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Politico
4 days ago
- Business
- Politico
A big, beautiful affordable housing boom?
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 Everyone agrees that the U.S. lacks affordable housing. An underreported component of President Donald Trump's 'big, beautiful bill' might actually do something about it. The bill's sweeping changes to arcane sections of the tax code could boost the supply of affordable rental units by as many as 1.2 million over the next decade. The adjustments to financing requirements for low-income housing tax credits, along with a higher allocations of tax breaks available for new projects, represent 'the single largest increase in affordable housing development resources in at least 25 years,' said Peter Lawrence, the chief public policy officer at Novogradac — an accounting firm whose analysis of the legislation has been widely cited by housing advocates. Those tax credits serve as the 'premier source of capital for affordable housing supply,' he added (roughly 3.7 million housing units have qualified since 1987). 'There's nothing else that comes close in importance to it.' The U.S.'s housing shortage was a major factor in post-pandemic inflation, and its political salience has only grown since Trump returned to office. New York City mayoral candidate Zohran Mamdani seized headlines with pledges to freeze rents, but his housing platform includes plans to expand state and municipal bonding capacity to boost the supply of affordable units. Rep. Mikie Sherrill, now the Democratic Party's gubernatorial nominee in New Jersey, also treated housing costs as a central theme of her primary campaign and pledged to improve the state's housing stock by making loans and tax credits more readily available. Under the GOP's tax and spending law, developers of low-income housing would only have to finance 25 percent of their building and land costs through a special type of municipal bond — known as private activity bonds, or PABs — to qualify for a widely utilized tax credit. The volume of PAB financing available for those projects is capped and, under the previous regime, developers had to obtain 50 percent PAB financing before they could take full advantage of the credit. By cutting the threshold in half, 'you can do the same amount of housing [development] with half the bonds,' said Emily Cadik, the chief executive officer of the Affordable Housing Tax Credit Coalition. The shift gives states the ability to move ahead with 'twice as much affordable housing with the existing bond cap.' The tax credit provisions that were included in the GOP's megabill derive from a bipartisan measure that has been kicking around Congress for nearly a decade. The Affordable Housing Credit Improvement Act, whose current lead sponsors are Rep. Darin LaHood (R-Ill.) and Sen. Todd Young (R-Indiana), has enjoyed broad bipartisan support for years. Sen. Maria Cantwell (D-Wash.) has been a major force for the legislation since introducing its first iteration in 2016. New York Housing Conference Executive Director Rachel Fee — whose nonprofit group has been critical of Trump's broader housing agenda — applauded the megabill's expansion of low-income housing tax credits for being long overdue. 'It will be a huge boost,' she said. 'It'll get shovels in the ground more quickly and produce affordable housing that low-income renters need.' That's obviously welcome news for banks or real estate firms looking to invest in new construction (to say nothing of pro-growth cheerleaders on Trump's economic team). But Fee included several caveats in her praise. The White House's budget proposal would slash tens of billions of dollars from rental assistance programs — which underpin low-income tenant payments to landlords— and eliminate popular programs that support the development of affordable housing. Other cuts to the social safety net, including reductions in Medicaid and food stamp programs, also pose a threat to household finances of low-income tenants. 'Even just the budget proposal being out there is starting to make the lenders in this space nervous,' said Fee. The threat of those cuts 'make it more difficult to maximize the benefits of this low-income housing tax credit expansion.' IT'S WEDNESDAY — And as always, send MM tips and pitches to Sam at ssutton@ Driving the Day Senate Banking holds a hearing on digital asset markets at 10 a.m. with testimony from Blockchain Association CEO and former CFTC Commissioner Summer Mersinger, Chainalysis CEO Jonathan Levin, Paradigm General Partner Dan Robinson, Ripple CEO Brad Garlinghouse, former CFTC Chairman Timothy Massad and University of Minnesota Law School Professor Richard Painter, the former Associate Counsel to the president and chief White House ethics lawyer … The Chamber of Commerce holds a virtual discussion on 'Trade Wars and the Cost of Doing Business' at 1 p.m. … The Federal Reserve meeting minutes for June will be released at 2 p.m. … Vigilantes? What vigilantes? — From Benjamin Guggenheim: 'As congressional Republicans advanced their megabill in recent months, many fiscal hawks in the party figured they had a powerful force on their side: wary titans of finance who had started sending powerful signals that their appetite for purchasing U.S. debt was not, in fact, endless. Turns out Wall Street was barely a bump in the road.' You didn't hear? It's a trade news cycle now — Trump insisted that he won't punt on his new Aug. 1 tariff deadline, per Nicole Markus. 'There has been no change to this date, and there will be no change,' Trump posted on Truth Social. 