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. Programming note: We’ll be off this Monday for Juneteenth, but we’ll be back in your inboxes on Tuesday. They did it: Three months after the SVB meltdown, Senate Banking Chair Sherrod Brown and Sen. Tim Scott late Thursday revealed a bill that would crack down on the management of failed banks. The big question now is whether they can sell it to Sen. Elizabeth Warren. Before we get to the drama, a quick swing through a few details: The Brown-Scott bill would allow regulators and bank boards to claw back executive compensation at failed lenders going back two years. It would also increase potential penalties the executives face. It carves out “community” banks with assets under $10 billion. Brown and Scott’s breakthrough is a big deal at the Banking Committee. It shows a bipartisan appetite to challenge — to an extent that is already being debated — a powerful industry lobby. Wednesday’s planned vote on the bill will be the first-ever markup under Brown’s tenure. And, oh yeah, Scott, of South Carolina, is running for president. Brown, of Ohio, faces a tough re-election in a state that’s looking pretty red. Now they have to win over Warren and other lawmakers who wanted to be even tougher on bank executives. Warren had her own breakthrough earlier this month, when she revealed a bipartisan bill that would also claw back pay from the leaders of failed banks. At the time, it seemed like the most politically viable option yet for Congress to respond to the SVB crisis. The bill had Sen. Josh Hawley (R-Mo.) as a lead co-sponsor. It had critical backing from Sen. J.D. Vance, Brown’s Republican counterpart in Ohio, who negotiated changes that helped Warren attract nearly half of the Banking Committee’s members as co-sponsors. Warren wanted Brown to hold a vote on her bill but he opted to work out a compromise with Scott. The Brown-Scott legislation covers more ground than clawbacks but on that issue appears to be scaled-back in comparison. Warren’s bill would make it a requirement that the FDIC claw back pay, while the Brown-Scott bill would just enable such a move. Warren’s bill would cover three years of compensation, while the Brown-Scott plan would only go back two. Brown may end up getting the votes he needs, despite the disagreements over the process and the final product. But it’s been a window into how populist politics are shifting in the run-up to 2024. It’s a moment when Republicans like Hawley and Vance are chafing at the pragmatism of someone who hasn’t been known to hold back against Wall Street. “I’m just really worried that that’s going to get watered down,” Hawley told our Eleanor Mueller Thursday. “If they don’t mark it up, maybe I should just go to the floor and try passing it.” Happy Friday — What do you think of the Brown-Scott plan? Let me know.
| 
