| | | | |  | | By Sam Sutton | | 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.
| | Donald Trump has chosen to move fast and break things with his early picks for top Cabinet posts. He is facing stiff resistance to that strategy when it comes to the Treasury Department. The president-elect has been hung up for days over who will get the nod for Treasury secretary, the most powerful economic post in the Cabinet. It had been a two-man race between billionaire Howard Lutnick , Trump’s transition team co-chair, and Scott Bessent, a hedge fund executive, until internal squabbling created openings for other candidates. These include former Federal Reserve Gov. Kevin Warsh, Sen. Bill Hagerty (R-Tenn.) and Apollo Global Management CEO Marc Rowan. Trump has long been hypersensitive to the stock market and interest rates, two areas where the Treasury secretary exerts tremendous influence. Treasury chiefs serve as both the spokesperson for the administration’s economic agenda and the steward of government debt that underpins global financial markets. Injecting a dedicated disrupter in the vein of other Cabinet picks like former Florida Rep. Matt Gaetz for the Justice Department or former Fox News host Pete Hegseth for the Pentagon could create major upheavals to markets that Trump views as a scorecard for his economic performance, your MM host reports. “The U.S. Treasury secretary should wake up every morning focused upon driving U.S. economic hegemony, which means being the principal advocate for such policies as a strong dollar, robust economic growth, regular and predictable issuance of Treasury securities,” Tiger Infrastructure Partners CEO Emil Henry , a former assistant Treasury secretary under President George W. Bush, told MM. “Disruption can be a beautiful thing — our country was built by disrupters — but disrupter or not, Trump’s choice at Treasury should hold these principles as sacrosanct,” he added. Still, some of Trump’s closest advisers are angling for the president-elect to choose a candidate who will shake things up at Treasury. Elon Musk , the world’s wealthiest man and a major Trump booster, backed Lutnick for the job over the weekend, arguing that Bessent would be a “business-as-usual choice.” And advocates for protectionist tariff policies have been campaigning to propel Trump’s onetime trade representative and longtime economic adviser Robert Lighthizer into the role. Many economists and analysts have warned that Trump’s trade agenda, if implemented, could cause prices to rise and growth to stall. (For more on how warring trade policy factions are shaking up the Treasury race, check out Monday’s West Wing Playbook top by your host’s similarly over-caffeinated brother-in-arms Gavin Bade). “Treasury — more than any other department — is where the anti-establishment aspect of Trumpism runs into the logic and structure of markets and just how much they depend on things like predictability, credibility, clear communication and stability,” said Graham Steele , who served as Treasury’s assistant secretary of financial institutions before stepping down earlier this year. IT’S TUESDAY — I will accept any and all tips on this horse race. Especially if you happen to be talking to Kevin Warsh. As always, you can reach me at ssutton@politico.com and @samjsutton.
| | | | A message from the Electronic Payments Coalition: SHOW ME THE MONEY: CORPORATE MEGA-STORES POCKETED THE MONEY BREAKING THEIR PROMISE TO CONSUMERS. Corporate mega-stores promised they would lower prices for consumers if Congress put mandates on Americans’ debit cards. That never happened and the mega-stores pushing up costs pocketed more than $145 billion, according to the Congressional Research Service. Why should anyone believe this time will be different? CONGRESS: STOP THE MEGA-STORE WINDFALL & OPPOSE THE DURBIN-MARSHALL CREDIT CARD BILL! | | | | | | October housing starts and building permits data will be released at 8:30 a.m. … The Senate Judiciary Committee holds a hearing on credit card swipe fees at 10 a.m. … The Joint Economic Committee holds a hearing on the 2025 tax policy debate at 2:30 p.m. … Tune in — Victoria Guida and Katy O’Donnell are among the moderators at POLITICO's Affordable Housing: The New Agenda event today. Doors open at 7:45 a.m. for discussions with Acting HUD Secretary Adrianne Todman, Rep. Darin LaHood (R-Ill.), Rep. Ritchie Torres (D-N.Y.) 