On the Hill

Congress Reaches Deal on ROAD to Housing

Senate leaders released a revised version of the 21st Century ROAD to Housing Act, which includes most of the House-passed housing language, including a provision prohibiting the Federal Reserve from issuing a central bank digital currency (CBDC) through the end of 2030.

• The package retains House language aimed at limiting large institutional investors and private equity firms from outcompeting families in the single-family housing market.

• The legislation would prohibit the Federal Reserve from issuing a CBDC or any digital asset deemed substantially similar to a CBDC until December 31, 2030.

• Negotiators included key House priorities, including nine community banking bills, and agreed to a three-year authorization for the CDBG-DR disaster relief program.

• Senators invoked cloture on the package Thursday morning, a procedural measure that sends it back to the House, where a vote is anticipated after lawmakers return from recess.

Blumenthal Releases Report on Consumer Protection

Sen. Richard Blumenthal (D-CT) released a report titled “Trump’s Reality: Unaffordability and Financial Instability,” arguing that the Trump Administration’s financial policy agenda has weakened consumer protections, raised costs for households, and increased risks to the broader financial system.

• The report walks through a series of Trump Administration actions that Blumenthal says have left consumers more exposed. Among them: the rollback of the CFPB’s overdraft rule, the Labor Department’s move to allow alternative investments in 401(k) retirement accounts, and opening OCC bank charters to cryptocurrency and financial technology firms.

• Blumenthal also lays out several recommendations for Congress, including legislation to cap credit card late fees at $8, require mortgage servicers to pay homeowners interest on escrow balances, and reverse the rollback of a rule requiring credit unions to publicly disclose how much they collect in overdraft and NSF fees.

HFSC Republicans Urge FinCEN to Modernize AML Rules

In a letter to Financial Crimes Enforcement Network (FinCEN) Director Andrea Gacki, HFSC Chair French Hill (R-AR) and Rep. Warren Davidson (R-OH) urged the agency to finalize its April proposed AML/CFT program rule in a way that more squarely prioritizes risk in Bank Secrecy Act (BSA) implementation.

• The members argue that the current BSA regime too often rewards compliance over meaningful risk detection, pushing financial institutions to devote resources to liability mitigation and low-value reporting rather than identifying real AML/CFT threats.

• Hill and Davidson also asked FinCEN to address outdated SAR and CTR filing thresholds, saying that financial institutions continue to file millions of reports that are rarely accessed by law enforcement.

• The letter also calls on FinCEN to give financial institutions more room to use AI across their AML/CFT programs, arguing that firms need modern tools to keep pace with scammers and illicit actors.

In the Administration

POTUS Attends G7 Amid Iran Conflict and Global Economic Disruptions

President Trump attended the G7 Summit in Évian-Les-Bains, France, where leaders pledged to strengthen supply chains, reduce economic dependencies, and address trade disruptions that could threaten global growth. The statement issued at the end of the summit emphasized the importance of secure energy and commodity flows amid ongoing geopolitical uncertainty.

• Leaders warned that disruptions to energy, agricultural input, and fertilizer supply chains continue to pose risks to the global economy.

• The G7 called for safe transit through the Strait of Hormuz and urged countries to avoid arbitrary export restrictions.

• Members pledged to diversify supply chains, reduce reliance on single sources in strategic sectors, and prevent technology leakage.

• Leaders also called for WTO reform and warned that persistent global economic imbalances could increase trade tensions and financial risks.

Warsh Leads First FOMC Meeting

The Federal Reserve left interest rates unchanged at 3.5 percent – 3.75 percent as reflected in Warsh’s first Federal Open Market Committee (FOMC) meeting, while new projections showed that many officials now expect rate increases later this year. Warsh used his first press conference to announce a broad review of several core Federal Reserve functions, signaling potential changes to how the central bank operates and communicates policy.

• Warsh announced five task forces focused on Fed communications, the balance sheet, data sources, productivity and jobs, and the central bank’s inflation framework.

• He declined to participate in policymakers’ “dot plot” projections and said the Fed’s policy statement had been shortened and simplified.

• Warsh discussed his interactions with Treasury Secretary Scott Bessent but declined to comment on whether he has spoken with President Trump since taking office, emphasizing the Fed’s independence as chairman.

CFTC Issues RFI for Fintech Firms

The Commodity Futures Trading Commission (CFTC) released a request for information (RFI) seeking stakeholder input on regulatory requirements that may be making it harder for fintech firms to partner with CFTC-regulated institutions or navigate the agency’s registration and authorization processes.

• The RFI asks five core questions, including which CFTC registration, designation, or authorization processes are no longer “fit for purpose”; which rules or other regulatory items impede fintech partnerships with registrants; whether existing categories fail to capture certain fintech activity, including DeFi protocols or applications; and whether some categories are too broad and sweep in activity that should not require registration.

• The notice follows President Trump’s May 19 Executive Order, “Integrating Financial Technology Innovation Into Regulatory Frameworks,” which directs federal financial regulators to review existing fintech-related policies and identify changes that could promote innovation and competition. Similar notices from other financial regulators could follow. Comments are due in 21 days and could inform future rulemakings.

On the Horizon

• June 23, 2026 @ 10:00 AM ET: “The Affordability Agenda” — Senate Banking, Housing, and Urban Affairs Committee

• June 24, 2026 @ 10:00 AM ET: “Future of Payments: Promoting Innovation and Fair Markets” — House Financial Services Committee

• June 25, 2026 @ 10:00 AM ET: “From Wall Street to Main Street: The Future of How America Invests” — House Financial Services Subcommittee on Capital Markets

• June 25, 2026 @ 1:00 PM ET: “Win-Win Trade in North America: Six Years of the USMCA” — Cato Institute

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On the Hill

Ways and Means Weighs Crypto Tax Overhaul

The House Ways and Means Committee held a legislative hearing on seven bills to discuss digital asset taxation, with bipartisan agreement on compliance simplification but Democratic resistance to the centerpiece staking-deferral proposal.

• Members found common ground on extending wash-sale rules and creating a voluntary disclosure program, while Democrats warned that indefinite deferral of staking rewards could permanently eliminate rather than merely defer tax liability.

• Chairman Jason Smith (R-MO) has urged bipartisan support for the package before moving forward, but a markup has not yet been scheduled. Given that bipartisan support is crucial for success, the legislation is unlikely to move in the near term.

Senate Banking Examines AI Innovation and U.S. Competitiveness

The Senate Banking, Housing, and Urban Affairs Committee held a hearing on artificial intelligence (AI), focusing on U.S. competitiveness with China, financial stability risks, and workforce impacts.

• Members reached bipartisan agreement on the need for stronger export controls on AI chips and semiconductor manufacturing equipment (SME), with witnesses citing enforcement gaps at the Bureau of Industry and Security (BIS) as a key vulnerability.

• Democrats raised concerns about systemic financial risk and potential job displacement, while Republicans focused on maintaining U.S. technological leadership and avoiding regulations that could push innovation overseas.

Other Notable Congressional Headlines

• HFSC Oversight and Investigations Subcommittee Discusses Chinese Money Laundering Networks and Cartel Financing

• HFSC Housing and Insurance Subcommittee Examines Disaster Recovery

• HFSC Monetary Policy Task Force Reviews the Structure of the Federal Reserve System

In the Administration

CFTC Proposes Prediction Market Framework

The CFTC proposed a new framework for evaluating event contracts under the Commodity Exchange Act (CEA), clarifying when such contracts raise public-interest concerns warranting regulatory action.

• The notice of proposed rulemaking (NPRM) establishes a contract-by-contract public-interest approval process that weighs price-discovery utility, market-integrity risks, and self-regulatory compliance capacity, codified through a structured 90-day review.

• The proposal arrives amid rapid growth in event contracts across CFTC-registered exchanges and leaves open the possibility of further rulemaking on broader questions raised in the March 2026 advance notice of proposed rulemaking (ANPRM).

White House Nominates New CFPB Director

The White House nominated Brian Johnson, a former Consumer Financial Protection Bureau (CFPB) deputy director and current Capital One executive, to lead the agency, sending the nomination to the Senate Banking Committee.

• Johnson would replace acting director Russell Vought, who oversaw significant efforts to wind down the agency, including mass staff terminations and the closure of nearly all active enforcement cases.

• The nomination is widely viewed as a signal that the Administration has shifted from attempting to shutter the CFPB to operating it in a reduced capacity, with priorities expected to focus on issues such as immigration and debanking rather than on broad consumer enforcement.

SEC Moves to Overhaul Stock Market Trading Rules

The Securities and Exchange Commission (SEC) proposed rescinding Rules 611 and 610(e) of Regulation NMS, moving to scrap two decades of equity market structure rules governing U.S. stock trading.

• Rule 611 was intended to ensure investors receive the best available price on trades, but critics argue it instead spurred a proliferation of trading venues, fragmenting liquidity and raising costs.

• Chair Paul Atkins, who voted against the original rules as a commissioner in 2005, argued they produced unintended consequences that hindered market growth; the proposal now heads to public comment.

Treasury Expands Trump Accounts to Foster Youth

The Treasury Department announced a new initiative to expand Trump Accounts to children in the foster care system, allowing state child welfare agencies to open accounts on behalf of foster youth.

• State child welfare agencies will be permitted to open Trump Accounts on behalf of foster youth for whom the state serves as legal guardian, with 23 Republican governors pledging to enroll children in their states’ foster care systems.

• Treasury Secretary Scott Bessent encouraged states to direct federal survivor and disability benefits into the accounts. With the program set to launch July 4, nearly 6 million families have already opened Trump Accounts.

BLS Inflation Report Shows Energy Shock Driving Prices Higher

The Bureau of Labor Statistics (BLS) released its May Consumer Price Index (CPI) report, showing inflation rose to a three-year high of 4.2 percent year over year, accelerating from 3.8 percent the prior month.

• The energy index accounted for over 60 percent of the month-over-month CPI increase, with gasoline prices up more than 40 percent year over year amid the ongoing conflict with Iran.

• Core inflation, excluding food and energy, rose a more modest 2.9 percent year over year and 0.2 percent month over month, suggesting underlying price pressures may remain contained.

On the Horizon

• June 16-17, 2026 @ 9:00 AM ET: Federal Open Market Committee (FOMC) Closed Meeting — The Federal Reserve

• June 17, 2026 @ 12:00 PM ET: “Stablecoins, Tokenization, and Cross-Border Payments” — Atlantic Council

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On the Hill

Bessent Testifies Before Senate Finance and House Ways and Means

Treasury Secretary Scott Bessent made back-to-back appearances before the Senate Finance Committee and House Ways and Means Committee this week, facing oversight on the FY2027 Treasury budget, tax policy, and digital assets.

• Across both hearings, members discussed the 2025 Republican tax cut package’s impact, digital asset taxation, retirement security, and the economic impact of the Iran conflict. Bessent committed to working with Congress on a comprehensive digital asset tax framework and urged passage of the CLARITY Act.

• Republicans highlighted the tax bill’s relief for middle-class households and a manufacturing renaissance driven by full expensing, while Democrats pressed Bessent on the reported IRS audit-immunity settlement, Treasury’s security vulnerabilities, and elevated consumer prices.

Prudential Regulators Face HFSC Oversight

Regulators from the Federal Reserve (Fed), Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and National Credit Union Administration (NCUA) testified before the House Financial Services Committee on Thursday.

• Throughout the hearing, Republicans focused on debanking, moving away from “regulation by enforcement,” and the specifics of the recent Federal Reserve Basel III reproposal. Democrats raised concerns about staffing cuts at the respective agencies, the rolling back of climate risk regulations, and artificial intelligence (AI)-driven cyber threats.

• Notably, Comptroller Jonathan Gould and FDIC Chair Travis Hill provided updates on their efforts to implement the GENIUS Act, both stating they were working to meet statutory timelines while preserving institutions’ abilities to innovate within a clear framework.

House Ways and Means Tees Up Digital Asset Tax Hearing

The House Ways and Means Committee announced a legislative hearing on digital asset taxation for next Tuesday, with the committee set to release a seven-bill package aimed at establishing a federal tax framework for digital assets.

• Chairman Jason Smith (R-MO) is making digital asset taxation a top priority, with Treasury, Commerce, and the White House all involved in drafting legislation. Smith is insisting that any package be bipartisan.

• The package addresses staking and mining taxation, stablecoin treatment, parity with traditional financial instruments, wash sale rules, a new voluntary disclosure program, and anti-tax avoidance measures.

In the Administration

Trump Signs Executive Order on AI and Cybersecurity

President Trump signed an executive order establishing a voluntary framework for AI companies to share advanced models with the federal government up to 30 days before public release for cybersecurity review.

• The order directs the formation of an AI cybersecurity clearinghouse, sets classified benchmarks for designating covered frontier models, and explicitly prohibits using the framework to create mandatory licensing or preclearance requirements.

• The order complements the Great American AI Act, a bipartisan House discussion draft to establish a federal AI governance framework, and follows a delayed signing after Trump pulled an earlier draft over concerns that a 90-day review period would stifle innovation.

SEC Investor Advisory Committee Weighs Private Markets Access and Proxy Voting Reform

The Securities and Exchange Commission’s (SEC) Investor Advisory Committee (IAC) met this week, holding two panel discussions and passing recommendations on mutual fund proxy voting and public company reporting requirements.

• The first panel examined the risks of expanding retail investor access to private markets, focusing on liquidity mismatches, conflicts of interest, and disclosure adequacy. The second panel debated the concentration of voting power in passive index funds.

• The committee passed recommendations to modernize the mutual fund proxy voting system by expanding opt-in voting mechanics and to oppose the SEC’s proposal to shift public companies from quarterly to semiannual reporting.

Trump Admin Adjusts Tariff Regime Post-IEEPA

The Trump Administration continued to reshape its tariff regime this week under Section 301 and Section 232 authorities, following the Supreme Court’s decision invalidating the use of IEEPA tariffs.

• On June 2, the United States Trade Representative (USTR) recommended new duties under a Section 301 forced labor investigation, proposing tariffs of up to 12.5 percent on imports from 60 countries, while the President reduced Section 232 tariffs on certain steel and aluminum derivative products.

• Separately, the Department of Justice (DOJ) is appealing a court order requiring universal IEEPA refunds, arguing the court lacks authority to mandate repayments for importers that haven’t independently filed suit.

SEC Moves to Roll Back Climate Disclosure Requirements

The SEC recently proposed fully rescinding its 2024 climate-related disclosure rules that require public companies to disclose greenhouse gas emissions, climate risk management, and weather-related financial impacts.

• Chairman Paul Atkins argued the rules exceeded the agency’s statutory authority, imposed unjustified costs on public companies, and strayed beyond the SEC’s core mandate of materiality-based disclosure.

• The proposed rescission is the latest step in the Administration’s broader effort to pare back environmental, social, and governance (ESG)-related regulatory requirements across financial markets.

Treasury Asks Financial Institutions to Detect Illegal Activity of Immigrants

The Financial Crimes Enforcement Network (FinCEN), jointly with the FDIC, OCC, and NCUA, issued an advisory urging financial institutions to detect and report suspicious activity tied to the unlawful employment of undocumented immigrants.

• The advisory highlights identity theft, payroll fraud, and shell company schemes as key mechanisms through which complicit employers conceal immigration law violations, noting over $2.5 billion in suspicious activity tied to payroll tax fraud in 2025.

• The advisory provides 18 red-flag indicators for financial institutions and encourages enhanced due diligence regarding Individual Taxpayer Identification Numbers (ITINs).

May Jobs Report Beats Expectations

The Bureau of Labor Statistics (BLS) reported that the U.S. economy added 172,000 jobs in May, exceeding expectations, while the unemployment rate held steady at 4.3 percent.

• Job growth was broad, led by leisure and hospitality, health care, and government, with prior months revised upward by a combined 93,000 jobs.

• The strong report reinforces the Fed’s reluctance to cut rates, with elevated inflation driven by the Iran conflict remaining the central bank’s primary concern heading into Chair Kevin Warsh’s first meeting on June 16-17.

On the Horizon

• June 9, 2026 @ 10:00 AM ET: “Converging Criminal Enterprises: Chinese Money Laundering Networks and Cartel Financing in the U.S. Financial System” — House Financial Services Subcommittee on Oversight and Investigations

• June 9, 2026 @ 2:00 PM ET: “Digital Asset Taxation” — House Ways and Means Committee

• June 10, 2026 @ 10:00 AM ET: “Examining Local Needs in Disaster Recovery” — House Financial Services Subcommittee on Housing and Insurance

• June 11, 2026 @ 10:00 AM ET: “AI and the American Dream: Promoting Innovation, Affordability, and American Dominance” — Senate Banking, Housing, and Urban Affairs Committee

• June 12, 2026 @ 2:30 PM ET: 2026-2027 EXIM Advisory Committee Meeting — Export-Import Bank

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Carolyn Coda | Noah Marine | Alex Cisneros | Alden Knowlton | Kristopher Denzel | Ryan Dilworth | Peter Wells | Audrey Neumann | Ethan Billips | Ben Wiener

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Our Take: This week reflected steady progress across several parallel tracks in financial services, as Congress works to advance priorities before the August recess with midterm elections on the horizon. The passage of the housing bill is a meaningful step forward, though Senate reservations suggest further negotiation lies ahead. The fintech executive order and the Fed's payment account proposal mark a significant step toward the Administration's goal of broadening access to financial services and infrastructure for nonbank institutions. The prediction markets debate is deepening around a question Congress has yet to resolve: whether the existing federal event contract framework can adequately govern sports-linked contracts, or whether a distinct statutory approach is needed. With time running short before August recess and members seeking wins ahead of the midterm elections, movement on these issues is unlikely to abate.

On the Hill

House Passes Bipartisan 21st Century ROAD to Housing Act

The House passed the bipartisan 21st Century ROAD to Housing Act in an overwhelming 396-13 vote, while sending the amended bill back to the Senate with final passage still unresolved.

• The House text removes the Senate’s provision requiring institutional investors to sell build-to-rent homes after seven years while retaining the ban on large investors purchasing single-family homes and a five-year Central Bank Digital Currency (CBDC) prohibition; the White House endorsed the amended version.

• Senate Banking Chairman Tim Scott (R-SC) and Ranking Member Elizabeth Warren (D-MA) said there is “still work to be done,” leaving final passage uncertain.

Our Take: The House vote gives the housing package real momentum, but broad bipartisan support has not yet translated into bicameral agreement. The House moved closer to the Senate’s approach by preserving institutional-investor restrictions, while removing the build-to-rent divestiture requirement and retaining House priorities on community banking and CBDC policy. With Congress leaving for recess, the path to enactment likely depends on whether Senate leaders view the amended bill as the most viable vehicle for a housing win.

Horsford and Miller Introduce Bipartisan PARITY Act

Reps. Steven Horsford (D-NV) and Max Miller (R-OH) finalized their bipartisan cryptocurrency tax legislation, building on a previous discussion draft and incorporating feedback from industry and lawmakers.

• The bill moves away from a small-transaction tax exemption threshold, directing the Treasury to study the issue and provide interim guidance within 180 days on whether existing authority could provide relief.

• Both members said they believe the legislation could advance before the end of this Congress, while Ways and Means Chairman Jason Smith (R-MO) has stated that the committee is also working on similar legislation.

Senate Commerce Subcommittee Examines Sports Integrity

The Senate Commerce Consumer Protection Subcommittee held a hearing examining sports integrity concerns amid the expansion of prediction markets into sports-linked contracts.

• Members raised concerns about prediction markets’ effects on tribal gaming communities and potential exposure of younger users and debated whether the CFTC’s event contract framework can coherently encompass sports outcomes.

• The hearing reflected growing congressional interest in whether federal legislation is needed to clarify the distinction between prediction markets and traditional gambling, with the Coalition for Prediction Markets welcoming congressional engagement in the rulemaking process.

HFSC Subcommittee Holds Bank-Fintech Partnerships Hearing

The House Financial Services Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence held a hearing on bank-fintech partnerships, covering examiner training, community bank access, and master account policy.

• Members and witnesses agreed that examiner knowledge gaps are the clearest obstacle to effective oversight.

• Members raised questions about federal preemption of state usury laws and the merits of a federal payments license framework, with witnesses broadly supportive of clearer statutory guidance.

Other Notable Congressional Headlines

• HFSC Capital Markets Subcommittee Examines Equity Markets

• HFSC Reviews Modernizing the Bank Secrecy Act

• House W&M Tax Subcommittee Discusses the Working Families Tax Cuts

In the Administration

Trump Signs Twin Fintech and Financial Integrity Executive Orders

President Trump signed two executive orders (EOs) directing a regulatory overhaul of how the federal government treats fintech firms and financial institutions’ compliance obligations.

• The first EO directs federal financial regulators to review rules to support fintech innovation and asks the Fed to evaluate frameworks governing payment account access for nonbank financial companies.

• The second EO directs Treasury and financial regulators to develop tougher customer identity verification rules and issue guidance on the risks of extending credit to borrowers without legal work authorization.

Our Take: The Administration is advancing its agenda to expand financial infrastructure access, but the real impact will depend on how agencies implement the EOs through proposed rules and guidance. The fintech EO could create a clearer pathway for nonbank financial companies to access federal payment infrastructure. Key questions around eligibility, compliance expectations, and supervisory treatment will be resolved through the agency process. For more information, our memo outlining the orders’ implications is available here.

