A short, quiet ride with Sam Bankman-Fried

Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy.

Jan 04, 2023 View in browser   By Sam Sutton 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. NEW YORK — Sam Bankman-Fried might actually be listening to his attorneys. A little more than an hour before his arraignment in a criminal case that could send him to prison for decades if convicted, the FTX founder stood with his attorney Mark Cohen under a statue of Lady Justice at a federal courthouse — doing everything he could to avoid eye contact with the reporters scribbling nearby in a hallway. Of course, as anyone with a pulse knows, the severity of Bankman-Fried's alleged crimes has not turned him press shy over the last two months. Prior to his arrest, the former billionaire went on a media tour that could only provide ammunition to investigators as they drew up charges. Even after being released to his parents' California home on bail, Bankman-Fried reportedly met with the author Michael Lewis — who has been preparing a book on FTX since before its collapse — as well as crypto influencer Tiffany Fong. He's tweeting again. But as Bankman-Fried rode a crowded elevator up 21 floors to the courtroom, flanked by his attorney, his mother — the legal scholar Barbara Fried — and reporters who'd rushed into the car, Cohen eyed his client and pressed his finger to his lips. For once, Bankman-Fried kept quiet. More on his arraignment from Sam Sutton: "Bankman-Fried pleaded not guilty in federal court in Manhattan on Tuesday to criminal charges alleging the disgraced crypto industry titan led a massive international scheme that siphoned billions of dollars from consumers and investors … "Judge Lewis Kaplan of the Southern District of New York set a tentative date of Oct. 2 for the trial. Prosecutors are expected to provide evidence to Bankman-Fried's defense team within the next four weeks, though more could be uncovered as investigators continue to dig through his complex network of investments and holding companies… "Clad in a dark suit and a hastily tied blue tie with white spots, Bankman-Fried did not speak during the hearing — only occasionally whispering to his attorney Mark Cohen as prosecutors successfully argued for tighter bail conditions that prohibit him from accessing or transferring any assets belonging to the failed crypto exchange and Alameda." IT'S WEDNESDAY — Why do days like this always happen during dry January? Please send tips to ssutton@politico.com and zwarmbrodt@politico.com. Driving The Day Job openings data will be released at 11 a.m. … Secretary of State Antony Blinken will outline the U.S.'s global strategy for women's economic security at 11 a.m. … Fed minutes will be released at 2 p.m. WHO'S THE BOSS? NOT McHENRY — Our Eleanor Mueller: Congress started its new session in chaos. Lawmakers were on the floor for nearly six hours straight on their first day back as they voted repeatedly on House speaker — and a majority remained out of reach for Rep. Kevin McCarthy (R-Calif.). As House Financial Services Chair Patrick McHenry (R-N.C.) described it to reporters off the House floor Tuesday night, it was all "a bit shambolic." Hallways swarmed with members' spouses and kids; reporters; Republicans darting to the bathroom; the lost staffers of newly installed lawmakers; and flatbeds stacked with pizzas. Democrats, meanwhile, sat back and enjoyed the show. So what happens now? Rep. Ralph Norman (R-S.C.), who voted repeatedly against McCarthy, told reporters "you'll see a lot of different names coming up," though he declined to get into "the personalities or the people" who might lead the chamber instead. Some have floated McHenry — one of McCarthy's top advisers — as an alternative. "That is abuzz right now," said Financial Services' Rep. Bill Huizenga (R-Mich.), who told Eleanor that he has discussed that possibility with the North Carolina Republican. "It's a big question," he added. "Anybody who is reasonable or rational would have to be ready to turn their whole life upside down to do this job or be criticized to death." But McHenry himself — who once served as chief deputy whip to former House Speaker John Boehner (check out this fun POLITICO read on their relationship back in the day) — says he wants to stick with his committee