McHenry’s next move

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Oct 27, 2023 View in browser   By Zachary Warmbrodt and Eleanor Mueller 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. QUICK FIX Fans of Rep. Patrick McHenry — and MM can confirm there are many of you — may be disappointed that he didn’t become speaker. But he has a consolation prize. He’s running for reelection, which wasn’t seen as a sure thing after 10 terms. And he isn’t ruling out a move that the finance world would love — hanging on another few years as the GOP leader of the Financial Services Committee, even though he’ll face a term limit in 2025. “I’m not prepared to talk about it,” McHenry said at the Capitol Thursday. “Let me have at least a little comedown off the speaker pro tem thing.” Committee Republicans who might be McHenry’s successors are starting to clear a path. “He’s a strong leader and I’ve always supported him,” said Rep. Blaine Luetkemeyer (R-Mo.), who has previously signaled that he’d go for the post if it opened up. “He’s done a good job and I will not challenge him for that position.” Per House GOP rules, McHenry would have to seek a waiver to keep serving beyond his six-year term. It’s not out of the question after Rep. Virginia Foxx (R-N.C.) won such a pass to keep leading the education and workforce committee this year. Luetkemeyer said other GOP chairs are in the same position. "He can look for it,” Foxx said. “I don't know how that will work out." One thing we do know: McHenry is ready to vent about his brutal three-week stint as a caretaker speaker. “Pure anger” is what he felt as he made the gavel slam heard around the world. He’s also sounding less than confident about the House GOP maintaining its newfound unity. “We’ll see,” he said. It may be a new world for McHenry. He was a top deputy to former Speaker Kevin McCarthy but said “I have not talked to Speaker [Mike] Johnson at all.” He’s now turning back to his own priorities, including passing landmark cryptocurrency legislation that could be his legacy. Rep. Maxine Waters, the top Democrat on Financial Services, told Jasper Goodman that she expects talks on a stablecoin bill to start back up. “I’ve got a stack of policy that I want to get into end-of-year packages,” McHenry said. “That’s what I’m focused on.” Happy Friday — Have a great weekend, and please keep sending tips and stray thoughts: zwarmbrodt@politico.com.   A message from Electronic Payments Coalition: Don’t Let Durbin-Marshall Steal YOUR Data: Senators Dick Durbin and Roger Marshall introduced legislation allowing big-box retailers like Walmart and Target to process credit card transactions based solely on what is cheapest for them, disregarding YOUR data security. Durbin-Marshall would shift billions in consumer spending to higher-risk payment networks, weakening America’s payment system and putting consumers in a vulnerable position. Last year, Congress wisely rejected a similar Durbin-Marshall bill, and they must do so again.   Driving the day The personal-consumption expenditures price index – a Fed inflation gauge – is out at 8:30 a.m. … Fed Vice Chair for Supervision Michael Barr delivers opening remarks at the Fed’s Economics of Payments Conference at 9 a.m. … NEC Director Lael Brainard speaks at the Peterson Institute at 9:30 a.m. First look: Brainard on the economy – Biden’s chief economic adviser will tell the Peterson Institute this morning that the U.S. is defying expectations as inflation appears to be coming down and growth remains robust, though she'll also note potential geopolitical and financial volatility risks. "In comparison to previous forecasts, to recoveries of other advanced economies, and to the last U.S. recovery, America’s recovery under President Biden’s economic plan stacks up well," she said in prepared remarks. "That is true across a range of indicators including output, inflation, productivity and household balance sheets." (Treasury also released a report this week touting the U.S. economy's strength relative to other countries.) Taking the longer-term view, she said Biden’s agenda “may be contributing to supply-side gains in capital and labor that could boost potential growth in the years to come.”   The World Strategic Forum (WSF) is taking place on November 6-7th in Miami, Florida at the Biltmore Hotel Coral Gables. WSF 2023 will discuss ‘Mastering the New Economy’, examining the ways in which business and society can thrive despite current economic and environmental challenges. The conference will gather 100+ speakers from companies including Volkswagen, Siemens and C3.ai, as well as U.S. Senator for Tennessee Bill Hagerty; Florida’s Chief Financial Officer Jimmy Patronis; Former President of Colombia Iván Duque Márquez and Former President of Ecuador Jamil Mahuad. Learn more and register now at www.worldstrategicforum.com.     