Federal Reserve Proposes New “Payment Account” for Non-Bank Institutions

The day after Trump’s executive order, the Fed proposed a new limited-purpose “payment account” that would allow legally eligible financial institutions to clear and settle payments directly through the Fed’s payment services.

• The accounts would have guardrails, including no intraday credit, no access to the discount window, and automated overdraft controls.

• The proposal builds on a December request for information (RFI) and arrives amid a push from nonbanks to access the Fed’s payment infrastructure directly, though banks have broadly opposed the concept.

CFTC Signs Prediction Market Integrity Agreement with NHL

The CFTC and NHL signed a Memorandum of Understanding (MOU) to share information and coordinate to protect the integrity of professional hockey and related prediction-market contracts.

• The CFTC and NHL each designated representatives to communicate regularly and share information confidentially; the NHL has also implemented its own layered protections to monitor prediction markets.

• The agreement follows a similar MOU with Major League Baseball (MLB) in March and comes as the CFTC filedan additional lawsuit to block a Minnesota law that would make operating a CFTC-regulated prediction market a criminal felony.

On the Horizon

Have a great Memorial Day Weekend! We remember all those who have given their lives in service to the United States.

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Our Take: All eyes were on the CLARITY Act markup this week, and the bill cleared committee with two Democratic votes, meaning further negotiations will be needed before it can attract greater bipartisan support necessary for floor passage. The ethics debate, among other issues, remains unresolved and may further prolong the timeline. Beyond crypto, the week illustrated a broader pattern of intra-party division within the GOP across myriad policy issues. All of this is playing out against a backdrop of rising inflation and the ongoing conflict in Iran, which has kept energy prices elevated and added pressure to address the cost of living and working to coalesce around how to deliver it.

On the Hill

Senate Banking Committee Advances Digital Asset Market Clarity Act

The Senate Banking Committee voted 15-9 to advance the Digital Asset Market Clarity Act of 2025, with two Democrats crossing the aisle to give the bill bipartisan committee backing.

• Sens. Ruben Gallego (D-AZ) and Angela Alsobrooks (D-MD) provided votes for the bill, though both said their votes do not guarantee floor support. Both Senators stressed that a key ethics provision restricting government officials’ engagement with digital assets remains unresolved.

• The bill must still be reconciled with a companion measure from the Senate Agriculture Committee before advancing to the floor, and several other Democrats, including Sens. Mark Warner (D-VA), Catherine Cortez Masto (D-NV), and Raphael Warnock (D-GA), said they plan to continue negotiating ahead of any floor vote.

Our Take: Thursday’s committee vote marks a crucial step forward for the CLARITY Act, but significant hurdles remain before it reaches the floor. The 15-9 vote gave Chairman Tim Scott (R-SC) a bipartisan stamp of approval, but Gallego and Alsobrooks made it clear that their support was conditional, and neither is committed to a floor vote. The ethics fight over government officials’ crypto holdings remains the most politically charged obstacle, and the bill still must be reconciled with the Agriculture Committee’s version before advancing. With several Democrats holding out for stronger consumer and law enforcement protections, the path to passage remains uncertain.

Senate Confirms Kevin Warsh as Federal Reserve Chairman

The Senate confirmed Kevin Warsh’s nomination to become Federal Reserve chairman, replacing Jerome Powell, whose term expired May 15, after months of delay stemming from a recently dropped Justice Department investigation into Powell.

• The Senate confirmed Warsh in a 54-45 vote, with Sen. John Fetterman (D-PA) as the only Democrat to vote in favor. Powell plans to remain on the Fed’s Board of Governors, potentially creating a competing power center within the central bank.

• Fed Governor Stephen Miran also formally submitted his resignation, effective upon his successor’s swearing in, clearing the way for Warsh to assume his seat on the Board.

House Releases Revised Housing Package

House leaders released a revised housing package this week, defying Trump’s call to pass the Senate bill unchanged, with a floor vote targeted for next week.

• The final House text maintains restrictions on institutional investors’ ability to purchase single-family homes, but significantly scales back the Senate bill’s limitations on institutional players and preserves a five-year ban on the Fed issuing a digital currency.

• Senate Majority Leader John Thune (R-SD) cautioned that the bill’s prospects in the upper chamber will depend on whether Senators can support the House changes, leaving the path to final passage uncertain.

Our Take: The revised House package narrows the Senate’s institutional investor restrictions enough to satisfy House members but may ultimately risk Senate approval. If it passes the House, the Senate will need to decide whether to accept the revised text. Senate Banking Ranking Member Elizabeth Warren (D-MA) has argued the changes undermine the core of the bill, and Thune has taken a wait-and-see approach. The shared midterm incentive to deliver a housing win keeps both sides at the table, but further negotiation appears likely.

HFSC Advances Six Bills on AI, Fraud, and Federal Reserve Mandate

The House Financial Services Committee advanced six bills out of markup focused on artificial intelligence in financial services, fraud prevention, and the Federal Reserve’s mandate.

• The Price Stability Act, which would remove the Federal Reserve’s employment mandate, passed 30-21 along party lines. The Unleashing AI Innovation in Financial Services Act, which would establish regulatory sandboxes for firms to test AI applications under agency supervision, passed 33-19.

• Four bills passed unanimously: the GUARD Act, the AI PLAN Act, the FUTURES Act, and the Bank Fraud Technology Advancement Act, all aimed at improving coordination on AI-related fraud prevention and modernizing regulatory technology capabilities.

GOP Lawmakers Express Mixed Reactions to President Trump’s Gas Tax Proposal

President Trump called on Congress to suspend the federal gasoline tax this week as gas prices hover above $4.50 per gallon, but Republican congressional leaders stopped short of committing to a legislative vehicle.

• Speaker Mike Johnson (R-LA) called the idea “intriguing” but said Republicans need to contemplate any unintended consequences. Senate Majority Leader Thune questioned whether the 18-cent-per-gallon savings would reach consumers at the pump.

• Sen. Josh Hawley (R-MO) introduced a standalone bill to suspend both the federal gasoline and diesel taxes for 90 days, but leadership is waiting for a more direct White House push before acting, with members wary of the implications for the Highway Trust Fund.

In the Administration

Trump Visits China for High-Stakes Summit

President Trump traveled to Beijing this week for a two-day summit with Chinese President Xi Jinping, the first U.S. presidential visit to China in nearly a decade, with trade, the Iran conflict, and bilateral stability headlining the agenda.

• Both sides agreed the Strait of Hormuz must remain open, with Xi signaling a willingness to help broker a deal with Iran, though China stopped short of any formal commitment to pressure Tehran.

• The two sides announced early deliverables, including a 200-plane Boeing order, the resumption of American beef exports, and a commitment to establish bilateral boards of trade and investment to manage economic cooperation going forward.

CFTC Reaffirms Exclusive Jurisdiction Over Prediction Markets in Sixth Circuit

The Commodity Futures Trading Commission (CFTC) filed an amicus brief in a U.S. Court of Appeals battle over prediction markets, asserting that the agency’s regulatory structure preempts state laws governing the novel products.

• The brief is the latest step in the CFTC’s broader effort to claim unilateral regulatory remit over prediction markets. The CFTC argued that its filing was meant to counter “state encroachment,” following similar lawsuits against Arizona, Connecticut, Illinois, New York, and Wisconsin, and a preliminary injunction secured against state regulation of prediction markets in Arizona.

• In a statement, CFTC Chairman Mike Selig explained that “the CFTC will not allow overzealous state governments to undermine the agency’s longstanding authority over [prediction] markets.”

CPI Report Finds Consumer Price Spike in April

The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose 3.8 percent in April from a year earlier, the highest reading in three years, driven primarily by elevated energy prices amid the Iran conflict and the closure of the Strait of Hormuz.

• Energy prices rose 18 percent year-over-year, with gasoline up 28 percent, fuel oil up 54 percent, and airfare up 21 percent.

• Inflation-adjusted average hourly earnings declined 0.3 percent year-over-year, the first time wages have trailed inflation since April 2023, as consumer sentiment hit a record low.

On the Horizon

• May 19, 2026 @ 10:00 AM ET: “Building the Future: How Small Home Builders are Closing America’s Housing Gap” — House Small Business Committee

• May 19, 2026 @ 10:00 AM ET: “Modernizing the Bank Secrecy Act (BSA) for Financial Crime in the 21st Century” — House Financial Services National Security, Illicit Finance, and International Financial Institutions Subcommittee

• May 19, 2026 @ 10:00 AM ET: “Your Paycheck, Returned: How the Working Families Tax Cuts Delivered for Americans” — House Ways and Means Tax Subcommittee

• May 20, 2026 @ 10:00 AM ET: “Partnering for Innovation: How Bank-Fintech Collaborations Enhance Financial Infrastructure” — House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee

• May 20, 2026 @ 2:00 PM ET: “From Order to Execution: Ensuring Efficient and Transparent Equity Markets” — House Financial Services Capital Markets Subcommittee

Contact Us

Carolyn Coda | Noah Marine | Alex Cisneros | Alden Knowlton | Kristopher Denzel | Ryan Dilworth | Peter Wells | Audrey Neumann | Ethan Billips | Ben Wiener

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Our Take: A brief May recess arrives with the legislative agenda more deferred than resolved. Crypto market structure and tax negotiations have bipartisan momentum but face a narrowing window as reconciliation consumes floor time and political bandwidth, the latter of which the House and Senate Republicans remain far apart on scope and offsets. The Administration’s recent activity, including the retirement plan executive order, is moving faster than legislation. With the midterms approaching and the window for major legislation shrinking, the coming months will test whether Congress can convert negotiations into policy.

On the Hill

Warsh Nomination Clears Senate Banking Committee

The Senate Banking Committee voted 13–11 to advance Kevin Warsh’s nomination as Fed chair to the full Senate.

• Sen. Thom Tillis (R-NC) lifted his hold after the Justice Department dropped its investigation into Chair Jerome Powell; Warsh will fill the seat of Fed Governor Stephen Miran, whose term has already expired, as Powell has committed to remaining on the Board of Governors.

• Senate Majority Leader John Thune (R-SD) filed cloture on Warsh’s nomination on Thursday, teeing up a confirmation vote the week of May 11 ahead of Powell’s May 15 term expiration.

Senate Bans Members from Prediction Market Trading

The Senate unanimously passed a resolution prohibiting senators and staff from trading on prediction markets, effective immediately.

• The measure, led by Sen. Bernie Moreno (R-OH), follows growing scrutiny over trades made in relation to recent users winning hundreds of thousands of dollars by accurately predicting U.S. military actions, raising insider trading and national security concerns.

• Minority Leader Chuck Schumer (D-NY) urged the House and Administration to follow suit. Sens. Todd Young (R-IN) and Elissa Slotkin (D-MI) are pushing broader legislation to extend the prohibition to all federal officials and employees.

House Passes Bipartisan Tax Administration Bills

The House cleared more than a half dozen bipartisan tax measures, with six passing by voice vote and a seventh reforming the Internal Revenue Service (IRS) whistleblower program passing 346-10.

• The bills address a range of tax administration issues, including IRS notification requirements for bank information requests, expanded disaster loss deductions, and exemptions for sexual assault settlement damages from federal income taxes.

• The measures move to the Senate as tax writers in both chambers eye a potential bipartisan tax vehicle later this year.

HFSC Examines Basel III Capital Proposal

The House Financial Services Committee held a hearing on the impact of the 2026 Basel III capital proposal on economic growth and lending.

• Members broadly acknowledged improvements over the 2023 proposal, including greater risk sensitivity and removal of punitive mortgage risk weights, though concerns remained about potential double-counting between standardized requirements.

• Democrats questioned whether capital relief would translate into increased lending rather than shareholder returns; Republicans warned that higher capital requirements on futures intermediaries could raise costs across food supply chains.

In the Administration

Trump Signs Executive Order Expanding Retirement Plan Access

President Trump signed an executive order directing the Treasury to establish TrumpIRA.gov by January 1, 2027, connecting workers without employer-sponsored plans to low-cost individual retirement accounts (IRAs).

• Eligible lower-income workers earning below $35,000 can receive up to $1,000 annually through the Federal Saver’s Match; Treasury and the IRS are also directed to clarify the tax treatment of charitable contributions to IRAs on behalf of eligible workers.

• National Economic Council (NEC) Director Hassett signaled a Phase 2 legislative push to expand retirement access for older individuals, citing Australia’s retirement savings model, with discussions underway with Chairman Jason Smith (R-MO) and Rep. Lloyd Smucker (R-PA).

Our Take: The executive order is largely an implementation vehicle for SECURE 2.0 provisions already enacted, moving the Saver’s Match and TrumpIRA.gov forward administratively but leaving the heavier lift to Congress. Hassett’s Phase 2 signaling, with early outreach to Smith and Smucker, suggests the White House sees this as a precursor for expanded retirement legislation. Taken together, the order fits within a broader effort to make retirement access for Americans a more prominent feature of the Administration’s economic agenda.

Trump Raises EU Auto Tariffs

President Trump announced he will increase tariffs on EU cars and trucks to 25 percent, citing non-compliance with the U.S.–EU trade agreement.

• The deal had committed the EU to eliminating levies on U.S. industrial goods in exchange for a 15 percent tariff ceiling on most EU products. France and others have pushed for stronger retaliation if the U.S. breaks the terms.

• The announcement follows King Charles’s U.S. visit and Thursday’s decision to lift Scotch whisky tariffs under the U.S.-U.K. Economic Prosperity Deal, capping a busy week on the transatlantic front. The EU tariff will not apply to vehicles built in U.S. facilities.

CBP Sets May 11 Target for First IEEPA Tariff Refunds

Customs and Border Protection (CBP) told the Court of International Trade it expects to begin issuing refunds for tariffs collected under the International Emergency Economic Powers Act (IEEPA) on or about May 11.

• Of the over 11 million entries being processed through CBP’s new Consolidated Administration and Processing of Entries (CAPE) refund system, only roughly 3 percent have been liquidated, and about 21 percent have been accepted for duty removal.

• Importers’ attorneys flagged ongoing IEEPA duty collection on certain entries and technical issues with the system; the court directed CBP to provide a progress report by May 12.

CFTC Sues Wisconsin to Assert Exclusive Jurisdiction Over Prediction Markets

The Commodity Futures Trading Commission (CFTC) filed suit against Wisconsin after the state brought civil actions against five CFTC-regulated prediction market platforms, including Kalshi, Polymarket, and Robinhood, asserting felony violations of state gambling law.

• The CFTC argues Congress granted it exclusive jurisdiction over event contracts traded on designated contract markets (DCMs), preempting state gambling statutes.

• The Wisconsin suit is part of a broader federal enforcement push; the CFTC has now filed similar actions against New York, Arizona, Connecticut, and Illinois.

BEA Report Shows Q1 GDP Grew 2 Percent as Inflation Accelerated

The Bureau of Economic Analysis (BEA) reported real gross domestic product (GDP) grew at an annual rate of 2.0 percent in the first quarter of 2026, up from 0.5 percent in the prior quarter.

• Investment drove the acceleration, particularly in equipment and intellectual property products tied to artificial intelligence (AI) buildout, while consumer spending decelerated to 1.6 percent.

• Inflation pressures picked up sharply in the quarter, with the Iran conflict driving energy prices roughly 44 percent higher since February and pushing overall price growth well above the prior quarter’s pace.

CFPB Finalizes Revised Small Business Lending Data Rule

The Consumer Financial Protection Bureau (CFPB) finalized a revised rule under the Dodd-Frank Act, scaling back Biden-era data collection requirements for banks and credit unions that lend to small businesses.

• The rule lowers the small business revenue reporting threshold from $5 million back to $1 million, raises the minimum loan volume trigger from 100 to 1,000 loans, and removes several data requirements added in 2023.

Fed Holds Interest Rates Amid Growing Internal Divide

The Fed held the federal funds rate steady at 3.5–3.75 percent, with four dissents, the most since 1992, as the economic outlook grows more complicated.

• The Iran conflict has driven energy prices sharply higher, reigniting inflation the Fed was already struggling to contain, pushing the committee toward a more neutral policy stance where rate moves in either direction remain possible.

• Three regional bank presidents dissented in favor of removing any easing bias from the Fed’s statement, while Governor Miran dissented in the opposite direction, voting for an immediate rate cut.

On the Horizon

• May 5, 2026 @ 10:30 AM ET: “Treasury Borrowing Advisory Committee Closed Meeting” — Treasury Department

• May 6, 2026 @ 9:00 AM ET: “U.S.-China Trade Update: Imports, Exports, Fentanyl Flows, and Beyond” — Peterson Institute for International Economics

• May 6, 2026 @ 11:00 AM ET: “Internal Revenue Service Advisory Council Meeting” — Treasury Department/Internal Revenue Service

• May 7, 2026 @ 11:00 AM ET: “Federal Emergency Management Agency Review Council Meeting” — Department of Homeland Security

• May 7-8, 2026: “13th Annual Conference on Financial Market Regulation” — Securities and Exchange Commission

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Our Take: The week’s activity reflected an active policy agenda, even as the legislative calendar grows more congested. Competing demands from FISA, reconciliation, and the DHS shutdown crowd out the possibility of movement on other legislation before May. Regulators continue to drive near-term action as major financial services policies, such as housing and crypto, remain under negotiation. Meanwhile, both parties face growing pressure as the midterms approach. Republicans will look to tout policy wins on trade, border security, and the 2025 tax cuts, while Democrats will center their message on consumer prices, the tariff refund process, and economic uncertainty tied to the Iran conflict. Warsh’s confirmation, the most publicized political flashpoint this week, may now move quickly, with the Justice Department’s criminal probe into Federal Reserve (Fed) Chair Jerome Powell formally closed and Sen. Thom Tillis’ (R-NC) chief rationale for holding out removed.

On the Hill

Kevin Warsh Testifies Before Senate Banking

The Senate Banking Committee held a confirmation hearing for Kevin Warsh, President Trump’s nominee to lead the Federal Reserve, where Senators questioned him on monetary reform, agency independence, and asset divestiture.

• Warsh called for a new inflation framework that prioritizes interest rates over balance-sheet tools and the elimination of forward guidance; he denied that President Trump ever sought a rate commitment and pledged to divest his financial assets before taking office.

• The Justice Department recently closed its criminal investigation into Powell over cost overruns at the Fed’s Washington headquarters, removing the key obstacle to Warsh’s confirmation; the Senate Banking Committee now has enough time under its notice rules to schedule a committee vote as soon as next week.

House Committees Unveil Coordinated Data Privacy Bills

The House Financial Services Committee and Energy & Commerce Committee jointly announced the GUARD Financial Data Act and the SECURE Data Act, a two-bill effort to establish national consumer data privacy standards.

• The GUARD Act would modernize Title V of the Gramm-Leach-Bliley Act (GLBA), requiring affirmative opt-in consent before financial institutions disclose sensitive personal data and granting customers rights to access and delete their data.

• The SECURE Data Act, led by Energy & Commerce Chair Brett Guthrie (R-KY) and Rep. John Joyce (R-PA), is designed to align with the GUARD Act while addressing considerations specific to non-financial sectors.

Our Take: The joint announcement signals a more coordinated House Republican approach to data privacy than previous Congresses have managed. The SECURE Data Act’s preemption language is notably stronger than last Congress’s American Privacy Rights Act (APRA), which will draw pushback from states that have built their own privacy frameworks. Floor action will require a bipartisan path forward, but the lack of Democratic input makes this likelihood an uphill battle. The next concrete test will be whether either bill advances out of committee before the August recess.

USTR Greer Testifies Before House on 2026 Trade Agenda

U.S. Trade Representative Jamieson Greer testified before the House Ways and Means Committee on the Administration’s trade priorities, including the United States-Mexico-Canada Agreement (USMCA) joint review, Section 301 investigations, and African Growth and Opportunity Act (AGOA) reauthorization.

• Greer cited a reduction in the goods trade deficit since April 2025, nine concluded reciprocal trade agreements, and committed to a multi-year AGOA reauthorization.

• Democratic members pressed Greer on consumer price increases, access to tariff refunds for small businesses, and potential conflicts of interest in exemption decisions.

House Financial Services Advances Four Bills Out of Markup

The House Financial Services Committee favorably reported four bills to the House covering proxy advisory firm oversight, small lender reporting requirements, exchange rate accountability, and a rollback of Consumer Financial Protection Bureau (CFPB) data collection mandates.

• The Protecting Americans’ Retirement Savings from Politics Act, introduced by Rep. Bryan Steil (R-WI), passed 27-24 and would establish new materiality standards for issuer disclosures, create registration and oversight requirements for proxy advisory firms, and refocus fiduciary decisions on investors’ economic interests.

• The Small Lenders Exempt from New Data and Excessive Reporting (LENDER) Act passed 26-22; the China Exchange Rate Accountability Act of 2026 passed 32-20; and the Repealing Big Brother Overreach Act passed 26-25.

PACE Act Targets Nonbank Access to Payment Rails

Reps. Young Kim (R-CA) and Sam Liccardo (D-CA) introduced the Payments Access and Consumer Efficiency (PACE) Act to allow qualified nonbank providers direct access to Federal Reserve payment systems.

