committee. Brown said he and Scott are “poles apart on almost every issue” but that Scott is “an agreeable guy.”

“Toomey — and Toomey would agree with this — is more an ideologue than a partisan,” Brown said. “I would think Scott is a little more of the latter. Not that partisan and ideologue don’t often land you in the same place.”

Brown, who’s running for reelection in 2024, also flagged Scott’s potential run for president. “I hope he’s going to devote the time to this committee that we need, and I assume he will. He’s a conscientious guy.” (Scott has started to assemble his Banking team, with Visa’s Lila Nieves-Lee named as GOP staff director.)

From a Scott spokesperson: “Given their mutual passion for the issues before the committee, we hope Senator Brown can set aside partisan rhetoric so that the two can focus on finding solutions to help empower all Americans.”

Rep. Patrick McHenry (R-N.C.) will be Brown’s counterpart in the House as Financial Services chair. Brown said they don’t have much of a relationship, but he recommended reading Washington Monthly’s coverage of McHenry’s involvement with the College Republicans. The 2005 piece “Getting Ahead in the GOP” documented how McHenry leveraged the group to enter Congress and later intervened in a race for its national chairmanship.

“I actually like him more than the article might suggest,” Brown said.

It’s Thursday — Thanks to everyone who shared music recommendations in response to Monday’s MM. Watch this space for a roundup of what readers have in their AirPods. Please send tips to zwarmbrodt@politico.com and to my co-author Sam Sutton, ssutton@politico.com .

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Driving the Day

Driving the day … House Financial Services holds a 9 a.m. subcommittee hearing on private sector disclosures of workforce and diversity data … The SEC investor advisory committee meets at 10 a.m. … Labor Secretary Marty Walsh speaks at a U.S. Chamber of Commerce Foundation workforce event that starts at 1 p.m. … Treasury’s insurance advisory committee meets at 1 p.m. to talk climate risks and auto insurance …

SBF faces Capitol Hill subpoena threats — Brown and House Financial Services Chair Maxine Waters (D-Calif.) are raising the prospect of subpoenaing FTX founder Sam Bankman-Fried to force him to testify in hearings next week.

Brown made the subpoena threat directly to Bankman-Fried in a letter released late Wednesday, giving him a Thursday afternoon deadline to respond. Waters said in a tweet that a subpoena from her committee was also “on the table.”

It's official — House Republicans on Wednesday picked Patrick McHenry to be the next chair of the Financial Services Committee.

Gensler’s stock market structure shake up is almost here — Traders, mark your calendars. The SEC will vote Dec. 14 on proposals that could lead to one of the biggest overhauls of the U.S. stock market's plumbing in nearly two decades, our Declan Harty reports.

"It's about driving greater competition, transparency and efficiency in the marketplace," SEC Chair Gary Gensler said Wednesday in an interview with Yahoo Finance.

The unreleased proposals have drawn industry threats of litigation for months.

First in MM: Huizenga, Gottheimer push back on Gensler’s market structure plans — From Declan: Reps. Bill Huizenga (R-Mich.) and Josh Gottheimer (D-N.J.) told Gensler in a letter Wednesday that the SEC should conduct “a thorough analysis of the current functioning of the market” to head off unintended consequences from the stock trading rules he plans to unveil next week.

The bipartisan duo raised concerns about the SEC’s expected proposal to rewire how and where individual investors’ orders are executed in the name of promoting competition.

Another MM first read: Warren targets banks that served crypto firms — From Sam: Sen. Elizabeth Warren is calling on bank regulators to investigate U.S. financial institutions over their ties to the crypto industry after two banks were buffeted by losses following the collapse of the FTX exchange.

The Massachusetts Democrat demanded in letters that the agencies provide the names of banks that have granted loans, taken deposits or provided other services to digital asset startups. She sent letters to Federal Reserve Chair Jerome Powell, the FDIC and the OCC.

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Vanguard bails on climate group — FT: “Vanguard is pulling out of the main financial alliance on tackling climate change at a time when Republicans in the US have stepped up their attacks on financial institutions that they say are hostile to fossil fuels.

“[The company] said on Wednesday that it was resigning from the Net Zero Asset Managers initiative, whose members have committed to achieving net zero carbon emissions by 2050.