'In other words, all money will be due and payable starting AUGUST 1, 2025 - No extensions will be granted.' — He also said he would impose 50 percent levies on imported copper – which sent prices of the commodity soaring — and indicated that 'he could offer pharmaceutical manufacturers at least a year before applying a crippling 200% tariff on their foreign-made products,' per Bloomberg's Joe Deaux and Stephanie Lai. — Richard Saynor, CEO of the Swiss generic pharma giant Sandoz, told POLITICO's Mari Eccles that 'a stick is not going to encourage us to make significant capital investment into a market which is unsustainable.' This will show up labor market data — From Josh Gerstein and Hassan Ali Kanu: 'The Trump administration can move forward with plans to fire tens of thousands of workers across the federal government, the Supreme Court ruled Tuesday.' The Economy A new talking point — Council of Economic Advisers Chair Stephen Miran has a new report spotlighting how inflation on consumer goods has fallen — including for imports — even in the face of Trump's tariff regime. Trump seized on the research as proof that tariffs 'are making our Country 'BOOM,'' as he put it on Truth Social, and said, 'Someone should show this new Study to 'Too Late' Jerome Powell.' (Many economists still expect tariff-related inflation to appear in the consumer price index and personal consumption expenditures index later this summer.) Speaking of Powell… — The president told reporters that the Fed chair 'should 'resign immediately'' if Federal Housing Finance Agency Director Bill Pulte's claim that Powell misled lawmakers about renovations at the central bank's headquarters is proven correct. More big news on housing — FICO officially has a competitor. The FHFA signed off on rule changes that allow lenders to choose to use the VantageScore 4.0 model or Fair Isaac Corp.'s credit score when originating loans backed by Fannie Mae and Freddie Mac, The WSJ's Imani Moise and Katherine Hamilton report. Feeling the heat — Employers are struggling to fill positions that had been staffed by immigrants, reports Aaron Pellish. Agriculture Secretary Brooke Rollins said those roles can be filled by adult Medicaid participants who will soon face stricter work requirements under the GOP megabill. 'The mass deportations continue, but in a strategic way, and we move the workforce towards automation and 100 percent American participation,' she said. Crypto Another big crypto hearing — At today's Senate Banking hearing, Ripple CEO Brad Garlinghouse will encourage lawmakers to 'set clear jurisdictional boundaries for our main financial regulators,' according to a copy of his testimony shared with MM. — New York Attorney General Tish James – who previously cautioned that the Senate's stablecoin legislation lacked adequate guardrails — will provide written testimony urging lawmakers to include language that would block retirement accounts from investing in digital assets. She'll also call for controls to ensure stablecoins are on-shored. Jobs report David Saltiel, former acting director of the SEC's trading and markets division, has joined the parent company of the Texas Stock Exchange as senior managing director of firmwide strategy. The American Securities Association has promoted Kelli McMorrow to chief advocacy officer and Jessica Giroux to chief legal officer. McMorrow previously worked as the group's head of government affairs, while Giroux was general counsel. — Declan Harty Nice work if you can get it — Former U.K. Prime Minister Rishi Sunak has rejoined Goldman Sachs as a senior adviser, report Bloomberg's Todd Gillespie and Alex Morales.
Politico
6 days ago
- Business
- Politico
The Yellow Rose of antitrust
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 Ken Paxton's bid to unseat Sen. John Cornyn in a GOP primary is the latest chapter in a battle between pro-Trump upstarts and old-line Republicans for control of Washington. When it comes to antitrust policy, the powerful — and oft-embattled — Texas attorney general is already making his presence known. 'From an enforcement policy standpoint, what the Republicans were doing in Texas is now what the Republicans are doing in Washington,' said Michael Keely, who chairs the antitrust practice at the law firm Axinn, Veltrop and Harkrider. Texas law affords its state attorney general considerable authority when it comes to competition policy and consumer protection, and Paxton has taken a broad view on how those powers can be put to use to advance MAGA-friendly political priorities. The Texas AG was recently backed by Federal Trade Commission Chair Andrew Ferguson and Assistant Attorney General for Antitrust Gail Slater in a lawsuit targeting large asset managers for allegedly disrupting coal production in their pursuit of environmental, social and governance initiatives. Paxton's investigation into alleged collusion among advertising firms was cited by the FTC chair in a recent decision allowing the ad giant Omnicom to purchase its rival Interpublic — so long as the firms swore off any future effort to steer ad dollars from publishers for political or ideological reasons. Notably, several Paxton alums are now in prominent roles at the White House National Economic Council (Paige Willey, Ryan Baasch), DOJ's Office of Legal Counsel (Lanora Pettit), the Department of Homeland Security (Joseph Mazzara) and the upper echelons of Vice President JD Vance's policy shop (James Lloyd — the former head of the Texas AG's antitrust division). 'Personnel is often policy,' said Keely, who has written about how Paxton could become a driving force for antitrust policy in Trump 2.0. 'The people setting policy have done an interesting job — including the Texas people — of building up what I would consider to be an antitrust intellectual framework around issues that have been more associated with Trump's political' priorities, he added. Still, Paxton's playbook risks creating some political headaches for President Donald Trump's team. Paxton's efforts to police ESG initiatives at asset management firms, for instance, could limit resources for the very industries that the president has sought to elevate. The Texas AG's lawsuit against BlackRock, State Street and Vanguard over their coal holdings requested a court order that would require the investment companies 'to divest from coal or restrain them from limiting coal production or competition.' As the WSJ's editorial board said, it would be hard to boost coal production in the U.S. if three of the largest asset managers in the world were forced to unload their coal company shares. IT'S MONDAY — If you have thoughts on how the Trump administration is navigating antitrust and merger policy, I'd love to hear from you. And as always, send MM tips and pitches to me at