• The bill would create a federal supervisory framework administered by the Comptroller of the Currency (OCC) that allows qualified nonbank payment providers to access Federal Reserve payment rails directly, enabling faster and more efficient money movement.

Other Notable Congressional Headlines

• Senate Appropriations Subcommittee Hears Bessent on FY2027 Treasury Budget

• House Financial Services Subcommittee Examines Reinsurance and Credit Risk Transfers

In the Administration

Atkins Outlines SEC Priorities in Keynote Remarks

Securities and Exchange Commission (SEC) Chair Paul Atkins delivered keynote remarks at the Economic Club of Washington, previewing a near-term rulemaking agenda focused on Initial Public Offering (IPO) modernization and digital assets one year into his tenure.

• Atkins announced plans to propose a regulatory IPO “on ramp,” expanded shelf registration access, and an optional quarterly or semiannual filing cadence for public companies.

• On digital assets, Atkins cited the publication of a crypto-token taxonomy that distinguishes five categories of digital assets and previewed a forthcoming innovation exemption while the Commission develops longer-term rules.

Regulators Lower Capital Threshold for Community Banks

The Fed, Federal Deposit Insurance Corporation (FDIC), and OCC have finalized a rule that lowers the community bank leverage ratio from 9 percent to 8 percent, reducing the barrier for community banks to opt into a simpler capital reporting framework.

• The rule, adopted unchanged from its November 2025 proposal, aims to reduce regulatory burden while preserving safety and soundness.

• Banks that temporarily fall out of compliance will now have a four-quarter grace period to return to good standing, doubling the previous two-quarter window.

SEC and CFTC Propose Form PF Threshold Increases

The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) jointly proposed amendments to Form PF to raise filing thresholds and reduce reporting burdens for private fund advisers.

• The proposal would raise the general filing threshold from $150 million to $1 billion in private fund AUM, increase the large hedge fund adviser exposure reporting threshold from $1.5 billion to $10 billion, and introduce a new mechanism to identify funds active in the private credit market.

On the Horizon

• April 28, 2026 @ 10:00 AM ET: “Prioritizing Main Street: Evaluating the Impact of Capital Proposals on Economic Growth and American Communities” — House Financial Services Committee

• April 28, 2026 @ 10:00 AM ET: “Initiation of Section 301 Investigations Related to the Failure to Impose and Effectively Enforce a Prohibition on the Importation of Goods Produced with Forced Labor” — U.S. Trade Representative

• April 28, 2026 @ 1:30 PM ET: “2026-2027 EXIM Advisory and Sub-Saharan Africa Advisory Committee Meeting” — Export-Import Bank

• April 29, 2026 @ 10:00 AM ET: “Examining Derivatives’ Role in the Treasury Market” — House Financial Services Committee

• April 29, 2026 @ 2:30 PM ET: Federal Open Market Committee Meeting Press Conference — Federal Reserve Board

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Our Take: The DHS reconciliation sprint remains the week’s central legislative challenge, with a narrow House majority making it difficult to satisfy conservative demands on scope and offsets. The Warsh stalemate is the week’s most consequential slow-burn—President Trump’s conflict with Chair Powell shows no signs of resolution, and Sen. Thom Tillis’s (R-NC) commitment to his blockade suggests the standoff could persist well beyond the May 15 term expiration. Meanwhile, significant regulatory movement on digital assets continues through GENIUS Act implementation proposals, even as the broader market structure bill remains in limbo. All of this is playing out against the backdrop of the U.S.-Iran conflict, which continues to sow uncertainty for Congress and markets, even as Trump recently signaled that the Strait of Hormuz is open.

On the Hill

House Agriculture Examines CFTC Priorities Under Chairman Selig

The House Agriculture Committee heard testimony from CFTC Chairman Michael Selig on prediction markets, digital asset legislation, and agency capacity, with sharp partisan divisions over insider trading enforcement and staffing.

• Selig defended the Commission’s advance rulemaking on prediction market standards and reaffirmed a zero-tolerance policy on insider trading, while Democratic members pressed him on trading patterns tied to geopolitical events and concerns about conflicts of interest.

• Members expressed bipartisan support for the CLARITY Act, though Democrats raised concerns about reduced enforcement staffing, vacant commissioner seats, and Selig advancing major rulemakings as the sole sitting commissioner.

Our Take: This week’s hearing reflects the growing regulatory complexity surrounding prediction markets as they continue to expand in scale and visibility. The CFTC finds itself at the center of a broader challenge facing financial regulators: adapting existing frameworks to new technologies and products. From prediction markets to digital assets, the Commission is being asked to move quickly on multiple fronts simultaneously through rulemaking, guidance, and interagency coordination. As states continue to contest federal authority over prediction markets, the CFTC will likely continue to assert its jurisdiction. How the Commission navigates its rulemaking posture and ongoing court battles will be a closely watched front in the broader debate over who governs these markets.

IRS CEO Testifies Before Senate Finance

The Senate Finance Committee heard testimony from IRS CEO Frank Bisignano on 2026 filing season results and IRS operations, with partisan divisions emerging over workforce reductions, data security, and agency performance.

• Republicans highlighted strong filing season metrics, including 120 million returns received, average refunds up 11 percent to over $3,400, and 53 million Americans claiming Working Families Tax Cuts Act deductions.

• Democrats argued DOGE layoffs cost $598 billion in lost enforcement revenue and pressed Bisignano on IRS data sharing with ICE, a potential Social Security data breach, and President Trump’s $10 billion lawsuit against the agency.

HFSC Subcommittee Examines Capital Markets Fraud

The House Financial Services Subcommittee on Capital Markets held a hearing on capital markets fraud, focusing on prevention, regulatory coordination, and emerging technology risks.

• Witnesses warned that AI-powered scams are accelerating fraud at scale and called for stronger controls on social media and telecom advertising to stop criminals before they reach consumers.

• Members discussed FINRA’s proposed five-business-day hold on suspicious transactions, while Democrats raised concerns that staffing reductions at the Securities and Exchange Commission (SEC) would weaken enforcement.

Warsh Fed Chair Hearing Set for April 21

The Senate Banking Committee scheduled a confirmation hearing for Kevin Warsh, President Trump’s pick to replace Fed Chair Jerome Powell, ahead of his May 15 term expiration.

• Warsh filed a 69-page financial disclosure committing to divest his holdings within 90 days of confirmation and recuse himself from matters involving The Estée Lauder Companies.

• Sen. Thom Tillis (R-NC) remains a persistent obstacle, vowing to vote no unless the DOJ concludes its investigation into Powell—a significant threat given Republicans’ razor-thin committee majority.

Our Take: Warsh's April 21 hearing is a step forward in the formal nomination process, but confirmation is far from certain. The primary obstacle remains the legal battle between Powell and the White House, far beyond Warsh’s control. With Sen. Tillis wielding the decisive vote and the DOJ appeal potentially dragging on for months, the Fed could remain in leadership limbo well past May 15. Read our full breakdown of Kevin Warsh’s nomination and the path forward here.

Other Notable Congressional Headlines:

• HFSC Financial Institutions Subcommittee Examines Access to Credit

In the Administration

CEA Releases 2026 Economic Report

The Council of Economic Advisers (CEA) published its annual Economic Report of the President, outlining the Administration’s policy priorities across 14 chapters covering trade, energy, housing, AI, and fiscal policy.

• The report estimates the economic and fiscal impact of the One Big Beautiful Bill Act on GDP, wages, and debt, and quantifies savings from the Administration’s deregulatory agenda.

• Other chapters address housing supply constraints, private equity access through defined contribution plans, defense industrial base resilience, and the Administration’s critique of social policies driving hiring and investment practices.

Agencies Roll Out GENIUS Act Implementation Proposals

The Federal Deposit Insurance Corporation (FDIC) and the Treasury issued proposed rules earlier this month to implement the GENIUS Act's stablecoin framework, following the Office of the Comptroller of the Currency's (OCC) February proposal.

• The FDIC proposed liquidity, reserve asset, and permissible activity requirements for payment stablecoin issuers that are bank subsidiaries, and separately proposed rules implementing congressional changes to the Bank Secrecy Act under a risk-based supervisory approach.

• Treasury’s FinCEN and OFAC jointly proposed anti-money laundering (AML) and sanctions compliance program requirements for permitted payment stablecoin issuers, framing the rule as tailored to mitigate illicit finance risks without burdening innovation.

SEC and CFTC Approve Treasury Market Cross-Margining Relief

The SEC issued a conditional exemptive order and approved a Fixed Income Clearing Corporation (FICC) rule change allowing customer cross-margining between cash U.S. Treasury positions and Treasury futures, with a concurrent CFTC order.

• The relief permits dually-registered broker-dealers and futures commission merchants that are joint clearing members of FICC and Chicago Mercantile Exchange (CME) to offer cross-margining to customers, extending a benefit previously available only to clearing members.

• The orders advance Treasury clearing implementation and are intended to unlock additional liquidity and strengthen resilience in the U.S. Treasury market.

Federal Reserve Proposes FedNow Intermediary Access

The Federal Reserve invited public comment on a proposal to allow U.S. banks and credit unions to use intermediaries to transfer funds through the FedNow Service, expanding the network’s current two-bank transaction limit.

• The change would support new private sector use cases, including enabling U.S. banks to use FedNow to transact with correspondent banks for the international portion of cross-border payments.

On the Horizon

• April 21, 2026 @ 10:00 AM ET: “Nomination Hearing of Kevin Warsh to be Chairman of the Federal Reserve System.” — Senate Banking Committee

• April 21, 2026 @ 10:00 AM ET: “Markup of Various Measures.” — House Financial Services Committee

• April 22, 2026 @ 10:00 AM ET: “A Review of the President’s FY2027 Budget Request for the Department of the Treasury.” — Senate Appropriations Financial Services and General Government Subcommittee

• April 22, 2026 @ 10:00 AM ET: “Diversifying Risk: The Benefits of Reinsurance and Credit Risk Transfers.” — House Financial Services Housing and Insurance Subcommittee

• April 22, 2026 @ 10:00 AM ET: “Main Street Meets Crypto: What Digital Assets Mean for Small Businesses.” — House Small Business Innovation, Entrepreneurship, and Workforce Development Subcommittee

• April 22, 2026 @ 2:00 PM ET: “Evaluating the Effectiveness of U.S. Sanctions Programs.” — House Financial Services National Security, Illicit Finance, and International Financial Institutions Subcommittee

• April 22, 2026 @ 10:00 AM ET: “Trump Administration’s 2026 Trade Policy Agenda with United States Trade Representative Jamieson Greer.” — House Ways and Means Committee

• April 23, 2026 @ 10:00 AM ET: “The President’s 2026 Trade Policy Agenda.” — Senate Finance Committee

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Our Take: The House rejection replaces what had looked like a clean shutdown off-ramp with a new negotiation across the two chambers, both now heading into a two-week recess. Notably, Senate Republicans plan to pursue funding for ICE and Border Patrol through reconciliation, cutting Democrats out entirely and sidestepping an intensely partisan funding debate. Meanwhile, the housing impasse risks leaving a core GOP priority unresolved as the legislative window narrows ahead of the midterms. Limited pay-fors and internal skepticism continue to cloud the second reconciliation package, making a post-election bipartisan extenders deal the more credible path for meaningful tax action. In the absence of legislative movement, the Administration’s deregulatory push through the SEC, CFTC, and Treasury continues, though actions lacking legislative backing remain vulnerable. Oil price volatility tied to Iran remains the key external wildcard for both parties.

On the Hill

Waters Pushes for Formal Housing Bill Conference

House Financial Services Ranking Member Maxine Waters (D-CA) sent a letter to the House Democratic Caucus calling for a conference committee to formally reconcile the House and Senate-passed versions of the 21st Century ROAD to Housing Act, citing significant changes to the House-passed bill.

• Waters argues that the Senate removed key Democratic housing and banking provisions, while outlining a broad set of requested revisions that reflect ongoing policy and stakeholder concerns.

• The push underscores growing bicameral friction, with both House Democrats and Republicans resisting Senate pressure to accept the current bill, raising the risk that the broader housing effort could stall without a negotiated compromise.

HFSC Examines Tokenization of Securities

House Financial Services held a hearing on the tokenization of traditional securities and its potential to reshape U.S. capital markets.

• Members and witnesses highlighted tokenization’s potential to accelerate settlement, reduce operational frictions, and unlock capital, while emphasizing that risks may shift rather than disappear in a real-time system.

• Lawmakers also debated regulatory treatment, with broad agreement that tokenized assets remain securities, alongside concerns about fraud, market fragmentation, and the need for clear, consistent regulatory frameworks to support innovation.

HFSC Examines Regulatory Capacity to Keep Pace with Financial Innovation

The House Financial Services Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence held a hearing on how regulators are adapting to rapid technological change across financial markets.

• Members and witnesses emphasized balancing innovation with safety and soundness, highlighting agency efforts to modernize oversight through AI use, updated tokenization guidance, and increased industry engagement.

• Lawmakers also examined risks around prediction markets and access to Fed payment rails, raising concerns about jurisdictional gaps, national security implications, and inconsistent fintech access to core infrastructure.

Ways and Means Advances Bipartisan Tax Bills

The House Ways and Means Committee unanimously approved five bipartisan tax bills focused on targeted relief measures.

• The package includes provisions benefiting preschool teachers, disaster victims, sexual assault survivors, and whistleblowers, as well as legislation to improve IRS taxpayer service through enhanced refund tracking.

• The action reflects a shift toward narrower, bipartisan measures that could serve as a foundation for a broader year-end tax agreement, though some Democrats raised concerns about limited impact on affordability.

Reps. Miller, Horsford Release Bipartisan Crypto Tax Bill

Reps. Max Miller (R-OH) and Steven Horsford (D-NV) released an updated discussion draft of their proposal to establish rules for the taxation of digital assets. The bipartisan proposal has been widely viewed by industry observers as a key marker for where negotiations on crypto tax may lead.

• The discussion draft covers a wide range of issues in the digital asset ecosystem, including updates to wash-sale rules and safe harbors for trades made for taxpayers’ own accounts and for certain stablecoin transactions.

• The lawmakers plan to formally introduce the bill as the Digital Asset PARITY Act later this spring.

Our Take: The Miller-Horsford proposal marks the most comprehensive package contemplating crypto tax to date. While the bill does not have the formal blessing of the Ways and Means Committee, both Miller and Horsford’s membership on the committee will prove impactful as the House tax writers weigh next steps. Committee Chairman Jason Smith (R-MO) has signaled his intent to move on crypto tax in the remainder of the year and has held several policy meetings on the subject. It is widely expected that various provisions of the Miller-Horsford draft will be adopted in a future committee work product.

Lawmakers Introduce Multiple Prediction Markets Bills

Lawmakers this week introduced a series of bipartisan bills to establish regulations for the rapidly growing prediction-markets sector.

• Sens. Elissa Slotkin (D-MI), Todd Young (R-IN), Adam Schiff (D-CA), and John Curtis (R-UT) introduced a bill to restrict federal officials from using non-public information to trade on prediction markets, alongside a House measure from Reps. Nikki Budzinski (D-IL) and Adrian Smith (R-NE) focused on political and policy-related contracts.

• Additional proposals from Sens. Adam Schiff (D-CA) and John Curtis (R-UT), as well as Sen. Jeff Merkley (D-OR) and Rep. Jamie Raskin (D-MD), would limit certain types of contracts, including those tied to elections, government actions, and sports, reflecting broader efforts to define the scope of the market.

Senate Republicans Weigh Reconciliation 2.0 Amid Policy Debates

Senate Republicans continue to explore a second reconciliation package focused on defense and homeland security, though internal divisions and growing skepticism are complicating the path forward.

• Senate Budget Chair Lindsey Graham (R-SC) is working to advance a budget resolution to unlock reconciliation, with proposals focused on military funding, immigration enforcement, and elements of the SAVE America Act.

• While some signals suggest tax provisions could be considered if a package materializes, tax writers in the House have signaled doubts that a second reconciliation bill will come together, citing limited viable pay-fors and internal disagreement.

• The more likely path for significant tax action is a bipartisan extenders package post-election, alongside continued committee activity on crypto tax, market structure, and tax administration.

Our Take: The prospects for a second reconciliation package remain low. Despite recent positive signals from leadership, a concrete path forward has yet to materialize. Ways and Means Republicans have expressed deep skepticism that a 2.0 bill will make significant headway and acknowledged that limitations on viable pay-fors would make it difficult to include tax policy in such a vehicle. The more likely vehicle for broader tax action remains a bipartisan extenders package post-election, though the Democratic cost of entry is uncertain, with potential asks around Affordable Care Act (ACA) credits or partial Inflation Reduction Act (IRA) repeal rollbacks.

Senate Finance Tees Up Hearing with IRS CEO

Internal Revenue Service (IRS) CEO Frank Bisignano will reportedly testify before the Senate Finance Committee on April 15, marking his first appearance before the panel.

• Lawmakers are expected to examine the newly created IRS CEO role, which was not subject to Senate confirmation, as well as Bisignano’s dual service leading both the IRS and Social Security Administration, an arrangement that has drawn scrutiny from both parties.

• The hearing comes amid broader concerns about IRS operations following significant staffing reductions, funding cuts, and leadership turnover during the current tax filing season.

Hagerty and Alsobrooks Renew Push to Expand Deposit Insurance

Sens. Bill Hagerty (R-TN) and Angela Alsobrooks (D-MD), alongside Rep. Frank Lucas (R-OK), reintroduced the bipartisan Main Street Depositor Protection Act, which would direct the Federal Deposit Insurance Corporation (FDIC) to raise insurance coverage for non-interest-bearing transaction accounts.

• The legislation would require the FDIC to set a new insurance cap for eligible accounts between $250,000 and $5 million, using a data-driven process to calibrate coverage levels.

• The proposal is intended to address bank run risks by protecting payroll and operating accounts at community and regional banks, though it may face scrutiny over competitive impacts and appropriate cap levels.

Additional Congressional Highlights

• House Financial Services Discusses Factors Influencing the High Cost of Flooding

In the Administration

FSOC Releases Nonbank Financial Company Designation Guidance

The Financial Stability Oversight Council (FSOC) voted unanimously to issue proposed interpretive guidance revising its approach to nonbank financial company designations.

• The proposed guidance prioritizes an activities-based approach to systemic risk, reinstates cost-benefit analysis, raises the threshold for designation, and introduces a pre-designation off-ramp allowing firms to address risks before formal designation.

• The changes shift FSOC away from firm-specific designations toward broader market-wide risk monitoring, which could reduce the likelihood of future designations and recalibrate the council’s role in financial stability policy.

CFTC Launches Innovation Task Force

Commodity Futures Trading Commission (CFTC) Chairman Michael Selig announced the formation of a new Innovation Task Force focused on emerging financial technologies.

• The task force will develop regulatory approaches for crypto assets, artificial intelligence, and prediction markets, and will coordinate with other federal regulators, including the Securities and Exchange Commission (SEC).

• The initiative positions the CFTC to play a more central role in shaping oversight of evolving financial products and market structures as innovation accelerates.

White House Reviews SEC Crypto and Private Fund Proposals

The SEC submitted proposed rules on digital assets and private fund disclosures to the White House Office of Management and Budget for review.

• The digital asset proposal includes a potential “innovation exemption” that would allow certain firms to operate outside traditional registration requirements on a temporary basis, while the second rule could significantly revise Form PF reporting for hedge funds and private equity firms.

• The review signals continued coordination between the SEC and the Administration on capital markets policy, with potential implications for crypto market structure and regulatory requirements for private fund managers.

Fed Urges Court to Reject DOJ Subpoena Effort

The Federal Reserve (Fed) filed a court brief urging a judge to stand by his decision blocking Department of Justice (DOJ) subpoenas, escalating a legal dispute with implications for central bank independence and Fed leadership.

• The subpoenas, which sought information on cost overruns and Powell’s prior congressional testimony, were previously quashed by the court for insufficient justification, and DOJ is now seeking to revive them.

• The case highlights tensions between the Trump Administration and Fed Chair Jerome Powell and could delay confirmation of Fed Chair nominee Kevin Warsh, as the DOJ signals a potential appeal if the ruling stands.

On the Horizon

• March 31, 2026 @ 3:00 PM ET: “The GENIUS Act in Practice: Key Questions for Stablecoin Regulation” – The Federalist Society

• April 13 – 18, 2026: “2026 Spring Meetings” – International Monetary Fund and the World Bank Group

• April 16, 2026 @ 9:00 AM ET: “Options Market Structure Roundtable” – Securities and Exchange Commission

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Our Take: A crowded governing backdrop continues to limit congressional bandwidth and narrow the window for substantive legislative action. The conflict with Iran is beginning to reshape both the economic outlook and the legislative agenda, with rising oil prices threatening to reinforce inflationary pressures and complicate efforts to address affordability. The DHS shutdown, now approaching one month, adds another layer of political friction; conditions may need to worsen before either side faces sufficient pressure to cut a deal. Democratic opposition focused on underlying policy changes rather than agency leadership limits how much Sen. Markwayne Mullin’s (R-OK) expected confirmation can move the needle. While crypto legislation is showing genuine signs of progress, it remains contingent on resolving the stablecoin yield dispute and securing bipartisan support. More broadly, persistent disagreements across chambers continue to stall otherwise viable policy areas such as housing, leaving regulators to drive near-term action as Congress remains hemmed in by competing priorities.