GDP surge — The economy grew by 4.9 percent in the third quarter, its fastest pace in two years. ICYMI: The stellar report may spell peak “Bidenomics.” Getting to know you — Speaker Mike Johnson is enjoying a bit of a fiscal honeymoon. GOP hardliners are signaling that they’re open to a short-term government funding bill and are even willing to disregard spending cuts they sought under McCarthy. POLITICO has 55 things you should know about the new speaker, who also just met with President Joe Biden and Senate Minority Leader Mitch McConnell. He has a podcast. Yellen hints at more Hamas action — Treasury Secretary Janet Yellen said at a Bloomberg event that the U.S. is looking at more ways to cut off Hamas financing in the wake of its attack on Israel, Katy O’Donnell reports. Brian Nelson, Treasury’s undersecretary for terrorism and financial intelligence, met with officials in Qatar Wednesday. Deputy Treasury Secretary Wally Adeyemo is heading to Europe and is expected to warn crypto firms about financing terrorist organizations, the Washington Post reports.   A message from Electronic Payments Coalition:   Crypto SBF speaks — FTX founder Sam Bankman-Fried’s debut on the stand got off to a weird start Thursday: Instead of testifying in front of the jury, the one-time crypto mogul had to first make his case to Judge Lewis Kaplan, Declan Harty reports. Kaplan wanted to hear parts of Bankman-Fried’s testimony related to the network of lawyers surrounding his FTX empire, to determine whether it could be heard by the jury. The judge is expected to rule this morning, meaning Bankman-Fried may testify Friday and be on the stand for several days. On Thursday, Bankman-Fried testified that FTX’s attorneys drafted the exchange’s terms of service and helped structure personal loans he and other executives received from Alameda Research. On cross-examination by prosecutors, Bankman-Fried evaded several lines of questioning, causing Kaplan at one point to chime in and say “the witness has what I’ll simply call an interesting way of responding to questions.” Brown plots crypto plan — Senate Banking Chair Sherrod Brown told Jasper that he hopes to take up a crypto bill, as his committee scrutinizes the role digital currency played in financing the Hamas attacks on Israel and other criminal activity. Brown wants to come up with legislation that ranking member Sen. Tim Scott will also back. At a Thursday Senate Banking hearing on the issue, some committee Republicans downplayed the crypto concerns, citing industry claims that Hamas' use of digital assets has been exaggerated. At the center of the debate is an Oct. 10 Wall Street Journal story that said Hamas and other militant groups had received as much as $134 million in crypto since 2021. The story has come under intense scrutiny from key crypto players who say the numbers were inflated. The Journal did not respond to a request for comment. Some Republicans are pushing for a crackdown. Sen. Cynthia Lummis and Rep. French Hill in a letter Thursday urged Attorney General Merrick Garland to target Binance and Tether and “choke off sources of funding to the terrorists currently targeting Israel.”   PLAYBOOK IS GOING GLOBAL! We’re excited to introduce Global Playbook, POLITICO’s premier newsletter that brings you inside the most important conversations at the most influential events in the world. From the buzzy echoes emanating from the snowy peaks at the WEF in Davos to the discussions and personalities at Milken Global in Beverly Hills, to the heart of diplomacy at UNGA in New York City – author Suzanne Lynch brings it all to your fingertips. Experience the elite. Witness the influential. And never miss a global beat. BE PART OF THE CONVERSATION. SUBSCRIBE NOW.     Regulatory Corner Gensler hints at climate rethink — SEC Chair Gary Gensler suggested in comments at the U.S. Chamber of Commerce that his agency could scale back its landmark climate disclosure rule, Declan and Jordan Wolman report. Gensler said at the event that the prospect of Scope 3 reporting, referring to disclosures of a company's climate impact throughout its supply chain, has generated "a lot of questions and doubts and concern."   A message from Electronic Payments Coalition: CONGRESS: Don’t Let Durbin-Marshall Steal YOUR Data: Cyber-attacks against consumers are on the rise, with large retailers like Target falling victim to breaches that expose customer information to hackers and foreign countries. Now, mega-retailers like Walmart and Target want to leave you even more vulnerable to credit card cyber-attacks so they can pocket billions of dollars in additional profits. After Senator Dick Durbin passed similar routing mandates for debit cards in 2010, the fraud rate for debit cards increased by NEARLY 60%. A similar outcome for credit cards would likely cost OVER $6 BILLION in additional fraud and likely require passing much of the bill onto consumers. Last year, Congress wisely rejected a similar Durbin-Marshall bill, and they should do so again. Congress must protect consumers, preserve the integrity of the payment ecosystem, and reject this detrimental and unnecessary government intervention into the U.S. payment system.     Follow us on Twitter Mark McQuillan @mcqdc Zachary Warmbrodt @Zachary Victoria Guida @vtg2 Declan Harty @ @declanharty Eleanor Mueller @eleanor_mueller Katy O'Donnell @katyodonnell_ Sam Sutton @samjsutton   Follow us

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