ssutton@ Driving the Week MONDAY … TUESDAY … The NFIB's Small Business Optimism Index is out at 6:30 a.m. … House Financial Services Subcommittee on Financial Institutions holds a hearing on 'Main Street or Mandates? How Dodd-Frank Closed the Door on Financial Opportunities' at 10 a.m. … The House Financial Services Task Force on Monetary Policy holds a hearing entitled 'Less Mandates. More Independence' at 2 p.m. … The Federal Reserve's report on consumer credit is out at 3 p.m. … WEDNESDAY … Senate Banking holds a hearing on 'From Wall Street to Web3: Building Tomorrow's Digital Asset Markets' at 10 a.m. … House Financial Services Subcommittee on Capital Markets holds a hearing on the costs and consequences of Dodd-Frank at 10 a.m. … The Chamber of Commerce holds a virtual discussion on 'Trade Wars and the Cost of Doing Business' at 1 p.m. … The House Financial Services Subcommittee on Housing and Insurance holds a hearing on the housing shortage at 2 p.m. … The Federal Reserve meeting minutes for June will be released at 2 p.m. … THURSDAY … The Brookings Institution holds a discussion on 'Can Trump Bring Manufacturing Back to the U.S.?' at 10 a.m. … Fed Gov. Christopher Waller will speak at a Federal Reserve Bank of Dallas and World Affairs Council of Dallas/Ft. Worth event at 12:30 p.m. … The Bipartisan Policy Center holds a virtual discussion on the economic effects of rent regulation at 2 p.m. … FRIDAY … Treasury's monthly budget statement will be released at 2 p.m. … Deadline approaching? Maybe? — As the countdown to Trump's July 9 deadline to impose punishing 'reciprocal' tariffs on dozens of trading partners, Treasury Secretary Scott Bessent told CNN's State of the Union that the new rates won't take effect until next month. 'If you don't move things along, then on Aug. 1 you will boomerang back to your April 2 tariff level,' he said. — Trump isn't sweating that he has yet to deliver on major trade deals with just days to go, Daniel Desrochers and Megan Messerly report. 'We can do whatever we want,' the president said last week about Tuesday's deadline for countries to reach deals — or face punishing new tariffs. 'We could extend it, we could make it shorter. I'd like to make it shorter.' AWOL — As first reported in Playbook, Commerce Secretary Howard Lutnick was supposed to join EU Commissioner for Trade and Economic Security Maroš Šefčovič on Thursday for a meeting as Europe negotiates a trade deal with the Trump administration, but Lutnick had already left town to go on vacation with his family in Italy, a person familiar with the matter told POLITICO's Daniel Lippman and Daniel Desrochers. Instead, Bessent said he was meeting with the EU as the deadline for Trump's pause on his so-called reciprocal tariffs is due to expire next Wednesday. Bessent canceled a family July 4 trip to Wimbledon and the Henley Royal Regatta to get Trump's tax and spending legislation across the finish line and work on trade deals, according to a person familiar with the matter. On Thursday, he also did five media appearances, including all three business networks. 'Secretary Lutnick met his wife and family for a July 4th trip,' a Commerce spokesperson said in a statement to Playbook. 'He has been on nonstop calls working for the American people and plans to be back in DC this weekend. President Trump's deal announcement with Vietnam earlier this week proves that Sec. Lutnick continues to level the playing field for the American worker.' A Treasury spokesperson declined to comment. At the White House Contradictions — Trump signed the One Big Beautiful Bill into law on July 4. The measure is chockablock with new tax breaks for 'venture capitalists, Alaskan fisheries, spaceports, private schools, rum makers and others,' reports Brian Faler. — While GOP heavyweights spent decades trying to simplify the tax code. Trump's signature piece of domestic policy legislation did the opposite, writes Victoria Guida. 'The result was a sprawling and quirky piece of legislation that is distinctively Trumpy: lower taxes and a bigger pile of tax breaks.' — ICYMI: The legislation allocates tens of billions of dollars for deportation and border patrol that hastens the decline in the size of the foreign-born workforce, the economy could slow. — The effects on health care could be profound, according to The WSJ's Dominique Mosbergen, Joseph Walker, Liz Essley Whyte and Josh Ulick: 'Millions of people will lose health-insurance coverage, and struggling hospitals across the country may have to close, lay off staff or shut down some services, they say. States will also face difficult budget choices as federal funds are reduced.' — White House officials say they are bullish on the economy's trajectory now that OBBB is law. 'It's the same combination of policies, tax cuts, deregulation, trade renegotiation, and energy abundance that gave us astounding economic growth in the president's first term, 2.8 percent until the pandemic,' Council of Economic Advisers Chair Stephen Miran said on Sunday. 'And that's exactly what we forecast again, very similar numbers.' On The Hill The next big bill — The scheduled cuts to the social safety net imposed by OBB are setting the stage for massive political battles in 2026 and 2028, writes Benjamin Guggenheim. Zelle — From Katherine Hapgood: 'Democratic lawmakers in a letter released Thursday called on the banks that own Zelle to provide information on how they will monitor and handle social media scams on peer-to-peer payment platforms.' First in MM: Bipartisan legislation sanctioning Russia — House Financial Services members Reps. Zach Nunn (R-Iowa) and Josh Gottheimer (D-N.J.) will introduce legislation today that would impose sanctions on Russia by restricting the opening or maintaining of correspondent or payable-through accounts by certain foreign financial institutions, Katherine Hapgood reports. The bill is expected to be marked up by the committee. 'As a combat veteran and former intelligence officer, I know that words alone will not bring the Russians to the table,' Nunn said. 'This bipartisan bill puts teeth behind our message, cutting off the financial lifelines that fund Putin's aggression without costing the taxpayer a cent.'