On the Hill

Senators, White House Reach “Agreement in Principle” on Stablecoin Yield

Senate negotiators and the White House have reached an agreement in principle on stablecoin yield language, marking a potential breakthrough that could unlock progress on stalled crypto market structure legislation. The tentative deal would likely restrict yield on passive stablecoin balances, while potentially allowing more limited, activity-based rewards.

• Sen. Thom Tillis (R-NC) said he feels “like we’re in a good place,” but noted the proposal still needs to be vetted with industry stakeholders. “We’ve come a long way,” Sen. Angela Alsobrooks (D-MD) added, noting that the framework aims to “protect innovation” while preventing “widespread deposit flight.”

• Senate Banking is now expected to target an April markup following the Easter recess, with lawmakers signaling that resolving the yield issue is necessary to unlock broader progress, though additional issues remain outstanding.

HFSC Examines Financial Privacy Framework

House Financial Services held a hearing on modernizing financial data privacy laws, with members and witnesses emphasizing the need for a more unified and updated framework as digital finance evolves.

• Lawmakers and witnesses expressed support for a single national privacy standard to replace the current patchwork of state laws. They argued that overlapping requirements increase compliance costs and disproportionately burden smaller institutions.

• Members also highlighted the shift from screen scraping to application programming interfaces (APIs) and raised concerns about the limits of the current notice-and-opt-out model. Witnesses called for stronger baseline protections, including data minimization and clearer rules for emerging risks such as artificial intelligence.

House Democrats Urge Scrutiny of Private Credit Market Risks

Reps. Seth Moulton (D-MA) and Stephen Lynch (D-MA) pressed appropriators to examine potential risks in the rapidly growing private credit market, citing potential threats to broader financial stability.

• In a letter to House Appropriations leaders, the lawmakers urged inclusion of FY2027 report language directing FSOC to assess private credit market vulnerabilities and their potential spillover effects on the broader economy.

• The request highlights growing scrutiny of the market’s rapid growth. The lawmakers also argue that its differences from the public debt market could pose systemic risks without additional oversight.

Additional Congressional Highlights

• House Financial Services Subcommittee Examines Oversight of the Export-Import Bank

• House Financial Services Monetary Policy, Treasury Market Resilience, and Economic Prosperity Task Force Reviews the Treasury-Fed Accord

• Ways and Means Trade Subcommittee Discusses WTO Reform Ahead of Ministerial Conference

In the Administration

SEC and CFTC Issue Joint Interpretation on Crypto Asset Regulation

The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) released a joint interpretation clarifying how federal securities and commodities laws apply to crypto assets, marking a significant step toward establishing clearer regulatory boundaries ahead of potential congressional action.

• The interpretation and subsequent guidance establish a formal taxonomy distinguishing between digital commodities, collectibles, tools, stablecoins, and digital securities. It also reinforces that many crypto assets are not inherently securities but may become subject to securities laws depending on how they are offered.

• Regulators clarified the treatment of common crypto activities, including staking, mining, airdrops, and token “wrapping.” They also outlined when an investment contract begins and ends, providing greater certainty on SEC and CFTC jurisdiction.

• Additionally, SEC Chair Paul Atkins recently said the agency expects to vote in the coming weeks on a separate proposal to give crypto firms clearer pathways to raise capital.

Our Take: The SEC is moving to fill the policy vacuum with administrative action as congressional efforts on market structure remain unresolved. The joint interpretation and the forthcoming capital formation proposal move the Trump Administration’s crypto policy forward, but any final rules are likely a year or more away, given the standard notice-and-comment process. In the absence of bipartisan negotiations on market structure, the SEC will remain the primary driver of near-term crypto policy.

Fed, FDIC, OCC Propose Revised Bank Capital Standards

Federal banking regulators advanced a proposal to revise capital requirements for U.S. banks, signaling a shift toward lowering capital burdens to better align requirements with underlying risk.

• The Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) jointly proposed updates that would reduce capital requirements across bank categories. The largest banks would see an estimated 2.4 percent decrease, rising to 4.8 percent when combined with recent stress test changes. Midsized banks would see reductions of roughly three percent, and smaller institutions would see reductions of about 7.8 percent.

• The proposal would be implemented through three separate rulemakings covering an expanded risk-based framework for the largest banks, updates to capital requirements for traditional lending activities, and revisions to GSIB surcharge calculations.

CFTC and MLB Sign Information Sharing Agreement on Prediction Markets

The CFTC and Major League Baseball signed a groundbreaking memorandum of understanding (MOU) to coordinate on oversight and integrity issues related to sports-based prediction markets.

• The agreement establishes a formal framework for information sharing and cooperation between the CFTC and MLB to protect the integrity of professional baseball and related prediction markets.

• The MOU is designed to improve both parties’ ability to respond to potential fraud, manipulation, and emerging risks, signaling increased regulatory attention on the intersection of sports and financial markets.

Trump Administration Releases National AI Framework

The White House unveiled a National AI Federal Framework as a guide for Congress to codify the Trump Administration’s executive order and vision for AI policy. The framework was developed in consultation with Republican Congressional leadership, and we expect both chambers to soon attempt to implement the framework.

• The National Policy Framework includes six objectives, including protecting children and families, upholding intellectual property rights and supporting creators, preventing censorship and protecting free speech, and enabling domestic AI innovation.

• The framework aims to establish a federal AI standard that preempts state AI laws. The Administration is emphasizing centralization, deregulation, and industry alignment as lawmakers navigate the nuances of the issue in Congress.

• While the framework does not specifically identify financial services, it is expected to have significant implications for the sector.

Treasury Releases FY2025 Financial Report

The Treasury Department released its Fiscal Year 2025 Financial Report, highlighting a modest decline in the federal deficit while continuing to raise concerns about the long-term fiscal outlook.

• The deficit-to-GDP ratio declined from 6.4 percent in FY2024 to 5.9 percent in FY2025, with the Administration attributing the improvement to spending restraint and economic growth initiatives.

• Treasury emphasized that the fiscal trajectory remains unsustainable without continued reforms, pointing to tax policy, regulatory changes, and energy policy as key tools to restore long-term fiscal stability.

Fannie and Freddie Ease Roof Insurance Requirements

Fannie Mae and Freddie Mac issued new guidance allowing mortgages on homes with lower-cost roof insurance, part of a broader effort by the Administration and congressional Republicans to deliver targeted housing affordability relief.

• The policy allows the use of actual cash value coverage for roofs, which lowers upfront insurance costs while maintaining replacement cost coverage for the rest of the home.

• The change follows mounting Republican pressure and recent executive actions on housing and aims to reduce monthly mortgage costs and expand access to financing.

Fed Holds Rates Steady as Geopolitical Risks Complicate Outlook

The Federal Reserve held interest rates steady at 3.5 to 3.75 percent at the recent Federal Open Market Committee (FOMC) meeting, maintaining a cautious stance amid geopolitical tensions and rising energy prices that are introducing new uncertainty into the economic outlook.

• The decision marks the second consecutive pause, with officials still projecting at least one rate cut this year even as inflation remains elevated and progress toward the 2 percent target has stalled.

• Policymakers highlighted increased uncertainty tied to the Iran conflict and rising oil prices, which are expected to push inflation higher and weigh on growth, complicating the Fed’s ability to balance price stability with a softening labor market.

• Chair Jerome Powell said he will remain as Chair past his May 15 term end until a successor is confirmed, and will not leave the Board, where he can serve until January 2028, until the Justice Department’s probe into the Fed’s headquarters renovation is resolved.

Our Take: The Fed finds itself navigating a difficult balancing act, with inflation risks pointing up and labor market risks pointing down. The Iran conflict and rising oil prices have added meaningful uncertainty to the outlook, enough that Powell acknowledged several officials questioned the value of releasing projections at all. Powell’s decision to remain until both a successor is confirmed and the Justice Department probe is resolved extends the timeline for a leadership transition that was already moving slowly. With the Warsh nomination yet to receive a Senate hearing, the path to a smooth handover remains unclear.

On the Horizon

• March 23, 2026 @ 1:30 PM ET: “What to Expect This Tax Season” – Brookings Institution Center for Effective Public Management

• March 23, 2026 @ 4:30 PM ET: “The Future of Fannie Mae and Freddie Mac” – American Enterprise Institute

• March 25, 2026 @ 9:00 AM ET: “POLITICO Economy Summit” – POLITICO

• March 25, 2026 @ 10:00 AM ET: “Tokenization and the Future of Securities: Modernizing Our Capital Markets” – House Financial Services Committee

• March 25, 2026 @ 10:00 AM ET: “Electronic Tax Administration Advisory Committee Meeting” – Treasury Department and Internal Revenue Service

• March 25, 2026 @ 1:25 PM ET: “Financial Stability Oversight Council Meeting” – U.S. Department of the Treasury

• March 26, 2026 @ 10:00 AM ET: “Innovation at the Speed of Markets: How Regulators Keep Pace with Technology” – House Financial Services Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence

• March 26, 2026 @ 2:00 PM ET: “Mitigation and Multiple Loss Properties: Factors Influencing the High Cost of Flooding” – House Financial Services Subcommittee on Housing and Insurance

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Our Take: The military conflict with Iran has upended much of the political calculus for the remainder of the legislative session. Supply shocks in the global oil market threaten to raise prices across nearly every sector of the economy, potentially undermining efforts to legislate on affordability issues. Potential War Powers votes risk consuming valuable floor time in the Senate, further complicating the path forward for additional legislative action. Additionally, mounting pressure in the private capital sector may force lawmakers to quickly shift their attention once again.

On the Hill

Senate Approves Bipartisan Housing Package

The Senate approved the bipartisan 21st Century ROAD to Housing Act in a 89-10 vote, advancing a major housing affordability package that now faces an uncertain path in the House due to disagreements among Republicans over key provisions.

• The legislation passed with broad bipartisan support and represents one of the most significant housing policy efforts in years, aimed at addressing supply constraints and rising housing costs as the average age of first-time homebuyers reaches record levels.

• The bill incorporates priorities from both chambers, including a provision supported by President Trump to limit large institutional investors from purchasing single-family homes and a temporary restriction on the Federal Reserve creating a central bank digital currency until after 2030.

• Several House Republicans raised concerns about the Senate approach, with some calling for the digital currency restriction to be permanent and others opposing the institutional investor provision.

• House leaders have suggested that a bicameral conference may be required to reconcile differences between the House and Senate versions, which could determine whether the broader housing package ultimately advances.

Senate Ag GOP Releases Updated Crypto Package

Senate Agriculture Committee Chairman John Boozman (R-AR) released updated text of his committee’s portion of the digital asset market structure legislation on Wednesday, which would grant the CFTC primary oversight of digital commodities. The release follows the committee’s party-line approval of the bill in late January.

• The legislation was subsequently placed on the Senate calendar under Rule XIV, allowing leadership to bypass additional committee procedures and positioning the bill for potential floor consideration. Boozman has indicated the move was intended to allow Senators outside the Agriculture Committee to co-sponsor the legislation.

• The new draft largely mirrors the version approved in committee, with only minor changes, including extending the implementation timeline from 17 months to 18 months after enactment.

• The update comes as negotiations continue between banks, crypto firms, and the White House on stablecoin yield provisions tied to the Senate Banking Committee’s companion market structure legislation. Senate Banking Committee Chairman Tim Scott (R-SC) has indicated he hopes to mark up his committee’s portion of the broader framework in the coming weeks.

CCM, Ricketts Release Bipartisan Small Business Capital Access Plan

Sens. Catherine Cortez Masto (D-NV) and Pete Ricketts (R-NE) introduced the bipartisan ELEVATE Act, legislation aimed at reducing regulatory barriers that make it difficult for smaller companies to spin off parts of their business and access growth capital.

• The bill would allow companies seeking Emerging Growth Company (EGC) status to submit two years of audited financial statements instead of the three years currently required by the Securities and Exchange Commission (SEC) when spinning off from an existing business.

• Lawmakers argue the current three-year disclosure requirement is costly and can prevent smaller firms from raising the capital needed to expand their operations.

• By aligning disclosure requirements across all EGCs, the legislation is intended to reduce compliance burdens and make it easier for small and mid-sized companies to access investment and scale their businesses.

• Companion legislation has been introduced in the House by Reps. Zach Nunn (R-IA) and Janelle Bynum (D-OR), and a similar measure previously passed the House last June.

In the Administration

CFTC Releases Prediction Markets Rulemaking

The Commodity Futures Trading Commission (CFTC) issued several actions in connection with the agency’s role in governing prediction markets. The Commission issued an advisory for Designated Contract Markets (DCMs) seeking to issue event contracts. Additionally, the CFTC announced an Advanced Notice of Proposed Rulemaking (ANPRM) seeking public feedback on potential new regulations on event contracts and prediction markets.

• The Commission’s advisory, intended for market participants, highlights DCMs’ obligations under Section 5(d) of the Commodity Exchange Act, among other existing CFTC regulations and guidance. The advisory also characterizes DCMs as “front-line regulators,” calling on operators to “be proactive, ensuring proper surveillance and oversight of trading.”

• The ANPRM seeks feedback on the application of statutory principles and CFTC regulations to prediction markets, along with whether certain event contracts “may be prohibited as contrary to the public interest.”

• In a statement, CFTC Chairman Mike Selig said the actions marked the start of “the process of new rulemaking grounded in a rational and coherent interpretation of the Commodity Exchange Act.”

• Public comments on the Commission’s ANPRM must be received within 45 days of its publication in the Federal Register.

Our Take: The CFTC’s activity comes as prediction markets capture the attention of both market observers and the general public. The rapid rise of prediction markets has sparked an intense debate over their efficacy and role in public discourse. The debate also transcends traditional partisan politics; prediction market operators face dozens of lawsuits from both red and blue states, putting Republican governors such as Utah’s Spencer Cox at odds with the Trump Administration.

The CFTC’s actions, followed by Chair Selig’s decision to assert the Commission’s remit over prediction markets in state lawsuits, represent the official start of what is expected to be a lengthy power struggle between state and federal regulators for oversight of the sector. As the take-up of prediction markets continues to span markets, politics, and culture, they will remain an all-but-certain fixture in policy conversations for the foreseeable future.

SEC, CFTC Unveil Joint Memorandum of Understanding on Regulations, Enforcement

The SEC and CFTC announced a new Memorandum of Understanding (MOU) to strengthen coordination between the agencies on regulation, oversight, and enforcement across U.S. financial markets. The agreement will improve regulatory clarity, support innovation, and reduce duplicative or conflicting rules between the two agencies.

• SEC Chairman Paul Atkins and CFTC Chairman Michael Selig said the updated framework will help harmonize regulatory definitions, improve data sharing, and coordinate policymaking and enforcement efforts. The agencies also launched a Joint Harmonization Initiative to align oversight in areas such as clearing and margin rules, regulatory reporting, and supervision of jointly regulated firms.

• The initiative will also focus on developing clearer regulatory frameworks for emerging technologies, including crypto assets, while reducing regulatory resistance for dually registered exchanges, trading venues, and intermediaries.

USTR Announces New Sec. 301 Investigations

The week the United States Trade Representative (USTR) announced the initiation of two new Section 301 investigations targeting structural overcapacity and forced labor practices among major U.S. trading partners, part of a broader effort to rebuild its tariff framework following the Supreme Court’s decision limiting the use of the International Emergency Economic Powers Act (IEEPA) tariffs.

• On Wednesday, USTR announced a Section 301 investigation into structural excess capacity in manufacturing across a range of economies, including China, the European Union, Japan, India, Mexico, Vietnam, Switzerland, and others, examining the role of subsidies, state-owned enterprises, and currency intervention in driving overproduction.

• USTR also announced a separate Section 301 investigation into whether approximately sixty trading partners have failed to adequately prohibit imports of goods produced with forced labor.

• U.S. Customs and Border Protection (CBP) reported progress on Thursday in developing systems to process refunds for tariffs collected under IEEPA, with the Court of International Trade (CIT) requesting another update on March 19 as the agency continues building the process to return duties with interest.

• Meanwhile, legal challenges to the Administration’s Section 122 tariffs are moving forward, with the Court of International Trade scheduled to hear two lawsuits on April 10 filed by Democratic state attorneys general and a group of importers.

Our Take: The Administration is using new Section 301 investigations as part of a broader effort to rebuild its tariff framework following the Supreme Court’s decision limiting the use of IEEPA tariffs. After imposing a temporary 10 percent global tariff under Section 122 of the Trade Act of 1974, Administration officials have indicated they intend to complete additional trade investigations before the 150-day Section 122 tariffs expire near the end of June. Additional announcements of new Section 232 and Section 301 investigations can be expected as the Administration seeks to establish alternative tariff authorities before the Section 122 measure expires.

Fed’s Bowman Previews Basel III Updates

Federal Reserve Vice Chair for Supervision Michelle Bowman said the Fed will soon propose rules to implement the final phase of Basel III in the United States, part of a broader effort to modernize bank capital requirements. Speaking at the Cato Institute on Thursday, Bowman said the proposal would simplify the capital framework, eliminate duplicative calculations, and better align requirements with risk.

• She indicated the Basel III changes could result in a small increase in capital requirements for the largest banks, though this may be offset by adjustments to stress testing and the global systemically important bank (G-SIB) surcharge.

• Bowman said the Basel III proposal will be released in the coming weeks, and it is expected before the end of the month. The release could also draw a response from European regulators, who have been closely watching how the U.S. finalizes its approach to implementing the international capital standards.

• The Federal Reserve Board also announced yesterday they will hold an open board meeting next Thursday to “revise capital requirements for the largest, most internationally active banks” and others.

SEC Investor Advisory Committee Discusses Disclosures, Proxy Voting, and Market Innovation

The SEC’s Investor Advisory Committee met to examine public company disclosure reform, address fund proxy-voting inefficiencies, and examine the role of technology and innovation in modernizing the regulatory framework. Discussion focused on balancing investor protection with reducing unnecessary compliance burdens as markets and data consumption evolve.

• SEC Chairman Paul Atkins emphasized a “minimum effective dose of regulation,” urging renewed focus on materiality, streamlined disclosures, and modernizing proxy-voting mechanics. He highlighted disclosure reform and innovation exemptions, particularly for tokenization, as opportunities to improve market efficiency without weakening investor protections.

• Panelists highlighted that frequent, reliable financial disclosures remain essential for investor confidence and capital formation, especially for smaller and growth‑stage companies.

• They also cautioned that reduced reporting frequency could increase uncertainty and the cost of capital, and emphasized the need to redesign disclosure systems, improve proxy-voting participation, and adopt a principles‑based approach to innovation that preserves market integrity.

February CPI Provides Little Insight Amid Iran Conflict

The Bureau of Labor Statistics (BLS) released its February consumer price index, which showed a 2.4 percent year-over-year increase in inflation. The figure aligned with expectations for the month, but notably does not account for the effects of the ongoing military conflict in Iran.

• Given the rapid spike and ongoing volatility in oil prices, the February print is widely expected to have minimal bearing on the Federal Reserve’s upcoming monetary policy decision next week.

• Despite the growing concerns over potential price shocks, President Trump reiterated his longstanding call for Fed Chairman Jerome Powell to lower interest rates, saying that Powell “should be dropping Interest Rates, IMMEDIATELY, not waiting for the next meeting!”

On the Horizon

• March 17, 2026 @ 10:00 AM ET: “Updating America’s Financial Privacy Framework for the 21st Century” - House Financial Services Committee

• March 18, 2026 @ 10:00 AM ET: “Oversight of the Export – Import Bank” - House Financial Services Committee

• March 18, 2026 @ 2:00 PM ET: “Revisiting the Treasury-Fed Accord” - House Financial Services Committee

• March 19, 2026 @ 10:00 AM ET: “Open Board Meeting” - The Federal Reserve Board

• March 19, 2026 @ 100:00 AM ET: “Open Board Meeting” - The Federal Deposit Insurance Corporation

Invariant Team Spotlight

Last week, Economic Policy Practice Group Chair Carolyn Coda joined Invariant’s CEO, Heather Podesta, for a fireside chat with Edelman Smithfield and POLITICO on the evolving regulatory landscape and the implications for financial institutions in 2026. Joined by the authors of POLITICO’s Morning Money, Heather and Carolyn discussed the policy forces that are reshaping financial services in real time.

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Carolyn Coda | Noah Marine | Alex Cisneros | Alden Knowlton | Kristopher Denzel | Ryan Dilworth | Peter Wells | Audrey Neumann | Ethan Billips | Ben Wiener

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Our Take: Economic policy activity on Capitol Hill continues to move through targeted sectoral initiatives rather than a single comprehensive agenda. Housing remains the most viable bipartisan vehicle, though restrictions on institutional investors are emerging as a key pressure point because of their potential impact on financing and housing supply. Financial services policy is also chugging along, with the House pursuing deregulatory proposals aimed at community banks and at improving access to capital. At the same time, the ongoing DHS shutdown has been further complicated by the abrupt firing of DHS Secretary Kristi Noem and mounting national security demands, which together are consuming floor time and limiting political bandwidth for additional legislation. All of this is unfolding amid an accelerating midterm cycle and a new, potentially prolonged military engagement with Iran, increasingly shaping policymakers’ priorities around addressing voter concerns about affordability and geopolitical stability.

