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Presented by Goldman Sachs: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | |  | | By Zachary Warmbrodt | Presented by Goldman Sachs | 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
| | Bank regulators are facing a Wall Street lobbying barrage aimed at undoing their plans to ratchet up capital buffers for the largest lenders. Next week, key lawmakers on both sides of the aisle are poised to join the fight. Top officials from the Federal Reserve, FDIC and OCC are set to face a bipartisan buzzsaw when they appear Tuesday and Wednesday at back-to-back Senate and House hearings. Intense GOP opposition is to be expected. But based on a survey by our Jasper Goodman and Eleanor Mueller, it’s clear that a number of Democrats are also ready to push back. Among them is Sen. Mark Warner, a senior member of Senate Banking. He acknowledged in an interview that banks often complain that new regulations will diminish access to capital. But this time, he said, “they may be right.” “You could have this perfect storm where you've got the additional capital requirements, recent high interest rates and you've got ticking time bombs like the commercial real estate market,” he said. “All that comes together and you could have a dramatic effect on the economy and access to credit." The stakes are high. Large banks are throwing everything they can at stopping the 1,000-page proposal, and even Fed Chair Jerome Powell has hinted that he has reservations about its impact. The rules at issue would require large lenders to tap more capital to safeguard a range of business activities, in a bid to fend off future bailouts. But next week you’ll likely hear lawmakers warn about the drag that the higher regulatory costs might impose on lending and economic growth, from mortgages to clean energy investment. (The Fed’s Michael Barr, who will testify at the hearings, has noted that the economy kept growing substantially after other post-crisis rules went into effect.) “I just want to make sure that consumers aren't unfairly hit with this,” said Sen. Jon Tester, another senior Democrat on Senate Banking. Sen. Chris Van Hollen, who also sits on the committee, said he’s concerned about how it will affect the use of tax credits for renewable energy projects. Some Democrats who back the proposal are trying to rally their colleagues to stand behind the agencies. “The bank lobbyists clearly want the softest possible approach to regulating the banks,” Sen. Elizabeth Warren said. “But it's the public that pays the price when these banks fail. So much of the conversation veers back and forth between very technical pushes from industry lobbyists to weaken the rules and a tough reminder from elected officials that those rules are there to protect the entire system.” Happy Friday — It’s International Accounting Day. Show some love to your favorite number cruncher. MM wants to hear from you, too. Shoot an email to zwarmbrodt@politico.com.
| | | | A message from Goldman Sachs: Minority-owned businesses already face significant challenges accessing capital. 81% of Hispanic small business owners and 85% of Black small business owners are concerned about their ability to access capital. The Federal Reserve’s Basel III Endgame proposal would make it even harder for minority-owned businesses to access loans and credit. Tell the Fed: Stop the Squeeze on Small Businesses. | | | | | Treasury market hit by ransomware strike — The FT reports that a ransomware attack on the financial services arm of China’s largest bank disrupted the U.S. Treasury market. It forced clients of the Industrial and Commercial Bank of China to reroute trades. “This is a large party on [the Fixed Income Clearing Corporation], so [it is] certainly of major concern, and potentially impacting liquidity of US Treasuries,” said an executive at a large bank. Joe Manchin’s out — The West Virginia Democrat, one of the party’s most prominent centrists, will not seek reelection. It’s a major blow to Democrats’ hopes of maintaining a Senate majority. He will most likely be succeeded by Republican Gov. Jim Justice. Peter Thiel’s out — The billionaire PayPal co-founder and GOP megadonor told The Atlantic that he won’t give money to candidates in the 2024 campaign. Powell’s f-bomb — Victoria Guida reports that Fed Chair Jerome Powell appeared to be caught on an open mic saying a swear word Thursday after being interrupted by climate protesters. “Just close the fucking door,” could be heard on the livestreamed audio feed. A Powell speech last month was also interrupted by protesters. Powell said Thursday that the central bank will launch another review of its interest rate policies in the second half of next year. It will focus in part on the structural changes to the economy in the wake of the coronavirus pandemic.