Politico
03-07-2025
- Business
- Politico
Why the jobs report may be headed for Alligator Alcatraz
Presented by Programming note: We'll be off this Friday but will be back in your inboxes on Monday. Enjoy the holiday! 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 The solid monthly job tallies that the White House has touted as a 'Trump effect' are expected to fade as the president's hard-line immigration policies chip away at the supply of foreign-born workers. That could spell trouble for economic growth. Policymakers and economists are coalescing around a belief that the labor market's breakeven rate — the total number of jobs that businesses must add to keep unemployment from rising — has cratered with the abrupt end of the Biden-era immigration surge. Even if the jobless rate stays near its current level of 4.2 percent, a slowdown in monthly payroll expansion would pose a risk. 'If the job market slows, then we should expect economic growth to follow,' said Daniel Zhao, the lead economist and senior manager at Glassdoor's economic research team. The Labor Department will release its jobs report for June at 8:30 a.m. today. President Donald Trump and top administration officials have long attributed the labor market's expansion under President Joe Biden to an unchecked flow of undocumented immigrants across the Southern border. Trump has made reversing that tide a centerpiece of his second term, ordering politically explosive Immigration and Customs Enforcement workplace raids and proposing billions in funding for new detention centers and border security. On Tuesday, he toured a Florida holding facility for undocumented immigrants dubbed 'Alligator Alcatraz.' But while those efforts have deterred new arrivals, there's growing evidence that they've also dented a workforce pipeline that's been critical to U.S. employers. The average monthly employment gains reported by the Labor Department have slid since Trump's return to office, which has coincided with declines in both the size and share of the foreign-born workforce. Law enforcement encounters with migrants at the Southwest border — a statistic that's often used as a proxy for undocumented immigration levels — have plummeted. Deutsche Bank economists told clients earlier this week that immigration declines could push the breakeven rate down to as low as 50,000 jobs per month. That estimate is in line with what Labor Department officials believe is necessary to keep the unemployment rate stable, and well below the massive nonfarm payroll totals that some economists assumed were necessary to keep pace with the expanding immigrant population under Biden. But slower employment growth also implies that the economy can't expand as quickly without overheating. And the 'underlying demographics aren't favorable,' Aditya Bhave, a senior U.S. economist and managing director at Bank of America, told reporters on Tuesday. If immigration slows down, 'where are the people going to come from to do the jobs?' Stephen Miran, Trump's top economist and the chair of his Council of Economic Advisers, told MM that there's an ample supply of native-born workers to pick up the slack. The unemployment rate for workers between the ages of 20 and 24 is north of 8 percent — roughly double the national average — and nearly 13.5 percent of working-age teenagers are unemployed. Major elements of the president's tax bill, including eliminating taxes on overtime, are intended to boost the supply of available labor, he added. 'It's a fallacy to think that we have no domestic substitute for immigrants,' Miran said. 'There's plenty of labor supply waiting to be brought in by the right incentives for firms to hire them — and for them to work — but they'll never come in if you just provide an infinite flood of non-Americans willing to work for slave wages.' (Miran specified that he had not yet seen the Labor Department's June report, which is typically provided to CEA chairs a day before publication.) Miran acknowledged that uncertainty around the administration's policies could lead to'weaker numbers for a period of time,' but added that he 'would not see such weakness as indicative of a deep underlying problem in the economy.' Nevertheless, economists have long cautioned that immigrant workers are critical to offsetting the effects of an aging domestic population. The American Enterprise Institute published research on Wednesday projecting that net migration to the U.S. could flatline — or decline — in 2025, which it said would shave 0.3 to 0.4 percentage points from gross domestic product. And Trump himself noted recently that he's concerned about how the recent crackdown could affect farmers and hospitality businesses. IT'S THURSDAY — Here's to barbecues and ballgames. And as always, send MM tips and pitches to me at ssutton@ Driving the day The Labor Department will release the June jobs report at 8:30 a.m. … The ISM Services Index will be released at 10 a.m. … The Securities and Exchange Commission has a closed meeting at 2 p.m. … More from Miran — The CEA chair also offered this rejoinder to critics of his team's economic analysis of the 'big, beautiful bill,' which we covered in yesterday's edition of the newsletter. The analysis encapsulates several components of Trump's economic agenda in addition to the megabill, he said. 