Anti-woke GOP attacks inequality with deregulation

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Feb 09, 2023 View in browser   By Zachary Warmbrodt Presented by 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. House Republicans are rolling out a plan to retool the financial industry to reduce wealth disparities and boost the underbanked. That's right, Republicans. You may think they’re taking a page from Democrats’ diversity and inclusion playbook — as Tucker Carlson and other conservative pundits have complained. But don’t be mistaken. It’s all about deregulation. Republicans on the House Financial Services Committee on Wednesday crammed in three hearings showcasing regulatory rollbacks in banking and capital markets. GOP lawmakers cast the measures as their answer to economic empowerment.  “Expanding opportunities for all investors and entrepreneurs is not just a moral imperative, but it is also essential for the growth and prosperity of our economy,” said capital markets subcommittee Chair Ann Wagner (R-Mo.). She led a hearing on loosening safeguards for investing in privately held companies. It featured supportive testimony from representatives of Investors of Color network and the Hispanic startup-focused Angeles Investors. Another hearing led by financial institutions subcommittee Chair Andy Barr (R-Ky.) showcased his “Promoting Access to Capital in Underbanked Communities Act”— a bill that would give startup banks a three-year break on having to fully comply with capital requirements designed to prevent their failure. The framing was notable after Republicans did away with Democrats’ subcommittee dedicated to financial industry inclusion and increasingly bash Wall Street firms that they deem too “woke” because of their societal goals.  The bills Republicans showcased would be a boon to not just little banks and individual investors but also major corporations and sophisticated financiers. One bipartisan proposal would help shield the biggest financial institutions from tougher regulation by the Federal Reserve if regulators think their failure would threaten the financial system. The hearings allowed for some pushback on the GOP premise. Renita Marcellin, with Americans for Financial Reform, said that many of the proposals featured at the hearing on banking regulations “represent regression from the path to creating a more equitable banking system that works for working-class communities.” Rep. Maxine Waters, the committee’s top Democrat, put it bluntly to our Eleanor Mueller when asked about easing safeguards to boost access to financial services: “We're not going to let them roll back regulations that are protecting the citizens of this country.” The Republicans’ approach underscored why some lobbyists aren’t exactly quaking in their boots even as GOP lawmakers criticize executives at big banks and money managers for moving too far to the left.  “They can walk and chew gum at the same time, if you will,” one Wall Street advocate told MM. It’s Thursday morning — Do you know where our scoops are? Please send tips to zwarmbrodt@politico.com and ssutton@politico.com. A message from the American Bankers Association: An estimated one in five seniors is a victim of financial exploitation, costing an average of $120,000 per person — and adding up to billions of dollars lost annually. Thanks to the ABA Foundation’s Safe Banking for Seniors program and other industry initiatives, banks across the U.S. are protecting seniors from scams and fraud. Learn more.   Driving the Day Senate Banking has a hearing on the state of housing at 10 a.m. … Senate Finance has its organizational meeting at 10:45 a.m. … Treasury Secretary Janet Yellen talks about multilateral development banks at CSIS at 11:30 a.m. … Yellen preview — Yellen, who in October called for the World Bank and other multilateral development banks to revamp their operations, will give an update on progress so far and the way forward when she speaks this morning at a CSIS event, according to a Treasury spokesperson. She will also report back on her recent trip to Africa. Dimon: Don’t get cocky on inflation — JPMorgan Chase CEO Jamie Dimon told Reuters that “people should take a deep breath” before declaring victory on inflation, amid signs that it’s easing. He said the U.S. economy is in good shape but that “sticky” inflation could make the Fed raise interest rates above 5 percent. JPMorgan is cutting hundreds of mortgage employees as the home-lending business takes a hit from higher rates, according to Bloomberg. Barkin Q&A — Richmond Fed President Thomas Barkin told our Victoria Guida in a new interview that he doesn’t love the word “pause” when it comes to talking about when the Fed might stop raising rates and assess the impact on the economy. “You’re always in the mode of being ready to react to inflation,” he said. “You don't have to raise rates at every meeting, or every other — whatever. But that doesn’t mean that you wouldn’t raise rates if inflation were to continue to alarm you.” Biden downplays post-balloon tensions — President Joe Biden denied that ties between the U.S. and China have taken a big hit in the wake of the spy balloon saga. “Look, the idea shooting down a balloon that’s gathering information over America, and that makes relations worse?” he said on PBS NewsHour. “Look, I made it real clear to Xi Jinping that we’re going to compete fully with China but we’re not going looking for conflict.”   