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Inside Patrick McHenry’s House Financial Services shakeup

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Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services’ morning newsletter delivered to our subscribers every morning at 5:15. The POLITICO Pro platform combines the news you need with tools you can use to act on today’s biggest stories. Keep up with the news with POLITICO Pro.

That Patrick McHenry-era of the House Financial Services Committee starts with a bang.

The North Carolina Republican on Thursday rolled out a major overhaul of one of Congress’ most influential committees, shaking up its longtime GOP leadership structure and policy priorities.

Here’s what MM learned about McHenry’s agenda and general approach to leading the committee after talking the changes through with him.

– New faces at the top — Lawmakers and lobbyists have spent months speculating about how McHenry would hand out subcommittee clubs. It’s the definition of Washington in baseball — under-the-radar positions that most people don’t care about but that are hotly contested because of the influence and career opportunities they hold for ambitious members. McHenry had a difficult decision to make, and he had to sit on it for weeks afterward Kevin McCarthy asked incoming chairs to withhold assignments until his race for speeches was resolved.

The assignments were a dilemma for McHenry because Republicans at the top of the most prized subcommittees—capital markets and financial institutions—hit GOP term limits for committee leadership positions. That sparked questions about whether McHenry would enforce those limits on the two members — Reps. Bill Huizenga and Blaine Luetkemeyer – or would find a way to leave them in place. Huizenga has served as the top Republican on capital markets, and Luetkemeyer was at the top of financial institutions.

Capital markets, which has jurisdiction over the SEC, was sought by a number of lawmakers, including Huizenga, who has spoken publicly about his ambitions, and Rep. Ann Wagner, which did not. Wagner, the only woman on the GOP side of the committee in recent years, spent the last two sessions as the top Republican on the Diversity and Inclusion Subcommittee.

McHenry chose to reposition the old hands and elevate Wagner to leading capital markets. He chose Rep. Andy Barr to chair the Subcommittee on Financial Institutions, which, in addition to banking regulation, will also assume jurisdiction over monetary policy under McHenry.

Although Republicans had become vacillating on term limits in recent weeks — Rep. Virginia Foxx won a waiver to seek the hammer on education and workforce—McHenry retained the mandate. McHenry himself will be term-limited at the top of Financial Services in two years.

“It means we bring fresh views on all the subcommittees,” he told MM.

Crypto is a real priority — McHenry creates a subcommittee on digital assets, financial technology and inclusion. It’s his response to what he saw as a “huge gap in how we structure the committee” amid the crypto meltdown and calls for new rules.

He pressed Rep. French Hill to lead the new panel. Tray, who is pro-crypto, is one of the committee’s most experienced hands when it comes to financial regulation and policy, having led his own bank, served in the Treasury Department and led oversight work over the past few years on central bank digital currency.

The diversity test – McHenry decided to abolish the Subcommittee on Diversity and Inclusion, which his predecessor, Rep. Maxine Waters. But in a twist, he commits to keeping the issue on the committee’s agenda and making it part of every sub-panel. What this really means for oversight and hearings is TBD. Democrats are already blasting him for the move (more on that below).

He told MM that there is bipartisan concern about “the nature of justice in our society.”

thank you — We appreciate everyone who has shared kind words about our former colleague Blake Hounshell. POLITICO and the New York Times have set up a GoFundMe campaign for his family.

Programming Note – MM will take Monday off for the MLK holiday and return Tuesday morning. Please send tips to [email protected] and [email protected].

White House eyes GOP allies on debt ceiling — POLITICO’s Jonathan Lemire, Caitlin Emma and Adam Cancryn report that White House officials have begun reaching out to first-year lawmakers and are reaching out to moderate Republicans in an effort to build support for raising the debt limit.

SEC sues Winklevoss twins, Genesis over crypto lending— The SEC alleged that crypto trading firms Genesis and Gemini, led by Cameron and Tyler Winklevoss, violated securities laws by offering products that promised customers high interest rates for borrowing their crypto assets.

Our Sam Sutton and Declan Harty describe the move as “a significant escalation in SEC Chairman Gary Gensler’s crackdown on the industry.”

Good news about inflation— Inflation in December fell for the sixth consecutive month according to Thursday’s CPI. That brings relief to consumers, although the NYT’s Jeanna Smialek reports that “price increases are still unusually fast on a range of goods and services, from food to car maintenance.”

