GOP rage tamed for House ‘ESG month’

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Jul 10, 2023 View in browser   By Zachary Warmbrodt Presented by Fidelity Investments 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. In the right’s culture war with big business, the Republicans leading Wall Street’s go-to House committee are picking their spots. The House Financial Services Committee on Wednesday will kick off a month of six hearings — culminating with votes on a number of bills — ostensibly aimed at deterring companies from prioritizing environmental and social goals in their operations. Republicans are branding it “ESG month.” It’s a looming agenda that’s had financial firms and lobbyists on edge the last few weeks. Republican politicians — like Florida governor and GOP presidential contender Ron DeSantis — are increasingly adopting an antagonistic tack toward corporations when it comes to pledges they make on climate and diversity. The largest asset managers and banks have faced a barrage of legislative attacks from state Republican officials over financing for energy and guns. But the Financial Services Committee — where a number of senior GOP lawmakers would rather tell government regulators, instead of executives, what to do — doesn’t appear to be following in DeSantis’s footsteps. Instead, in a plan that mostly sounds like something the U.S. Chamber of Commerce may be able to embrace, the committee will target the process in which advocates pressure public companies to adopt ESG goals using the shareholder voting process. The committee is prioritizing oversight of regulators and two proxy advisory firms that most voters have probably never heard of, rather than showcasing the influence of BlackRock, Vanguard and State Street – giant asset managers that have faced intense scrutiny for their ESG practices from other Republicans, including House Judiciary Chair Jim Jordan. Big banks also largely appear to be getting a pass, with the exception of a messaging bill designed to deter lenders from cutting off firearms businesses, crypto firms and energy companies. It’s not a huge surprise if you’ve followed the committee’s leadership. Financial Services Chair Patrick McHenry isn’t the TARP-tanking bomb-thrower he used to be, and he hasn’t shown much interest in using his committee gavel to go after Wall Street’s handling of social issues. Financial executives — even left-leaning ones — see him as a steady hand in a dysfunctional House. Perhaps even more relevant to this month’s hearings, he’s told MM that climate change is real and talked about the need to address the ensuing financial risks. He even caught flack from the likes of Tucker Carlson for keeping diversity and inclusion issues under the jurisdiction of his subcommittees. “My members are intent on sending a message that you can’t kowtow to a far-left agenda and still have Republicans fighting the good fight on behalf of free markets and a marketplace that would benefit these companies,” McHenry told us as he prepared to pursue the chairmanship late last year. “This is a complicated factor for sure. I have a variety of members that are deeply engaged in the subject matter, and you’ll hear a lot more from them, that’s for sure.” Read more — including interviews with committee members and reaction from industry — in a new piece by your MM host and Eleanor Mueller. Happy Monday – They’re baaack (lawmakers, that is). What does Congress have in store for us over the next few weeks? Send tips: Zach Warmbrodt, Sam Sutton.   A message from Fidelity Investments: Fidelity Investments supports eDelivery. Let’s enact it into law. Learn More.   Driving the Week Monday … Federal Reserve Vice Chair for Supervision Michael Barr shares his latest views on bank capital at the Bipartisan Policy Center at 10 a.m. … San Francisco Fed President Mary Daly discusses the economy in a Brookings Institution fireside chat at 11 a.m. … Tuesday … Senate Banking’s housing subcommittee holds a hearing on “abusive” land contracts at 2:30 p.m. … Wednesday … House Financial Services kicks off “ESG month” with a hearing on environmental and social policy in financial regulation at 10 a.m. … The Fed releases its latest Beige Book – an economic survey of businesses around the country – at 2 p.m. … Senate Banking votes on Fed nominees at 2 p.m. … Sen. Elizabeth Warren chairs a Senate Banking subcommittee hearing on bank M&A at 2:30 p.m. … Thursday … House Financial Services holds subcommittee hearings on the proxy process and proxy advisory firms at 10 a.m. and 2 p.m. … SBA IG Hannibal "Mike" Ware testifies on SBA fraud at House Small Business at 2 p.m. … Fed Governor Christopher Waller talks about the economic outlook in a Money Marketeers speech in New York at 6:45 p.m. … Friday … House Financial Services holds a subcommittee hearing on how ESG mandates impact insurance and housing at 9 a.m. …   JOIN 7/11 FOR A TALK ON THE FAA’S FUTURE: Congress is making moves to pass the FAA Reauthorization Act, laying the groundwork for the FAA’s long-term agenda to modernize the aviation sector to meet the challenges of today and innovate for tomorrow. Join POLITICO on July 11 to discuss what will make it into the final reauthorization bill and examine how reauthorization will reshape FAA’s priorities and authorities. REGISTER HERE.     