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Presented by Mastercard: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | |  | | By Zachary Warmbrodt | | | 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.
| | An MM scooplet to kick off your morning: Senate Banking Chair Sherrod Brown is reviving legislation to crack down on tech companies that want to get into banking. The Ohio Democrat’s bill would ratchet up federal regulation of firms outside the banking industry that obtain industrial loan company charters — a type of state-level license — to expand into financial services. Brown’s rallying cry is that consumers are at risk as tech giants become even bigger players in finance but aren’t subject to the same safeguards as traditional lenders. The CFPB has highlighted similar concerns in new rules aimed at Apple Pay and Google Pay. “Letting Big Tech and commercial companies operate banks without proper oversight will only open doors for predatory lending, invasions of consumer privacy and broader financial instability,” he said. Brown’s plan is getting a bipartisan boost. Republican Sens. John Kennedy of Louisiana, Mike Braun of Indiana and Roger Wicker of Georgia are co-sponsors, in addition to Sens. Bob Casey (D-Pa.) and Chris Van Hollen (D-Md.). The bill is also backed by the Ohio Bankers League, the Bank Policy Institute, the Independent Community Bankers of America and Americans for Financial Reform. In the House, Rep. Sean Casten (D-Ill.) is trying to trigger similar bipartisan resonance behind another fintech target: strengthening anti-money laundering safeguards in crypto. His partner across the Capitol, Sen. Elizabeth Warren (D-Mass.), has succeeded in recruiting Republicans to sign on to legislation and make demands of the Biden administration, but Casten has yet to lock down GOP allies. The Republican-led House at this moment is notably more crypto-friendly than the Senate. Casten told our Eleanor Mueller that he’s in talks with several Republicans on and off the Financial Services Committee and that he’s hopeful he’ll bring someone around soon. Casten is facing resistance from what he calls “very libertarian, crypto-bro types” but sees an opportunity with national security hawks. “There's a substantial overlap of that Venn diagram of people who understand the national security threats … and who are frustrated with the more extreme members of their caucus that make it hard for them to do things like support Ukraine, stand up to Putin and limit the ability for Iran to get money to Hamas,” he said. Happy Friday — MM will be with you for one more week in 2023. What are we missing? What’s next? Send tips to zwarmbrodt@politico.com.
| | A message from Mastercard: Small businesses are the backbone of our communities, and Mastercard understands that every business has unique needs. Alongside partners, Mastercard supports small business owners with innovative and tailored tools, resources and solutions. With Mastercard, small businesses can connect to capital, technology, financial tools and more, to help grow and protect their business every step of the way. Learn more about how Mastercard supports small businesses at mastercard.us/smallbusiness. | | | | | The Congressional Budget Office will release its views on the economy through 2025 at 11 a.m. Spoiler alert — Per the FT, the ECB and the Bank of England on Thursday refused to declare victory over inflation, putting a damper on a market rally fueled by signals of Fed rate cuts. ECB President Christine Lagarde said there was “work to be done” and Bank of England Governor Andrew Bailey said there was “still some way to go” as they held rates steady. JPMorgan Asset Management’s Oksana Aronov told Bloomberg that she doesn’t expect the Fed to ease monetary policy until the end of next year, if at all. “I know this is a crazy notion right now but we think that on balance, there is more of a risk of a hike next year than these aggressive cuts that people are pricing in,” she said. For the soft landing file — The WSJ reports that November saw a surprise increase in retail sales, according to Commerce Department data released Thursday. Separately, the Atlanta Fed raised its forecast for fourth-quarter economic growth to a 2.6 percent annualized rate, from 1.2 percent earlier this month. Yellen on China — Treasury Secretary Janet Yellen outlined how the Biden administration plans to minimize tensions with Beijing, per Doug Palmer. She plans to make a second trip to China next year. Andreessen Horowitz gets political — The VC firm said it will start backing candidates who align with its vision and values for technology, including AI and crypto. "Every penny we donate will go to support like-minded candidates and oppose candidates who aim to kill America’s advanced technological future," cofounder Ben Horowitz said in a post on the company's site. “Continuing to stabilize our relationship to prevent escalation won’t make news,” Yellen said in a speech to the U.S.-China Business Council. “But our economies, our people — and, again, also economies and people around the world — will be safer and more secure.”
| | | | Yellen, financial regulators sound alarm on AI — The Financial Stability Oversight Council — a Treasury-led panel of top banking and markets regulators — said Wall Street’s adoption of AI is a brewing risk, and they called for tougher oversight, per Declan Harty. The council in its annual report said for the first time that AI is “an emerging vulnerability.”
| | | | A message from Mastercard:   | | | | | McHenry, Warren plot crypto moves — Must-pass government funding legislation and even the farm bill are shaping up to be crypto policy battlegrounds next year. House Financial Services Chair Patrick McHenry told our Jasper Goodman that he’s eyeing the bills as potential vehicles for his sweeping crypto legislation, after he was unable to attach it to the NDAA. He also wants to schedule standalone floor votes on his proposals. "That can help us leverage the policy ... with proof of bipartisan support,” he said. Sen. Elizabeth Warren in an interview with Eleanor also floated January and February's government funding bills as potential avenues to pass her legislation that would ratchet up anti-money laundering safeguards in crypto. "The point I want to underscore is the urgency,” she said. The latest on the credit card fee debate — The Congressional Research Service said that the impact of credit card processing changes like those proposed by Sens. Dick Durbin (D-Ill.) and Roger Marshall (R-Kan.) is unclear, per Eleanor. CRS said “the ultimate impact of routing restriction prohibitions is not certain” and that “if it is impactful, it is unclear who would benefit." It’s also uncertain how the bill would move forward amid a fierce lobbying battle between the banking industry and retailers. Marshall said in an interview that he saw no path forward at this point. "I don't know there's going be any package that we can amend it to right now," Marshall said. "So it's tough times here at Ridgemont High." He added that he was "disappointed" that the Senate Banking Committee had not held a hearing, and that "the silence is deafening" from Senate Banking Chair Sherrod Brown. "He hasn't talked to me," Brown said in an interview. "Maybe he's not reading the right papers." Crypto bill-backing Democrat to leave the House — Rep. Wiley Nickel, a first-term North Carolina Democrat who serves on House Financial Services, will not seek re-election and will instead explore a Senate run. Nickel was one of the few Democrats to support McHenry’s crypto bills when the committee approved them in July.
| | EU gives banks a pass on due diligence rules — EU officials backed rules that will force companies to safeguard the environment and human rights in their supply chains, our Antonia Zimmermann reports. Banks and insurers won carve-outs sought by France. The rules will apply to some non-EU firms, which has been a concern for lawmakers and Biden administration officials.
| | A message from Mastercard: Whether it’s setting up shop online, accepting digital payments, or boosting cybersecurity readiness, Mastercard connects small businesses with the support they need to help reach their goals. With Mastercard, small businesses can connect to capital, technology, financial tools and more, to help grow and protect their business every step of the way. And as part of Mastercard’s community, small business owners can hone their skills and learn new ones to help build, manage, and grow their enterprises. Small businesses are the backbone of our communities, and Mastercard understands that every business has unique needs. By helping business owners reach their goals, we’re helping make our economy stronger together. Learn more about how Mastercard supports small businesses at mastercard.us/smallbusiness. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
