| | | | |  | | By Sam Sutton | Programming Note: Morning Money is off on Wednesday for Juneteenth. We’ll be back in your inboxes on Thursday. 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.
| | Banks and credit card companies are contending with new threats to swipe fees that have popped up in statehouses across the U.S. Earlier this month, Illinois Gov. J.B. Pritzker signed a state budget that eliminated interchange fees on the sales tax and tipped portions of transactions. New legislation that was fast-tracked through the Pennsylvania House Finance Committee last week would nix interchange fees — charges that merchants pay to issuing banks and payment networks when customers use credit cards to make purchases — on sales and use taxes. Similar legislation has been introduced in more than a dozen other states, according to the lawmakers behind the Pennsylvania bill. “What has happened in Pennsylvania and Illinois would create credit card chaos,” Richard Hunt, the executive director of the Electronic Payments Coalition, said in an interview. “It would be an operational nightmare.” Hunt later added that his Washington-based organization — which represents large banks and credit unions, as well as Visa and Mastercard — had already placed “significant amounts” of ads in Pennsylvania to oppose the bill. Banks and payment networks have been sparring with retailers for years over the swipe fees levied on individual transactions. Ever since Majority Whip Dick Durbin (D-Ill.) successfully attached language to Dodd-Frank Act that obliterated debit card swipe fees, retailers have angled for similar laws targeting the amounts charged for individual credit transactions. There have been plenty of attempts to cap the interchange fees at the state level as well, but none on the magnitude of the new Illinois law have ever made it over the finish line. Depending on how new state laws are structured, it could lead to a mish-mash of different interchange rules across the U.S. — creating huge headaches (and costs) for banks, payment processors and credit card networks. That’s why powerful Washington-based industry organizations like EPC and the Consumer Bankers Association, as well as major card issuers like JPMorgan Chase and Capital One, are tracking the progress of the Pennsylvania bill so closely. “It is simply easier to get legislation through the states,” TD Cowen’s Jaret Seiberg told clients in a research note last week. “Once one state starts excluding taxes and tips, then it may be tough to prevent more from following suit.” But merchants contend that the state-level efforts are part of a broader national effort to rein in credit card swipe fee charges that drive up the price of consumer goods and services. Advocates on the retail side view Illinois’s new law, as well as the Pennsylvania bill, as a way to generate momentum for federal legislation that’s been sponsored by Durbin and Republican Sen. Roger Marshall of Kansas. Both have said they want to attach their bill to must-pass legislation this session. “It really shows the momentum and the trends here,” said Doug Kantor, the general counsel of the National Association of Convenience Stores and a member at the Merchants Payments Coalition, adding that the efforts being undertaken at the state level are “part of a grueling political and policy recognition that there’s a bigger problem here that has to be dealt with.” IT’S TUESDAY — I hope you have a joyous Juneteenth and look forward to catching up with you later this week. Send tips and suggestions to ssutton@politico.com or on Signal at 925.216.7576
| | | | THE GOLD STANDARD OF FINANCIAL SERVICES POLICY REPORTING & INTELLIGENCE: POLITICO has more than 500 journalists delivering unrivaled reporting and illuminating the policy and regulatory landscape for those who need to know what’s next. Throughout the election and the legislative and regulatory pushes that will follow, POLITICO Pro is indispensable to those who need to make informed decisions fast. The Pro platform dives deeper into critical and quickly evolving sectors and industries, like financial services, equipping policymakers and those who shape legislation and regulation with essential news and intelligence from the world’s best politics and policy journalists.
Our newsroom is deeper, more experienced, and better sourced than any other. Our financial services reporting team—including Zach Warmbrodt, Victoria Guida and Declan Harty—is embedded with the market-moving legislative committees and agencies in Washington and across states, delivering unparalleled coverage of financial policy and the financial services industry. We bring subscribers inside the conversations that determine policy outcomes and the future of industries, providing insight that cannot be found anywhere else. Get the premier news and policy intelligence service, SUBSCRIBE TO POLITICO PRO TODAY. | | | | | | | | | The Senate Finance Committee holds a hearing on challenges with work and Social Security disability benefits at 10 a.m. … Senate Appropriations has a subcommittee hearing on transit-linked housing at 10 a.m. … Richmond Fed President Tom Barkin will speak on an MNI Webcast Q&A at 10 a.m. … Boston Fed President Susan Collins to speak before the Lawrence Partnership Annual Meeting at 11:40 a.m. … Fed Governor Adriana Kugler speaks about the economic outlook at monetary policy at the Peterson Institute for International Economics at 1 p.m. … St. Louis Fed President Alberto Musalem to speak at CFA Society St. Louis luncheon at 1 p.m. … Dallas Fed President Lorie Logan to participate in moderated Q&A at the Headliners Club Speaker Series at 1 p.m. … Chicago Fed President Austan Goolsbee will participate in a hybrid 2024 Marshall Forum event at 2 p.m. Senate