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. The state of play — Trump’s transition team is considering tasking Warsh with Treasury while assigning Bessent as the director of the White House’s National Economic Council, according to Bloomberg. Warsh has been invited to Mar-a-Lago to interview. — The WSJ reports that “Rowan has yet to speak to Trump about the job and isn’t actively lobbying to become Treasury secretary.” And though Hagerty has met with Trump at Mar-a-Lago, it’s unclear if they discussed Treasury and the Tennessee Republican “has privately told allies he feels like he could be a good fit to lead the department.” — Are you wealthy? Are you in the running to join Trump’s Cabinet? Bully for you, the job offer comes with a healthy tax perk: “An arcane provision in the tax code that allows people who join the federal government to sell stock and other assets and put off paying the capital gains tax they’d owe,” POLITICO’s Brian Faler reports . “The break is designed to help take the sting out of having to comply with federal ethics laws that can require appointees to sell off assets when they would pose a conflict of interest. In order to qualify, they have to put the proceeds from those sales into government-approved investment vehicles like index funds.” — POLITICO’s Chris Marquette: “Trump taps former lawmaker and reality TV star for Transportation”
| | | | 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. | | | | | | | Out with the old, in with the off-the-wall — Victoria Guida, Benjamin Guggenheim and Katy O'Donnell have a sharp story on how previously fringe economic theories and concepts have entered the foreground as Trump prepares for his second term. Selling federal land for housing construction and creating new tax cuts for tipped wages “would never have happened a decade ago — and likely wouldn’t have happened today under a different president,” they report. Policy addresses the previous crisis— President Joe Biden ’s decision to pursue a $1.9 trillion stimulus bill in the early days of his administration was informed by the slow growth and weak employment market that bedeviled the Obama administration in the aftermath of the global financial crisis. As The WSJ’s Nick Timiraos reports: “Politically, those choices backfired.” The demand created by the stimulus, along with “ultralow interest rates and a successful vaccine rollout ran headlong into crippled supply chains and discombobulated labor markets.” — The result? Inflation.
| | First in MM: Basel III analysis — With House Financial Services slated to take testimony from Federal Reserve Vice Chair for Supervision Michael Barr and other banking regulators on Wednesday, the law firm Latham & Watkins has conducted a new analysis on Barr’s Sept. 10 speech that unveiled plans to scale back his initial proposal to raise capital requirements for big banks. The revisions Barr described addressed less than a quarter of the issues that were raised in 373 public comments, according to the law firm’s analysis. According to the law firm, that suggests an “overwhelming” majority of the issues raised in the public comment file would not be explicitly amended in any new re-proposal of the Basel III endgame, which was intended to represent the final iteration of major rules imposed on banks after the global financial crisis. — Flashback: Banking regulators have yet to act on Barr’s proposed revisions, and Barr noted in his speech on Sept. 10 that “the agencies have not made final decisions on any aspect of the re-proposals, including those that are not explicitly addressed in the re-proposal. The public should not view any omission of a potential change in these re-proposals as an indication that the agencies will finalize a provision as proposed.”
| | | | A message from the Electronic Payments Coalition:   | | | | | House Republicans move forward with U.S.-China investment restrictions — Rep. Andy Barr said Monday that House Republicans are shopping a “consensus product” that would restrict U.S. investment in China, Eleanor Mueller reports. “Obviously, not everybody out there thinks it's perfect, but I think it's pretty good,” the Kentucky Republican said in an interview. “I feel that we've threaded the needle with the product before us. Now it's just: 'Let's see what we can do.’” House Speaker Mike Johnson’s office is “talking to the Senate” about getting the language in “a big China component” to the NDAA, Barr said. He added that he's personally trying to set up a meeting with Senate Banking ranking member Tim Scott (R-S.C.) this week to discuss the same. What's in the compromise: House Foreign Affairs Chair Michael McCaul said Monday that it's a Barr proposal that's “going to be a hybrid of OFAC and Treasury sanctions, and then instead of saying ‘sector-based,’ it'll be ‘prohibited technologies.’” “It’s a balance between the financial sector and the national security sector,” McCaul said. “I’d love to see it pass.” The more things change — Eleanor reports that Senate Majority Whip Dick Durbin wants to once again offer his credit card swipe fee bill as an amendment to must-pass defense legislation in the lame duck. "I would like to," the Illinois Democrat told reporters. "I know it's a long shot."