On the Hill

HFSC Advances Community Bank Package

In a recent markup, the House Financial Services Committee approved a sweeping package aimed at easing regulations on community banks and encouraging the formation of new banks.

• The committee voted 26–15 along party lines to advance the Main Street Capital Access Act, which combines several previously approved bills designed to modernize regulatory thresholds and reduce compliance burdens for smaller lenders.

• The panel also unanimously approved legislation to reauthorize the Defense Production Act through 2031, alongside several additional measures addressing small issuer capital raising, secondary securities trading rules, and limits on funding for certain international financial activities.

Bipartisan Housing Bill Faces Industry and House GOP Pushback

A sweeping bipartisan housing package, the 21st Century ROAD to Housing Act, is nearing Senate passage but is drawing criticism from housing industry groups and some House Republicans over provisions targeting institutional investors.

• The package combines most provisions from the Senate’s earlier ROAD to Housing Act and the House-passed 21st Century Housing Act, with sponsors arguing the legislation would boost housing supply, reduce regulatory barriers, and lower housing costs without increasing federal spending.

• However, industry groups warn that a provision requiring large investors to sell newly built single-family rental homes to individual buyers after seven years could make financing for build-to-rent developments more difficult and ultimately reduce housing supply, even as the Senate continues moving the bill forward with strong bipartisan support.

IRS CEO Testifies on Tax Season Operations and Agency Oversight

IRS Chief Executive Officer Frank Bisignano testified before the House Ways and Means Committee on the agency’s performance during the 2026 filing season and its broader modernization and enforcement priorities.

• Lawmakers questioned Bisignano about refund processing, audit practices, and implementation of new tax provisions, with Republicans highlighting faster refunds and tax relief policies while Democrats raised concerns about declining audit rates and enforcement against high-income taxpayers.

• Members also pressed the IRS chief on data privacy and modernization, including the agency’s use of artificial intelligence, technology upgrades, and efforts to better measure and address the estimated $650 billion tax gap.

HFSC Subcommittee Examines Challenges in Combating Financial Fraud

The House Financial Services Subcommittee on Financial Institutions held a hearing on rising fraud risks and the role of financial institutions, regulators, and technology in preventing scams.

• Witnesses emphasized that much of today’s fraud originates outside the banking system, including through social media platforms, telecom networks, and foreign actors, prompting calls for stronger interagency coordination, clearer regulatory guidance, and improved data sharing to help financial institutions detect and prevent scams.

Cruz and Scott Urge Treasury to Index Capital Gains for Inflation

Sens. Ted Cruz (R-TX) and Tim Scott (R-SC) are urging the Treasury Department to allow inflation indexing for capital gains without congressional approval, arguing the change would reduce taxes on investment gains and encourage economic activity.

• In a letter to Treasury Secretary Scott Bessent, the senators argued that taxing inflationary gains discourages investment and contributes to housing market lock-in, as homeowners avoid selling properties to evade large capital gains tax bills.

• The proposal could face legal challenges because prior Justice Department guidance states that indexing capital gains for inflation likely requires congressional approval, and analysts estimate the policy could significantly reduce federal revenue while disproportionately benefiting high-income taxpayers.

Additional Congressional Highlights

• HFSC Discusses the Role of Self-Regulatory Organizations in Capital Markets Subcommittee Hearing

In the Administration

Treasury and IRS Release Proposed Rules for Trump Accounts and $1,000 Pilot Program

The Treasury Department and IRS released two notices of proposed rulemaking (NPRMs) providing initial regulatory guidance for Trump Accounts, a new savings vehicle for children created under the 2025 tax law.

• The first proposed rule outlines the process for opening and electing a Trump Account, including requirements for eligible children, individuals making elections on their behalf, and account trustees.

• A second proposed rule establishes a pilot contribution program under which the Treasury would deposit $1,000 into Trump Accounts for eligible children born between 2025 and 2028 who have valid Social Security numbers.

Trump Endorses CLARITY Act Following Meeting with Crypto Executive

President Donald Trump publicly called for the swift passage of landmark digital asset market structure legislation. In a Truth Social post, Trump accused major banks of attempting to block crypto legislation and urged Congress to pass the CLARITY Act “as soon as possible,” warning that delays could push innovation and investment overseas.

• The President’s post came after a meeting with Coinbase CEO Brian Armstrong, weighing in on the ongoing stalemate over crypto market structure legislation.

• The dispute centers on proposals that would allow crypto firms to offer yield-like rewards on stablecoin holdings, which banks argue could draw deposits away from traditional accounts and have contributed to delays in advancing broader digital asset legislation.

Court Order Advances Tariff Refund Process Following Supreme Court Ruling

Litigation over tariff refunds is accelerating after a federal trade court ordered U.S. Customs and Border Protection (CBP) to remove invalidated tariffs imposed under the International Emergency Economic Powers Act (IEEPA) from certain import entries.

• A judge on the U.S. Court of International Trade (CIT) directed CBP to reliquidate imports that have not yet reached final liquidation without applying the overturned tariffs, a move that trade experts say could effectively allow many importers to receive refunds even if they have not filed individual lawsuits.

• In a separate court filing, the Trump Administration acknowledged that if refunds are required, the government would also pay interest on the returned tariff payments, potentially increasing the financial exposure as thousands of refund claims continue moving through the court system.

• In response to the CIT’s ruling, CPB wrote in a late Friday court filing that a streamlined tariff refund system could be stood up within 45 days. In light of this declaration, Judge Richard Eaton granted a stay on his order for CBP to begin issuing refunds.

Bank Regulators Clarify Capital Treatment of Tokenized Securities

Federal banking regulators issued new guidance clarifying how banks should treat tokenized securities under existing capital rules.

• The Federal Reserve, FDIC, and Office of the Comptroller of the Currency (OCC) stated that eligible tokenized securities, assets recorded using distributed ledger technology, generally receive the same capital treatment as their traditional, non-tokenized counterparts.

• Regulators further explained that capital requirements are technology-neutral and noted that banks holding tokenized securities must continue to follow sound risk management practices and comply with applicable laws and regulations.

Trump Orders DFC to Provide Risk Insurance to Gulf Vessels

Amid the escalating military conflict with Iran, President Trump announced via Truth Social that he directed the Development Finance Corporation (DFC) to provide political risk insurance for vessels traveling through the Persian Gulf. The President added that the U.S. Navy would also “begin escorting tankers through the Strait of Hormuz.”

• President Trump stressed that the DFC would provide insurance “at a very reasonable price” and would include “guarantees for the Financial Security of ALL Maritime Trade… traveling through the Gulf.”

• Following the President’s announcement, the DFC confirmed that it would “mobilize its Political Risk Insurance and Guaranty products to stabilize international commerce and support American and allied businesses operating in the Middle East.”

• As the conflict has spilled into other countries in the region, questions remain as to how the DFC can effectively underwrite insurance policies amid the growing crisis. Recent reporting suggests that the DFC is nearly $200 billion short of the necessary underwriting capacity to insure vessels.

• A late-breaking announcement from DFC outlines plans to deploy maritime reinsurance covering losses up to $20 billion on a rolling basis. The DFC also clarified that insurance will initially prioritize Hull & Machinery and Cargo.

Trump Formally Nominates Kevin Warsh as Fed Chair

The White House formally submitted Kevin Warsh’s nomination to serve as the next Federal Reserve chair, initiating the Senate confirmation process ahead of Chair Jerome Powell’s term ending in May.

• Warsh, whom President Trump announced as his pick in January, would replace Powell as head of the central bank. His nomination now allows the Senate to begin hearings and the formal vetting process.

• The confirmation timeline remains uncertain because Sen. Thom Tillis (R-NC) has said he will not vote to advance Federal Reserve nominees until the Justice Department completes its investigation related to Powell.

United States and Mexico Launch USMCA Joint Review Process

The United States and Mexico announced the start of bilateral discussions to prepare for the formal joint review of the United States–Mexico–Canada Agreement (USMCA), marking the first step in evaluating potential updates to the trade pact.

• U.S. Trade Representative Jamieson Greer and Mexican Economy Secretary Marcelo Ebrard directed negotiators to begin scoping discussions on measures aimed at ensuring the agreement’s benefits accrue primarily to North American partners.

• Early discussions will focus on reducing reliance on imports from outside the region, strengthening rules of origin, and enhancing the security and resilience of North American supply chains ahead of the formal review process.

SEC Hosts Private Markets Roundtable

The SEC convened a roundtable to examine the growing intersection between private markets and retail investors, focusing on valuation practices, liquidity considerations, and governance frameworks as access to private assets expands.

• SEC Chairman Paul Atkins emphasized that private markets are a key engine of American enterprise. He signaled that the Commission is exploring ways to expand retail investor access while maintaining strong investor protections.

• Panelists highlighted that broader retail participation will require greater transparency around valuation models, clearer disclosure of liquidity limits in semi-liquid funds, and stronger governance structures for retail-oriented products such as interval funds and retirement vehicles.

February Jobs Report Shows Labor Market Contraction and Rising Unemployment

The U.S. labor market weakened in February, with employers cutting 92,000 jobs and the unemployment rate rising to 4.4 percent, according to newly released Labor Department data.

• Job losses were broad-based across sectors, including health care, leisure and hospitality, construction, and manufacturing, while economists noted that a large California nurses strike and severe winter weather also contributed to the decline.

• The weaker report is likely to intensify debate at the Federal Reserve ahead of its March meeting, as policymakers weigh whether labor market softness warrants interest rate cuts even as higher oil prices and geopolitical risks continue to pose inflation concerns.

Treasury OFR Examines Hedge Fund Participation in Treasury Repo Markets

A new brief from the Treasury Department’s Office of Financial Research (OFR) analyzes how hedge funds participate in Treasury repo markets and their readiness for upcoming clearing requirements.

• The report finds that hedge funds whose counterparties faced lower supplementary leverage ratios were more likely to use centrally cleared “sponsored repo” transactions, suggesting that dealer balance-sheet constraints play a significant role in whether repo trades are centrally cleared as new SEC and Treasury clearing rules approach.

On the Horizon

• March 9, 2026 @ 1:00 PM ET: “45th Annual Small Business Forum” – Securities and Exchange Commission

• March 10, 2026 @ 8:30 AM ET: “2026 Tax Policy Summit: Unleashing Growth Through Tax Policy Stability at Home and Abroad” – U.S. Chamber of Commerce.

• March 10, 2026 @ 3:00 PM ET: “The Future of FinTech: How Emerging Financial Technologies Are Shaping Our Financial Lives” – Urban Institute

• March 11, 2026 @ 3:00 PM ET: “The Fiscal Outlook: 2027–2036” – Senate Finance Committee Fiscal Responsibility and Economic Growth Subcommittee

• March 11, 2026 @ 8:00 PM ET: “The Outlook of Global Capital Markets and the Role of Technology and Data in Financial Markets” – The Economic Club of Washington, D.C.

• March 12, 2026 @ 10:00 AM ET: “Investor Advisory Committee Meeting on Public Company Disclosure Reform, Fund Proxy Voting, and Tokenization of Equity Securities” – U.S. Securities and Exchange Commission

• March 13, 2026 @ 11:00 AM ET: “Broken Promises: Failures of the Little Rock Housing Authority and the Impact on Residents” – House Financial Services Committee Oversight and Investigations Subcommittee

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Our Take: The Supreme Court’s ruling changed the legal authority for tariffs but not the Administration’s trade strategy. The shift to Section 122 preserves the Administration’s leverage while triggering a 150-day clock that could force congressional engagement and heighten pressure on refunds. Meanwhile, despite a brief suspension of TSA PreCheck and Global Entry that has since been lifted, the DHS shutdown has not yet generated significant public backlash, limiting immediate incentives for either side to compromise. On policy, housing remains one of the few areas with bipartisan momentum, though institutional investor restrictions have emerged as the central negotiating fulcrum between the chambers. Trump’s State of the Union remarks reinforced his approach that favors executive authority and regulatory action over major new legislation, signaling that policy movement in the coming months will flow primarily through executive action, agency decisions, and targeted legislative vehicles as both parties prepare for midterm elections.

On the Hill

Senate Banking Hears from Prudential Regulators

The Senate Banking Committee held an oversight hearing with the federal prudential regulators, focusing on regulatory tailoring, alleged debanking practices, and emerging policy issues in digital assets and deposit insurance.

• Republicans, led by Chair Tim Scott (R-SC), emphasized the need to “right-size” regulation, arguing that excessive capital requirements, examiner focus on non-material issues, and rigid supervisory processes have limited credit availability and discouraged banks from participating in mortgage lending and innovation.

• Democrats, meanwhile, focused on enforcement rollbacks, consumer protection, and the risks of weakening regulatory safeguards. They criticized the rescission of recent Community Reinvestment Act rules, raised concerns about the easing of stress tests and fair lending standards, and questioned regulators about oversight decisions involving large banks and crypto-focused institutions, expressing concerns regarding conflicts of interest.

• Members also questioned regulators on the Basel III endgame timeline, lessons from Silicon Valley Bank, foreign ownership and bank charter applications, stablecoin rewards, and potential deposit flight, with witnesses stating they have not observed deposit flight tied to stablecoin developments.

Senate Moves to Use House Housing Bill as Vehicle for Expanded ROAD Package

The Senate is moving forward with the House-passed Housing for the 21st Century Act as the legislative vehicle for its broader ROAD to Housing proposal, leading House Financial Services to stand down on a planned markup of standalone institutional investor legislation.

• Senate Majority Leader John Thune (R-SD) filed cloture on Thursday on the House’s sweeping bipartisan housing package and scheduled a floor vote on the motion to proceed on Monday, setting up the bill to serve as the shell for the Senate’s expanded ROAD to Housing Act. The Senate is expected to add its preferred ROAD provisions and its own institutional investor language.

• The Senate substitute could incorporate select House provisions but is not expected to include the House’s community banking measures, setting up further bicameral negotiations over investor restrictions, small bank deregulation, and housing program differences.

Senate Democrats Introduce Institutional Housing Investors Bill

Senate Banking Committee Ranking Member Elizabeth Warren (D-MA), alongside 17 Democratic Senators, introduced the American Homeownership Act, legislation aimed at curbing corporate ownership of housing and redirecting federal benefits toward families and affordable housing supply.

• The bill would end certain tax breaks and federal housing benefits for large corporate landlords and private equity-backed investors, reinvest the savings into affordable housing development and homeownership support, and provide antitrust enforcers with additional tools to address large-scale corporate acquisitions of single-family homes.

Hawley, Merkley Introduce Bipartisan Bill to Restrict Institutional Home Purchases

Sens. Josh Hawley (R-MO) and Jeff Merkley (D-OR) introduced bipartisan legislation to curb large institutional investors’ role in the single-family housing market.

• The Homes for American Families Act would prohibit large institutional investors from purchasing single-family homes, townhouses, and condominiums, and grant the Department of Justice enforcement authority, including prioritized antitrust review of residential real estate acquisitions.

• The Senators also introduced an updated HOPE for Homeownership Act, which would use targeted tax changes to incentivize large investors and hedge funds to divest existing single-family home holdings, aiming to increase housing availability for individual buyers.

In the Administration

Trump Addresses Tariffs, Investment Accounts in SOTU

In his State of the Union address, President Trump reaffirmed tariffs as a central pillar of his economic agenda and announced a new retirement savings initiative for workers without employer-sponsored plans.

• Trump defended his use of tariffs as a tool to boost domestic manufacturing and protect U.S. industries, reiterating that he can impose or adjust trade measures under existing statutory authorities and signaling that additional actions remain on the table.

• He also announced that beginning in 2027, the Administration will provide up to a $1,000 annual federal match for low-income workers without workplace retirement plans, building on the 2022 Saver’s Match framework. Additional details about the program are expected to be released in the near future.

• Read Invariant’s 2026 State of the Union takeaways here.

OCC Releases Proposal for GENIUS Act Implementation

The Office of the Comptroller of the Currency released a proposed rule to implement the GENIUS Act, becoming the first agency to outline how firms can qualify to issue regulated stablecoins and how they will be supervised.

• The proposal establishes application, capital, liquidity, and risk management standards for stablecoin issuers, including non-bank issuers with assets exceeding $10 billion. The proposed rule will be open for public comment for 60 days, with BSA/AML and sanctions provisions to follow in coordination with Treasury.

Federal Reserve Releases Proposal to Codify Removal of Reputational Risk

The Federal Reserve issued a proposal to formally codify its earlier decision to remove reputational risk from bank supervision, advancing the Administration’s broader effort to address alleged debanking practices.

• The proposal would prohibit the use of reputational risk as a supervisory factor and reiterates that banks should not be penalized for serving customers engaged in lawful activities.

• The move follows a rulemaking proposal by the OCC and FDIC last year to remove reputational risk from supervisory frameworks and a White House executive order targeting alleged debanking.

SEC Finalizes Foreign Private Issuers Rule

The SEC adopted final rules implementing the Holding Foreign Insiders Accountable Act (HFIA) to expand disclosure requirements for foreign private issuers (FPIs).

• Beginning March 18, 2026, directors and officers of FPIs with a class of equity securities registered under Section 12 of the Securities Exchange Act of 1934 (Exchange Act) must begin disclosing their holdings and transactions in the FPI’s equity securities.

• The rules eliminate the prior broad exemption from insider reporting for these companies, while keeping limited carveouts for certain profit and short-selling provisions and excluding large shareholders from the new reporting requirement.

Treasury Issues Fifth Round of CAMT Guidance

Late last week, Treasury and the IRS issued the fifth CAMT notice since the end of the prior administration.

• The notice provides interim relief by allowing companies to better align CAMT calculations with regular tax treatment in areas such as accelerated domestic research and development expenses, certain repair costs, acquired intangibles, production expenses, and materials and supplies.

• Officials have indicated that Treasury plans to release new proposed CAMT regulations by the end of 2026 that would incorporate the recent guidance, along with prior interim updates.

Treasury Releases Resources on AI in Financial Services

The Treasury Department released several resources to guide AI use in the financial services sector. The release, in support of President Trump’s AI Action Plan, included an Artificial Intelligence Lexicon and a Financial Services AI Risk Management Framework (FS AI RMF).

• The AI Lexicon is designed to establish a central set of definitions for AI concepts, capabilities, and risk categories for regulatory, technical, legal, and business entities. Additionally, the FS AI RMF establishes tools and reference materials for institutions to evaluate AI use cases and manage risk across the AI lifecycle.

• In a statement, Senior Treasury Official Derek Theurer said that “by establishing a common language for AI and a tailored framework for managing AI risks in financial services, these deliverables help protect consumers while supporting responsible innovation.”

On the Horizon

• March 4, 2026 @ 10:00 AM ET: “Markup of Various Measures” – House Financial Services Committee

• March 4, 2026 @ 9:30 AM ET: “USMCA Forward 2026 launch” – The Brookings Institution

• March 4, 2026 @ 1:00 PM ET: "Private Markets Roundtable" - Securities and Exchange Commission

• March 5, 2026 @ 10:00 AM ET: “Fighting Fraud on the Front Lines: Challenges and Opportunities for Financial Institutions” – House Financial Services Financial Institutions Subcommittee

• March 5, 2026 @ 2:00 PM ET: “The Role of Self-Regulatory Organizations in U.S. Markets: Examining FINRA and the MSRB” – House Financial Services Capital Markets Subcommittee

• March 5, 2026 @ 5:30 PM ET: “Washington to Wall Street Conference” – Edelman Smithfield

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Our Take: Congress continues to operate in a fragile environment defined by narrow majorities and unresolved policy disputes. The likely DHS shutdown underscores that immigration enforcement remains the central obstacle in funding talks, and moderate Democratic resistance suggests the standoff may persist beyond recess. The strong House vote on housing demonstrates real bipartisan appetite for supply-side reforms, but bicameral differences and emerging White House priorities will determine whether that momentum translates into a final package. Chair Atkins’ testimony reinforced the Administration’s regulatory reset, yet debates over crypto and executive authority remain politically charged. The tariff rule vote is the clearest sign of strain within the House Republican conference, setting up difficult votes that could complicate leadership’s floor strategy in the weeks ahead.

On the Hill

House Advances Bipartisan Housing Package to Senate

On Monday, the House passed the Housing for the 21st Century Act under suspension of the rules by a vote of 390–9, marking a significant bipartisan step in Congress’s push to address housing affordability ahead of the midterms.

• The overwhelmingly bipartisan vote reflects broad agreement on supply-focused reforms, housing finance modernization, and regulatory streamlining, positioning the House bill as a central vehicle in upcoming bicameral negotiations.

• The resolution also passed despite a last-minute push from the White House to include language relating to President Trump’s call to ban institutional investors from purchasing single-family homes.

• The Senate is expected to bring its bipartisan ROAD to Housing Act to the floor in the coming weeks, setting up negotiations between the chambers as leaders seek to shape a final legislative framework without increasing federal spending.

Our Take: The decisive House vote underscores that housing has become one of the few areas with bipartisan momentum. However, given the Senate’s ROAD to Housing Act, both chambers must negotiate overlapping provisions in their respective legislation and reach an agreement on spending levels. The negotiations over these differences, as well as the open question of how congressional Republicans will address the President’s executive order restricting large institutional investors from purchasing single-family homes, will determine whether Congress can create a unified package to clear both chambers. More information on the housing policy and affordability debate in Washington can be found in Invariant’s latest Substack post, written by Alex Cisneros and Ashley O’Sullivan.

