| | | | |  | | By Kate Davidson and Aubree Eliza Weaver | Presented by United We Succeed | Editor's Note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers 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.
| | | Sens.Joe Manchin (D-W.Va.) and Susan Collins (R-Maine) have all but sealed the fate of President Joe Biden's nominee to be the nation's top bank regulator. What happens next will determine whether Biden can get anyone confirmed to the job this year, before Republicans potentially take back the upper chamber. The White House said it was sticking by Sarah Bloom Raskin, Biden's pick to be the Federal Reserve's vice chair for supervision, after Manchin and Collins said they would not support her. A spokesman said the administration is working to line up other Republican votes to get her confirmed. Senate Banking Chair Sherrod Brown (D-Ohio) still intends to try to hold a vote on Raskin's nomination, which Republicans have boycotted since last month. "Why would we not move forward, have a vote? Vote her down if they want, but put her up either way," Brown said Monday. He accused Republicans of being "in thrall to the fossil fuel industry," according to our Victoria Guida and Burgess Everett. The Manchin problem Republicans always held out hope that Manchin — who hails from the nation's second-biggest coal-producing state — would come out against Raskin over her views on how regulators should scrutinize lending to the fossil fuel industry. Soaring gas prices and decades-high inflation gave Manchin more fodder to oppose her. In announcing his opposition on Monday, he said Raskin has "failed to satisfactorily address my concerns about the critical importance of financing an all-of-the-above energy policy to meet our nation's critical energy needs." Without Manchin's support, Raskin would need at least one Republican vote on the Senate floor to win confirmation. That seemed a real possibility when she was first nominated — Raskin has been confirmed with unanimous Republican support twice before — but Collins' announcement that she was also a "no" suggests it's highly unlikely now. As one lobbyist put it, why would a Republican help Democrats do something they can't do on their own?
| | | | SUBSCRIBE TO NATIONAL SECURITY DAILY : Keep up with the latest critical developments from Ukraine and across Europe in our daily newsletter, National Security Daily. The Russian invasion of Ukraine could disrupt the established world order and result in a refugee crisis, increased cyberattacks, rising energy costs and additional disruption to global supply chains. Go inside the top national security and foreign-policymaking shops for insight on the global threats faced by the U.S. and its allies and what actions world leaders are taking to address them. Subscribe today. | | | | | What happens next? "Sooner or later, Raskin is going to withdraw to let the White House save face and get off the hook," said Stephen Myrow, managing partner at Beacon Policy Advisors and a former Bush Treasury official. "The sooner she does that, it gives them time to pivot to someone else." The challenge for the White House will be finding someone who can win the support of all 50 Democrats. That may require a serious resetting of expectations, Myrow and others said. When the White House put forward the current group of five Fed nominees, it was viewed as a compromise slate — Biden kept Fed Chair Jay Powell, whom some on the left like Sen. Elizabeth Warren (D-Mass.) opposed, but he put forward Raskin, viewed as a reliable progressive who would help advance the administration's climate agenda. The White House sought to line up broad support for the nominees and avoid a repeat of the disastrous, failed nomination of Saule Omarova to lead the Office of the Comptroller of the Currency. But they found themselves facing a familiar problem: Joe Manchin. Just as they've pared back their expectations on Build Back Better, Democrats may have to accept a more moderate vice chair for supervision, or face the possibility of none being confirmed at all this year. Among the names that have circulated for the job previously: Atlanta Fed President Raphael Bostic, who would likely garner Republican support; former Obama Treasury official Michael Barr, originally a contender for the OCC job; and Treasury under secretary for domestic finance Nellie Liang. "There's a tough conversation to be had in the Democratic Party about where do you go from here," said Jesse Van Tol, president of the National Community Reinvestment Coalition, which supports Raskin's nomination. "Something's got to give. Either you've got to mount a campaign that can win, in terms of pressuring certain people, or you've got to compromise. "Maybe today's news will shake something loose, but it's not clear to me that they're yet having that conversation." IT'S TUESDAY — Beware the Ides of March. (But really, are Democrats at risk two days in a row?) Also, don't forget to send us your questions for Powell at tomorrow's press conference. You'll see the best ones here tomorrow morning. Email: kdavidson@politico.com, aweaver@politico.com, or find us on Twitter @katedavidson and @aubreeeweaver.
| | | | A message from United We Succeed: Proposed new regulations on credit cards would cause millions of low-income and minority Americans to lose access to credit. Research shows that similar regulations on debit cards cost low-income consumers about $160 per year. Furthermore, all credit card users, including individuals and small businesses, would see their points and perks slashed if these regulations pass. Congress should leave credit cards alone! Learn more. | | | | | | Federal Open Market Committee begins its two-day meeting … February producer price index data at 8:30 a.m. … Senate Banking Committee hearing on public transportation in the bipartisan infrastructure law at 10 a.m. DEMOCRATS ON TRACK FOR A CRYPTO COLLISION — Our Zachary Warmbrodt: "Questions around how to police digital currency and whether to support its adoption are driving a rift not just between the party's liberal and centrist wings but also among progressives who often see eye-to-eye on financial regulation. "Sen. Elizabeth Warren of Massachusetts — who has long led the left's charge to crack down on banks and Wall Street — has emerged as one of the party's most vocal cryptocurrency critics, warning that it exposes consumers to danger, is ripe for financial crimes and is an environmental threat because of its electricity usage. "But a new generation of progressives — and a number of other senior Democrats — are embracing the startup industry. They're arguing against regulations that could stifle what proponents say is a new avenue for financial inclusion and a breakthrough alternative to traditional banks." —Also: Blockchain groups from 32 states have banded together to coordinate their playbook for state policy efforts as well as their talking points for Democrats and Republicans on policy issues like taxes and energy, our Susannah Luthi reports. SEC STAFF URGES MARKET VIGILANCE AMID UKRAINE CRISIS — Our Katy O'Donnell: "SEC staff on Monday cautioned market participants to stay on the alert for potential risks to their positions as the Russian invasion of Ukraine continues to rattle financial markets around the world. "Staff of the Division of Trading and Markets released a statement urging broker-dealers and others to 'remain vigilant to market and counterparty risks that may surface during periods of heightened volatility and global uncertainties.'" CTC CREATES TAX REFUND ROLLERCOASTER — Our Brian Faler: "People who received the monthly Child Tax Credit checks lawmakers created last year may be surprised to see those payments are now reducing or even eliminating their tax refunds. Some divorced people could be upset to learn they weren't actually eligible for checks they received and now have to pay the money back. At the same time, some will see fatter refunds, particularly the several million who opted out of the monthly payments."
