Left presses Schumer on Banking Committee Presented by U.S. Bank

LEFT PRESSES SCHUMER ON BANKING COMMITTEE — Via POLITICO’s Zachary Warmbrodt: “Several progressive groups are calling on Sen. Chuck Schumer — expected to be the Senate's next Democratic leader — to avoid letting the Banking Committee become too cozy with the financial industry in the next Congress. At issue are concerns that the committee's contingent of moderate Democrats might grow. Progressives have been on alert amid speculation around whether Evan Bayh, who is campaigning in Indiana to return to the Senate after working for a lobbying and law firm, would regain seniority on the panel.

“In a letter sent today, the advocacy groups asked Schumer to ‘publicly state your intention to ensure the makeup of the Senate Banking Committee reflects the [Democratic] Party's consensus in support of financial reform.’ ‘The Committee already conspicuously harbors several of the Democratic Caucus’s most conservative, Wall Street-friendly members,’ groups including MoveOn.org, Rootstrikers, New York Communities for Change and CPD Action said in the letter to the New York senator.” Read more.

FROM THE MAILBAG — Reuters Breakingviews’ Rob Cox has an alternative view of Sheryl Sandberg’s future: “I have my money on Sheryl running for governor of California - beating Gavin Newsom - and after a term or two running for POTUS.”

MORE FROM CLINTON WALL STREET SPEECHES — POLITICO’s Kyle Cheney: “Hillary Clinton frequently offered warm and at times sympathetic words for Wall Street during her paid speeches before some of the biggest financial powerhouses as the nation was still recovering from the 2008 crisis, according to excerpts flagged as problematic by her speaker’s bureau …

“WikiLeaks’ trove of hacked emails from Clinton campaign manager John Podesta’s Gmail account includes an 80-page attachment seemingly from Harry Walker Agency that highlights hundreds of ‘speech flags.’ The document sorts the speech excerpts by more than 50 categories, including China, Clinton Foundation, Equal Pay, Government Surveillance, Islam, Personal Wealth, and Praising Wall Street” Read more.

TRUMP ECON TEAM OFTEN AT ODDS — WSJ’s Nick Timiraos: “Trump stormed to the GOP nomination without the help of a formal economic team and only a smattering of position papers. Since then he has assembled an eccentric band of advisers to shape policy— many of whom openly disagree with several of his key economic prescriptions.

Economist Larry Kudlow … hasn’t been shy in highlighting these differences, as he did after Mr. Trump torched the political independence of the Federal Reserve in a speech last month in New York. …

“This week, after the campaign was buffeted by controversies including a 2005 video in which Mr. Trump made lewd comments about women, Mr. Kudlow was even blunter. ‘If he continues to drop into these rabbit holes, I will write in Mike Pence,’ he said on CNBC … Advisers describe Mr. Trump’s economic shop as a decentralized, free-wheeling operation that communicates mostly by email and speaks infrequently with the candidate himself. Instead of fleshing out positions live they relay memos to Stephen Miller, the campaign’s policy director, or Steven Mnuchin, an investment banker who is the campaign’s finance chairman. And the team, to the pride of some, is unusually lean on advisers with any White House or government experience” Read more.

SPEAKING OF TRUMP — MM is not going to get into the multiple allegations of sexual assault lodged against Trump on Wednesday. You can get plenty of that elsewhere. In fact, the level of Trump content in here is likely to drop significantly in the coming weeks unless something happens to suggest he has any chance of resurrecting his campaign and winning the White House.

Because at the moment, there is no scenario under which Trump can win. The question is only how much further damage he can do to the civic life of the nation. And once it’s done, we will have plenty of coverage of how the GOP rebuilds itself and deals with a core of voters who embrace Trump’s xenophobic, racist, misogynistic message and live in a self-confirming information bubble that is entirely detached from anything resembling reality.

FIRST LOOK: CARLYLE ON CENTRAL BANK WOES — Carlyle’s Kewsong Lee, Deputy CIO for Corporate Private Equity and Head of Global Market Strategies, and Jason Thomas, Director of Research have a new paper out Thursday arguing that “central banks realize suppressing long-term interest rates doesn't make sense. And given concerns about Deutsche Bank and Euro lenders, ECB tapering could be a real risk to consider.” Read the paper.

STUMPF REACT — Cowen’s Jaret Seiberg: “We see the decision by Wells Fargo to replace John Stumpf with Tim Sloan as CEO and Stephen Sanger as chairman as a positive move to address the bank's political liability over cross selling. What it won't do is end the investigations of whether bank employees broke the law. And the bank is still stuck in the middle of a fight between Democrats and the GOP over the CFPB.