| | | | JOIN US ON 11/15 FOR A TALK ON OUR SUSTAINABLE FUTURE: As the sustainability movement heats up, so have calls for a national standard for clean fuel. Join POLITICO on Nov. 15 in Washington D.C. as we convene leading officials from the administration, key congressional committees, states and other stakeholders to explore the role of EVs, biofuels, hydrogen and other options in the clean fuel sector and how evolving consumer behaviors are influencing sustainable energy practices. REGISTER HERE. | | | | | | | | Ken Griffin’s warning — The Citadel founder said unrest and structural changes are pushing the world toward de-globalization and causing higher baseline inflation that may last for decades, per Bloomberg. “The peace dividend is clearly at the end of the road,” he said.
| | | | A message from Goldman Sachs:   | | | | | House digs into crypto crime — House Financial Services plans to hold a hearing Wednesday focused on illicit activity in digital assets. The hearing — titled “Crypto Crime in Context” — is notable given the Hill’s intense focus on the potential nexus of digital currency and terrorist groups like Hamas. Until now, the Senate’s been grabbing most of the attention, with Sen. Warren rallying lawmakers to support an anti-money laundering crackdown and Senate Banking Chair Sherrod Brown using his committee to do oversight. The hearing will be led by Rep. French Hill, the Arkansas Republican who chairs the digital assets subcommittee. Hill last month urged Attorney General Merrick Garland to target Binance and Tether and “choke off sources of funding to the terrorists currently targeting Israel.” Hill was also part of an Intelligence Committee briefing on the topic last week. He told MM it was “the latest step as the Financial Services Committee investigated reports of terrorist groups using crypto to raise money.” Crypto amendments added to funding bill — Jasper reports that the House agreed to attach several crypto-related amendments to the financial services appropriations bill before GOP leaders abruptly pulled the legislation Thursday. The amendments, which were all adopted by a voice vote, included proposals to block a central bank digital currency, restrict the SEC from pursuing digital asset enforcement actions and increase Treasury funding for crypto investigations.
| | | More on the U.K.’s finance plans — Following his interview in Thursday’s MM, U.K. Economic Secretary to the Treasury Andrew Griffith appeared at POLITICO’s London financial services summit. He talked more about efforts to give pension managers further leeway to invest in riskier assets. He said it can be done without legislation. Griffith also wants British citizens to become more involved in investing. “If you go to a barbecue in America, they’ll talk about their soccer game. But they may well also talk about what’s in their 401k,” he said. “We’ve got a good pensions system but very, very few people know what’s in their pensions.”
| | | | PLAYBOOK IS GOING GLOBAL! We’re excited to introduce Global Playbook, POLITICO’s premier newsletter that brings you inside the most important conversations at the most influential events in the world. From the buzzy echoes emanating from the snowy peaks at the WEF in Davos to the discussions and personalities at Milken Global in Beverly Hills, to the heart of diplomacy at UNGA in New York City – author Suzanne Lynch brings it all to your fingertips. Experience the elite. Witness the influential. And never miss a global beat. BE PART OF THE CONVERSATION. SUBSCRIBE NOW. | | | | | | | | D.C. eateries add credit card fees — From Washingtonian Magazine: “‘Credit card processing has never cost me more, and the reality is, I’ve been absorbing that cost for a long time,” says Jeff Black, who added a four-percent credit card fee at his DC restaurants Pearl Dive Oyster Palace and BlackSalt this year. … At Capitol Hill restaurants Beuchert’s Saloon and Fight Club, you’ll now find a four-percent ‘fair wage’ charge and a 3.5-percent ‘non-cash adjustment.’” People moves — AT&T CFO Pascal Desroches was elected to the Dallas Fed’s board of directors
| | | | A message from Goldman Sachs: Even without the Fed’s proposed new bank capital requirements, accessing and affording capital is an ongoing challenge for small business owners.
Only 29% of small business owners say their business can currently afford to take out a loan given high interest rates.
- 65% of small business owners who have applied for a new business loan or line of credit in the past year have found it difficult to access affordable capital.
- 31% of small business owners cite 2023 as being the most difficult year over the past four years.
The 10,000 Small Businesses Voices community is calling on the Fed to reconsider implementing the Basel III Endgame. Stop the Squeeze on Small Businesses.
Source: Survey of 1,240 Goldman Sachs 10,000 Small Businesses participants conducted by Babson College and David Binder Research from October 9-12, 2023. The survey included small business owners from 48 U.S. states, Washington, D.C., and Puerto Rico. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
