Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy.
Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy.
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By KATE DAVIDSON
Presented by Sallie Mae®
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Lindsey Johnson took over as head of the Consumer Bankers Association in July at a time of heightened scrutiny for retail banks.
Overdraft and junk fees. Consumer data collection. Payments fraud. Anti-redlining rules. Abusive practices.
Biden administration financial regulators are eyeing dozens of areas for potential changes to the way financial institutions serve American consumers and communities — with many of those efforts coming to a head this fall.
Johnson sat down with MM this week for a brief chat to talk about upcoming congressional hearings with the big bank CEOs, rising payments fraud, working with regulators and more.
Her biggest gripe, in so many words: It’s not 2008 anymore.
“Some of the things that policymakers are pressing the banks on — whether it is bank fees, whether it is overdraft — a lot of the commentary, a lot of the discussion points are just very dated,” she said. (For example, CBA argues the “$35 cup of coffee” isn’t really a thing anymore — most overdraft charges cover larger purchases, according to a 2021 study, which they attribute to changes made by banks to mitigate big fees for tiny purchases.)
“One thing that we have been very, very strong about is ensuring that policymakers are speaking from a point of reality, today’s reality, using data [and] using the analysis that’s been done, and not just using political or ideological talking points,” Johnson added.
What’s the message the big bank CEOs will bring to lawmakers later this month?
“The biggest message is going to be that this industry is prepared and they are coming from a position of strength to lead the economy through this next phase,” she said.
That was also true in the early months of the pandemic, she added, when banks helped ensure that small businesses stayed afloat and workers kept or returned to their jobs.
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CBA President and CEO Lindsey Johnson speaks at the group’s 2022 Executive Banking School in Greenville, S.C., in August. | Consumer Bankers Association
Could banks be doing more to address payments fraud? Lawmakers have urged the Consumer Financial Protection Bureau to hold banks more accountable for scams targeting consumers on payments platforms such as Zelle.
While banks are concerned about rising fraud, Johnson said, shifting liability to banks would “have significant ripple effects throughout the American economy.”
“Those proposals don’t do anything to actually address the underlying issue and solve the problem, and in fact it could make scams more prevalent,” she said, adding that policymakers should support longstanding bank efforts to prevent fraud, and detect and mitigate scams.
Johnson isn’t a fan either of updates to CFPB’s exam manual for so-called unfair, deceptive or abusive acts and practices, which several bank trade groups have called on the consumer bureau to rescind.
“We think that these sweeping changes ushered in under this manual really have the potential of altering the legal duties of the Bureau,” she said.
But Johnson demurred when asked whether CBA or another trade group could mount a legal challenge.
“We’ve argued and will continue to argue that the CFPB has got to follow the [Administrative Procedure Act] process,” she said. “At this time, we’re just looking at the impacts of this … and we’re looking at the different options on the table.”
What’s the biggest change in Washington for trade groups CEOs? Johnson, who worked on Capitol Hill and was previously head of the U.S. Mortgage Insurers, says regulators now often go around business and outside normal processes to set policy.
“The way that we work together with these regulatory bodies has shifted,” she said. “I would love to see it grow in a more constructive way. It’s very counterproductive to not work with the industry, to not work with the entities that you regulate, to not try and address these issues in a transparent way.”
IT’S WEDNESDAY — Short week means we’re already over the hump! Have a tip, story idea or other feedback to carry us through Friday? You know what to do: [email protected] and [email protected].
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International trade data released at 8:30 a.m. … Cleveland Fed President Loretta Mester speaks at 10 a.m. Federal Reserve Vice Chair Lael Brainard speaks at BPI conference at 12:40 p.m. … Fed Vice Chair for Supervision Michael Barr speaks at the Brookings Institution at 2 p.m. … Fed’s Beige Book released at 10 a.m.
TRUMP’S SPAC DEAL IN LIMBO — Our Declan Harty: “Wall Street is quickly souring on the likelihood of former President Donald Trump’s new social media company going public.
“Nearly a year ago, Trump Media & Technology Group, the company behind the conservative social media app Truth Social, agreed to sell its stock to the public through a deal with Digital World Acquisition Corp., a little-known SPAC, or special purpose acquisition company. At the time, Digital World had 11 months to complete the deal, but closing the transaction has proved to be trickier than anticipated.”