“This is not over … All of the pending investigations will continue. This includes the criminal probe of whether senior executives or regional managers engaged in fraud as well as whether the bank retaliated against those who complained about illegal cross-selling practices. We continue to expect that Wells Fargo will be bogged down in this controversy for the next two years”

Seabreeze Partners’ Douglas Kass emails: “What was the size of Stumpf's severance package? If it is large it could result in more backlash from authorities and public opinion than if he had stayed! Why did tone-deaf Wells Fargo board replace Stumpf with a veteran who has spent three decades at the bank? And who ran the commercial banking business? Why not someone new and not "tainted"?”

FED DIVIDED — Mohamed A. El-Erian on Bloomberg View: “The minutes of the September meeting of the [FOMC] … explained why three Fed board members had dissented from the majority’s ‘close call’ decision to keep rates unchanged. The highly anticipated transcript provides insights into internal and external developments, illustrating the ‘unusual uncertainty’ that policy makers must contend with. The transcript is an important reminder of how difficult it has become to maintain a high level of conviction about the correct policy in a time of such fluidity in the economic, financial, political and institutional environment.” Read more.

GOOD THURSDAY MORNING — Will some please wake me up from this nightmare of a campaign? At least there is football and Nats-Dodgers Game Five tonight. Email me on [email protected] and follow me on Twitter @morningmoneyben. And email Andrew Hanna on [email protected] and follow him on Twitter @andrewbhanna

THIS MORNING ON POLITICO PRO FINANCIAL SERVICES — Patrick Temple-West on how the investment industry is bracing for new SEC rules for mutual funds — and to get Morning Money every day before 6 a.m. — please contact Pro Services at (703) 341-4600 or [email protected].

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ASIAN STOCKS TUMBLE — Reuters: “Asian stocks stumbled to three-week lows and U.S. stock futures and Treasury yields fell after China's September trade data showed a sharp decline in exports, raising fresh concerns about the health of the world's second biggest economy. … Risky assets have had a torrid start to the final quarter of 2016 after recent outperformance as concerns around the outcome of U.S. elections, fallout from a ‘hard Brexit’ and a struggling German banking sector spread turmoil in markets.

“Early on Thursday, the mood soured after data showed Chinese imports in dollar terms were back in contractionary territory in September while exports dropped by a sharper-than-expected 10 percent.” Read more.

THE BIG IDEA: BIG TECH MONEY; FEW JOBS — WSJ’s on Hilsenrath and Bob Davis: “The technology revolution has delivered Google searches, Facebook friends, iPhone apps, Twitter rants and shopping for almost anything on Amazon, all in the past decade and a half. What it hasn’t delivered are many jobs. Google’s Alphabet Inc. and Facebook Inc. had at the end of last year a total of 74,505 employees, about one-third fewer than Microsoft Corp. even though their combined stock-market value is twice as big.

“Photo-sharing service Instagram had 13 employees when it was acquired for $1 billion by Facebook in 2012. … This outcome is a far cry from what many political leaders, tech entrepreneurs and economists predicted about a generation ago … The gap between what the tech boom promised and then delivered is another source of the rumbling national discontent that powered the rise this year of political outsiders Donald Trump and Bernie Sanders.” Read more.

A message from U.S. Bank Banks must do more and better to reverse systemic inequality. At U.S. Bank, that starts by committing $116 million to address social and economic inequities and elevating Black voices and Black-owned businesses. Because we’re small enough to care – and big enough to make a difference. Learn more.

KASICH FOR TPP — Ohio Governor John Kasich in a WP op-ed: “For me, the only common-sense direction is forward, because trade is the foundation of peace. Not only will the TPP promote peace and stability in the Asia-Pacific region, but also it will help maintain the United States’ essential strength in that hemisphere at a time of increased Chinese and Russian assertiveness.” Read more.

DUDLEY: SLACK REMAINS — POLITICO’s Jimmy Vielkind: “There is extra ‘slack’ in the labor market that has given the Fed … pause about raising interest rates, the president of the organization's New York branch said during a speech. Bill Dudley, president of the Federal Reserve Bank of New York and vice chairman of the powerful Federal Open Markets Committee … discussed the state of the economy during a breakfast roundtable sponsored by the Business Council of New York State.

“Dudley said that employment gains reported in payrolls have led him to conclude that there is still room for more jobs to be added. … ‘As the labor market has improved, people who were discouraged are actually going back into the labor force, so that's actually augmenting the supply of workers so that's allowing us to grow payroll at a pretty decent clip without pushing down the unemployment rate,’ Dudley said. Read more.