Congress Hears from SEC Chair Atkins on Agency Activity

Securities and Exchange Commission (SEC) Chair Paul Atkins testified before both the House Financial Services Committee and the Senate Banking Committee this week, outlining the agency’s priorities on capital formation, disclosure reform, digital assets, and investor protection.

• In the House, members questioned Atkins on proxy advisory firms, rulemaking initiatives, digital asset market structure, and interagency coordination. Atkins emphasized the SEC’s focus on materiality, retrospective rule review, and efforts to provide clearer rules of the road for innovators while maintaining investor protections.

• In the Senate, members questioned the SEC’s priorities, including capital formation, disclosure reform, and digital asset policy. Atkins outlined a three-pillar plan to revive IPOs and support congressional crypto legislation, while some Democrats raised concerns about enforcement levels and investor protection.

HFSC Debates Housing Costs and Credit Constraints

The House Financial Services Committee held a hearing to discuss rising housing and borrowing costs, with members agreeing that limited supply is central to affordability pressures while sparring over regulatory policy and federal intervention.

• Republicans argued that post-crisis bank regulation, zoning limits, permitting delays, and tariffs have constrained credit and increased construction costs. They called for regulatory tailoring, reduced barriers to development, and supply-side reforms to lower mortgage rates and expand access to capital.

• Democrats emphasized consumer protection, fair lending enforcement, appraisal reform, and sustained federal housing investment. They warned that weakened oversight and structural inequities are worsening affordability challenges and raised concerns about digital asset innovation and risks to community bank deposits.

House Votes to Terminate Canada-Related National Emergency Tariffs

The House voted 219–211 to terminate the national emergency tied to illicit drug flows from Canada, which underpinned additional tariffs of up to 35 percent on Canadian imports imposed under the International Emergency Economic Powers Act (IEEPA) and the National Emergencies Act.

• Six Republicans joined Democrats to approve the resolution, while Rep. Jared Golden (D-ME) was the lone Democrat to vote no. Earlier this week, a bipartisan coalition defeated a procedural rule that would have blocked consideration of resolutions challenging the president’s emergency tariffs through July, opening the door to additional forced votes.

• Members could now seek votes on other emergency-based tariffs, including those related to Mexico, Brazil, and the Liberation Day actions, although House leadership may attempt to block such efforts procedurally. Any termination resolution would still be subject to presidential veto.

Warren Presses SEC on Trump’s Proxy Adviser Order

Sen. Elizabeth Warren (D-MA) sent a letter to SEC Chair Paul Atkins questioning how the agency is implementing President Trump’s executive order directing changes to the regulation of proxy advisory firms.

• Warren argued that the order appears designed to weaken shareholder rights and shift power toward corporate management. She requested details on which rules, guidance, or enforcement policies the SEC has reviewed, revised, or plans to rescind in response, including those related to Rule 14a-8 and proxy adviser oversight.

• The Senate Banking Committee’s lead Democrat also asked how the SEC is evaluating the impact on institutional investors’ voting processes and enforcement priorities. Warren set a February 25 deadline for responses, signaling continued Democratic scrutiny of the Administration’s corporate governance agenda.

Senate Finance Discusses USMCA Ahead of Review

The Senate Finance Committee held a hearing to examine the United States-Mexico-Canada agreement (USMCA) ahead of the upcoming joint review.

• Senate Republicans on the Finance Committee voiced strong support for extending the USMCA during a recent hearing, emphasizing the agreement’s importance for trade certainty, investment, and U.S. competitiveness even as President Trump has raised doubts about renewing the pact.

• Lawmakers from both parties warned that uncertainty or withdrawal could harm key sectors such as agriculture and manufacturing, while witnesses highlighted the agreement’s economic benefits for North America.

• Although some members criticized the Administration’s tariff-focused approach toward Canada and Mexico, bipartisan sentiment in the Senate favored maintaining and updating the deal rather than abandoning it.

Senate Republicans Introduce Litigation Funding Transparency Act

A group of Senate Republicans introduced the Litigation Funding Transparency Act, the Senate companion to House legislation requiring disclosure of third-party litigation financing in class action and mass tort cases.

• Introduced by Sens. John Kennedy (R-LA), Chuck Grassley (R-IA), Thom Tillis (R-NC), and John Cornyn (R-TX), the bill would mandate disclosure of third-party funders in class action and mass tort lawsuits and require additional disclosure when the funder is a foreign state, foreign person, commercial enterprise, or sovereign wealth fund that is not a party to the case.

• Senate Republicans have argued that outside litigation financing can prolong cases, increase costs for consumers, and allow foreign entities to influence U.S. legal proceedings without transparency.

Other Notable Congressional Headlines

• HFSC Housing and Insurance Subcommittee Examines Homeownership and the Role of the Secondary Mortgage Market

• HFSC Oversight and Investigations Subcommittee Examines Public Housing Agencies

In the Administration

Trump Administration Finalizes Reciprocal Trade Agreement with Taiwan

The Trump Administration finalized a reciprocal trade agreement with Taiwan that reduces barriers to U.S. exports while maintaining a 15 percent U.S. tariff rate.

• Taiwan agreed to eliminate or reduce 99 percent of tariff and non-tariff barriers on U.S. industrial and agricultural goods, recognize certain U.S. regulatory standards, and expand market access for products including beef, pork, poultry, autos, medical devices, and pharmaceuticals.

• Under the agreement, Taiwan also committed to significant U.S. purchases and investment, including energy imports and support for U.S. AI and semiconductor manufacturing, while the United States will maintain a 15 percent reciprocal tariff on most Taiwanese imports.

January Jobs Report Shows Strongest Hiring in Over a Year

The Bureau of Labor Statistics (BLS) released its delayed January jobs report that showed the U.S. economy added 130,000 jobs in January, marking its strongest monthly gain in over a year as the unemployment rate fell to 4.3 percent and wage growth continued.

• Job growth was heavily concentrated in health care and social assistance, with additional gains in construction and manufacturing, while financial activities and information sectors lost jobs, reflecting uneven labor market strength across industries.

• Annual revisions sharply lowered prior job totals for 2024 and 2025, underscoring last year’s hiring slowdown, but January’s declining unemployment rate suggests some movement towards reversing the past year’s cooling labor market.

NCUA Seeks Comments on Proposed GENIUS Act Regulations

The National Credit Union Administration (NCUA) Board announced that it is seeking public comment on proposed regulations to implement portions of the GENIUS Act, including establishing a licensing and supervisory framework for payment stablecoin issuers affiliated with federally insured credit unions.

• The proposal outlines the approval and licensure process for permitted payment stablecoin issuers under NCUA jurisdiction and would limit federally insured credit unions to investing only in NCUA-licensed issuers. A separate forthcoming rule will address additional standards and restrictions applicable to stablecoin issuers.

• The GENIUS Act requires the NCUA to finalize implementing regulations by July 18, 2026. Comments on the proposal are due 60 days after publication in the Federal Register.

January CPI Report Shows Inflation Easing

The BLS released January Consumer Price Index (CPI) data showing inflation eased more than expected at the start of 2026, providing some relief to the Federal Reserve as it assesses the timing of future rate moves.

• Headline inflation slowed to 2.4 percent year-over-year, down from 2.7 percent in December, while core inflation declined to 2.5 percent, indicating modest progress toward the Fed’s 2 percent target.

• Inflation remained relatively contained despite tariff-related turbulence, giving the Federal Reserve additional breathing room as it balances lingering price pressures against previous signs of a cooling labor market.

On the Horizon

• February 16, 2026 @ 8:00 AM ET: “Community Bankers Conference” – The American Bankers Association

• February 17, 2026 @ 9:30 AM ET: “India, China, and the Balance of Power in the Indo-Pacific” – U.S.-China Economic and Security Review Commission

• February 18, 2026 @ 9:00 AM ET: “Is the World Trade Organization at a Crossroads?” – Peterson Institute for International Economics

• February 18, 2026 @ 9:00 AM ET: “WTO Matters - Wither MFN (Most Favored Nation): its Relevance in a Rapidly Changing World” – Washington International Trade Association

• February 18, 2026 @ 12:00 PM ET: “Monthly Luncheon with Federal Reserve Board Vice Chair for Supervision Michelle Bowman” – Exchequer Club

Contact Us

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Our Take: Congress bought itself time, but not a resolution. The short-term DHS extension ensures that immigration enforcement will continue to dominate the political landscape as both parties work to coalesce around broader affordability messages as the midterms approach. Momentum for housing policy is solidifying, with the House set to move the Housing for the 21st Century Act toward floor consideration and the multiple hearings on housing policy set for next week, signaling bipartisan appetite for action even as Senate alignment lags. However, crypto remains the clearest pressure point, with Senate Banking market-structure talks stalled over stablecoin rewards and ethics concerns that now serve as the gating issues for any near-term breakthrough. The developing Republican posture on these issues during this work session will define the Congress’s and Administration’s priorities as the November midterms near.

On the Hill

Congress Questions Bessent on FSOC Priorities

Treasury Secretary Scott Bessent testified this week before both the House Financial Services Committee and the Senate Banking Committee on the Financial Stability Oversight Council’s (FSOC) Annual Report, prompting sharp partisan exchanges over affordability, regulation, and financial system risks.

• Across both chambers, Republicans defended the Administration’s deregulatory approach, arguing FSOC should prioritize economic growth, household financial resilience, and tailored regulation for banks and credit unions. Members also highlighted Treasury market reforms, cybersecurity, responsible AI adoption, and targeted expansion of deposit insurance as core priorities for financial stability.

• Meanwhile, Senate and House Democrats challenged the Administration’s record on affordability and oversight, warning that deregulation, enforcement pullbacks, and tariffs are increasing consumer costs and systemic risk, while pressing Bessent on housing affordability, private credit risks, crypto ethics concerns, and perceived conflicts of interest tied to Trump-linked financial activities.

Housing for the 21st Century Act Set for Floor Vote Monday Evening

House Republican leadership plans to bring the Housing for the 21st Century Act to the floor under suspension of the rules on Monday, February 9, during the 6:30 PM vote series, positioning the bill for a strong bipartisan vote.

• Committee staff indicated the bill will be considered under suspension, requiring a two-thirds majority, with up to an hour of floor time expected to promote the legislation and continued outreach to industry stakeholders for letters of support.

• Staff emphasized that leadership is prioritizing bipartisan passage in the House rather than reconciliation with Senate housing efforts, noted that additional provisions could still be attached, and confirmed that a reauthorization of the Terrorism Risk Insurance Act Program is not included.

• Meanwhile, the White House and Treasury continue developing a separate proposal on institutional investment in single-family homes.

Capital Markets Subcommittee Discusses SEC Oversight

The House Financial Services Capital Markets Subcommittee held a hearing to examine recent changes at the Securities and Exchange Commission (SEC) and their impact on investor protection and securities law enforcement, along with internal accountability and public confidence in the securities regulator.

• Republican members and witnesses argued the SEC should rely on longer notice-and-comment periods and more rigorous cost-benefit analysis. They emphasized the need for clearer statutory direction from Congress to produce durable rules. Members also warned that rushed rulemaking disproportionately burdens small and mid-sized firms.

• Democratic members warned that reduced enforcement activity and staffing declines could increase fraud risk and politicization. They also raised concerns about expanding retail access to private markets.

Gallego Introduces Strong Start Act to Rebrand Trump Accounts

In response to the Republican-led push for Trump Accounts, Sen. Ruben Gallego (D-AZ) introduced a bill to provide direct financial support to families at birth and expand government-seeded savings accounts for children.

• Gallego’s bill, known as the Strong Start Act, would establish a one-time $3,000 newborn credit, rename Trump Accounts as “American Dream Accounts,” and make the $1,000 federal contribution permanent and indexed to inflation.

• The proposal reflects growing Democratic support for government-funded account seeding and addresses lingering concerns about the Trump Accounts’ branding by renaming and expanding the program.

Reed Introduces Bill to Tax Large Investor Purchases of Single-Family Homes

Sen. Jack Reed (D-RI) introduced legislation to discourage institutional ownership of single-family homes by imposing a new tax on purchases by certain large investors.

• The bill would amend the Internal Revenue Code (IRS) to tax purchases of single-family homes by qualifying large investors and has been referred to the Senate Finance Committee, positioning tax policy as a tool to address housing affordability and supply concerns.

• The proposal follows a parallel House effort led by Rep. Anna Paulina Luna (R-FL) to restrict large funds from purchasing single-family homes and is backed by a broad group of Democratic cosponsors, signaling increasing congressional focus on limiting institutional participation in residential housing.

Other Notable Congressional Headlines

• Senate Finance to hold hearing on USMCA

In the Administration

White House Convenes Crypto and Banking Groups on Stablecoin Rewards

Crypto and banking industry leaders met at the White House this week to address a stablecoin rewards dispute that has stalled Senate Banking Committee progress on digital asset market structure legislation.

• The meeting, led by White House Digital Asset Council Director Patrick Witt, was constructive but inconclusive, with no agreement on third-party stablecoin rewards, as the Administration pressed for a negotiated outcome by the end of February to enable a March Senate Banking markup.

• Banking groups reiterated opposition to third-party stablecoin rewards without tighter limits, citing deposit flight and safety and soundness concerns, while crypto firms and trade groups opposed a categorical ban and framed rewards as essential to innovation rather than a systemic risk.

CFTC Withdraws Biden-Era Proposal on Event Contracts

The Commodity Futures Trading Commission (CFTC) rescinded several agency actions related to event contracts, including a 2024 proposed rule, signaling a shift toward a new rulemaking framework for the emerging prediction market industry.

• CFTC Chair Michael Selig said the withdrawn proposal reflected an improper move toward merit regulation, including an outright ban on political event contracts, and confirmed the Commission will pursue a new rulemaking grounded in a coherent interpretation of the Commodity Exchange Act and congressional intent.

• The CFTC also withdrew a 2025 staff advisory on certain event contracts, issued “regarding preparations with respect to potential market disruption” ahead of the September government shutdown.

• Selig said the staff advisory on sports event contracts created confusion and uncertainty for market participants and emphasized that its withdrawal is intended to support lawful innovation while the agency develops a clearer, more durable regulatory approach.

Trade Update: Trump Announces Tariff Reduction Amid New Agreements and China Talks

President Trump announced via Truth Social that the United States is reducing the reciprocal tariff rate on Indian goods from 25 to 18 percent following a call with Prime Minister Narendra Modi.

• According to the President, India agreed to stop purchasing Russian crude oil and to move toward eliminating tariff and non-tariff barriers on U.S. goods. The President also noted that India committed to purchasing more than $500 billion in U.S. energy, technology, agricultural, coal, and other products as part of what he described as a new U.S.–India trade deal “effective immediately.”

• Additionally, on Thursday, U.S. Trade Representative Jamieson Greer signed the U.S.-Argentina trade agreement, eliminating over 1,600 reciprocal tariffs on Argentine goods.

• President Trump also spoke over the phone with Chinese President Xi Jinping on Wednesday ahead of his April visit to Beijing. He stated that the two discussed the military, trade, energy, and agricultural purchases, among other issues.

• Meanwhile, the Administration announced action plans with Mexico, the European Union, and Japan to strengthen critical mineral supply chain resilience.

FHFA’s Pulte: Administration May Reconsider Fannie and Freddie IPOs

Federal Housing Director Bill Pulte suggested the Trump Administration may back away from plans to take Fannie Mae and Freddie Mac public, while emphasizing that any decision ultimately rests with President Trump.

• Pulte said the Administration does not need to pursue initial public offerings of the government-sponsored enterprises and is considering alternative housing policy actions to address affordability, despite earlier discussions with banks on structuring potential IPOs.

• The comments mark a shift in public messaging after President Trump previously expressed interest in taking the firms public, underscoring continued uncertainty over the future of Fannie and Freddie as the White House keeps multiple options on the table.

On the Horizon

• February 10, 2026 @ 10:00 AM ET: “Priced Out of the American Dream: Understanding the Policies Behind Rising Costs of Housing and Borrowing” – House Financial Services Committee

• February 10, 2026 @ 2:00 PM ET: “Building a Solid Foundation: Restoring Trust and Transparency in Public Housing Agencies” – House Financial Services Oversight and Investigations Subcommittee

• February 10, 2026 @ 3:00 PM ET: “The Next Chapter of Community Development Finance and Place-Based Investment” – The Urban Institute

• February 11, 2026 @ 10:00 AM ET: “Oversight of the Securities and Exchange Commission” – House Financial Services Committee

• February 11, 2026 @ 2:00 PM ET: “Homeownership and the Role of the Secondary Mortgage Market” – House Financial Services Housing and Insurance Subcommittee

• February 12, 2026 @ 10:00 AM ET: “The U.S.-Mexico-Canada Agreement: Evaluating North American Competitiveness” – Senate Finance Committee

• February 12, 2026 @ 1:00 PM ET: “The Future of the Digital Economy” – The Brookings Institution

Contact Us

Carolyn Coda | Noah Marine | Jennie Jacoby | Alex Cisneros | Alden Knowlton | Kristopher Denzel | Ryan Dilworth | Peter Wells | Audrey Neumann | Ethan Billips | Ben Wiener

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Our Take: As Washington freezes over, so does Congress. Lawmakers were poised to pass the last of a series of funding bills before unrest in Minneapolis last weekend changed the narrative on Immigration and Customs (ICE) and Department of Homeland Security (DHS) funding. Should the Senate advance the new funding package, the House is only scheduled to return on Monday, leaving a weekend shutdown on the table. Most lawmakers are intent on avoiding a prolonged shutdown similar to last year’s, though issues, including enhanced guardrails on ICE activity, remain a major sticking point.

On the Hill

Senate Agriculture Committee Advances Partisan Crypto Market Structure Package

The Senate Agriculture Committee advanced major cryptocurrency market structure legislation along party lines, marking a significant step forward for GOP-led efforts to reshape digital-asset regulation after months of stalled bipartisan talks.

• The committee voted 12–11 to advance the bill, which would grant the Commodity Futures Trading Commission (CFTC) expanded authority over spot markets for digital commodities, after negotiations between Sen. John Boozman (R-AR) and Sen. Cory Booker (D-NJ) failed to produce a bipartisan compromise.

• During the markup, Democrats offered amendments on ethics restrictions for federal officials’ crypto holdings, barring taxpayer-funded bailouts, and regulating crypto ATMs, but each failed 11–12, while three GOP amendments on foreign adversary restrictions and dealer scope were withdrawn.

• Democrats criticized Republicans for abandoning a prior bipartisan framework and raised concerns over ethics and consumer protections, while Boozman said the bill can still evolve as it heads toward the Senate floor and will ultimately need to be merged with a separate Securities and Exchange Commission-focused package under Senate Banking’s jurisdiction.

• Additionally, the White House is hosting a meeting this coming Monday between crypto and banking industry executives to reach a compromise on yield, which is holding up Senate Banking Committee negotiations on its portion of the bill.

In the Administration

Trump Nominates Kevin Warsh as Next Fed Chair

On Friday morning, President Trump announced plans to nominate former Federal Reserve (Fed) Governor Kevin Warsh to succeed Jerome Powell as Fed chair, selecting a longtime Republican economic figure who has criticized the central bank’s rate decisions.

• Chosen from a group of candidates that included Rick Rieder, Kevin Hassett, Christopher Waller, and Treasury Secretary Scott Bessent, Warsh is a former Morgan Stanley banker and Bush-era adviser now affiliated with Stanford’s Hoover Institution.

• Though known as an inflation hawk during his time at the Fed, Warsh has argued that short-term rates should be lowered while the central bank reduces its large balance sheet.

• If confirmed by the Senate, Warsh would succeed Jerome Powell, whose tenure as chair ends in May.

Our Take: Warsh’s nomination comes amid President Trump’s continued standoff with Chair Powell, who the President has described as “Too Late” on lowering interest rates. While the announcement has received praise from Senate Banking Committee and House Financial Services Committee Chairs Tim Scott (R-SC) and French Hill (R-AR), Warsh’s nomination faces key hurdles to a swift confirmation. Outgoing Sen. Thom Tillis (R-NC), who has vocally defended Powell amid the Justice Department inquiry into his congressional testimony last year, insisted this morning he will not support any Fed nominees until the inquiry is “fully and transparently resolved.” Though Tillis praised Warsh as “a qualified nominee with a deep understanding of monetary policy,” he wields a crucial vote on the Senate Banking Committee and can effectively stall Warsh’s nomination until he leaves office at the end of 2026.

Treasury Summit Highlights Support for Trump Accounts

President Donald Trump, congressional leaders, and Treasury officials convened the Treasury Department’s Trump Accounts Summit to promote the Administration’s new Trump Accounts for newborns created under the One Big Beautiful Bill Act, as major employers and financial firms announced plans to participate and match federal contributions.

• Trump highlighted that the program will provide $1,000 in managed brokerage accounts for children born between 2025 and 2028, framed the initiative as a cornerstone of the Administration’s affordability and long-term growth agenda, and credited Sens. Marsha Blackburn (R-TN), Katie Britt (R-AL), and Ted Cruz (R-TX) for their role in crafting the policy.

