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. House Republicans are getting headlines this week for the month of hearings they’re launching to keep climate and social goals out of investing. You might have missed that a similar fight is unfolding in the Senate — one that’s focused on banks and might have a near-term impact on policy. Let’s start with one of MM’s newest recurring characters: Sen.J.D. Vance. As our Eleanor Mueller reported first on Thursday, the Ohio Republican has a new bill that would try to shield banks from regulatory pressure to cut off customers like crypto firms, gun manufacturers and oil and gas companies. It would do so by prohibiting regulators from invoking “reputational risk” when they take action against lenders. It reflects a long-standing allegation on the right — triggered by the defunct, Obama-era anti-fraud initiative “Operation Choke Point” — that regulators discourage banks from serving customers that are politically unfavorable to the left. The crypto world recently joined the cause after it became an obvious target for scrutiny because of widespread mismanagement and alleged fraud by industry leaders. House Republicans haven’t tackled the issue yet as part of their “ESG month,” but will likely get to in the coming weeks, with a potential vote on a bill that would deter lenders from cutting off the same kinds of customers that Vance is looking to protect. A backlash against these kinds of policies is playing out in the Senate, and it threatens to upend a bill that would provide legal protections for banks that serve the cannabis industry. Eleanor and Natalie Fertig have a new story looking at concerns raised by Sen. Jack Reed (D-R.I.) about a section of the cannabis bill that, like Vance’s new legislation, would make it harder for regulators to pressure banks to cut ties with certain customers for reasons of reputational risk. The provision has been attached to the bill for years at the behest of Republicans. Changing or cutting it may have an impact on the coalition that’s grown up around the proposal. The clash is instructive of how future culture war issues will likely play out in banking policy. Making it harder for banks to drop certain customers could also leave lenders exposed to risks from criminal activity. In the case of the cannabis bill provision that's being contested, there’s an exception for national security concerns but not fraud. Consumer advocates are urging lawmakers to rethink the measure, citing the rise in mortgage wire fraud and Zelle scams. “Operation Choke Point had a sexy name and it gave the right wing all sorts of fodder for ‘the government’s coming after your guns,’” National Consumer Law Center Associate Director Lauren Saunders told MM. “None of that was ever true. Operation Choke Point ended years ago.” “This is not about going after legal businesses. It’s about going after accounts being used unlawfully.” Happy Friday — Thanks for reading this week. We’ll be back Monday. Until then, feel free to keep in touch: Zach Warmbrodt, Sam Sutton.
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