JOIN POLITICO ON 2/9 TO HEAR FROM AMERICA’S GOVERNORS: In a divided Congress, more legislative and policy enforcement will shift to the states, meaning governors will take a leading role in setting the agenda for the nation. Join POLITICO on Thursday, Feb. 9 at World Wide Technology's D.C. Innovation Center for The Fifty: America's Governors, where we will examine where innovations are taking shape and new regulatory red lines, the future of reproductive health, and how climate change is being addressed across a series of one-on-one interviews. REGISTER HERE.     Crypto House Republicans try to sidestep crypto rift — The GOP chairs of the House Financial Services and Agriculture Committees are signaling that they want to avoid a clash when it comes to writing rules for digital assets, Eleanor and POLITICO’s Meredith Lee report. It’s a delicate situation because they share jurisdiction over the crypto market. House Agriculture Chair G.T. Thompson said in an interview that he and Financial Services Chair Patrick McHenry “have an ongoing conversation, and I think that’s important on any issue, whether it's digital commodities or [anything else].” One Republican aide granted anonymity to speak about the conflict said there has been discussion about holding joint committee roundtables for staff. Bank regulators get GOP warning — Recent moves by federal bank regulators to warn lenders about their crypto offerings are starting to trigger a political backlash. Sen. Bill Hagerty, a Republican on the Banking Committee, said on Twitter that “regulators singling out business activities should alarm all Americans.” “It doesn’t matter if it’s cryptoassets, firearms, or any other lawful business, using banking regulators to advance political agendas should not be tolerated,” he said.   A message from American Bankers Association:   Regulatory Corner McHenry's data privacy bill sees pushback — Eleanor reports that Financial Services Chair Patrick McHenry's proposed data privacy revamp faced resistance from the committee’s top Democrat and questions from key industry groups at a Wednesday hearing that set the stage for a potential vote later this month. Rep. Maxine Waters criticized the bill because it would preempt state-level privacy laws for financial firms in a bid to set a federal standard. Faster trades on the way — Our Declan Harty reports that the SEC will vote Feb. 15 to finalize a rule that would accelerate the amount of time it takes to settle a stock trade. The push gained steam after the GameStop blowup, when brokerages including Robinhood were overwhelmed by margin demands, highlighting risks traders face during settlement windows. Treasury sees problems in the cloud — The Treasury Department on Wednesday warned that financial firms face potential risks from their increasing dependence on cloud computing services, including exposure to cyber attacks and reliance on a small number of cloud providers. Europe tells banks to increase capital — The European Central Bank told lenders to add more to their capital buffers, our Bjarke Smith-Meyer reports. The head of the ECB’s supervisory arm said banks have fared well during the conflict in Ukraine but that “challenges will remain as long as the war drags on, and the effects of rising interest rates warrant careful monitoring.” BIS chief: New rules needed for big tech — Bjarke also reports that Agustín Carstens, the head of the Bank for International Settlements, is arguing that existing financial services rules are ill-equipped for tech giants that are wading deeper into the market.   DOWNLOAD THE POLITICO MOBILE APP: Stay up to speed with the newly updated POLITICO mobile app, featuring timely political news, insights and analysis from the best journalists in the business. The sleek and navigable design offers a convenient way to access POLITICO's scoops and groundbreaking reporting. Don’t miss out on the app you can rely on for the news you need, reimagined. DOWNLOAD FOR iOS– DOWNLOAD FOR ANDROID.     Fly Around Disney slashes jobs — NYT: “Disney expects to cut costs by $5.5 billion and eliminate roughly 7,000 jobs, or about 4 percent of its global total.” Tally of misspent Covid aid rises — POLITICO: “The Labor Department’s internal watchdog identified nearly $30 billion more in pandemic unemployment benefits that were wrongfully sent out than previously estimated, according to testimony submitted Wednesday to the House Ways and Means Committee.” Hyundai in discussions with DOL over Alabama child labor — Reuters: “Hyundai Motor Co said it is in talks with the U.S. Department of Labor to resolve concerns about child workers in its U.S. supply chain, and the company is taking corrective actions after a Reuters investigation found children as young as 12 working in hazard-laden Alabama factories linked to the automotive giant.” A message from the American Bankers Association: Older Americans hold approximately 65% of bank deposits in the U.S., and criminals see this as an opportunity for financial exploitation. America’s banks are fighting back to protect seniors and their money. Through the ABA Foundation’s Safe Banking for Seniors program, banks of all sizes help older adults, their families and financial caregivers understand and mitigate the risks of elder financial exploitation. Learn more about how banks are safeguarding America’s seniors.     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

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