Republicans dial up the pressure over credit cards and gun storesSeptember 23, 2022
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.
We told you that Republicans would get angry about a new tool for financial institutions to track how much consumers spend at gun stores.
Backing up, American Express, Mastercard and Visa earlier this month said they would implement a new merchant code that would identify purchases made at firearm and ammunition retailers.
The announcement represented the culmination of a years-long campaign on the part of top Democrats and advocacy groups who claimed a dedicated merchant category would help law enforcement identify consumers who might be using their cards to finance gun trafficking or violent attacks.
Hundreds of other types of businesses already have their own codes and, despite claims of undue corporate surveillance, the new merchant category wouldn’t give banks and credit cards visibility into what products were actually purchased. The credit card companies and the leaders of major commercial banks have repeatedly insisted that the new code will have no bearing on legal firearm purchases and won’t be used to block individual transactions.
Now, with a little more than six weeks to go before the midterms, Republican policymakers across the country are kicking up a fuss.
GOP members of the House Financial Services Committee and Senate Banking Committee this week urged the leaders of the country’s largest commercial banks to avoid kowtowing to progressives — calling the new merchant code an example of overreach on the part of ESG-obsessed Democrats.
“Please resist the impulse to respond to the very loud noise in your left ears,” Sen. Kevin Cramer (R-N.D.) told bank CEOs during a Senate hearing on Thursday. “I'm happy to be the loud noise in your right ears.”
From Sam: “Leaders from both parties have grown increasingly aggressive in using their power – and their financial resources – to cajole corporations into adopting practices that adhere to their respective ideologies. Those often conflict.
For every blue state pension fund that charges ahead with climate-conscious investment initiatives, Republican leaders in states like West Virginia will halt public contracts with big banks that no longer finance coal.”
In the case of the gun store codes, Republican policymakers say the new merchant category is politicizing payment systems to the detriment of law-abiding gun owners. Democrats say that the GOP’s claims about surveillance capitalism ignore a gun violence epidemic that kills tens of thousands of Americans annually.
More from Sam: “‘It's not just a question for policymakers and lawmakers to engage,’ said Adam Skaggs, the chief counsel and policy director at Giffords Law Center to Prevent Gun Violence. ‘Business leaders, just like others, have a role to play.’
That line of thinking leaves out federal and state policymakers who are ultimately held accountable by voters, said Tennessee Attorney General Jonathan Skrmetti, a state Supreme Court appointee who spearheaded the GOP attorneys general letter.
“‘My worry is if boardrooms get more involved in politics, then politics is gonna get more involved in boardrooms,’ Skrmetti said. ‘We are moving in a direction where everything is becoming political — and that's bad.’”
IT’S FRIDAY — And the dinner I plan to cook this weekend assures my card will be flagged for delicious activity. Have tips, story ideas or other feedback? Please send it to [email protected] and [email protected].
Federal Reserve Chairman Jerome Powell delivers opening remarks at 2 p.m. at a “Fed Listens” event, which will include a discussion moderated by Vice Chair Lael Brainard and Governor Michelle Bowman
CLIMATE NON-DENIAL — While we were watching the big bank CEOs and consumed with the Fed meeting, World Bank President David Malpass found himself in a frankly embarrassing exchange over his views on climate change this week that prompted calls for his dismissal and forced him to back-pedal on Thursday.
In a panel discussion with New York Times climate reporter David Gelles Wednesday, Malpass repeatedly avoided answering a question about whether he believes the scientific consensus that climate change is manmade — i.e. that the burning of fossil fuels is warming the planet. At the same event, hosted by the Times, former Vice President and climate activist Al Gore blasted Malpass as a climate change denier and said he should be removed.
Malpass, a former Trump administration official, apparently sought to clean up the mess Thursday in an interview with CNN International, saying, “I’m not a denier.”
“It's clear that greenhouse gas emissions are coming from manmade sources, including fossil fuels, methane, agricultural uses and industrial uses,” he said. “And so we’re working hard to change that.”
Treasury Secretary Janet Yellen has urged the multilateral development banks, including the World Bank and International Monetary Fund, to step up their efforts to combat climate change.
“We expect the World Bank Group to be a global leader of climate ambition and the mobilization of significantly more climate finance for developing countries,” a Treasury spokesman said. “We have—and will continue—to make that expectation clear to World Bank leadership. The World Bank must be a full partner in delivering on this global agenda.”
WATCH THIS SPACE —POLITICO’s Katy O’Donnell and Declan Harty: “House Republicans are pressing CFPB Director Rohit Chopra and SEC Chair Gary Gensler to defend the legality of a slew of measures the regulators have taken, in light of the Supreme Court case this summer holding that a federal agency needs explicit congressional approval for certain major actions.”
YELLEN OP-ED — Yellen for The Atlantic: “Policy makers have long tried to foster rapid economic growth. But as we shape our post-pandemic economy, we also need to strengthen our economic resilience both in America and around the world.”
WANTED: SANCTIONS ECONOMIST — Bloomberg’s Daniel Flatley: “Two decades after it began relying increasingly on sanctions to pressure adversaries around the world, the US Treasury Department is hiring someone to make sure those measures do what they’re supposed to.”