• Treasury Secretary Scott Bessent highlighted early uptake and private-sector engagement, noting that roughly 600,000 families opened accounts within the first three days of tax filing season and describing significant support from philanthropists, companies, and everyday Americans.

• Trump pointed to commitments from businesses across the economy to match the $1,000 federal contribution for eligible employees, while major financial institutions also pledged support as the White House pushes to expand the accounts as an employer benefit.

White House Trade Announcements Spotlight USMCA, Cuba, and Latin America

President Trump announced a series of potential new tariffs affecting major U.S. trading partners, including Canada and Mexico, as part of ongoing trade policy actions involving the United States and its allies.

• On Thursday, President Trump warned of a 50 percent tariff on Canadian aircraft imports and the decertification of new Canadian jets, which he said mirrors Canada’s use of certification barriers against U.S. Gulfstream aircraft. This follows last weekend’s threat of 100 percent tariffs on all Canadian goods following Canada’s electric vehicle deal with China.

• Mexico may also face new levies after President Trump said he would target countries that supply oil to Cuba. This comes after a call between President Trump and Mexican President Claudia Sheinbaum, described as “cordial,” and the formal launch of U.S.-Mexico talks on potential United States-Mexico-Canada Agreement (USMCA) reforms ahead of the agreement’s July review.

• President Trump also threatened to raise tariffs on South Korean goods from 15 percent back to 25 percent, citing unmet trade commitments, though he later told reporters the two countries would “work something out.”

• As of now, none of these tariff threats has been formally implemented.

• Additionally, this week, USTR announced the official signing of reciprocal trade deals with El Salvador and Guatemala.

CFPB Returns to Full Open Banking Rewrite Process

The Consumer Financial Protection Bureau (CFPB) plans to revert to a traditional notice-and-comment rulemaking process to rewrite the open banking rule after securing additional funding, extending uncertainty for banks and fintech firms while preserving the substance of the Trump Administration’s approach.

• Following a $145 million cash infusion after a court rejected challenges to its funding authority, the CFPB abandoned plans for an interim final rule and will instead proceed with a full rulemaking process, citing greater legal durability despite a longer timeline.

• While the procedural shift delays clarity for market participants, the agency does not plan to alter the substance of the rewrite, which would allow banks to charge limited fees for fintech access to customer deposit and credit card data, an issue already entangled in ongoing litigation and appeals.

SEC and CFTC Hold Joint Event on Harmonization in the Crypto Era

Yesterday, Securities and Exchange Commission (SEC) Chair Paul Atkins and Commodity Futures Trading Commission (CFTC) Chair Mike Selig held a joint event on crypto regulatory harmonization, outlining the next phase of the agencies’ Project Crypto.

• Both Atkins and Selig stressed that fragmented oversight no longer works for on-chain markets and urged regulators to move now to harmonize standards and reduce duplicative compliance as Congress advances digital asset market structure legislation, prioritizing durable, principles-based rules over new enforcement.

• In one of his first public remarks as CFTC Chair, Selig noted that event contracts are long-standing, CFTC-regulated markets and said regulatory uncertainty has constrained their development. He directed staff to withdraw prior restrictive proposals, begin a dedicated rulemaking, reassess ongoing litigation, and coordinate with the SEC to avoid jurisdictional gray areas.

SEC Releases Statement on Tokenized Securities

The SEC’s Divisions of Corporation Finance, Investment Management, and Trading & Markets released a joint staff statement outlining how existing federal securities laws apply to tokenized securities, as part of an effort to provide greater regulatory clarity for crypto-linked financial instruments.

• The statement explains that tokenized securities remain securities under federal law, regardless of whether ownership records are maintained on-chain or off-chain, and identifies two primary models: issuer-sponsored tokenization and third-party tokenization. It emphasizes that format alone does not alter registration, disclosure, or compliance obligations.

• The statement was intended to assist market participants as they seek to comply with the federal securities laws and prepare to submit any necessary registrations, proposals, or requests for appropriate action to the Commission or its staff.

Fed Holds Rates Steady as Internal Dissent Persists

On Wednesday, the Federal Reserve (Fed) held interest rates steady at its first meeting of 2026, maintaining the benchmark range at 3.5 to 3.75 percent, citing solid growth, a stabilizing labor market, and still-elevated inflation despite ongoing pressure from President Trump to cut rates.

• The Fed upgraded its assessment of the economy, saying activity is expanding at a solid pace and that the unemployment rate is showing signs of stabilization, with Chair Jerome Powell underscoring that the economy has again surprised to the upside.

• Governors Stephen Miran and Christopher Waller dissented in favor of a quarter-point cut, as Powell reiterated a meeting-by-meeting approach and framed the Supreme Court dispute over Fed Governor Lisa Cook as the most important legal case in the Fed’s 113-year history.

On the Horizon

• February 4, 2026 @ 9:00 AM ET: “The Securitization of Trade: Where Is Globalization Going?” – Peterson Institute for International Economics

• February 4, 2026 @ 10:00 AM ET: “The Annual Report of the Financial Stability Oversight Council” – House Financial Services Committee

• February 4, 2026 @ 2:00 PM ET: “A New Day at the SEC: Restoring Accountability, Due Process, and Public Confidence” – House Financial Services Capital Markets Subcommittee

• February 5, 2026 @ 10:00 AM ET: “The Annual Report of the Financial Stability Oversight Council” – Senate Banking Committee

• February 5, 2026 @ 12:00 PM ET: “Pathways to Reduce Child Poverty: Impacts of Federal Tax Credits” – The Brookings Institution

• February 6, 2026 @ 10:00 AM ET: “Supply-side Factors and Inflation: What Have We Learned?” – The Brookings Institution

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Our Take: Washington braced for a variety of outcomes this week, many of which ultimately did not come to pass.

• The President’s commitment to not use military force in Greenland, followed by the announcement of a “concept of a deal,” led to a market rebound from the “Sell America” trade that dominated the first half of the week. The agreement led the President to scrap plans to levyadditional tariffs against Europe, and in doing so, keep the US-EU trade agreement on track. Stakeholders will continue to look to the Supreme Court for its looming decision on the President’s tariff authority, which could serve as a potential inflection point in 2026.

• The Senate, meanwhile, will return to a list of challenges amid a potentially shortened week. Passage of the Senate’s six-part funding package is increasingly in question as Democrats deliberate on whether to withhold support for Homeland Security funding over Immigration and Customs Enforcement (ICE) activity across the United States. Additionally, a scheduled markup of a GOP-led bill on digital asset market structure is poised to set the tone for future crypto negotiations after recent setbacks. The House of Representatives will be in recess next week after passing 12 stand-alone appropriations bills, on time, for the first time in 29 years.

On the Hill

Senate Ag Releases Updated Market Structure Text, Schedules Markup

Senate Agriculture Committee Chair John Boozman (R-AR) released a new draft of digital asset market structure legislation and scheduled a markup for next Tuesday, even though bipartisan agreement remains elusive.

• The draft has not yet secured support from key Agriculture Committee Democrats, including Ranking Member Amy Klobuchar (D-MN) and Sen. Cory Booker (D-NJ), increasing the likelihood of a party-line markup and underscoring a sharp contrast with the House Agriculture Committee’s CLARITY Act, which advanced with strong bipartisan support (47–6). Sen. Booker’s team has said he will continue working with Chair Boozman toward enactment, leaving open the possibility of Democratic support later in the process.

• Early industry reaction has been largely positive, as the draft closely tracks the Agriculture title of the House-passed CLARITY Act, maintains a clear regulatory focus on intermediaries rather than protocols or users, and provides strong protections for non-custodial software developers and infrastructure providers.

• The Senate bill also adds a new provision addressing meme coins, classifying them as digital commodities primarily marketed to drive speculative trading, while preserving regulatory discretion to carve out exceptions.

• It authorizes $150 million for the CFTC, available until expended, to support implementation until a permanent registration-fee regime is established — a long-standing industry priority.

• The draft includes nonbinding “sense of Congress” language supporting a fully staffed, bipartisan CFTC, but it does not set new statutory requirements for commissioner appointments or quorum.

• Meanwhile, momentum has slowed on the Senate Banking Committee, where the near-term focus has shifted to housing policy, pushing any rescheduled market structure markup into late February or early March. Talks between Banking Committee negotiators and industry have not resumed in earnest, and the dispute between crypto firms and banks over stablecoin yields remains unresolved. Both the White House and Banking Committee leadership have indicated that progress depends on a workable yield compromise, along with continued discussions with Democrats on ethics-related provisions.

HFSC Advances Several Bills

The House Financial Services Committee held its first markup of the year, voting on bills, including a bill to reauthorize the Terrorism Risk Insurance Act (TRIA) and the Community Bank Regulatory Tailoring Act. The Committee favorably reported six bills and one resolution to the House floor for the chamber’s consideration.

• Committee Chairman French Hill (R-AR) said the bills reduce unnecessary regulatory burdens while protecting the financial system, noting they “address the real challenges facing our financial sector while promoting innovation and growth.”

• Among the bills favorably reported was H.R. 7128, the TRIA Program Reauthorization Act, which passed the committee by a vote of 51-2. This legislation would extend the Terrorism Risk Insurance Program for seven additional years. Reps. Ralph Norman (R-SC) and John Rose (R-TN) were the two committee members to vote against the bill.

HFSC Questions HUD Secretary Turner on Housing Policy

The House Financial Services Committee held its annual oversight hearing with Housing and Urban Development (HUD) Secretary Scott Turner, with bipartisan questioning focused on housing affordability, program oversight, and regulatory reform.

• Chairman French Hill (R-AR) highlighted rising costs and supply constraints, calling for modernization of HUD programs and less red tape. Secretary Turner defended the Administration’s approach, pointing to efforts to boost supply, crack down on fraud and crime in public housing, and streamline regulations.

• Democrats, led by Ranking Member Maxine Waters (D-CA), pushed back on the Department, citing concerns over civil rights enforcement, staffing cuts, and proposed reductions to homeless assistance.

Other Notable Congressional Headlines:

• HFSC Releases February Schedule

In the Administration

Trump at Davos Signals Economic Confidence and Criticizes Europe

On Wednesday, President Trump used his World Economic Forum address to argue that U.S. economic strength is driving global growth while criticizing European governments, as his Greenland push and tariff threats heightened geopolitical uncertainty for allies and markets.

• The President initially reiterated his call for U.S. ownership of Greenland and threatened escalating tariffs on Denmark and other allies if they do not negotiate, while saying he would not use force and warning NATO allies that Washington will remember any refusal. The issue was later diffused after an agreement was reached between Trump and NATO leaders, leading the President to scuttle plans for tariffs set to begin on February 1.

• Alongside broader affordability messaging, Trump framed Europe’s challenges as tied to energy, trade, immigration, and growth, with EU leaders signaling proportional retaliation if tariffs move forward and warning that U.S. actions could undermine the existing U.S.-EU trade framework.

President Trump Signs Single-Family Housing Executive Order

On Tuesday, President Trump announced an executive order targeting investor-owned single-family housing, signaling a new Administration push to limit institutional participation in the housing market as part of a broader affordability agenda.

• The executive order does not specify immediate enforcement actions but directs the Treasury Department, within 30 days, to develop new regulations restricting investor-owned housing, including revised definitions of large institutional investor and single-family home, in coordination with the National Economic Council, the Department of Housing and Urban Development (HUD), and others, with agencies permitted to adopt the definitions for implementation purposes.

• The order also directs agencies to restrict certain federal property sales and federally assisted sales, instructs the Attorney General and the Federal Trade Commission to investigate potential antitrust violations, requires HUD to establish reporting requirements identifying institutional investors receiving federal housing funds, and tasks the White House Office of Legislative Affairs with drafting a legislative proposal expected to be actively promoted on Capitol Hill early this year.

Our Take: We expect the majority of rule-making to come from the Treasury and to be heavily pushed for codification by Congress. If this strategy falls short, either due to legal challenges or political roadblocks on the Hill, expect the Administration to turn to increased legal and regulatory action, including increased reporting requirements from HUD. We’re closely watching how Treasury defines large institutional investors, particularly after Secretary Bessent’s Davos comments, which signaled sensitivity to not sweeping in smaller, mom-and-pop, or retiree-owned rental portfolios.

White House Publishes Study on AI’s Impact on the Economy

On Wednesday, the White House released a new Council of Economic Advisers report examining how artificial intelligence could reshape U.S. economic growth, productivity, and global competitiveness.

• The report finds that AI investment, performance, and adoption are accelerating rapidly, with AI-related investment already contributing meaningfully to GDP growth and positioning the United States ahead of China and the European Union across key metrics.

• While the long-term impact on employment remains uncertain, the analysis suggests that AI could deliver substantial productivity gains over time, with estimates of GDP-level increases ranging from low single digits to double digits over the next decade, depending on adoption and labor-substitution dynamics.

SEC and CFTC to Hold Joint Crypto Harmonization Event

The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) will convene a joint public event at CFTC headquarters next Tuesday to discuss regulatory harmonization and U.S. financial leadership in the crypto era.

• The conversation, led by SEC Chairman Paul Atkins and CFTC Chairman Michael Selig, will focus on breaking down legacy regulatory silos and creating clearer, more aligned frameworks to support responsible crypto innovation in the United States.

• The joint event comes as the Senate is actively working to advance crypto market structure legislation and signals that regulators are eager to move crypto oversight forward even in the absence of a comprehensive market structure bill from Congress.

Supreme Court Signals Skepticism of Administration Bid to Fire Fed Governor

The Supreme Court conveyed broad skepticism toward President Trump’s attempt to remove Federal Reserve Governor Lisa Cook during Wednesday’s oral arguments, raising concerns about due process and the implications for central bank independence.

• Several conservative Justices questioned the Administration’s argument that Cook could be removed without a formal hearing, emphasizing the risks of allowing presidents to fire Fed officials based on disputed or minor allegations.

• The case, which is being considered on an emergency basis, carries significant implications for presidential power and the Federal Reserve’s independence, with justices suggesting potential outcomes that would keep Cook in her role while the dispute continues in lower courts.

On the Horizon

• January 27, 2026 @ 9:00 AM ET: “Federal Open Market Committee Meeting” – Federal Reserve

• January 27, 2026 @ 10:00 AM ET: “SEC - CFTC Harmonization: U.S. Financial Leadership in the Crypto Era” – Commodity Futures Trading Commission, Securities and Exchange Commission

• January 27, 2026 @ 3:00 PM ET: “Markup of legislation to regulate digital commodities” – Senate Agriculture Committee

• January 29, 2026 @ 9:00 AM ET: “WTO Matters: Core Functions of the World Trade Organization” – The Washington International Trade Association

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Several crucial policy debates reached a boiling point this week. While key funding bills were approved, a number of failed votes in the House have sent warning signals to Speaker Mike Johnson (R-LA) and Republican Leadership about their razor-thin majority. The Senate made important progress on several appropriations bills but hit a significant roadblock in its negotiations on landmark digital asset market structure legislation, with a scheduled markup pulled at the eleventh hour. Lawmakers on Capitol Hill also balked at several actions of the Trump Administration, including the Department of Justice’s reported inquiry into Federal Reserve Chair Jerome Powell and President Trump’s growing interest in U.S. action abroad. The Administration continued its push on affordability issues, ranging from credit cards, interest rates, and the potential impact of the Supreme Court’s tariff ruling on consumer prices.

Our Take: Lawmakers are headed into the holiday weekend with a mixed bag of policy results. While appropriators have made progress advancing must-pass legislation ahead of the January 30 funding cliff, efforts to move legislation without a hard deadline are proving challenging. Meanwhile, election-year rhetoric is increasingly shaping Hill debates as President Trump seeks to reclaim populist policy positions ahead of the midterms. The much-awaited Supreme Court ruling on tariffs is also highly likely to affect the President’s focus on consumer sentiment in the coming months.

On the Hill

Senate Banking Crypto Markup Postponed Amid Policy Standoff

The Senate Banking Committee markup of landmark cryptocurrency market structure legislation was postponed after last-minute opposition from key industry stakeholders highlighted unresolved disagreements over the bill’s regulatory framework and scope.

• A markup of the committee’s market structure bill was canceled hours before the vote after Coinbase CEO Brian Armstrong publicly withdrew his support, objecting to provisions that could restrict certain crypto products, limit stablecoin reward programs, and expand Securities and Exchange Commission (SEC) authority.

• The pause reflected broader policy frictions, including opposition from traditional banking interests to stablecoin rewards, unresolved Democratic concerns over ethics and conflicts of interest, and lingering uncertainty about bipartisan support within the committee.

Our Take: While Banking Committee negotiations have temporarily stalled, the Senate Agriculture Committee, which oversees the Commodity Futures Trading Commission (CFTC) and must advance companion legislation before a final package can move forward, has already pushed its own markup to later in the month, suggesting the crypto policy debate remains active but delayed.

House Passes Bill to Limit ESG factors in Retirement Investing

On Thursday, the House passed legislation to restrict the consideration of environmental, social, and governance (ESG) factors in retirement plan investment decisions, sharpening the debate over fiduciary duties under federal retirement law.

• The House approved the Protecting Prudent Investment of Retirement Savings Act by a 213–205 vote, a GOP-backed measure sponsored by Rep. Rick Allen (R-GA) that would tighten standards under ERISA and limit when fiduciaries may consider ESG factors, directly targeting a Biden-era Labor Department rule that allowed ESG considerations when financially relevant.

• As the legislation now heads to the Senate, Republicans champion the bill to reinforce a requirement that retirement plan managers prioritize financial returns and economic factors over social or political considerations.

Republican Study Committee Releases Reconciliation 2.0 Blueprint

On Tuesday, the Republican Study Committee (RSC) released its Reconciliation 2.0 framework outlining a GOP strategy to address affordability and advance President Trump’s broader policy agenda.

• The blueprint focuses on lowering housing, health care, and energy costs through expanded housing supply, reduced regulatory barriers, and the codification of Trump-era executive actions, while claiming over $1 trillion in net deficit reduction.

• RSC Chair August Pfluger (R-TX) said the framework is designed to meet reconciliation rules and advance policies Democrats cannot block, as party leaders assess the timing and political viability of a second reconciliation bill ahead of the midterms.

• However, the prospects of reconciliation 2.0 remain unlikely as Republicans face narrow House margins, potential Senate resistance, and limited legislative time.

House Ways and Means Advances Tax Return Digitization Bill

On Wednesday, the House Ways and Means Committee unanimously advanced legislation requiring the Internal Revenue Service (IRS) to digitize most paper-filed tax returns and correspondence, aiming to reduce processing delays and manual data entry errors.

• The bill, approved 42–0, would direct the IRS to use barcode or text-recognition technology to convert paper submissions into electronic records, while allowing limited exceptions for materials deemed more efficient to process manually.

• While supporters argue digitization would improve efficiency and speed refunds, the measure’s practical impact is uncertain, as the IRS has already begun phasing out paper returns and requiring most payments to be made digitally, with the legislation not expected to take effect until at least the 2027 filing season.

House Financial Services Discusses Fintech Policy

On Tuesday, the House Financial Services Subcommittee on Digital Assets, Financial Technology, and Artificial Intelligence held a hearing on fintech innovations and regulations, discussing how emerging financial products affect consumers and how policymakers should approach oversight.

• Lawmakers and witnesses focused on Earned Wage Access (EWA) and Buy Now, Pay Later (BNPL), with broad agreement that EWA, which allows workers to access already earned wages, should not be treated as credit if it does not create debt and includes clear disclosures and free options.

• While some raised concerns that certain BNPL products can function like traditional credit and carry high effective costs, others highlighted BNPL’s role in offering flexible payment options that support cash-flow management.

• Across party lines, Members agreed that fintech can expand access to financial services, particularly for underserved communities, while underscoring the need for clear, activity-based regulation to protect consumers and support continued innovation.

Senate Banking Ranking Member Warren Raises Concerns on Crypto in 401(k)s

On Monday, Senate Banking Ranking Member Elizabeth Warren (D-MA) wrote to Securities and Exchange Commission (SEC) Chair Paul Atkins, pressing the agency to explain how it will protect investors as the Trump Administration moves to allow cryptocurrencies to be offered in 401(k) retirement plans.

• Warren warned that the volatility of crypto assets, lack of transparency, and potential conflicts of interest pose significant risks to retirement savers, citing a 2024 Government Accountability Office (GAO) study finding that crypto assets have uniquely high volatility and no standard method for projecting future returns.

• The letter, sent as Congress considers legislation on crypto market structure, argues that the proposed reforms could weaken the SEC’s authority through tokenization and regulatory loopholes, increasing the risk of losses toworkers’ retirement savings.

Sen. Gallego Releases Housing Affordability Plan

On Wednesday, Sen. Ruben Gallego (D-AZ) unveiled a housing affordability plan titled The Path Home, outlining a four-pillar strategy to address high housing costs and expand access to homeownership.

• The proposal would increase national housing supply and accelerate construction by reforming zoning and permitting systems.

• It would also lower costs and prevent displacement through assistance and consumer protections, while “future-proofing” communities against extreme weather, rising insurance costs, and aging infrastructure.

• The plan emphasizes both short- and long-term measures to rebuild the housing market and restore the promise of attainable homeownership for working families.