NEW LABOR RULES — Our Nick Niedzwiadek: “The National Labor Relations Board on Tuesday released a highly anticipated proposal to broaden the legal standard for determining whether a worker is employed jointly by multiple employers. The proposed rule would establish two or more employers as joint employers if they ‘share or codetermine’ key employment conditions — such as pay, scheduling, workplace safety and employee discipline policies. That includes indirect and reserved authority over those terms and conditions.”
MEET KWASI KWARTENG — Our Annabelle Dickson in London: “Kwasi Kwarteng has been appointed as Britain’s new chancellor of the exchequer, Downing Street has confirmed. The former business secretary previously held a more junior role in the business department and was also junior minister at the former Department for Exiting the European Union.”
OUT OF THE CLOSET — WSJ’s Yuka Hayashi: “The Commerce Department has been called the ‘hall closet’ of the federal government with an eclectic mix of responsibilities including business promotion, patents and weather forecasts.
“But [Secretary Gina] Raimondo, 51 years old, has positioned the department as a driver of administration efforts to confront China’s geopolitical ambitions and Russia’s aggression in an era when supply chains, advanced technology and economic alliances are major battlegrounds.”
SEC WARNING ON CHINA — Bloomberg’s Lydia Beyoud: “The Securities and Exchange Commission is telling American audit firms to be cautious about taking on as new clients Chinese firms that trade in New York. The warning on Tuesday follows several businesses switching to US auditors amid an ongoing dispute between regulators in Washington and Beijing over access to audit work papers that could lead to about 200 companies being kicked off American stock exchanges.”
A message from Sallie Mae®: 
FRANCE BACKS GAS-PRICE CAP — Our Clea Caulcutt and America Hernandez: “France has come out in favor of imposing an EU-wide price cap on gas supply from Russia and a windfall tax on excess energy profits as Europe looks to rein in sky-high energy costs and respond to provocations from Moscow.”
WINDFALL TAXES — FT’s Sam Fleming and Alice Hancock: “Brussels is pushing for national windfall taxes on energy companies’ inflated earnings to counter what European Commission president Ursula von der Leyen described as ‘astronomic’ electricity bills.”
WALL STREET HEADS BACK TO THE OFFICE — Bloomberg’s Claire Ballentine and Natalie Wong: “After Labor Day, it’s back to the office for Wall Street. Big banks including Goldman Sachs Group Inc. and Morgan Stanley are clearing the final hurdles for full-time, in-person work, and once again reminding employees that they’re wanted in the office. After a few false starts, there’s a sense that this time it’s for real.”
GEORGIEVA TO POLITICIANS: NO SPENDING SPREES — Our Paola Tamma: “Central bankers should continue to tighten monetary policy and politicians should resist pressure to spend public money in a way that could feed inflation, the International Monetary Fund’s Managing Director said Tuesday.
“’Fighting inflation is the overwhelming priority everywhere,’ Kristalina Georgieva said at an event by Bruegel, a Brussels-based think tank, adding that ‘fiscal policy has to provide cushions for the most vulnerable people … there will be pressure to do more for everybody, and that pressure needs to be resisted.’”
MIXED SERVICES SIGNALS — WSJ’s Austen Hufford: “The U.S. services sector either expanded or shrank faster in August than in July, according to two separate business surveys, adding to other mixed signals of the U.S. economy’s strength in recent months.”
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Saima Ahmed has joined SIFMA as executive vice president and general counsel. Ahmed was most recently a senior director at the New York Stock Exchange. She also worked previously as a senior enforcement attorney at the Securities and Exchange Commission, and was appointed special assistant U.S. attorney for the Southern District of New York.
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Colony Capital LLC founder Tom Barrack, a longtime friend of Trump, wants evidence of his wealth, spending and lifestyle to be kept out of his upcoming criminal trial. — Bloomberg’s Patricia Hurtado
A trial over Elon Musk’s bid to end his $44 billion deal for Twitter Inc should be delayed by several weeks to allow the billionaire to investigate a whistleblower’s claims about security on the social media platform, Musk’s lawyer told a judge on Tuesday. — Reuters’ Tom Hals and Sheila Dang
A conservative activist turned investor who has criticized Wall Street’s efforts to address climate change and other issues is publicly urging Chevron Corp. to pump more fossil fuels over the next decade. — WSJ’s Amrith Ramkumar
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