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Presented by NRF Foundation : Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | |  | | By Zachary Warmbrodt and Jasper Goodman | | | 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.
| | Rep. Patrick McHenry is staring at a GOP uprising over China policy. The Financial Services chair has been fighting efforts to ramp up scrutiny of U.S. investments in China via the annual defense bill, inflaming tensions with China hawks. As our Eleanor Mueller reports, spurned lawmakers are plotting how to sidestep the North Carolina Republican. But he’s not going down without a fight. Sen. John Cornyn (R-Texas), who drafted the China investment screening proposal with Sen. Bob Casey (D-Pa.), is urging Speaker Mike Johnson (R-La.) to hold a vote on similar legislation backed by House Foreign Affairs Chair Michael McCaul (R-Texas). Cornyn had lunch with Johnson Wednesday and, according to Cornyn, Johnson said he would consider it. “Almost everybody in the House agrees with us,” Cornyn said. “It’s Chairman McHenry who's the one who derailed it. I’ve made my request to the guy who can make it happen.” McHenry has responded by requesting that his committee be able to revise the legislation before it hits the floor. The spat underscores the salience of China fears in U.S. politics and how it’s scrambling conservative ideology on the economy. McHenry has framed his reelection message, like many other Republicans, in part around challenging China. But he’s warned that the outbound investment crackdown that’s gaining steam would backfire because blocking American capital abroad would also dampen the West’s influence. (It would also be a big headache for financial firms that fall under his committee’s jurisdiction.) McHenry has instead called for the use of “time-tested tools” that would provide more certainty to investors. He's pushing for an alternative that would direct Treasury to sanction banks that service key Chinese companies. It’s at odds with fellow Republicans like Rep. Mike Gallagher, the Wisconsin lawmaker who chairs the Select Committee on the CCP. He said the removal of investment restrictions in the defense bill would be “deeply disappointing.” Right-leaning groups Heritage Action and American Compass have called out McHenry by name. “While Congress dithers, we continue to fuel our own potential destruction as American capital and know-how pour into firms that directly support the People’s Liberation Army and the CCP’s totalitarian surveillance state,” Gallagher said. “I look forward to working with my colleagues on both sides of the aisle to rectifying this national security own goal.” The stakes of the fight are huge for McHenry, who might get rolled; for Wall Street investors, who want the issue put to bed; and for Johnson, who may have to pick a side as he faces the beginnings of a broader revolt on the right. Happy Friday — “Baby Shark” was my most-played song of 2023. IYKYK. Send tips to Zach at zwarmbrodt@politico.com and Sam at ssutton@politico.com.
| | A message from NRF Foundation: Retail is a great place to start – and a great place to grow a career. The retail industry is the nation’s largest private-sector employer, supporting one in four U.S. jobs – 52 million working Americans. 32% of Americans’ first jobs were in retail, and more than 60% have worked in retail at some point in their careers. Learn more about how we help people get a first chance or a fresh start in retail. | | | | | Fed Vice Chair for Supervision Michael Barr talks regulation at the ECB Forum on Banking Supervision at 3 a.m. … ISM manufacturing data for November is out at 10 a.m. … Fed Chair Jerome Powell has a fireside chat with Spelman College President Helene Gayle at 11 a.m. Signs of a slowdown — Inflation and personal spending cooled last month, according to data released Thursday. The Fed’s preferred inflation gauge, which strips food and energy out of consumer prices, rose by 0.2 percent month-over-month in October and was up by 3.5 percent from a year earlier. “The Fed is on hold for now but their pivot to rate cuts is getting closer: Inflation is clearly slowing, and the job market is softening faster than expected,” said Bill Adams, chief economist at Comerica Bank, according to Bloomberg. Another take: A Vanguard executive told Reuters that an overly cautious Fed — one that keeps rates higher for longer because of inflation fears – could lead to a recession. "The risk of the Fed is asymmetric: the risk of cutting too early and inflation flaring up is much worse than the risk of staying higher and going into a mild recession," said Roger Aliaga-Diaz, global head of portfolio construction at Vanguard. White House economists had their own message pegged to Thursday’s data. The Council of Economic Advisers said in a blog post that the easing of supply chain snarls is responsible for the vast majority of the decrease in inflation, Victoria Guida reports. It could help bolster the case that temporary, Covid-era disruptions were the main driver of price spikes. A Realtor reckoning — Katy O’Donnell reports that DOJ and the National Association of Realtors will face off in federal court today over the Biden administration’s probe into the way homebuyers’ agents are compensated. Critics say the system is monopolistic and inflates housing costs. It follows an industry-shaking court loss from October in which a jury found NAR and two brokerages conspired to keep commissions high and were on the hook for $1.8 billion in damages. First in MM: House GOP targets SBA — House Small Business Chair Roger Williams is asking the agency for details on how it’s implementing new limits on its 8(a) lending program to historically disadvantaged groups. A federal judge in July restricted the SBA’s ability to let applicants cite their race as evidence of being disadvantaged, and the agency now requires applicants to submit narratives demonstrating their status. Williams said the committee is investigating SBA’s handling of the process in light of the increased workload.
