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. How will Washington revamp banking post-SVB? We’re going to get a good sense of that this week from the Biden administration, Congress and the Federal Reserve. First up this morning is a major Brookings speech on bank mergers from DOJ’s Jonathan Kanter, who leads the department’s antitrust division. Bankers will be watching the speech closely. They’re hopeful that the Biden administration will be more accommodating of bank consolidation to help shore up the industry — especially after Treasury Secretary Janet Yellen and Acting Comptroller of the Currency Michael Hsu sent signals that bank representatives saw as encouraging. But industry watchdog groups, including the American Economic Liberties Project, Americans for Financial Reform and Public Citizen, warn Yellen and top banking regulators in a new letter today that it would be risky to let big banks get bigger (AELP today also has a report out on the issue). They want the agencies to be “full-throated and clear in their affirmation that robust regulation and competition, not consolidation, will lead to a healthier, safer, and more vibrant financial system.” The other political battle to watch: Wednesday’s Senate Banking Committee vote on a bill that would claw back pay and ratchet up penalties for the executives of failed lenders. The proposal from Senate Banking Chair Sherrod Brown and Sen. Tim Scott has created some tensions with Sen. Elizabeth Warren, who has nearly half the committee signed on to a tougher clawback plan. The big question is the extent to which Warren and her allies will support the Brown-Scott proposal as it’s drafted. (At least two, Sens. Mark Warner and Tina Smith, have said they will support the chairman’s bill.) A list of proposed amendments obtained by MM shows that Warren is floating changes that would make Brown and Scott’s clawback plan look more like hers. A person familiar with the matter said Warren could propose amendments that would extend their clawback section’s lookback period to three years from two, expand its compensation definition to capture salary and increase the number of executives to be held accountable. Sen. J.D. Vance, a Warren co-sponsor, also drafted several potential amendments. One would subject state-chartered banks with more than $100 billion in assets to oversight by the OCC – a provision that would capture Truist. Another would appear to discourage consolidation by making it harder for megabanks to get around the 10 percent nationwide deposit cap in acquisitions. The amendments could just end up being talking points. Members may not have the appetite to blow up a deal between Brown, who’s facing a tough reelection, and Scott, who’s running for president. And as their bill stands now, bank trade groups may largely be able to stay neutral without putting up a big fight. The Independent Community Bankers of America, the only industry group willing to publicly weigh in so far, told MM it’s trying to “improve the bill so it doesn’t impact community banks.” (The bill already has exemptions for banks with less than $10 billion in assets.) A Brown spokesperson said his goal has been to “pass the most robust bill possible out of committee with strong bipartisan support, to have the highest chance of success on the floor, and ultimately get to the president’s desk.” Another important factor: House Financial Services Chair Patrick McHenry isn’t a “hell no” at this point. He hasn’t been pushing for executive accountability legislation, but does he want to impede Scott? Could this be a trade for another priority? McHenry spokesperson Laura Peavey said in a statement that House Financial Services “will take a look at any bill that is advanced by the Senate Banking Committee, including on executive compensation clawbacks.” She said McHenry’s committee has focused on accountability for regulators. It has approved a bill by subcommittee Chair Andy Barr to address those issues. “It is important to note that the regulators already possess the necessary authorities to claw back executive compensation,” she said. Last but not least, Fed Chair Jerome Powell and Biden’s latest Fed nominees will testify in Congress this week. Expect questions on all of the above, plus many inquiries on the Fed’s upcoming proposal to hike bank capital requirements – the top lobbying issue for the big banks this year. It’s Tuesday – Let us know what you think of Kanter’s bank merger speech today: Zach Warmbrodt, Sam Sutton.
| 