Driving the day Schumer signals hot banking summer — Senate Majority Leader Chuck Schumer said in a letter to Democrats Sunday that the chamber’s July session will include work to advance legislation that would hold bank executives accountable, safeguard cannabis banking and “compete with the Chinese government.” A reminder: Senate Banking approved the bank CEO accountability bill in a bipartisan 21-2 vote in June, and so that’s primed for the floor. It has yet to mark up cannabis banking legislation. We’ll be watching to see the extent to which bank lobbyists chip away at support for the executive accountability bill. Let us know how that quiet opposition campaign is going.   UNLEASH THE FUTURE OF HEALTHCARE WITH POLITICO, A 7/20 INTERACTIVE EVENT: Imagine a future where rare genetic diseases are not only treatable, but potentially curable. Where our approach to chronic illness takes a monumental leap forward. That future is already taking shape in the form of next-generation health care treatments such as gene therapy. Join POLITICO on Thursday, July 20 and delve into the burgeoning field of gene therapies, which hold the power to redefine our health care landscape. Are you ready to explore this new frontier in health care? Don't miss this chance to be part of the conversation. REGISTER NOW.     China Yellen says U.S. and China will keep talking; new China EO isn’t finalized — Treasury Secretary Janet Yellen signaled at a Sunday morning press conference in Beijing that her talks with Chinese officials last week helped make progress in shoring up the frayed relationship between the U.S. and China. In a separate interview, Yellen described potential new outbound investment restrictions as an “if.” Yellen said she and President Joe Biden believe there can be “healthy economic competition” between the two countries, even as they do what they have to do in terms of national security. The major win from Yellen’s visit appeared to be a willingness on the part of both sides to keep talking after years of escalating tensions. “Certainly, I expect our staffs to be in much more regular communication about the full range of issues that we discussed that require greater work,” she said. In a CBS “Face the Nation” interview, Yellen said “no final decision has been made” on a long-awaited executive order that would potentially impose limits on the investments of U.S. companies in China. “It's still something being discussed in the administration and the timing of it is not yet certain,” she said. “But I wanted to explain to my Chinese counterparts that if we go forward with this executive order, that we will do so in a transparent and narrowly targeted way.”   A message from Fidelity Investments:   Regulatory Corner A big morning for bank capital – Fed Vice Chair for Supervision Michael Barr is poised to make news this morning when he talks bank capital requirements at the Bipartisan Policy Center. We’ll be looking for updates on his holistic review of bank capital rules and fresh color on what to expect from an upcoming Fed proposal that will likely require large banks to beef up the buffers they maintain for financial turbulence. Bipartisan congressional oversight of Barr’s work is ramping up. Reps. Andy Barr (R-Ky.) and Bill Foster (D-Ill.) — the top members of the House subcommittee focused on bank regulation — wrote to Barr Friday and urged him to “minimize negative impacts” on lending in his capital review and any new requirements. (h/t to Eleanor for sharing the letter with MM). They asked for details on his review and potential capital reforms — as well as testimony — before the Fed proceeds to any formal rule proposal. They also want the cost-benefit analysis the Fed is using to justify changes to capital requirements. Bipartisan kudos for the FDIC — Reps. Barr and Al Green (D-Texas) in a Friday letter to FDIC Chair Martin Gruenberg commended the agency for shielding small banks as it prepares to impose a fee on lenders to pay for protecting the uninsured depositors of Silicon Valley Bank and Signature Bank. Barr and Green told Gruenberg it’s important to avoid ending up with a barbell banking system, “with a small number of Too Big to Fail institutions on one end, a scattering of small institutions on the other, and little in between.”   A message from Fidelity Investments: Fidelity Investments supports eDelivery. It’s a safe and secure method of delivering sensitive documents. Let’s enact it into law. Learn More.     Follow us on Twitter Mark McQuillian @mcqdc Victoria Guida @vtg2 Katy O'Donnell @katyodonnell_ Zachary Warmbrodt @Zachary Sam Sutton @samjsutton   Follow us

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