IS THIS ABOUT ‘QUIET QUITTING’? — POLITICO’s Eleanor Mueller: “The U.S. may have hemorrhaged $45.6 billion in fraudulent unemployment insurance payments during the pandemic, the Labor Department's inspector general reported Thursday — significantly more than the $16 billion the agency originally estimated in 2021.”
BIG SETTLEMENT — POLITICO’s Declan Harty: “Boeing has agreed to pay $200 million to settle SEC charges that the plane manufacturer misled investors following crashes in 2018 and 2019 involving its 737 MAX. Former Boeing CEO Dennis Muilenburg will also pay $1 million as part of the settlement, the SEC said Thursday.”
AUDITS — Declan again: “Public Company Accounting Oversight Board Chair Erica Williams warned Thursday that the ‘time for negotiations is over’ in the long-running fight for the U.S. to inspect the audits of Chinese firms listed on New York stock exchanges.”
INTERVENTION — Bloomberg’s Chikako Mogi and Tian Chen: “Japan intervened to support the yen for the first time since 1998, seeking to stem a 20% decline against the dollar this year amid a widening policy divergence with the US.”
A Treasury spokesperson said the U.S. did not participate in the currency intervention. “We understand Japan’s action, which it states aims to reduce recent heightened volatility of the yen,” the spokesperson said in an emailed statement, which stopped short of endorsing the move.
NOT-SO-GREAT RESIGNATION — The length of time a typical worker has been at the same workplace has barely budged between 2020 and 2022, according to the Labor Department.
In January 2022, the median worker has been at their current employer 4.1 years, virtually unchanged compared to the same period two years prior. That holds true for both men and women, though the latter tends to have a few months less tenure than the median male employee. — POLITICO’s Nick Niedzwiadek
BUTTER UP — WSJ’s Jesse Newman: “Lower milk production on U.S. dairy farms and labor shortages for processing plants have weighed on butter output for months, leaving the amount of butter in U.S. cold storage facilities at the end of July the lowest since 2017 … Tight supplies have sent butter prices soaring at U.S. supermarkets.”
THE 1 PERCENT — WSJ’S Katherine Clarke: “A new report by real-estate brokerage Redfin shows that in the three months ending Aug. 31, sales of luxury U.S. homes dropped 28.1%, from the same period last year. That marks the biggest decline since at least 2012, when Redfin’s records began, and eclipses even the 23.2% decrease recorded during the onslaught of the pandemic in 2020.”
[LAW & ORDER SOUND EFFECT] DAO DAO — The Block’s Michael McSweeney: “In a first, the CFTC sued a decentralized autonomous organization — and, it appears, the token holders who weigh in on its governance process. ‘DAOs are not immune from enforcement and may not violate the law with impunity,’ the agency said in a court filing.”
TOO MUCH OXYGEN — Rohit Chopra is tired of all the crypto talk. “I say this gently; Washington's obsession with crypto has sometimes come at the expense of really thinking about the entire payments ecosystem,” the CFPB director said in an appearance at the Electronic Transactions Association's annual fintech policy forum. The conversations around crypto, which is still largely dominated by speculative trading, have distracted from broader conversations about the steps needed to assure that “ubiquitous, real time payments [are] really done in a way that still addresses the core consumer issues, fraud and other attendant concerns.”
INSTANT PAYMENTS — Sens. Chris Van Hollen (D-Md.) and Elizabeth Warren (D-Mass.) and Reps. Ayanna Pressley (D-Mass.) and Jesús “Chuy” García (D-Ill.) have reintroduced a bill that would compel financial institutions to recognize funds in real time.
CROSS-CHECKING PAY — What happened in 1990 when NHL players suddenly learned how much all of their colleagues were making? Underpaid defensemen started scoring more goals — at the expense of team performance, WSJ’s Ben Cohen writes in a story about a new study that sheds light on how pay transparency affects worker behavior.
Beverly Cole has been named senior deputy comptroller for midsize and community bank supervision at the Office of the Comptroller of the Currency, after serving in the position in an acting role since July.
Minh-Hai Tran-Lam has been selected senior deputy comptroller for the OCC’s Office of Management. Prior to joining OCC, she was chief of staff to the FDIC’s chief information officer.
Jay Gallagher has been named senior deputy comptroller for supervision risk and analysis at OCC, after serving in an acting role since July. Gallagher was previously the deputy comptroller for systemic risk identification and support.
Jeffrey Little is now general deputy assistant secretary for housing at the Department of Housing and Urban Development. He most recently was associate DAS for multifamily housing at HUD. — POLITICO’sDaniel Lippman
Central banks around the world moved Thursday to combat the effects of a soaring dollar and rising inflation, joining the Federal Reserve in risking a recession to rein in climbing prices. — WSJ’s Will Horner
Credit Suisse is sounding out investors for fresh cash, two people familiar with the matter said, approaching them for the fourth time in roughly seven years as it attempts a radical overhaul of its investment bank. — Reuters’ Oliver Hurt
Meta Platforms Inc. is planning to cut expenses by at least 10% in the coming months, in part through staff reductions, as the social-media giant confronts stalling growth and increased competition. — WSJ’s Jeff Horwitz, Salvador Rodriguez and Miles Kruppa