'A lot of folks who have criticized the paper and our work have done so [by] imputing every single benefit in the world to the tax bill. And that's not true,' he said. 'It's a misrepresentation to say that the numbers are all attributed to this or that, when — in fact — it's a recipe with a number of interlocking ingredients that form a coherent policy.' Speaking of the bill — GOP House leaders were optimistic on Wednesday night that they'd secure the votes to send their megabill to Trump's desk, Meredith Lee Hill and Mike DeBonis reported on Wednesday evening. House Speaker Mike Johnson plowed ahead for a vote on the domestic policy megabill on Wednesday even despite threats from his members to vote down a key procedural measure. By 10:00 p.m., his optimism was starting to look misplaced. Four GOP members — Reps. Andrew Clyde of Georgia, Victoria Spartz of Indiana, Brian Fitzpatrick of Pennsylvania and Keith Self of Texas — voted 'no' on a must-pass procedural vote, leaving Speaker Mike Johnson without the necessary votes to proceed. Johnson and other House GOP leaders worked the holdouts for hours, eventually securing adequate support to clear the hurdle around 3:30 a.m. The megabill is now expected to pass later this morning, per Mia McCarthy. Fed File Pulte v. Powell — Bill Pulte, the head of the Federal Housing Finance Agency, escalated his extremely online feud with Fed Chair Powell by pressing lawmakers to probe the central bank chief's alleged 'political bias' as well as his recent Senate testimony about the renovation of the Fed's headquarters, Declan Harty and Victoria Guida report. A shadow chair to the shadow chair? — Powell has declined to say if he'll step down from the Fed board once his chairmanship concludes next year. That has complicated the president's search for a replacement. And Powell's 'circumspection has frustrated some of Trump's advisers, who are taking the silence as an attempt to push back against the president's desire for more influence on monetary policy,' r eport Bloomberg's Saleha Mohsin, Joshua Green and Amara Omeokwe. Bowman's turn — Victoria reports that several top Fed staffers in charge of bank oversight are taking a voluntary deferred resignation offer, clearing the way for a new crop of aides under Vice Chair for Supervision Michelle Bowman. At the regulators Goldmine — Declan Harty reports that Securities and Exchange Commission Chair Paul Atkins said he does not believe putting stocks on the same blockchain technology that underpins cryptocurrency markets ignores investor-protection rules, calling the tokenization process 'an innovation.' On The Hill Crypto vote — Agriculture Chair G.T. Thompson (R-Pa.) expects the House will hold a vote on landmark cryptocurrency legislation during the week of July 14, Jasper Goodman reports. Davidson on Ex-Im Bank — Rep. Warren Davidson tells Katherine Hapgood that the Export-Import Bank could play a bigger role during the second Trump administration. 'We should have the best export-finance operation in the world. And that doesn't mean that we do it the way the Chinese do it,' the Ohio Republican said. 'It means that we make American companies be able to compete against people. That is, particularly when you're competing against countries instead of companies.' The Economy Labor quality top small business issue in June — The National Federation of Independent Business's June jobs report found that 36 percent of small business owners reported job openings they could not fill, up 2 points from May. Job openings were the highest in construction, manufacturing and transportation industries, with 30 percent of small business owners surveyed continuing to have skilled labor openings, Katherine Hapgood reports. Trade Trouble? — From The WSJ's Gavin Bade and Brian Schwartz: 'Trump Said Trade Deals Would Come Easy. Japan Is Proving Him Wrong.' Momentum? — Trump announced a preliminary trade deal with Vietnam that would attach a 20 percent tariff on all imports into the U.S., Phelim Kine, Megan Messerly, Daniel Desrochers and Ari Hawkins report. Goods routed to the U.S. through Vietnam from other countries would be subject to a 40 percent tariff.