| | | | 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. | | | | | | | | The hopes of a crypto confab — Crypto lobbyists this week projected optimism at a two-day policy summit in Washington hosted by a top industry trade group, the Blockchain Association. Industry reps said turnout from key officials, including Deputy Treasury Secretary Wally Adeyemo and a bipartisan group of lawmakers, was a sign of crypto’s legitimacy. “Politics are increasingly on our side,” Kristin Smith, CEO of the Blockchain Association, told attendees Thursday. “The political engagement is growing, and it helps turn headwinds into tailwinds.” But just over a mile away from the conference on Capitol Hill, the crypto world appeared to be on the brink of another setback. McHenry’s ill-fated push to attach landmark crypto legislation to the NDAA is expected to fail amid opposition from key Democrats. It’s another reality check that digital asset firms – at least those that are still standing – face big hurdles in Congress. A number of lawmakers want to crack down rather than grant legitimacy, which McHenry's bill could do by setting up a custom regulatory regime. (The Blockchain Association gave McHenry an award this week for his commitment to the industry.) “The crypto industry is getting its last gasp to try to push through its worldview,” Sen. Elizabeth Warren (D-Mass.) told Sam Wednesday. House Republicans say they’ll put McHenry’s bills on the floor in the coming months, but they’re poised to hit a brick wall in the Senate. Looking forward, the 2024 election is giving lobbyists a reason to be hopeful. “These things take time,” Smith said. “We’re excited that we do have different candidates on the congressional level — even the presidential level — that are starting to try to court the crypto voter and are thinking more about how to appeal to that audience.” Wow — SEC Chair Gary Gensler took a lot of heat at the Blockchain Association conference, but the most memorable quote goes to Rep. Ritchie Torres (D-N.Y.): "Mr. Gensler ... went from a crypto cheerleader at MIT to a crypto critic. I've described him as the regulatory equivalent of George Santos," Torres said. “I had to get that joke in because it's going to be dated in about a week." An SEC spokesperson responded: “Many people have lost their livelihoods as victims of fraud and bankruptcies in the crypto space. It’s a market rife with noncompliance. The SEC is addressing challenges in the crypto market with the seriousness they deserve.”
| | | | A message from NRF Foundation:   | | | | | PwC firms fined by audit watchdog — PricewaterhouseCoopers affiliates in Hong Kong and China and a Chinese audit firm agreed to pay $7.9 million as part of a PCAOB enforcement action targeting the audits of U.S.-listed Chinese companies, per Reuters. It followed a deal between Beijing and Washington to allow the PCAOB to inspect the books of Chinese firms listed here. "The days of China-based firms evading accountability are over,” PCAOB Chair Erica Williams said in a statement.
| | | | 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. | | | | | | | | | Republicans dig into OCC hiring controversy — An OCC official is expected to face questions from House Republicans next week about how the agency hired a former chief technology officer who reportedly faked his resume. GOP lawmakers plan to question OCC official Donna Murphy about the issue when she testifies at a Financial Services subcommittee hearing Tuesday, according to a spokesperson for the panel. The OCC declined to comment. Treasury official wins kudos — Todd Conklin, Treasury Deputy Assistant Secretary for the Office of Cybersecurity and Critical Infrastructure Protection, was awarded the Partnership Award by the Financial and Banking Information Infrastructure Committee — Financial Services Sector Coordinating Council at their joint meeting on Wednesday. Conklin has been a key player in Treasury’s efforts to bring together private and public institutions to address cyber risks in the financial system.
| | A message from NRF Foundation: Retail careers are life-changing careers. As the nation’s largest private-sector employer, the retail industry supports one in four U.S. jobs – 52 million working Americans. 32% of Americans’ first jobs were in retail, and more than 60% have worked in retail at some point in their careers. With only 2-5 years of experience in the industry, earnings increase 54%. Those who stay in retail for more than 5 years can expect a staggering 122% increase in compensation. Retail careers also enable faster role advancement, with upward role advancements occurring every 14.5 months. To learn more about how we help people get a first chance or a fresh start in retail, visit nrffoundation.org. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
