The Tim Scott agenda

Oct 31, 2024

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Quick Fix

One of former President Donald Trump's fiercest champions on Capitol Hill is poised to become one of his most powerful allies on policy impacting Wall Street, housing and cryptocurrency.

Sen. Tim Scott (R.-S.C.), who challenged Trump for the GOP nomination before becoming a high-profile surrogate, has a lock on the chairmanship of the Senate Banking Committee if control of the chamber flips.

What's in store? Scott is less of a policy wonk than some of his Republican predecessors and peers in similar roles, like former Sen. Pat Toomey and retiring House Financial Services Chair Patrick McHenry. And Scott likely maintains bigger political ambitions — he's also gunning to lead the Senate Republicans' campaign arm, said a person with direct knowledge of the talks granted anonymity to speak candidly.

But the former Allstate insurance agent is beginning to sketch out a wide-ranging agenda that's rooted in deregulation and framed around his signature message of economic “opportunity,” Scott spokesperson Ryann DuRant said. Scott, the only Black GOP senator, has a well-known personal story of his struggles growing up poor as the child of a single mother.

Scott is far from being a populist in the mold of Sen. JD Vance (R-Ohio). But as a lawmaker who’s not rigidly guided by conservative economic policy, Scott has found spots over the years to buck others in his party on contentious banking committee issues. He delivered a major win for big business in 2017 when he helped block Trump's uber-conservative pick to lead the Export-Import Bank, amid concerns that the nominee would tank financing for U.S. exporters. Last year, he partnered with Senate Banking Chair Sherrod Brown (D-Ohio) to approve legislation that would impose stronger penalties on the executives of failed banks.

“Of course, he’s pushing back on regulations, but he hasn’t been an ideologue or unconditional friend to the financial services industry," said Healthy Markets CEO Tyler Gellasch, a former aide to Democrats in Congress and the SEC.

In recent weeks, Scott has signaled that he sees value in the party's new populist direction — "the expansion of the Republican tent," as he calls it — but that he's got more in common with his GOP's free-traders.

"I'm one of them, no question about it," he said on CNBC earlier this month.

MM has a preview of Scott's priorities, according to current and former aides, as well as other Capitol Hill and K Street sources:

Housing — Scott has been a longtime advocate for boosting the supply of affordable housing by streamlining regulations. Scott plans to revisit that goal as chair, DuRant said.

He wants to advance legislation he introduced last month that would overhaul various HUD policies, including by allowing more private investment in affordable housing and expanding a program that ties affordable housing to work requirements.

Crypto — Scott was a "blank slate" on digital asset policy when he became the top Republican on Senate Banking. But, like Trump, he's become a more vocal supporter of the crypto world this year. He wants to prioritize work on the type of regulatory overhaul that the industry has long sought.

“The senator will work to build a regulatory framework that establishes a reliable pathway for the trading and custody of digital assets that will promote consumer choice, education and protection and ensure compliance with appropriate Bank Secrecy Act requirements,” DuRant said.

Investing — DuRant said Scott would want to advance a bill he introduced last month that would allow more people to invest in privately held companies, in part by lowering the "accredited investor” threshold for investments subject to less-stringent transparency requirements. Scott has also been a critic of SEC Chair Gary Gensler and the agency's climate disclosure rule.

Banking — Separately, Scott is eyeing a banking policy framework that could tackle priorities like regulatory rollbacks, agency oversight and financial literacy, said three people with direct knowledge of the plan granted anonymity to discuss private conversations.

Scott's expected approach has financial watchdogs gearing up for a fight.

“A Republican chairmanship for the Senate Banking Committee will be great for crypto, dark markets, nonbanks and Wall Street executives, but bad for Main Street investors, consumers and financial stability, all of which will be threatened by yet more dangerous and mindless deregulation," Better Markets CEO Dennis Kelleher said.

HAPPY HALLOWEEN — Send your money-related costumes to your host at emueller@politico.com and @eleanor_mueller and, if you’re lucky, I’ll return the favor. As always, Hill tricks or treats are welcome, too (including on Signal).