“Vanguard, which mainly manages passive funds that track market indices, said the alliance’s full-throated commitment to fighting climate change had resulted ‘in confusion about the views of individual investment firms’.”

Schumer’s subpoena warning — Bloomberg: “Senate Majority Leader Chuck Schumer served notice Wednesday that Democrats can use their expanded majority in the chamber next year to subpoena corporations and executives to strengthen oversight investigations."

More NDAA nuggets — House Financial Services Chair Maxine Waters is touting several under-the-radar provisions attached to the defense policy bill Congress is about to pass.

They include measures that would make it easier for banks to hire individuals with minor criminal offenses, impose new restrictions on World Bank assistance to China, and require Treasury and financial regulators to exclude Russian officials from international meetings until its invasion of Ukraine ends.

Another section would require the Federal Reserve to create a public database of institutions that have access to Fed master accounts or have requested access.

A message from the Information Technology Industry Council (ITI):

Crypto

How crypto unified the bank lobby and an industry critic — In a surprising twist for some of us in the Washington financial policy bubble, American Bankers Association President Rob Nichols and Better Markets President Dennis Kelleher earlier this week published a joint op-ed calling for stricter crypto oversight. It’s a double byline you don’t usually see. Rob is a leading voice for the banking industry. Dennis is one of the few advocates focused on ensuring that banks are subject to stricter oversight.

But as we’re all learning, crypto is making strange political bedfellows, scrambling partisan divides and spurring new industry rifts. MM followed up with Rob and Dennis to see how their op-ed came together, and why it matters.

Rob: “Dennis and I saw one another at a Washingtonian event at Union Station. We got to talking about crypto risks, shadow banking, et al, and upon realizing we had similar views I asked if he would consider a joint op-ed on the subject. He agreed.”

Dennis: “A lot of lobbyists get very rich in stirring the pot, not getting stuff done. But there’s a bunch of people in town we have pretty good discussions with about all sorts of different things. We may not agree. We talk to them all the time.”

Rob: “We have known each other a long time, and while there is a lot we don’t agree on in terms of banking policy, we have always had a cordial and respectful relationship.”

Why you should care — Congress and the regulators are barreling toward a big fight over how to rein in crypto trading. A coalition of bank lobbyists and Wall Street watchdogs could end up being a powerful counterweight to the crypto industry, which before the FTX collapse was succeeding in convincing many policymakers that it deserved special regulatory carve outs.

“Almost all of our advocacy on the ‘shadow banking’ system aligns,” Dennis said.

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Regulatory Corner

Fair-lending group blasts KeyBank — From Sam: The National Community Reinvestment Coalition is breaking off negotiations with KeyBank over how much the mid-sized lender plans to invest in low-or-middle-income communities. NCRC, which often brokers community investment deals between banks and local advocacy groups to facilitate bank mergers, claims that KeyBank violated the terms of a five-year deal linked to its 2016 acquisition of First Niagara Bank.

"They failed the most vulnerable and neglected people in their cities and made a bunch of money in the process. Enough is enough,” NCRC President and CEO Jesse Van Tol said in a statement.

In a statement, the bank said while it was "pleased with the progress KeyBank has made through the Community Benefits Plan, we are also very aware of the work that still needs to be done. We look forward to continuing this work with our many local and national partners to support the growth, revitalization and sustainability of the communities we proudly serve.”

A message from the Information Technology Industry Council (ITI):

Currently, United States’ investments in research and development rank 27th out of 38 developed countries. Congress must act to reverse this harmful trend and support U.S. innovation. If Congress doesn’t act, the U.S. could lose out to the dozens of other countries that put a higher value on American ingenuity. Learn more about this critical pro-innovation and pro-jobs policy. Learn more.

Fly Around

China scraps Covid rules — WSJ: “China dropped many of its quarantine and testing requirements and curtailed the power of local officials to shut down entire city blocks, as the government accelerates plans to dismantle zero-Covid controls in the wake of nationwide protests.”

Elon Musk teeters as world’s richest — Reuters: “Twitter owner and Tesla boss Elon Musk briefly lost his title as the world's richest person on Wednesday, according to Forbes, following a steep drop in the value of his stake in the electric-car maker and a $44 billion bet on the social media firm.”

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