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Tensions between Washington and the finance industry are on the rise, thanks to a sweeping Biden era crackdown aimed at reining in big banks, trading firms and crypto.
A top U.K. official who made the rounds on Wall Street this week had a very different message: We want more risk-taking in London.
Economic Secretary to the Treasury Andrew Griffith told MM it’s about “rebalancing” the approach to policing finance after 15 years of regulatory tightening.
“You saw perhaps somewhat of an overreaction,” he said.
Griffith pointed to efforts to allow U.K. pensions to hold more illiquid assets and to smooth requirements around listed companies. Griffith cited a 30-year-old who would pay a performance penalty if his pension had to be invested in liquid assets like Gilts.
“I’m always at pains to make clear it’s not at the extremities,” he said. “It’s not about taking risk for its own sake.”
Griffith’s agenda in New York this week featured VC’s, tech firms, investors and banks, including an investor roundtable at Bloomberg headquarters and a meeting with Andreessen Horowitz.
His pitch: The U.K. government has a vision for “an open, sustainable, technologically innovative and globally competitive financial services sector.” Part of being internationally competitive includes “improving the clock speed with which regulators take decisions,” he said.
One clear area where the U.K. is starting to diverge with the U.S. is crypto. The Biden administration has responded with skepticism, and there is major disagreement in Congress about whether to give the industry legitimacy with its own rulebook. Across the Atlantic, Prime Minister Rishi Sunak has embraced crypto, and the U.K. is moving ahead with plans to facilitate the use of stablecoins.
The U.K., according to Griffith, “can be some sort of Goldilocks — not always the first mover, not as embracing of the technology as some, but also not putting it in the icebox.”
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House Financial Services holds a member day hearing at 9 a.m. … Fed Chair Jerome Powell speaks on a panel at an IMF event at 2 p.m.
A Fed seat opens — Victoria Guida reports that Cleveland Fed President Loretta Mester will retire next June, after a decade in the job. The regional Fed bank is kicking off the search for a successor for Mester, who has been known as a hawk. The Cleveland Fed has a vote on the FOMC next year.
The Fed investigates Morgan Stanley — The WSJ reports that the Fed is looking into whether the investment bank is doing enough to prevent rich foreign customers from laundering money.
The CFPB fines Citi — Citigroup will pay nearly $26 million to resolve CFPB charges that it discriminated against Armenian Americans when they applied for credit cards, Reuters reports.
Lawmakers press Treasury to rescue Yellow — Reuters reports that Democrats and Republicans are asking Treasury to help salvage trucking giant Yellow from bankruptcy. The company received a $700 million pandemic loan from the Trump administration.
First look: Manchin, Hagerty target SEC climate rule — Declan Harty reports that Sens. Joe Manchin and Bill Hagerty are urging SEC Chair Gary Gensler to delay the finalization of a sweeping climate disclosure rule and take more public comment, citing potential overlaps with a new California climate reporting requirement. The SEC proposal has been pending for nearly 20 months.
Romney, Manchin float fiscal commission — Sen. Mitt Romney is also joining forces with Manchin to propose a bicameral commission that would be tasked with recommending ways to address long-term fiscal and debt issues. Sens. Kyrsten Sinema, Todd Young, Cynthia Lummis and John Hickenlooper are co-sponsors.
FHFA warned on credit reporting — Rep. Blaine Luetkemeyer is urging the FHFA to reverse its decision to require mortgage lenders to use data from just two credit reporting companies instead of three when vetting borrowers, Eleanor Mueller reports. The Missouri Republican said in a letter to FHFA Director Sandra Thompson that the change “will add risk to the housing ecosystem.”
Goldman’s bright outlook — Goldman Sachs economists have declared “the hard part is over.”
They said in a macro outlook report that the global economy outperformed even their optimistic expectations this year and that core inflation should fall back to 2 to 2 1/2 percent by the end of 2024.
The risk of recession is limited, according to Goldman, and several global tailwinds are in store, including household income growth, a smaller drag from monetary and fiscal tightening and a recovery in manufacturing.
Moody’s Investor Service said in a separate report that it expects G-20 growth to slow next year to 2.1 percent from 2.8 percent in 2023.
Powell wants Fed economists to be flexible — The Fed’s Powell said the central bank must be willing to think beyond mathematical simulations because “the economy frequently surprises us,” Bloomberg reports. “Intellectual rigor has to be combined with flexibility and agility,” he said.
Former NYSE exec in talks for FTX reboot — The WSJ reports that a company run by one-time New York Stock Exchange President Tom Farley is among the three suitors vying to buy what’s left of the failed crypto exchange. A winner might be picked next month.