ICYMI, former Money Morning host and current financial services editor Zachary Warmbrodt is headed for a new role at POLITICO overseeing its Congress coverage as executive producer. That wraps a dozen years on the financial services beat (though he assures us he couldn’t go far if he tried). Send him your congratulations at zwarmbrodt@politico.com and @zachary (which, yes, remains D.C.’s most envied Twitter handle).

A message from the American Bankers Association:

Phishing and other financial scams cost consumers $10 billion in 2023, according to the Federal Trade Commission. America’s banks want to change that. #BanksNeverAskThat is a national campaign to empower customers to spot bogus bank communications—before they can do any damage. Learn how to protect yourself from scams by visiting BanksNeverAskThat.com.

Driving the Day

The stock market is betting on Harris — Wall Street executives, political gamblers and cryptocurrency traders are piling up their bets that Trump gets a second term — but the stock market may be telling a different story, our Declan Harty reports.

“U.S. stocks have been on a tear, with the bellwether S&P 500 index climbing more than 10 percent since August,” Declan writes. “While the stock market is not necessarily representative of the broader economy, the S&P 500’s performance in the run-up to Election Day has historically been a strong indicator of whether the incumbent party's candidate will retain control of the White House — correctly forecasting all but four presidential races over the last 96 years.”

“If the index is falling, the theory goes, investors are bracing for more uncertainty from a new administration. But a climb in the S&P 500 signals that the market is expecting the current president’s party to win. And the index’s recent rise is suggesting that Vice President Kamala Harris, who took over the Democratic ticket from President Joe Biden this summer, could be bound for victory.”

“The market’s making a call for Harris to win,” Adam Turnquist, chief technical strategist at the financial services company LPL Financial, told Declan.

In other campaign news — Top Treasury adviser Jacob Leibenluft and Leandra English , the former chief of staff for Biden’s National Economic Council, are among those in talks to join the small — and secretive — circle of advisers who will map out Harris’s Cabinet if she wins, our Adam Cancryn and Jasper Goodman report.

“The transition has additionally begun mapping out plans for the review teams that would be assigned to manage the changeover within individual federal departments,” Adam and Jasper write. “Those teams — which can serve as springboards into administration jobs for some — are expected to be smaller than the squads that Biden relied on in 2020, some of which exceeded two dozen people.”

“Former top [OMB] staffer Michael Linden , former senior Health and Human Services Department official Anne Reid and former senior Treasury official Anna Canfield Roth are among those who have been in discussions about aiding that effort or the broader transition, said two of the Democrats.”

But wait, there’s more campaign news — Deputies of Robert Lighthizer could get a second shot at reshaping trade policy if he gets a job in a second Trump administration, our Doug Palmer reports.

They include trade lawyers Stephen Vaughn, Jamieson Greer and Jeffrey Gerrish plus former U.S. deputy trade representative C.J. Mahoney, former WTO ambassador Dennis Shea and former U.S. chief agricultural negotiator Gregg Doud.

You thought that was all the campaign news? — Our Victoria Guida’s latest column focuses on how the Harris campaign is using billionaire Mark Cuban to “add some pizzazz to her pitch for an ‘Opportunity Economy.’”

In The Economy

Full steam ahead… The last GDP report before the election revealed that the economy is still going strong despite lingering concerns about higher prices and borrowing costs, our Sam Sutton reports.

“Consumer confidence is rebounding, the labor market has held steady and inflation is back to pre-pandemic levels,” Sam writes. “That's far from the expectations of economists from earlier in 2024, many of whom had predicted a recession during the election year.”

He adds that “the economy’s surprising resilience through the final months of the presidential campaign represents a positive outcome for Vice President Kamala Harris as she makes her closing argument to voters. But it may not be enough for Democrats to hold on to the White House, with many voters still incensed over still-elevated price levels since Biden and Harris entered office.”

… but not for housing — Mortgage rates are back up after dipping in anticipation of the Federal Reserve’s rate cuts, Reuters reports.