STUMPF STEPS DOWN — Reuter’s Dan Freed and Elizabeth Dilts: “Wells Fargo & Co's veteran chairman and chief executive officer, John Stumpf, abruptly departed on Wednesday bowing to pressure over its sales tactics that has damaged the bank's reputation and put Wall Street under renewed scrutiny.

“The bank is splitting the role of chairman and CEO with Stephen Sanger, its lead director, becoming chairman … The bank's shares, which have slumped in the wake of the scandal, rose 2 percent in after-hours trading after the bank announced Stumpf's exit.” Read more.

FARGO FALLOUT — FT’S Ben McLannahan: “The 63-year-old joins a long list of bank chief executives forced out in ignominious circumstances over the past decade, including Chuck Prince at Citigroup, Stan O’Neal at Merrill Lynch and Ken Lewis at Bank of America. His downfall is likely to have at least three big consequences for the rest of the big US banks.

“One is with respect to clawbacks of pay … Another is the separation of the roles of chairman and chief executive, which has long been a vexed question for the banks. Tim Sloan, the former president and chief operating officer who is stepping up to CEO of Wells, is not taking the additional title of chairman. Stephen Sanger, the lead independent director and former CEO of General Mills, is assuming the role — and not on an interim basis.” Read more.

FED MINUTES REVEAL CLOSE CALL — Bloomberg’s Christopher Condon and Jeanna Smialek: “At their Sept. 20-21 session, the Federal Open Market Committee voted 7-3 to leave interest rates unchanged. Minutes released Wednesday showed ‘several’ of those who supported the decision to wait on tightening policy said the decision was a ‘close call.’ Several also indicated it would be appropriate to raise rates ‘relatively soon.’

“Following the minutes’ release, investors continued to see about a two-thirds chance of a rate increase in December, based on prices in federal funds futures contracts. They assigned a 17 percent chance to a move in November, when the Fed meets a week before the U.S. presidential election.” Read more.

SNAP PICKS ITS BANKS — Bloomberg’s Sarah Frier and Alex Barinka: “Morgan Stanley and Goldman Sachs Group Inc. will lead the offering and were notified of their role early this week, said the people, who asked not to be named because the information isn’t public. JPMorgan Chase & Co., Deutsche Bank AG, Allen & Co., Barclays Plc and Credit Suisse Group AG will also be involved as joint book runners, the people said.

“Snap, with a private market value of $18 billion after its last funding round, will be the largest social media IPO since Twitter Inc. in November 2013.” Read more.

GIG ECONOMY … WITH BENEFITS — NYT’s “Two former drivers for Uber are eligible for unemployment payments, New York State regulators have ruled, finding that they should be treated as employees rather than independent contractors, as the company has maintained.

“The decision could make it more difficult for Uber, its rival Lyft and other new businesses operating in what is known as the gig economy by raising their costs and challenging their business model.” Read more.

HOLLANDE’S HOWL — POLTICO’s Bjarke Smith-Meyer: “France’s François Hollande has lashed out at the U.S. government for issuing multibillion-dollar penalties against European companies.

“’When the (European) Commission goes after Google or digital giants which do not pay the taxes they should in Europe, America takes offense,’ the French president said in an interview with Le Nouvel Observateur magazine that was picked up by Reuters. ‘And yet, they quite shamelessly demand 8 billion euros from BNP or 5 billion euros from Deutsche Bank.’” Read more.

BONDS LIKE HOTCAKES — TheStreet’s Bradley Keuon: “Last week's $3 billion bond sale by Deutsche Bank (DB) was so good — for investors — that the lender was flooded with additional requests to buy the debt on similar terms.

“Deutsche Bank, based in Frankfurt, needs to sell bonds now, partly because it has about 21 billion euros ($23 billion) of debt securities coming due in 2017 and doesn't want to wait until the last minute, according to David Hendler, principal at bond-analysis firm Viola Risk Advisors.” Read more.

TRUMP DESTORYS HIS OWN BRAND — WP’s Jennifer Rubin: “Donald Trump, a world-class narcissist with no interests beyond self-promotion and money, in all likelihood entered the presidential race as a promotional gimmick. That’s what former advisers suggest, at any rate. It’s the only thing Trump has ever been good at — self-promotion, that is. His actual real-estate business cratered, as the 1995 tax returns show. A string of businesses (vodka, airlines, mortgage brokerage, football team) all failed.

“But through it all, Trump’s insatiable desire for publicity and expertise in media manipulation — from exaggerating his wealth to assuming the identity of a PR man — fueled his image and generated a certain level of wealth (less than advertised, but still). Not only will Trump lose the 2016 election, but also his brand’ — such as it is now — is that of a creepy old man, a bigot, a misogynist” Read more.

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