Politico
30-06-2025
- Business
- Politico
Gary Gensler's warning
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 Every president tests the limits of their power. Gary Gensler has never seen anything like this. 'From Clinton to Bush to Obama — even the first Trump term – those were kind of more traditional policy pivots,' Gensler, who previously led the Securities and Exchange Commission and Commodity Futures Trading Commission, said in an interview. 'These are big, consequential, historic pivots.' Gensler — along with economists Simon Johnson, Ugo Panizza and Beatrice Weder di Mauro — has co-edited a volume of essays published by the Centre for Economic Policy Research that assess how President Donald Trump's actions in the early days of his second term have reverberated across the global economy. The Trump 2.0 agenda, in their view, could lead to 'a profound weakening of both US economic dynamism and the global system it once led.' That view also holds for how the president has transformed regulatory and enforcement activity within the federal government's administrative agencies, according to Gensler, an MIT professor. Trump has largely been successful — at least so far — in his efforts to oust regulators from agencies, defying an almost century-old legal precedent that has shielded such appointees from being fired for political reasons. He has also used novel legal strategies in an attempt to loosen rules affecting everything from energy production to showerhead water pressure. Other presidents have sought to sidestep time-consuming rulemaking processes or to fire agency leaders who are unfriendly to their agenda. Where Trump stands out, in Gensler's view, is how those efforts are dovetailing with directives that give the White House's Office of Management and Budget and the attorney general more say in how quasi-independent federal agencies promulgate and apply their rules. That's likely to lead to greater oscillation in policy — creating new challenges for private sector investment — while raising the likelihood that special interests will hold even more sway in the rulemaking process, Gensler said. Subjecting these agencies to even greater political influence also raises the risk of error and poses a threat to the rule of law, he added. We are now in 'a period where all those normative behaviors are being questioned,' Gensler said. 'The tools of government, the authorities of government, are being used for individual — sometimes transactional-oriented — goals.' In a statement, White House spokesperson Kush Desai said 'the only special interest guiding President Trump's decision-making is the best interest of the American people — hence why this Administration has rebuffed one special interest group after another to make historic progress on lowering drug prices, ending decades of broken 'free' trade deals, and securing our country's national and economic security.' While many industries have certainly blanched at Trump's drug pricing and tariff policies, his promises to slash regulations were a draw during the campaign. Business leaders and investors were sharply critical of President Joe Biden's agency chiefs — Gensler included — for being heavy-handed in their approach to both regulation and enforcement. Trump's appeal to Wall Street chieftains, crypto bros and energy tycoons alike stemmed from his pledge to spur growth by unshackling those industries from regulatory regimes they considered onerous and arbitrary. But the president's approach has also created risks that are severe and largely unprecedented in the modern era, Gensler said. As the White House concentrates power on federal rulemaking and enforcement, it may limit the extent to which businesses weigh in on Trump's broader agenda. Businesses may tread carefully before weighing in against Trump's policy agenda — particularly if their investment plans or growth depend on the approval of federal regulators, he said. Trump's policies are pressing 'the limits that those private sector actors understood about presidential authority,' he said. 'It's a wider set of considerations as to how you express your point of view.' IT'S MONDAY — And if you thought you'd get a chance at a breather before the July 4 holiday, think again. As always, send MM tips and pitches to me at ssutton@ Driving the Week Monday … Atlanta Fed President Raphael Bostic speaks on the economic outlook and monetary policy before an MNI Livestreamed Connect Video Conference at 10 a.m. … Chicago Fed President Austan Goolsbee speaks at the Aspen Idea Festival at 1 p.m. … Tuesday … … Fed Chair Jerome Powell participates in a policy panel before the European Central Bank Forum on Central Banking 2025 in Sintra, Portugal, at 9:30 a.m. … The Labor Department will release the Job Openings and Labor Turnover Survey (JOLTS) at 10 a.m. … The ISM Manufacturing Index is out at 10 a.m. … Former Sen. Heidi Heitkamp, (D-N.D.) American Enterprise Institute President Robert Doar, Brookings Institution president Ceclia Elena Rouse and former New Hampshire Gov. Chris Sununu speak at 1:30 p.m. at the launch of 'America's Rural Future: Announcing the Brookings-AEI Commission on U.S. Rural Prosperity.' Wednesday … ADP will release its private sector employment report for June at 8:15 a.m. … Acting CFTC Chair Caroline Pham will participate in a fireside chat at City & Financial Global's City Week 2025 at 9:45 a.m. … Thursday … The Labor Department will release the June jobs report at 8:30 a.m. … The ISM Services Index will be released at 10 a.m. … The Securities and Exchange Commission has a closed meeting at 2 p.m. … Friday … Hope you enjoy the fireworks! (Unlikely, if you happen to be my dog). Where things stand on the big, beautiful bill — Senate Republicans cleared a major procedural hurdle on Saturday night that opened the door for a marathon reading of the bill and the start of debate, which was ongoing by the time your MM host hit the hay on Sunday night. A final vote is expected later today. — The Senate's parliamentarian advised lawmakers on Sunday that several provisions violate the chamber's strict rules for budget reconciliation bills, Katherine Tully-McManus reports. Democrats are sharpening their attacks on how the measure will weaken or eliminate health coverage for millions of Americans, and budget hawks in the House are still howling. — So, how much will the bill cost? Depends on who you ask. Senate Republicans are attempting to use an unconventional accounting