| | | | First in MM: Neiman’s Cross-border payments push — Treasury Assistant Secretary for International Finance Brent Neiman will make a push for more progress on Project Agora, a cross-border wholesale central bank digital currency project that’s being conducted alongside other central banks, in a speech at the New York Federal Reserve’s FX Market Structure Conference this afternoon, according to excerpts and a summary shared with MM. He will also urge Congress to pass bipartisan stablecoin legislation and develop a federal payments network to support the central role of U.S. financial institutions, according to a Treasury spokesperson. Freeze tag — The Investment Company Institute wants the SEC to put its ongoing rulemaking work on ice — as well as more than a half-dozen recently adopted rules, our Declan Harty reports. ICI CEO Eric Pan asked in a letter to SEC Chair Gary Gensler on Monday that the agency suspend the compliance dates for certain new rules including changes to Treasury clearing and stock-trade pricing. Pan added that the SEC should halt work on pending rules. “Given the likelihood that the President-elect will seek leadership changes at the SEC, it is imperative that the next SEC Chair be given the opportunity to determine whether and how to advance the recent rule adoptions and outstanding proposals impacting investors, funds, investment advisers, and capital markets overall,” Pan wrote. An SEC spokesperson did not respond to a request for comment. Putting the “Big” in Big Tech — Bloomberg’s Leah Nylen and Josh Sisco report that the Justice Department will ask a judge to force Alphabet Inc.’s Google to sell off its Chrome browser. The judge has already ruled that the search giant illegally monopolized the online search and advertising markets over the past decade.
| | | | The lame duck session could reshape major policies before year's end. Get Inside Congress delivered daily to follow the final sprint of dealmaking on defense funding, AI regulation and disaster aid. Subscribe now. | | | | | | | | Coinbase’s influence — The WSJ’s Brian Schwartz reports that Trump met with Coinbase CEO Brian Armstrong on Monday to discuss personnel appointments for his second administration. Though he once called bitcoin a “scam,” the president-elect’s views on the sector have evolved and his pro-crypto platform attracted support from top industry executives. Coinbase spent $49 million backing pro-crypto Super PACS but did not take a position in the presidential race. First in MM: Lummis backs Lutnick for Treasury — Sen. Cynthia Lummis, a Wyoming Republican who sits on the Senate Banking Committee, told Jasper Goodman on Monday she is supporting Lutnick for Treasury. “Howard Lutnick is very loyal to the president, very smart, very knowledgeable about digital assets,” said Lummis, who is a leading advocate for industry-friendly crypto policy. She said she has conveyed her view to Trump’s incoming chief of staff, Susie Wiles, and to Lutnick himself. Speaking of Trump and crypto — The FT’s Phillip Stafford: “Donald Trump’s social media company is in advanced talks to buy Bakkt, a cryptocurrency trading venue owned by Intercontinental Exchange, as it pushes to expand beyond online conversation.”
| | | | A message from the Electronic Payments Coalition: DON’T LET CORPORATE MEGA-STORES TAKE FROM CONSUMERS… AGAIN!
Corporate mega-store lobbyists are at it again. They promised to lower prices for consumers if Congress enacted new mandates and price controls on debit cards. Congress gave them what they wanted, passing the Durbin Amendment, but consumers never saw those savings. The Richmond Fed reported 98% of retailers actually RAISED PRICES or kept them the same. Home Depot’s Chief Financial Officer Carol Tomé said on an earnings call in 2011 the company could gain $35 million in revenue annually from lower fees. Today, mega-stores are making the same broken promises if Congress passes new credit card routing mandates. THE DURBIN-MARSHALL CREDIT CARD BILL IS A MULTIBILLION-DOLLAR CORPORATE WINDFALL PAID FOR BY AMERICAN CONSUMERS via less secure transactions and a loss of rewards and services. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