Republicans open to FDIC pick — Republicans on Senate Banking may yet support Biden nominee Christy Goldsmith Romero for FDIC chair, Eleanor Mueller reports. “If you take a look at some of the options they put forth for some of the other financial regulators, I'm going in with a more positive sense, to be honest with you,” Sen. Thom Tillis said in an interview Monday night. “Could be a lot worse; we've seen it in the one being replaced, in [current FDIC Chair Martin] Gruenberg.” Sen. John Kennedy said he doesn't “know much about her” but is "looking forward to hearing her testimony." Sens. Tim Scott, Katie Britt and Steve Daines similarly withheld judgment last week — as did moderate Democrat Sen. Jon Tester, who said Monday he was still undecided. “I'm going to look over the papers, and we'll set something up as soon as we can,” Tester told reporters. "I'd like to look at her record before I have too many predisposed thoughts.” Goldsmith Romero, who was confirmed by voice vote as a CFTC commissioner in 2022, has already reached out to Senate Banking members including Sen. Mark Warner to discuss her nomination, the Virginia Democrat said. Sen. Tina Smith, who put out a statement Monday backing Goldsmith Romero, said they plan to meet “in the next couple of days.” “She's got a tough road to hoe in an agency that has some pretty significant needs for cultural reform,” Smith said. “So I'll be interested in hearing how she's planning on approaching that.” — More from Eleanor: Federal Reserve Chair Jerome Powell will testify at Senate Banking on July 9 and House Financial Services on July 10. Trump tariffs — New estimates from top Washington think tanks estimate that former President Donald Trump’s across-the-board tariffs will cost households between $1,500 and $1,700 per year, according to Bloomberg’s Nancy Cook. Republican National Committee spokesperson Anna Kelly responded by saying that “the notion that tariffs are a tax on US consumers is a lie pushed by outsourcers and the Chinese Communist Party.” A New Jersey earthquake — George Norcross, the millionaire insurance and health care executive who has led South Jersey’s powerful Democratic organization for decades, was indicted on racketeering charges on Monday. Be sure to read Matt Friedman’s unpacking of what the allegations of extortion and corruption will mean for a Democratic machine that was felled by its exploitation of state tax credits designed to spur the Camden, N.J., economy.
| | What’s at stake in the 2025 tax debate — President Joe Biden and Democrats want to raise the corporate tax rate to 28 percent. Trump and Republican leaders want to slash the rate from 21 percent to 20 percent. What’s the difference? The Wall Street Journal’s Richard Rubin put it this way: “Each percentage point is worth more than $130 billion over a decade in tax revenue, creating a $1 trillion-plus gap between the poles of the parties’ positions and giving the largest U.S. companies an outsize interest in the election’s outcome.”
| | | | JOIN US ON 6/26 FOR A TALK ON AMERICA’S SUPPLY CHAIN: From the energy grid to defense factories, America’s critical sites and services are a national priority. Keeping them up and running means staying ahead of the threat and protecting the supply chains that feed into them. POLITICO will convene U.S. leaders from agencies, Congress and the industry on June 26 to discuss the latest challenges and solutions for protecting the supply lines into America’s critical infrastructure. REGISTER HERE. | | | | | | | | | The Texas play — Wall Street’s new weapon for dismantling regulation is located in an office tower in Fort Worth, Texas. The membership of the National Association of Private Fund Managers is a closely held secret, but its headquarters in Fort Worth has provided a gateway to challenge any federal rule it opposes in the 5th US Circuit Court of Appeals in New Orleans.“It’s hard to imagine a friendlier forum for those challenges at this particular moment,” Steve Vladeck, a law professor at Georgetown University, told Bloomberg’s Lydia Beyoud and Madlin Mekelburg. Partnership roulette — Brian Faler reports that the IRS is planning to crack down on complex partnership transactions that are designed to inflate deductions and minimize taxes. The agency says it could generate $50 billion over a decade.
| | Citi’s lookahead strategy — Citi CEO Jane Fraser will tout the bank’s services business, which moves money across the globe, at the bank’s investor day today. “It is often a bright spot at a lender whose broader results have lagged behind rivals and that faces regulatory pressure to spend money overhauling systems,” Bloomberg’s Todd Gillespie reports. — To that end, Reuters on Monday reported that Citi faces an FDIC downgrade of its data management to a "deficiency" from a "shortcoming.” Apple bails on BNPL — Apple on Monday announced that it would discontinue the “buy now, pay later” program it had built to compete with fintechs. Instead, the company is launching new installment lending program that will offer installment loans through credit, debit cards and lenders, Reuters reports. New highs — The S&P 500 hit its 30th record high of the year on Monday, Bloomberg’s Rita Nazareth reports. Economic optimism, along with enthusiasm for tech companies and artificial intelligence-linked companies, have fueled the boom.
| | Anna Canfield Roth is leaving the Treasury Department in mid-July where she has been assistant secretary for management, according to an email she sent her colleagues that Daniel Lippman obtained and reported in West Wing Playbook. Aditi Hardikar, deputy chief of staff at Treasury, will replace her. | | | | Follow us on Twitter | | | | Follow us | | | | |
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