tactic that makes it appear as though the legislation has little effect on deficits. Senate Budget Chair Lindsey Graham (R-S.C.) on Sunday evening took the floor handwritten sign touting a new Congressional Budget Office score estimating the megabill would save about a half-trillion dollars, assuming tax cuts are extended indefinitely against what's known as a 'current policy baseline.' — Senate Minority Leader Chuck Schumer had another, more traditional, way of looking at it. Under the CBO estimate cited by the New York Democrat, Trump's bill adds $4.45 trillion to deficits. Tillis out — Medicaid cuts were a big reason why Sen. Thom Tillis voted 'no' on the procedural vote. Trump blasted the North Carolina Republican for doing so and — hours later — Tillis announced he would retire at the end of his term, Jordain Carney reports. Tillis, a major voice on Senate Banking, had been expected to seek reelection. We good? — Now that the so-called revenge tax was nixed from a sweeping domestic policy megabill, G7 countries have agreed to exempt the United States from applying a 15 percent minimum corporate tax rate, Gregorio Sorgi and Giorgio Leali report. Winning them over — Zohran Mamdani, whose victory over Andrew Cuomo in the New York City Democratic mayoral primary sent Wall Street into a tizzy, said on NBC's Meet the Press that billionaires shouldn't exist. 'It is so much money in a moment of such inequality, and ultimately, what we need more of is equality across our city and across our state and across our country,' the Queens assemblyman said. 'And I look forward to working with everyone, including billionaires, to make a city that is fairer for all of them.' Fed File 'Stubborn mule' — Trump on Friday encouraged Fed Chair Jerome Powell to resign, labeling him a 'stubborn mule' who has 'Trump derangement syndrome' for refusing to lower interest rates, Colby Smith reports. — Trump's repeated attacks on the Fed's independence and 'breathtaking fiscal policy excess' could diminish the U.S.'s status as a safe haven for foreign investors, according to economists polled by the Financial Times. Counterprogramming — Rates are elevated, recent economic data has been a mixed bag and Trump is at war with the Fed. Nevertheless, 'the summer stock rally is broadening beyond big tech,' write Hannah Erin Lang and Roshan Fernandez in the WSJ. At the regulators Stress test — The Fed's annual stress tests of big banks determined that major financial institutions would be able to withstand a severe recession that significantly hits the real estate sector, Victoria Guida reports. New faces at Treasury — Jasper Goodman reports that Treasury Secretary Scott Bessent has tapped Connor Dunn and John Poulson as deputy assistant secretaries for legislative affairs and hired John Crews as deputy assistant secretary for financial institutions policy. The hires — first reported in Friday afternoon's Playbook — include nearly a dozen policy roles across the department. Ripple's pullback — Declan Harty reports that crypto giant Ripple Labs is dropping its appeal of an earlier court decision in its legal fight against the SEC, CEO Brad Garlinghouse posted Friday on X, moving the nearly five-year-old case one step closer to its end. The SEC is also expected to drop its appeal in the case, Garlinghouse said. 'We're closing this chapter once and for all, and focusing on what's most important — building the Internet of Value,' Garlinghouse wrote. 'Lock in.' Jobs report New era at American Investment Council — Will Dunham has been hired to replace outgoing president and CEO Drew Maloney as the head of the private equity industry's primary lobbying group in Washington. Dunham, currently the vice president of government affairs at AIC, 'is going to do a fantastic job helping the AIC continue to grow, promoting private investment's essential role across America, and delivering value for our members,' said Maloney in a statement. Jasmin Alemán is now VP of U.S. government and regulatory affairs for BNP Paribas. She previously was a congressional affairs specialist at the Office of the Comptroller of the Currency, and is a Ritchie Torres and Chuck Schumer alum. — Daniel Lippman
Politico
27-06-2025
- Business
- Politico
A new crypto bubble grows
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 From Wall Street to Washington, the cryptocurrency industry is riding high. Lawmakers are weighing the best path to handing the market a pair of long-desired wins. Regulators have quickly moved to embed crypto into the financial system, from new investment products to mortgages. And crypto prices are soaring, as are other investments linked to the industry such as the stocks of crypto companies. (Have you seen Circle shares since the stablecoin giant went public?) And yet, trouble may be on the horizon. As your host reports in a new piece out this morning, some crypto backers, bearish investors like Jim Chanos and Democrats including Sens. Jeff Merkley and Elizabeth Warren are growing concerned about the rising trend of companies buying up bitcoin to create 'crypto treasuries' — a strategy that critics believe could exacerbate the market's next selloff. 'It's a lot of kindling being built up,' Castle Island Ventures founding partner Nic Carter told me. 'There's going to be a forest fire, and it's going to be catastrophic.' Dozens of companies from around the world — including Trump Media & Technology Group, Metaplanet and Michael Saylor's Strategy, which is broadly credited for popularizing the approach — have been plowing billions of dollars into bitcoin in recent months, as part of a long-term wager on the price of the original crypto token. Bitcoin, proponents say, offers companies a new way of monetizing the mounds of cash they usually sit on or put into relatively vanilla assets like U.S. Treasuries. And so far, it's paid off quite nicely. Bitcoin is, after all, trading near all-time highs right now, and investors have been piling into the shares of companies that have been setting up crypto treasuries. As Eric Trump put it recently: 'Everybody wants it, no one wants to get rid of it, and it's incredibly powerful.' Yet whether the good times can last is unclear. Crypto is a historically wild market, and to the critics, the growth of corporate crypto treasuries is a recipe for danger whenever the market sells off next. That's because many of those companies may need to dump their crypto in the process, feeding into the declines. Others are worried that the fallout will wind up reaching well beyond crypto, a market whose past declines have been relatively contained within the industry. In a statement, Warren said there could be 'layoffs and business failures' across other sectors as a result of the wide range of companies buying up bitcoin and other crypto tokens. To be sure, crypto currently appears to be a fast-moving train unlikely to be stopped anytime soon. But volatility can take hold fast, and whenever the market drops next, crypto is bound to face tough questions from both investors and policymakers. 