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Presented by National Retail Federation: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | |  | | By Sam Sutton | | | PROGRAMMING NOTE: We’ll be off for Thanksgiving this Thursday and Friday but back to our normal schedule on Monday, Nov. 27. 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.
| | Disputes over how to address artificial intelligence’s potential to upend life as we know it contributed to the stunning ouster of OpenAI’s ubiquitous co-founder and CEO Sam Altman. If fears of AI dystopia convinced OpenAI’s board to jettison their top executive — and the industry’s most effective spokesperson — consider how those concerns are sitting with Washington regulators. For months, top policymakers from the White House to the Securities and Exchange Commission have been strategizing over how to deal with whatever headaches AI could cause for financial institutions and markets. The reaction to Altman's surprise firing — and his subsequent hiring by Microsoft, OpenAI’s largest investor — underscores how AI’s future will likely rest on the whims of a handful of very large companies and their boards, CFPB Director Rohit Chopra told MM Monday afternoon. “There is a race to develop the foundational AI models. There will probably not be tons of those models. It may in fact be a natural oligopoly,” Chopra said, adding that those programs would likely have applications across the economy. “The fact that Big Tech companies are now overlapping with the major foundational AI models is adding even more questions about what we do to make sure that they do not have outsized power,” he added. While there has been plenty of chatter about the need for AI-specific regulation, compiling a rulebook will take time. Discussions on how to address existential challenges that the fast-evolving technology could pose to the economy are much more urgent now that previously internal debates over OpenAI’s future have spilled into the public. (OpenAI’sinterim CEO Emmett Shear wrote on X that the board did not remove Altman “over any specific disagreement on safety" of OpenAI’s tech.) “I don't think it's quite known what all the risks are that are out there,” CFTC Commissioner Christy Goldsmith Romero, who sponsored a technology advisory committee to help the derivatives regulator chart a course on AI, told MM. “It's evolving so quickly that I think the first thing to do is to come at the concept from high-level principles that always apply whenever we're looking at things; risk management, governance.”
| | | | Enter the “room where it happens”, where global power players shape policy and politics, with Power Play. POLITICO’s brand-new podcast will host conversations with the leaders and power players shaping the biggest ideas and driving the global conversations, moderated by award-winning journalist Anne McElvoy. Sign up today to be notified of new episodes – click here. | | | | | In the context of financial markets: AI programs could put automated trading and lending capabilities at financial institutions “on steroids,” Chopra said. If those programs are making their own decisions based on incoming data, that can “actually lead to very procyclical effects that would magnify tremors into much larger financial quakes,” he said. Sen. Mark Warner (D-Va.) is already working on legislation that would task the Financial Stability Oversight Council with responding to AI-related risks. There are also questions around what Microsoft’s subsequent hiring of Altman and other OpenAI executives might mean for the competitive landscape around AI, with some speculating that the personnel moves are akin to an acquisition, given the level of access Microsoft has to OpenAI’s tech. That could be a difficult argument to make. OpenAI’s technology still belongs to OpenAI and, as New York Magazine’s Kevin Dugan noted, replicating its success under Microsoft’s corporate auspices — rather than as an independent startup answering to a nonprofit board — will be a challenge. Still, FTC Chair Lina Khan has been interested in exploring if major tech firms have used strategic investments in artificial intelligence startups to avoid regulatory scrutiny or otherwise harm competition. In the meantime, Altman’s move to Microsoft will benefit from at least one policy designed to keep labor markets more competitive. “I’m sure OpenAI’s leadership and staff are grateful that non-competes are unenforceable in California,” one FTC official told MM. IT’S TUESDAY — And I’m back in the saddle for a few weeks after taking some time to learn how to diaper a newborn. Send tips, gossip and suggestions to Sam at ssutton@politico.com and Zach at zwarmbrodt@politico.com.