That means the Fed is on track to scale back the size of rate hikes in February, WSJ’s Nick Timiraos reports.

Yellen plans Africa trip — POLITICO’s Gavin Bade has details on Treasury Secretary Janet Yellen’s visits to Senegal, Zambia and South Africa later this month. She plans to speak about America’s commitment to economic development and clean energy amid growing Chinese commercial influence on the continent.

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The US Chamber CEO is still figuring out what “woke” means– Our Eleanor Mueller asked US Chamber of Commerce CEO Suzanne Clark on Thursday about Republicans targeting big companies for so-called vigilant capitalism and ESG investing.

“One of the things we’ve discussed is what ‘woke’ means,” Clark said during a press conference during the group’s State of American Business event. “I looked it up yesterday in Urban Dictionary — because I have a teenager, so I’m cool like that. And there were 25 or 30 definitions, and I stopped looking for a while.”

Clark said the chamber is concerned about “this idea that everything has to be political; that we have to have red banks and blue banks.”

The department is preparing to issue a statement on the debt ceilingproducing white papers and other information for legislators about the dangers of defaulting on the national debt.

Democrats criticize McHenry for dropping the diversity panel — Rep. Joyce Beattywho chaired the House Financial Services Subcommittee on Diversity and Inclusion under Waters, told Eleanor that “my Republican colleagues have once again made it explicitly clear that they do not prioritize diversity and inclusion.”

Top Financial Services Republicans in their own words — Here’s a rundown of McHenry’s full subcommittee chairman list with a little about how they plan to approach their new assignments.

— Rep. Ann Wagner, Capital markets “I will work to strengthen our public markets, help small businesses and entrepreneurs access capital and increase investor opportunities for high street investors.”

— Rep. Andy Barr, Financial institutions and monetary policy — “I look forward to continuing the important work of overseeing the Federal Reserve System … I also look forward to exercising much-needed oversight of other key financial regulators … to ensure that both financial institutions and their regulators facilitate a safe, sound, diverse and accessible financial ecosystem that promotes growth and competition.”

— Rep. French Hill, Digital assets, financial technology and inclusion — “In a time of great technological advancement and change in the financial sector, it is our job to work across the aisle and promote responsible innovation while encouraging fintech innovation to flourish safely and efficiently in the United States.”

— Rep. Blaine Luetkemeyer, National security, illicit financing and international financial institutions “For far too long, international financial institutions and major investors have been complicit in China’s unethical and immoral actions, and I am honored that Chairman McHenry has asked me to lead the Financial Services Committee’s efforts to stop it.”

— Rep. Bill Huizenga, Supervision and investigations — “I look forward to leading the fight against this administration’s repeated attempts to ignore congressional oversight. Today is a good day for the American people and a bad day for bureaucrats in Washington.”

— Rep. Warren Davidson, Housing and insurance “I look forward to working with my colleagues on the Financial Services Committee to strengthen public policy in our jurisdiction by addressing issues that help these markets better serve the American people.”

First look: House Republicans push Gensler on shareholder proposal, ESG movement — GOP Reps. John Rose, Pete Sessions and Bryan Steil asked SEC Chairman Gensler for details on how agency staff handle rules surrounding shareholder proposals that appear on public company proxies. They highlighted concerns about groups pressuring companies to take environmental and social stances. You can read their letter to Gensler here.

News organizations will have the right to reveal SBF benefactorsReuters: “Eight major media outlets on Thursday asked the US judge overseeing Sam Bankman-Fried’s criminal case to release the names of two people who helped guarantee the FTX cryptocurrency exchange founder’s $250 million bond.”

Carlyle eyes Citi, Morgan Stanley is CEO— FT: “Carlyle Group has tipped two senior Wall Street bankers to become its next chief executive, as the private equity group tries to wrap up a months-long process to find a new leader following the abrupt departure of Kewsong Lee last year.

ConocoPhillips in talks to sell Venezuelan oil in the US— WSJ: “ConocoPhillips, which exited Venezuela after its assets were nationalized in 2007, is now open to a deal to sell the country’s oil in the U.S. as a way to recover the nearly $10 billion Venezuela owes, according to people familiar with discussions between the company and Venezuela’s representatives.”