| | | | A message from United We Succeed:   | | | | | | INFLATION HITS JUST KEEP COMING — WSJ's Nick Timiraos: "For the Federal Reserve, the hits driving inflation keep piling up. Escalating sanctions by the West to punish Russia for its war against Ukraine are driving fears that an episode of increased inflation, already at its highest levels in 40 years, will become harder to wring out of the U.S. economy without a recession. "Before Moscow's invasion three weeks ago, Federal Reserve Chairman Jerome Powell had begun laying the groundwork for a more aggressive series of rate increases, driven by concerns that labor markets were overheating. He and his colleagues were also banking on getting an assist from recovering supply chains later this year, limiting how far rates would have to rise." POWELL ADMIRES VOLCKER, BUT NOW HE MAY HAVE TO ACT LIKE HIM — NYT's Jeanna Smialek: "To Jerome H. Powell, the chair of the Federal Reserve, Paul Volcker is more than a predecessor. He is one of his professional heroes. "'I knew Paul Volcker,' Mr. Powell said during congressional testimony this month. 'I think he was one of the great public servants of the era — the greatest economic public servant of the era.' "Now, if rapid inflation proves more stubborn than policymakers expect, Mr. Powell could find himself in a situation in which he must follow Mr. Volcker's lead. The towering former Fed chair is best remembered for waging an aggressive — and painful — assault on the swift price increases that plagued America in the early 1980s." INFLATION OUTLOOK RISES TO MATCH RECORD IN NY FED SURVEY — Bloomberg's Alexandre Tanzi: "U.S. consumers' outlook for inflation edged up as Russia's invasion of Ukraine sent prices of gasoline and food soaring. The median one-year inflation expectation rose to 6% in February, matching a record set in November 2021, according to the latest consumer survey by the Federal Reserve Bank of New York. In three years, the respondents anticipate a 3.8% rate."
| | | | STEP INSIDE THE WEST WING: What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president's ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today. | | | | | | | | CITIGROUP TO PULL MORE BUSINESS OUT OF RUSSIA — NYT's Lananh Nguyen: "Citigroup, the American bank with the largest presence in Russia, said it would broaden its planned withdrawal from the country because of the war in Ukraine. Citi, which announced plans last April to sell its Russian consumer division, will 'expand the scope of that exit process to include other lines of business,' Edward Skyler, the bank's executive vice president for global public affairs, said in a statement on Monday." TREASURY'S ADEYEMO: U.S. TO KEEP UP ECONOMIC PRESSURE ON RUSSIA — Reuters: "The United States will continue take actions to put pressure on Russia's economy and take away resources from Russian President Vladimir Putin's invasion of Ukraine, Deputy U.S. Treasury Secretary Wally Adeyemo told CNBC on Monday . Asked if the Biden administration would meet Ukrainian President Volodymyr Zelenskiy's demands to close international waterways for Russia and to implement a full trade embargo against Moscow, Adeyemo said the United States would take actions consistent with Zelenskiy's goals, but declined to be specific."
| | | WHAT WE'RE LISTENING TO — Former FDIC Chair Sheila Bair on IntraFi's Banking with Interest podcast , out this morning, talking crypto, inflation, CRA reform and more. On last year's blow-up over the FDIC board leadership, Bair says: "I think all the people on these agencies are good people, but I think to some extent, they think that they know their patrons expect them to fight the good fight and raise the political banner. I don't think that's what people want or should want. … I do worry that this was, you know, this was not a good thing for the FDIC." The key to a $4 billion fraud case? A banker who says he 'lied a lot.' — NYT's Matthew Goldstein China is battling its biggest Covid surge since the start of the pandemic and has locked down multiple cities including Shenzhen, its technology hub, in a move that threatens already brittle global supply chains. — FT's Ryan McMorrow, Primrose Riordan, Gloria Li and Kathrin Hille Citigroup is founding a hub for new investment bankers in the southern Spanish city of Malaga, as the Wall Street lender seeks to gain an edge in the fierce war for talent by offering younger employees a better work-life balance. — FT's Stephen Morris
| | | | A message from United We Succeed: Big retailers are pressuring Congress to regulate credit cards in a way that would unfairly punish consumers and put their private financial information at risk. These proposed changes would be especially tough on Americans in low income and minority communities. When Congress voted to impose similar regulations on debit cards, consumers were promised lower prices. It didn't happen. Instead of any consumer benefits, many low income and minority Americans lost access to the banking system. If these regulations were expanded, millions could lose access to credit. Community banks and credit unions rely on revenue from card programs to serve low income and rural communities. These proposed regulations put those programs at risk. They would also threaten the security of credit cards by introducing alternative networks to process transactions - all without the consumers' knowledge. Congress must not make the same mistakes with credit cards! Learn more. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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