'The crypto industry is just prone to everyone being overly optimistic during the booms and then coming to regret it during the bust,' said Omid Malekan, an adjunct professor at Columbia University who teaches courses on blockchain technology and crypto. IT'S FRIDAY — What other risks in the markets — crypto or not — should Washington be on the lookout for? How are we feeling about season 4 of The Bear? Send me all your thoughts: dharty@ And as always, send MM tips and pitches to Sam at ssutton@ Driving the day PCE is out at 8:30 a.m. … Fed Governor Lisa Cook participates in a FedListens discussion on issues including inflation and labor market conditions at the Cleveland Fed's 2025 Policy Summit at 9:15 a.m. … The University of Michigan consumer sentiment survey is out at 10 a.m. T-minus seven days — One week out from the White House's July 4 deadline for lawmakers to pass a sweeping megabill at the heart of President Donald Trump's domestic policy agenda, and things aren't exactly looking great. As Jordain Carney, Lisa Kashinsky and Robert King reported Thursday, GOP lawmakers aren't freaking out yet, but 'they thought they'd be close to done by now.' Instead, they write, 'Senators are preparing to stay in town and vote through the weekend, but internal policy disputes and procedural roadblocks thrown up by the chamber's parliamentarian are keeping firmer plans in flux.' The latest speed bump came early Thursday morning when the parliamentarian ruled that several critical provisions of the bill wouldn't fly, including its controversial plan around Medicaid costs. — Axe that revenge tax: Despite the budgetary fallout, Republicans have agreed to drop a tax included in the bill that was set to take aim at other countries that have 'discriminatory' taxes on U.S. companies, Brian Faler reports. The decision came shortly after Treasury Secretary Scott Bessent said the so-called revenge tax was no longer necessary given the state of conversations with other countries. Warning — In case you missed it, the Commerce Department said Thursday morning that the U.S. economy contracted more than expected in the first quarter with gross domestic product coming in at a 0.5 percent annualized rate, the Wall Street Journal's Harriet Torry reports. On The Hill Cue the Earth, Wind & Fire — 'Top Senate Banking Republicans said Thursday that the committee will not advance landmark cryptocurrency market structure legislation until after Congress' August recess, the latest twist in an emerging standoff with the House over how to advance digital assets legislation,' Jasper Goodman reports. — More from Jasper: 'Key Senate Republicans and President Donald Trump want the House to quickly adopt a Senate-passed stablecoin bill known as the GENIUS Act and move on to the broader market structure bill later in the year. But they are meeting resistance in the lower chamber, where some pro-crypto lawmakers want to change the Senate stablecoin bill and package it with market framework legislation that cleared the House Financial Services and Agriculture committees this month.' Let's try this again — On the heels of the Senate parliamentarian shooting down an initial plan to zero out the Consumer Financial Protection Bureau's funding through the megabill, Republicans on the Senate Banking Committee are now proposing to slash the watchdog's funding instead by nearly half, Jasper reports. The new plan would limit the CFPB's funding to 6.5 percent of the Federal Reserve's operating budget, down from the current 12 percent limit. The parliamentarian signed off on the proposal late Thursday. Senate Banking Chair Tim Scott said in a statement that committee Republicans are 'in a position to advance legislation that helps deliver on President Trump's mandate to cut waste and duplication in our federal government and save hardworking taxpayer dollars.' The top Banking Committee Democrat, Sen. Elizabeth Warren of Massachusetts, said Democrats 'fought back' on the initial plan to zero out CFPB funding 'and won.' 'Now, Senate Republicans will bring to the floor a proposal that slashes the agency's available budget so they can hand out more tax breaks for billionaires and billionaire corporations,' she said, adding that Democrats plan to introduce an amendment to strip Republicans' CFPB proposal from the bill. Senate Dems' megabill warning on small business — 'Senate Democratic leaders warned Republicans that cuts to SNAP, Medicaid and Affordable Care Act premium tax credits as part of a major budget and tax bill would be a 'disaster' for small businesses,' Katherine Hapgood reports. At the regulators Frankenstein's monster — The SEC on Thursday kicked off a review of the decades-old rules around how companies should be reporting details about their C-suite executives' pay packages, which Chair Paul Atkins equated to a creation of Dr. Frankenstein himself. The move is the latest sign that Atkins's agenda for the Wall Street regulator is beginning to take shape, your host reports. Wall Street It's not just crypto — Risky assets have roared in the U.S. market, despite lingering economic unease and questions over what will happen next with Trump's tariffs. Bloomberg's Esha Dey and Matthew Griffin report that an exchange-traded fund tracking volatile stocks 'is on track for its best quarter since 2020' compared to a lower-volatility offering, while another measurement of stocks with weak balance sheets is set for its best month since January. — 'This is the very beginning of a period of FOMO that happens in the late stages of every structural bull market — every single one,' Evercore ISI Chief Equity and Quantitative Strategist Julian Emanuel said. 'What we are surprised by is the speed at which speculation has been embraced, given the record bearishness just a little over two months ago and also in light of what continues to be significant economic and policy uncertainty.'