gavel. Asked if he was interested in the job, he told Eleanor he was "interested in getting Kevin McCarthy over the line to become speaker." Rep. Pete Sessions (R-Texas) doesn't see McHenry in the role: "He and I are good friends," but "it's outside of where we are. I don't think it's a third alternative," he said. "What they're after — that we have figured out — is Kevin." X GON' GIVE IT TO YA — Our Rebecca Kern, Sam, Ruth Reader and Tanya Snyder: "Even before Elon Musk's dramatic and controversial takeover of Twitter, the restless mogul was pitching the social-media company as his key to realizing a much bigger dream … But building a 'super-app' like WeChat is a far more complicated challenge than Twitter, with far more points of conflict with regulators in Washington, California, Brussels and elsewhere. Nothing like it exists yet in the West, and it could create a 'regulatory nightmare,' said Caitriona Fitzgerald, the deputy director for the Electronic Privacy Information Center, a nonprofit that advocates for privacy reform." Regulatory Corner EYES ON — Our Katy O'Donnell: "The CFPB will consider new ways to regulate credit reporting companies, Director Rohit Chopra said Tuesday, as the agency released its annual report on consumer complaints regarding the three companies that dominate the industry." TREAD CAREFULLY — Our Victoria Guida: "Bank regulators on Tuesday highlighted risks posed by cryptocurrencies that lenders should be aware of but emphasized that they're not discouraging firms from providing financial services to players in that sector." DON'T DO THAT — Bloomberg's Austin Weinstein and Chris Dolmetsch: "A former chief financial officer for blank-check firms pleaded guilty to wire fraud in a scheme to embezzle more than $5 million to trade crypto assets and meme stocks." THE ESG WARS CONTINUE — Our Jordan Wolman: "BlackRock Inc., JPMorgan Chase & Co. and Citigroup Inc. have been named to a list of firms subject to divestment by Kentucky's state government over lending and financing practices that state Treasurer Allison Ball claims amount to a boycott of fossil fuels." Markets A TROUBLING INDICATOR — A St. Louis Fed blog post noted that 27 states reported negative growth in October — a sign that the U.S. economy could be on the verge of a recession. MAESTRO — Bloomberg's Ana Monteiro: "Former Federal Reserve Chair Alan Greenspan said a US recession is the 'most likely outcome' as the central bank tightens monetary policy to curb inflation." OFF TO A GREAT START — WSJ's Caitlin Ostroff and Vicky Ge Huang: "U.S. stocks slipped Tuesday to kick off the new year, pulled lower by investor favorites such as Tesla and Apple." — WSJ's Peter Rudegeair: "The banks of the future are having a rough present. Financial-tech companies, long hyped for their vision of bringing Silicon Valley-style innovation to the businesses of lending, investing and payments, underperformed both financial stocks and tech stocks more broadly in 2022." WATCH THIS SPACE — FT's Antoine Gara: "One of the largest endowments in the US is making a $4bn investment into Blackstone's flagship private real estate investment trust, in a move intended to shore up confidence in a $69bn fund that put limits on investor withdrawals last year after suffering heavy redemptions." Jobs Report Brian Morgenstern is starting as head of public policy for Bitcoin mining and digital infrastructure company Riot Platforms, Inc. He most recently was principal at Win the Future Strategies, LLC and is a Trump White House and Treasury Dept. alum. — Daniel Lippman Liz Bourgeois has left the Treasury Department where she was a senior adviser for public affairs. She has been named as chief communications officer for the startup Handshake, a top recruiting platform for college and grad students looking for their first job. — Daniel Lippman   Follow us on Twitter Mark McQuillian @mcqdc Ben White @morningmoneyben Victoria Guida @vtg2 Katy O'Donnell @katyodonnell_ Zachary Warmbrodt @Zachary Sam Sutton @samjsutton   Follow us

To change your alert settings, please log in at https://www.politico.com/_login?base=https%3A%2F%2Fwww.politico.com/settings This email was sent to rouf@idiot.cloudns.cc by: POLITICO, LLC 1000 Wilson Blvd. Arlington, VA, 22209, USA Please click here and follow the steps to unsubscribe.