| | A message from National Retail Federation: The new CNBC/NRF Retail Monitor, powered by Affinity Solutions, provides a more accurate look at monthly retail sales. The CNBC/NRF Retail Monitor uses anonymized, real-time debit and credit card purchase data to provide more accurate and timely insights into retail sales activity across all U.S. sectors, categories and markets. All information produced by Affinity Solutions is anonymized and aggregated and does not include any personally identifiable information of an individual consumer. Learn more. | | | | | Existing home sales for October will be released at 10 a.m. … The Federal Reserve will release its Oct. 31-Nov. 1 meeting minutes at 2 p.m. Everyone’s bummed out — Americans with healthy household finances, but pessimistic views on the economy, told The New York Times that they felt as though they “were ‘just getting by,’ with ‘nothing left over.’ Many felt angry and anxious over prices and the pandemic and politics.” “People say, ‘Economists don’t know why we’re unhappy? Just look at the prices!’” Betsey Stevenson, a University of Michigan economist who worked in the Obama administration, told the Times. “We’re looking at the prices, and we’re wondering, why are you buying so much stuff?” — On the heels of last week’s CPI report showing that price growth is slowing, Treasury Secretary Janet Yellen on Monday noted the U.S. has seen “considerable progress in bringing inflation down, but Americans do notice higher prices from what they used to be accustomed to,” she said in an appearance on CNBC. “And importantly, we’re making this inflation progress while maintaining a strong economy and a strong labor market. So that’s good news for Americans.” Another head scratcher — The New York Fed’s quarterly Survey of Consumer Expectations Credit Access found that demand for new credit is softening even as interest in applying for more credit card debt rose, according to Reuters.
| | | | GET A BACKSTAGE PASS TO COP28 WITH GLOBAL PLAYBOOK: Get insider access to the conference that sets the tone of the global climate agenda with POLITICO's Global Playbook newsletter. Authored by Suzanne Lynch, Global Playbook delivers exclusive, daily insights and comprehensive coverage that will keep you informed about the most crucial climate summit of the year. Dive deep into the critical discussions and developments at COP28 from Nov. 30 to Dec. 12. SUBSCRIBE NOW. | | | | | | | | Happy holidays, crypto — The Justice Department is reportedly seeking $4 billion from Binance to resolve a yearslong investigation into alleged money laundering, bank fraud and sanctions violations, Bloomberg’s Chris Strohm, Allyson Versprille, and Olga Kharif report. Binance’s native cryptocurrency rose on the news and the settlement “could be a compromise that protects investors and allows Binance the option to evolve into a more institutional and compliant future direction,” Matt Walsh, founding partner at crypto venture firm Castle Island Ventures, told Bloomberg. — The SEC on Monday hit Kraken with charges that its crypto trading platform is an unregistered securities exchange, our Declan Harty reports. New owners — The cryptocurrency exchange Bullish has acquired the news site CoinDesk, which broke the story that led to the collapse of FTX late last year, from Digital Currency Group. Bullish is led by New York Stock Exchange (NYSE) President Tom Farley.
| | | | A message from National Retail Federation:   | | | | | German recession? — The Bundesbank warned in its monthly report that the country’s economy is headed for a slump, our Johanna Treeck reports. — Meanwhile, our Carlo Boffa reports that the European Central Bank is warning that windfall taxes have weakened bank valuations across the continent to the detriment of economic growth. France’s finances — The European Union is poised to place France on a watch list after the country ran afoul of its fiscal guidance, per Bloomberg.
| | A message from National Retail Federation: The new CNBC/NRF Retail Monitor will modernize how retail sales are tracked and measured, and how key demographics and channels are performing for the industry generally and for specific retail sectors. The CNBC/NRF Retail Monitor leverages Affinity Solutions’ vast dataset which includes more than 140 million credit and debit cards, with nearly nine billion transactions totaling more than $500 billion in annual spending, to measure the monthly and annual change in U.S. retail sales. All information produced by Affinity Solutions is anonymized and aggregated and does not include any personally identifiable information of an individual consumer. To learn more, visit nrf.com/crci | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