MORE ECONOMY NEWS: “Germany Avoids Recession, but Weak Growth Weighs on Europe,” from The New York Times’ Liz Alderman

A message from the American Bankers Association:

On Wall Street

Boardrooms brace for Trump’s tariffs — CEOs who use foreign suppliers are getting ready to charge customers more under a second Trump administration, The Washington Post’s David Lynch reports.

Billionaires, they’re just like us — Bridgewater Associates founder Ray Dalio said Wednesday that he’s apprehensive about post-election America no matter who wins the presidency, CNBC’s Pia Singh reports.

“Both of the candidates worry me,” Dalio said from the sidelines of the Future Investment Initiative conference in Saudi Arabia. “There needs to be a strong leader of the middle, I believe, that makes great reforms,” and “neither of the candidates does that for me.”

REGISTER NOW: Join POLITICO and Capital One for a deep-dive discussion with Acting HUD Secretary Adrianne Todman, Rep. Darin LaHood (R-IL), Rep. Ritchie Torres (D-NY) and other housing experts on how to fix America’s housing crisis and build a foundation for financial prosperity. Register to attend in-person or virtually here.

On the Hill

Main Street Republicans talk TCJA — The Main Street Republican caucus held a briefing on the expiration of Trump-era tax cuts Wednesday, our Benjamin Guggenheim reports.

Panelists included George Callas of Arnold Ventures; Kyle Pomerleau at AEI; Mark Mullet, who leads tax policy for Verizon; and Allie White, who does government relations for Walmart.

CRYPTO CORNER

First in MM: Crypto firms say Gensler has cost them $400M — Blockchain Association is out with a new survey today that found its members report spending more than $400 million to litigate more than 100 enforcement actions brought by SEC Chair Gary Gensler.

Coinbase pledges another $25M — Crypto firm Coinbase will pour another $25 million into industry super PACs next year, Jasper reports.

“As we look at Election Day, we thought it was important to reiterate that we’re in it for the long haul,” Faryar Shirzad, Coinbase’s chief policy officer, told Jasper.

Crypto’s week of layoffs — Crypto firm Kraken laid off 15 percent of its staff after hiring venture capitalist Arjun Sethi as co-CEO Wednesday, said a person with direct knowledge of the plans, who was granted anonymity because they were not authorized to speak publicly.

And earlier this week, Consensys and dYdX laid off 35 percent and 20 percent of their staffs, respectively, Blockworks’ Katherine Ross reports.

Though Consensys in part blamed SEC enforcement, some crypto lobbyists hypothesized that the companies are prepping for the friendlier stance of a second Trump administration.

“Industry players are shifting resources to best capitalize what many believe is an incoming bull run [and] potentially positioning themselves for an eventual IPO or acquisition should regulatory winds turn favorable,” said a crypto lobbyist who was granted anonymity to speak candidly.

FTX exec escapes jail time — A federal judge ruled Wednesday that FTX’s former director of engineering, Nishad Singh, will pay $11 billion but not spend time in prison for his role in the crypto firm’s collapse, Coindesk’s Cheyenne Ligon reports.

IN THE STATES

Oops — Florida has accidentally banned banks from selling investments, The Wall Street Journal’s Alexander Saeedy reports.

A message from the American Bankers Association:

“Is candy corn delicious or disgusting?” “Do ghosts exist?” While fun to debate, these are two questions a bank would never ask a customer. Banks also never ask for an account PIN or password in a text, email or phone call — and never ask you to send money from a payment app like Zelle.

Scammers, however, ask for those things all the time. Thousands of Americans fall victim every day to phishing emails, texts and calls from sophisticated criminals posing as your bank. These scams and other fraud cost consumers $10 billion in 2023, according to the FTC.

America’s banks are empowering consumers to fight back against phishing. #BanksNeverAskThat is an award-winning nationwide campaign helping bank customers spot scams—and stop criminals in their tracks.

Learn how to protect yourself at BanksNeverAskThat.com.