| | | | |  | | By Kate Davidson and Sam Sutton | Presented by Mastercard | 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. FDIC NOMINEES — If you had this on your Bingo card this week, we hope you bought some lotto tickets: President Joe Biden announced his intent to nominate two Republicans to the Federal Deposit Insurance Corp. board, and the White House says he'll soon announce a nominee to be chair, our Victoria Guida reported. Travis Hill , nominated to be vice chair, worked as a senior adviser to former FDIC Chair Jelena McWilliams and was previously senior counsel on the Senate Banking Committee Republican staff. Jonathan McKernan, nominated to be a director, is a senior counsel at the Federal Housing Finance Agency, currently on detail to the Senate Banking Committee's GOP staff, and worked at the Treasury Department and for Sen. Bob Corker (R-Tenn.). Timing is everything: These GOP nominees likely aren't going anywhere until the White House puts forward a Democratic nominee to be chairman. That's because their confirmation would effectively hand over control of the board to Republicans. Stay with us: If Hill is confirmed as the vice chair, then under FDIC bylaws he would automatically become acting chairman, replacing the current Democratic acting chairman Marty Gruenberg, whose term as director has already expired. Likewise, if McKernan is confirmed as a member of the board, he would replace Gruenberg — at least, that's the way we understand it based on conversations with several folks who follow the agency closely. A White House official told Victoria the plan is to move all three nominees together.
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Martin Gruenberg has led the FDIC as acting chairman since February, after a partisan blowup prompted the previous GOP chair to step down. | Andrew Harnik/AP Photo | The big question: Will the White House nominate Gruenberg as chairman? We hear a decision hasn't yet been made. Which begs the question everyone was asking: Why did they announce these Republican nominees without all their ducks in a row? Also, why now? Up until 3 p.m. yesterday, many people — your MM host included — were under the impression that Biden had no plans to nominate anyone to the FDIC anytime soon. The announcement follows a bitter partisan fight at the agency last year that eventually prompted the then-Republican chair to step down. That has left the board's three Democratic members — including CFPB Director Rohit Chopra and acting Comptroller Michael Hsu — to steer the agency's agenda unencumbered. If the nominees are confirmed, it would bring GOP voices back to the board and mark the first time the FDIC has had a full slate since 2015, per Victoria. IT'S WEDNESDAY — We've got bank CEOs in the morning, Powell & Co. in the afternoon and a stiff drink (or maybe a relaxing tea!) penciled in for the evening. Have tips, story ideas or words of encouragement? Please send them to kdavidson@politico.com and ssutton@politico.com.
| | | | A message from Mastercard: See what's possible when you partner with Mastercard. Learn More. | | | | | | Existing home sales data released at 10 a.m. … House Financial Services hearing with large retail bank CEOs at 10 a.m. … Consumer Financial Protection Bureau Director Rohit Chopra speaks to the Exchequer Club at 12 p.m. … Fed policy statement released at 2 p.m. … Fed Chair Jerome Powell press conference at 2:30 p.m. IT'S FED DAY — From our Victoria Guida: "The Federal Reserve is poised to deploy another supersized interest rate hike to fight the sharpest price surge in 40 years, a move that has drawn remarkably little political pushback despite rising market anxiety just weeks before an election. "That could change, with more and more voices from Washington to Wall Street warning that the central bank might end up doing serious damage to the economy." MEA CULPA — We shared some data with you in yesterday's MM from the Bank Policy Institute, which showed that Zelle — a consortium-owned instant payments app — has a much smaller share of disputed transactions than its nonbank competitors. Unfortunately, we mixed up the numbers — the share of disputed transactions are three times higher for PayPal and six times higher for Cash App than they are for Zelle, which sees just 0.06 percent of transactions disputed on average, according to BPI. Thanks to our eagle-eyed readers for catching this. CHIDING CHINA — Treasury Counselor Brent Neiman took China to task over its lending practices in a speech Tuesday at the Peterson Institute for International Economics, calling on one of the world's biggest sovereign creditors to do more to help low-income countries restructure their debt. Mark Sobel, a former Treasury official and U.S. chairman at the Official Monetary and Financial Institutions Forum, tells MM it's the most fulsome speech he's seen a Biden administration official deliver on the issue. But the tension between the U.S. and China and lack of engagement between American and Chinese financial authorities means the Treasury doesn't have much leverage to prod China to change (as Sobel wrote in the FT last month). "The IMF is really going to be the actor that's seen as neutral," he said. "I don't think the World Bank, with David Malpass there, can be seen as neutral. That really puts a special burden on the IMF to make forward progress."
| | | | DON'T MISS - MILKEN INSTITUTE ASIA SUMMIT : Go inside the 9th annual Milken Institute Asia Summit, taking place from September 28-30, with a special edition of POLITICO's Global Insider newsletter, featuring exclusive coverage and insights from this important gathering. Stay up to speed with daily updates from the summit, which brings together more than 1,200 of the world's most influential leaders from business, government, finance, technology, and academia. Don't miss out, subscribe today. | | | | | STABLECOIN BILL TAKES SHAPE — Our Sam Sutton and Declan Harty: "Rep. Patrick McHenry (R-N.C.) … who has been working with Committee Chair Maxine Waters (D-Calif.) on the legislation since early July, told an audience at a POLITICO Live event on cryptocurrency regulation that he is 'optimistic and hopeful' that the bill will come forward this year despite the clock winding down to the midterm elections." Also: "Democrats on the Financial Services Committee met on Tuesday evening to go over a draft of the bill that subjects non-bank payment stablecoin issuers to Federal Reserve oversight while maintaining a role for state regulators." GUN STORE CODES — Sam again: "Two dozen Republican state attorneys general fired off a letter to American Express, Mastercard and Visa on Tuesday demanding the companies reconsider plans to adopt a dedicated merchant category code for gun stores – something long-sought by gun control activists and Democratic policymakers." MS SETTLEMENT — And more from Declan: "Morgan Stanley Smith Barney has agreed to pay $35 million to settle charges by the SEC that it failed to protect critical information about roughly 15 million customers." STUDENT LOAN CHALLENGE — WSJ's Gabriel Rubin and Jacob Gershman: "The Biden administration and Republican opponents of mass student debt cancellation appear headed for a legal confrontation with hundreds of billions of dollars at stake just weeks before the November midterm elections."
| | | BIG BANKS PARE PROPERTY LENDING — Bloomberg's John Gittelsohn, Hannah Levitt and Natalie Wong: "Banks including Wells Fargo & Co., Bank of America Corp. and JPMorgan Chase & Co. have pulled back on financing for offices and other commercial real estate following a record burst of lending in the first half of this year." FORD FALLS — Reuters' Kannaki Deka and Noel Randewich: "Ford Motor Co's stock tumbled over 12% on Tuesday in its deepest one-day decline in over a decade after the automaker said inflation-related costs would be $1 billion more than expected in the current quarter and that parts shortages had delayed deliveries." A SPAC KING DETHRONED — Bloomberg's Bailey Lipschultz: "'SPAC King' Chamath Palihapitiya is winding down two blank check firms after a hunt to find targets to take public came up empty as the industry fizzles."
| | | | A message from Mastercard:   | | | | | | WHO GETS THE KIDS? — WSJ's Jean Eaglesham: "Ernst & Young's tax experts bring in lots of cash and are highly valued by the firm's clients. Many members of the 70,000 strong group don't know where they will be working next year, or if they will be competing against each other. … More than any other large group at the firm, the tax team will be dismembered in the split. Carving up that unit ' will probably be the trickiest part' of EY's breakup, according to Mark O'Connor, chief executive of Monadnock Research, which analyzes the consulting industry." STRONG ARM — WSJ's Julia Carpenter: "Use of adjustable-rate loans surged in recent months . As of August 2022, more than 9% of all mortgage applications were for ARMs, according to the Mortgage Bankers Association, up from 3.3% this same time last year."
| | | | JOIN THURSDAY FOR A GLOBAL INSIDER INTERVIEW : From climate change to public health emergencies and a gloomy global economic outlook, the world continues to deal with overlapping crises. How do we best confront all of these issues? Join POLITICO Live on Thursday, Sept. 22 at 10:30 a.m. EDT for a virtual conversation with Global Insider author Ryan Heath, featuring World Bank President David Malpass, to explore what it will take to restore global stability and avoid a prolonged recession. REGISTER HERE. | | | | | | | | HEAD SCRATCHER — "The saga over cryptocurrency regulation took another twist courtesy of a comment buried in a Securities and Exchange Commission lawsuit that hints at a case for US jurisdiction over the Ethereum blockchain … The SEC was already circling Ether, the blockchain's native token, after the digital ledger's upgrade last week to a much more energy-efficient system. SEC Chair Gary Gensler signaled a feature of this revised approach, whereby Ether holders can earn financial rewards by allowing the network to use some of their assets, could fall under securities rules."
| | | Jason Cole has joined FS Investments, an alternative asset manager based in Philadelphia, as executive director for public policy and corporate affairs. Cole worked previously at CBC Companies, MetLife and UBS, and is a House alum.
| | | Goldman Sachs earns billions of dollars a year advising moguls and giant corporations. Behind the scenes, small business owners are getting its gold-plated services free. — WSJ's Charley Grant The robots are here. And they are making you fries. — WaPo's Laura Reiley and Lee Powell Gap Inc. is cutting 500 corporate jobs as it contends with growing costs and weaker sales figures. — Bloomberg's Olivia Rockeman and Jeannette Neumann
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