Other Notable Congressional Headlines:

• House Financial Services Examines CFIUS Regulations and Activity

• House Ways and Means Subcommittee Discusses American Innovation and Technology Leadership

• Senate Democrats Introduce Bill Capping Credit Card Late Fees

In the Administration

Trump Administration’s Powell Inquiry Receives Icy Hill Reception

Following revelations that the Department of Justice served the Federal Reserve (Fed) and Chairman Jerome Powell with grand jury subpoenas last Friday, congressional Republicans and global financial leaders have warned that the move risks undermining the Fed’s independence and complicating the confirmation of President Trump’s future central bank nominees.

• Senate Majority Leader John Thune (R-SD) said the probe could make it challenging to confirm Federal Reserve nominees and called for a swift resolution, as Sens. Thom Tillis (R-NC) and Lisa Murkowski (R-AK) threatened to block nominees until the matter is resolved, with additional Republicans raising concerns about treating Powell’s actions as criminal.

• The investigation, centered on allegations that Powell misled Congress regarding cost overruns tied to a $2.5 billion Federal Reserve headquarters renovation, triggered broader market and institutional fallout, including market volatility and warnings from central bankers and Wall Street leaders that politicizing the Fed could damage its credibility and have lasting economic consequences.

Trump Endorses Credit Card Reform Proposals in Affordability Push

President Trump announced his endorsement of several major proposals impacting credit cards, as affordability takes center stage as a key issue in the midterm election cycle. The President first called for a one-year ten percent cap on credit card interest rates. He then publicly endorsed the Credit Card Competition Act “in order to stop the out-of-control Swipe Fee ripoff.” Both announcements have intensified debate over credit card swipe fees and competition in the payments market.

• Prompted by the President’s endorsement, Sens. Roger Marshall (R-KS) and Dick Durbin (D-IL) reintroduced the Credit Card Competition Act, which would require large banks to enable credit cards to be processed over at least two unaffiliated networks, allowing merchants to choose routing options and increasing competition with the aim of lowering swipe fees, reducing costs for retailers, and improving transaction security.

• While the bill has backing from retailers, grocers, and consumer groups, it faces strong opposition from major banks and card networks, as well as skepticism from some Republicans. It now heads to the Senate Banking, Housing, and Urban Affairs Committee, where its prospects remain uncertain despite Trump’s endorsement.

• The President’s call for an interest rate cap was also met with skepticism among Republican leadership. House Speaker Mike Johnson (R-LA) cautioned that Congress must “be very careful if you go forward in that,” adding that “you don’t want to have negative secondary effects.” Meanwhile, Senate Banking Ranking Member Elizabeth Warren (D-MA) stated that President Trump called her this week and discussed the potential for legislation on the issue.

Trump Administration Announces New Trade Actions

This week, the Administration rolled out several major trade actions, including a new trade deal with Taiwan and fresh Section 232 measures targeting critical minerals and semiconductors.

• On Wednesday, the President issued a proclamation directing Commerce and USTR to jointly negotiate agreements with trading partners to address national security risks associated with imports of processed critical minerals and derivative products.

• The same day, the President also imposed a 25 percent tariff on certain advanced chips (with carve-outs for U.S. supply chain buildout) and signaled that broader semiconductor tariffs and a tariff offset program may follow.

• On Thursday, the Administration announced a new trade deal with Taiwan that cuts U.S. tariffs on Taiwanese goods to 15 percent and includes at least $250 billion in direct investment and $250 billion in credit guarantees from Taiwanese tech firms.

• Additionally, on Monday, President Trump announced a new 25 percent tariff on goods from any country “doing business” with Iran. While the scope of this tariff remains unclear, the move could impact trade with partners such as China, India, and Turkey.

• This week, the Supreme Court again held off issuing a decision on the long-awaited litigation over President Trump’s IEEPA-based tariffs, releasing three unrelated decisions on Wednesday. The Supreme Court is set to issue more opinions on Tuesday, January 20.

Fed’s Miran: Deregulation Will Inform Monetary Policy

In remarks at the Delphi Economic Forum on Tuesday, Federal Reserve Governor Stephen Miran used Greece’s post-crisis recovery as a backdrop to make a broader point about U.S. economic policy: deregulation matters for how the Federal Reserve sets interest rates.

• Miran argued that easing regulatory burdens strengthens the economy’s supply side by boosting productivity, competition, and potential growth, allowing the economy to expand without fueling inflation. In his view, sustained deregulation can lower prices over time by removing supply constraints, which in turn supports a more accommodative monetary policy stance.

• He also warned that if central bankers fail to account for the deflationary effects of deregulation, policy risks becoming unnecessarily restrictive, potentially slowing growth just as supply-side reforms begin to take hold.

Travis Hill Sworn in as FDIC Chief

On Tuesday, Travis Hill was sworn in as the 23rd Chairman of the Federal Deposit Insurance Corporation (FDIC), following his service as Acting Chairman since January 2025 and as Vice Chairman since 2023.

• As Chairman, Hill will oversee implementation of major regulatory initiatives, including carrying out the GENIUS Act, reviewing and approving bank charters and merger applications, strengthening supervision and resolution planning, and guiding the FDIC’s approach to innovation, financial stability, and consumer protection.

December CPI Shows Steady Inflation but Renewed Pressure from Food Prices

On Tuesday, the Department of Labor Statistics (DOL) released its December CPI report, which showed inflation holding steady at year’s end, with headline price growth remaining moderate overall but rising food costs underscoring ongoing affordability challenges for consumers.

• Consumer prices rose 2.7 percent year over year in December, unchanged from November, while core inflation increased 2.6 percent, giving the Federal Reserve room to hold interest rates steady as it balances easing inflation against a cooling labor market.

• Food prices jumped 0.7 percent over the month, the largest one-month increase since October 2022, with notable increases in groceries such as beef, coffee, fruits, and vegetables, highlighting a politically sensitive area of inflation even as energy and gasoline prices declined.

On the Horizon

• January 21, 2026 @ 10:00 AM ET: “Oversight of the Department of Housing and Urban Development and the Federal Housing Administration” – House Financial Services Committee

• January 22, 2026 @ 10:00 AM ET: “Markup of Various Measures” – House Financial Services Committee

• January 23, 2026 @ 12:00 PM ET: “2026 Washington Auto Show” – The Washington Area New Automobile Dealers Association

Invariant Team Spotlight

We are pleased to welcome Republican strategists Kris Denzel and Ryan Dilworth to Invariant’s economic policy team.

Kris Denzel most recently served as Chief of Staff to Congressman Brad Knott (R-NC), overseeing the office’s policy, communications, and operational priorities. Before his tenure with Rep. Knott, Denzel was manager of government affairs at Caterpillar, representing the company before Congress, the executive branch, and foreign governments. His work focused on trade and international policy across the Asia‑Pacific and the Americas. He also held senior government affairs roles at DHL Express and the U.S. Chamber of Commerce, where he helped lead efforts to secure congressional passage of the United States‑Mexico‑Canada Agreement. Earlier, Denzel served as director of government affairs at the Global Business Alliance, representing the U.S. operations of leading international companies. He began his career on Capitol Hill, spending seven years working on trade and foreign policy issues.

Ryan Dilworth brings more than a decade of experience on Capitol Hill, advising senior Republican lawmakers on tax, trade, transportation, and infrastructure policy. Dilworth most recently served as Chief of Staff to Congresswoman Beth Van Duyne (R-TX), serving as principal advisor and strategist, overseeing legislative and political operations, and helping build the office’s policy and communications infrastructure. He previously served as the Congresswoman’s legislative director, leading work across the Ways and Means and Transportation and Infrastructure committees.

Contact Us

Carolyn Coda | Noah Marine | Jennie Jacoby | Alex Cisneros | Alden Knowlton | Kristopher Denzel | Ryan Dilworth | Peter Wells | Audrey Neumann | Ethan Billips | Ben Wiener

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Our Take: Welcome to the Thunderdome. Next week is set to be one of, if not the, most consequential for economic policy of the 119th Congress. Senators on both the Banking and Agriculture Committees will need to make significant headway in the coming days on numerous provisions of their respective digital asset market structure proposal to reach an agreement. If the Upper Chamber can advance a bipartisan package, the proposal still faces challenges in the House, where Financial Services Chair French Hill (R-AR) advanced the CLARITY Act last year and will seek to influence the Senate-led process. At the same time, all of Washington is bracing for a potential Supreme Court ruling on the Trump Administration’s tariff policy next week. An unfavorable ruling on the President’s use of authority under the International Emergency Economic Powers Act (IEEPA) could have major ramifications for the Administration’s economic agenda.

On the Hill

Crypto Market Structure Markups Expected Amid Senate Tensions

Bipartisan negotiators from the Senate Agriculture and Banking Committees met this week to try to resolve remaining disagreements over digital asset market structure legislation as both Committees prepare to mark up the package in the coming weeks.

• Senate Banking Committee Chairman Tim Scott (R-SC) has made clear he intends to proceed with a markup next Thursday, even though the two sides have yet to reach a consensus after six months of negotiations in the following areas:

  • Negotiations continue on token classification, including how and when a digital asset transitions from securities treatment and the respective roles of the SEC and CFTC.

  • DeFi and developer provisions, particularly the scope of statutory safe harbors, the treatment of front-end activity, and the role of “control” in determining regulatory status, remain central points of debate, as do efforts to balance those protections with existing enforcement authorities. Separately, talks are ongoing regarding illicit finance provisions, including whether additionaldefinitions or authorities are needed and how those provisions interact with developer and self-custody language.

  • Stablecoin rewards and yield have emerged as another late-stage issue, with Sen. Angela Alsobrooks (D-MD) leading efforts to explore a compromise that would permit rewards tied to transactional or network activity while limiting or prohibiting rewards that accrue solely from holding a stablecoin balance. This approach aims to avoid bank-like products without bank-like protections, consistent with congressional intent in the GENIUS Act.

  • Finally, Democrats continue to raise concerns about ethics and governance, including proposals on presidential ethics and technical provisions addressing SEC and CFTC quorum and operational authorities that could influence agency implementation after enactment.

• On Monday night, Senate Banking Committee Republicans, including Scott and Sens. Cynthia Lummis (R-WY), Bill Hagerty (R-TN), and Bernie Moreno (R-OH), delivered what they described as a “closing offer” to Democrats, outlining dozens of changes Republicans are willing to accept in exchange for maintaining certain priority provisions included in their September discussion draft.

• Meanwhile, Senate Agriculture Committee Chair John Boozman (R-AR) is expected to release a revised market structure draft in the coming days. The draft does not yet have the support of the committee’s lead Democratic negotiator, Sen. Cory Booker (D-NJ), though discussions are continuing.

House Subcommittee Deliberates the Future of Retirement Policy

On Wednesday, the House Committee on Education and the Workforce Subcommittee on Health, Employment, Labor, and Pensions (HELP) held a hearing on modernizing retirement policy to examine defined contribution plan design, longevity risk, and retirement policy solutions.

• Members emphasized expanding lifetime income options within employer-sponsored plans, including annuities, default investments, and clearer payout standards, while preserving participant choice and fiduciary protections.

• Democrats warned that stagnant wages and rising costs limit workers’ ability to annuitize their savings and deepen retirement inequality, while Republicans focused on strengthening defined contribution plans and reducing barriers for plan sponsors to offer lifetime income solutions.

In the Administration

Trump Targets Single-Family Housing, Mortgage Purchases in Affordability Push

On Wednesday, President Trump posted on Truth Social, announcing that he is “immediately taking steps to ban large institutional investors from buying more single-family homes, and I will be calling on Congress to codify it.” Trump followed up on Thursday, saying that the Administration would “BUY $200 BILLION DOLLARS IN MORTGAGE BONDS.”

• The President’s plan on single-family homes was met with both praise and skepticism from lawmakers. Senators Josh Hawley (R-MO) and Bernie Moreno (R-OH), who respectively sit on the Senate Judiciary and Banking Committees, both immediately signaled they plan to introduce legislation on the issue.

• Meanwhile, Senate Minority Leader Chuck Schumer (D-NY) argued that “Senate Democrats tried to do this last year,” but noted that “Republicans blocked it,” while Senate Banking Committee Ranking Member Elizabeth Warren (D-MA) claimed that President Trump was offering “empty promises” on housing reform.

• While most details surrounding the scope and scale of the single-family housing proposal are limited, Treasury Secretary Scott Bessent told an audience at the Economic Club of Minnesota that any restrictions on institutional investors’ portfolios “will not be retroactive.”

• Regarding the purchase of mortgage bonds, Federal Housing Finance Agency (FHFA) Director Bill Pulte signaled his readiness to direct Fannie Mae and Freddie Mac to facilitate the purchases, saying online, “We are on it, Mr. President!”

Our Take: In general, the President does not have the authority to unilaterally restrict private entities from buying single-family homes; such a restriction would require an act of Congress. As more details surrounding the President’s proposal emerge, several factors will be critical to determining the practical impact of any policy reforms. This will include a clear definition of “institutional investor,” along with Congress’s appetite for the proposal in an election year. Both proposals, however, indicate the Administration’s heightened interest in addressing affordability as a major theme in the upcoming midterm elections.

Treasury, OECD Reach Agreement on Global Tax

On Monday, the Treasury Department announced an agreement with the Organization for Economic Cooperation and Development (OECD) to exempt U.S.-headquartered companies from global minimum tax arrangements under the OECD’s Pillar 2. The deal was pushed by U.S. negotiators after Congress removed the Section 899 “revenge tax” from the One Big Beautiful Bill Act (OBBBA) in exchange for an international commitment not to impose additional taxes on U.S. multinationals under Pillar 2.

• The package includes simplification measures to reduce compliance burdens for multinational enterprises (MNEs) and tax authorities, including: (1) a new targeted substance-based tax incentive safe harbor to align global treatment of tax incentives, (2) new safe harbors for MNE groups headquartered in eligible jurisdictions that meet minimum tax requirements, and (3) an evidence-based stocktake process to maintain a level playing field among Inclusive Framework members.

• Lastly, the package reinforces qualified domestic minimum top-up taxes as the primary mechanism to protect local tax bases, especially for developing countries.

• In a statement, the Treasury Department praised the agreement for “recogniz[ing] the tax sovereignty of the United States over the worldwide operations of U.S companies and the tax sovereignty of other countries over business activity within their own borders.”

Job Report Offers Mixed Signals Amid a Cooling Labor Market

Today, the Bureau of Labor Statistics (BLS) released its December jobs report, showing that hiring remained subdued at year-end, capping off 2025 as the weakest year for job growth since the pandemic, even as unemployment edged lower and wages continued to rise modestly.

• Employers added 50,000 jobs in December, below expectations, bringing total job growth in 2025 to 584,000, far below prior years and the slowest pace since 2020, with significant downward revisions to October and November payrolls. The unemployment rate in December declined to 4.4 percent, down from 4.6 percent in November. 

• Job gains were concentrated in health care, food services, and social assistance, while retail and manufacturing continued to lose jobs. Wage growth remained steady at 3.8 percent year over year, suggesting some worker leverage persists even as hiring slows and job switching becomes more difficult.

• The mixed job report fuels the debate over further interest rate cuts as the Federal Reserve considers the possibility at its next Federal Open Market Committee (FOMC) meeting in late January. Amid a weaker job market, policymakers will now assess whether interest rate cuts are needed to reinvigorate the economy.

Fed Set to Remove Reputational Risk from Supervisory Standards

On Wednesday, Federal Reserve (Fed) Vice Chair for Supervision Michelle Bowman said in an address that the Fed will soon propose changes to redefine “unsafe and unsound” practices and remove reputational risk from its supervisory framework, aligning with recent actions by other banking regulators.

• Bowman indicated the Fed’s proposal will largely mirror joint efforts by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), shifting supervision toward material financial risks rather than reputational or ideological considerations amid broader concerns about debanking.

• She also previewed additional supervisory reforms, including revisiting asset thresholds used to classify banks and potentially incorporating business models into supervisory determinations, signaling a broader recalibration of bank oversight.

On the Horizon

• January 13, 2026 @ 10:00 AM EST: “Delivering for American Consumers: A Review of FinTech Innovations and Regulations” (House Financial Services Digital Assets, Financial Technology, and Artificial Intelligence Subcommittee)

• January 13, 2026 @ 2:00 PM EST: “Maintaining American Innovation and Technology Leadership” (House Ways and Means Trade Subcommittee)

• January 14, 2026 @ 10:00 AM EST: “Evaluating the Operations of the Committee on Foreign Investment in the United States (CFIUS)” (House Financial Services National Security, Illicit Finance, and International Financial Institutions Subcommittee)

• January 14, 2026 @ 2:00 PM EST: “Striking the Right Balance Sheet” (House Financial Services Task Force on Monetary Policy, Treasury Market Resilience, and Economic Prosperity)

• January 15, 2026 @ 3:00 PM EST: “2026 State of American Business” (U.S. Chamber of Commerce)

• January 15, 2026 @ 7:00 PM EST: “Discussion on the Future of Digital Money” (Economic Club of Washington, D.C.)

Contact Us

Carolyn Coda | Noah Marine | Jennie Jacoby | Alex Cisneros | Alden Knowlton | Kristopher Denzel | Ryan Dilworth | Peter Wells | Audrey Neumann | Ethan Billips | Ben Wiener

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Our Take: As we close the book on 2025, the shutdown clock is back on for congressional leaders. While there is very little appetite for a redo of the stare-down that occurred this Fall, the discord surrounding health care may place lawmakers in nearly the same position they found themselves in September. Potential retirement announcements from certain House Republicans in January would be a key data point in assessing Speaker Mike Johnson’s (R-LA) negotiating position entering the new year. Avoiding a partial government shutdown will be crucial to Congress’s ability to legislate during an election cycle, on topics ranging from cryptocurrency to a potential second reconciliation bill.

More information on what to expect in the new year can be found in Invariant’s 2026 Economic Policy Outlook.

On the Hill

HFSC Approves Various Bills in Multi-Day Markup

The House Financial Services Committee advanced 20 bills and one resolution over a two-day markup this week, headlined by the bipartisan Housing for the 21st Century Act, a sprawling package aimed at boosting housing supply, modernizing federal housing programs, expanding affordable and manufactured housing, and strengthening borrower protections.

• Committee Republicans framed the bill as a more targeted alternative to the Senate’s ROAD to Housing Act, while rejecting Democratic efforts to attach new funding, citing concerns about floor viability.

• In addition to housing legislation, the committee approved a slate of community banking, regulatory, and capital markets bills, as well as a short-term reauthorization of the National Flood Insurance Program through Sept. 30, 2026.

• Notably, the committee unanimously advanced the Bank-Fintech Partnership Enhancement Act, sponsored by Rep. Andy Barr (R-KY), which would require federal banking regulators to study how bank–fintech partnerships can support new bank formation and community bank health.

Senate Banking Punts Crypto Market Structure Markup to 2026

Senate Banking Committee Chair Tim Scott (R-SC) has delayed plans to markup a sweeping crypto market structure bill this year, with a committee vote now expected in early 2026 as negotiations continue.

• The delay follows several rounds of negotiations and multiple draft leaks to the media as the Senators continue to work through unresolved issues, including token classification, regulation of DeFi, stablecoin yield, and SEC and CFTC quorum and ethics language, which is being negotiated directly with the White House.

• Despite the slowdown, Scott and other negotiators say talks are progressing, with Senators recently meeting jointly with the crypto and traditional finance industries to push forward.

• House Financial Services Committee Chair French Hill (R-AR) said the Senate has had sufficient time for member education and debate and argued that the chamber should begin voting on market structure legislation. Hill reiterated his preference for the Senate to use the House-passed CLARITY Act, which cleared the House in July with broad bipartisan support, as a base text for amendments.

• If the Senate advances a revised market structure bill in 2026 that diverges materially from the CLARITY Act, the legislation will need to return to the House for further consideration before final passage. This compresses the legislative timeline and puts pressure on Congress to deliver a final bill to President Trump’s desk as midterm campaigning accelerates next year.

Senate Approves Key Nominations

Yesterday, the Senate voted en bloc, alongside other pending nominees, on the final confirmation of Michael Selig to serve as Chairman of the Commodity Futures Trading Commission (CFTC) and Travis Hill to serve as Chairman of the Federal Deposit Insurance Corporation (FDIC).

• Selig, currently a senior official with experience on crypto policy, would take the helm of the CFTC, while Hill would transition from his role as interim FDIC Chairman to the agency’s permanent leader.

• These confirmations are widely viewed as consequential for the regulatory direction of multiple policy priorities, including digital assets, derivatives markets, and banking oversight.

• The en bloc nomination package also included Ed Forst, who was nominated for Administrator of the General Services Administration. All nominees were confirmed in a 53 – 43 vote.

Other Notable Congressional Headlines:

• Senate Banking Holds Hearing on Fair Banking Access

In the Administration

FDIC Releases First GENIUS Act Implementation Guidance

The Federal Deposit Insurance Corporation (FDIC) issued its first proposed rule implementing the GENIUS Act, outlining how FDIC-supervised institutions can apply to issue payment stablecoins through subsidiaries. The notice of proposed rulemaking (NPRM) aims to establish a tailored application framework that would allow the agency to evaluate whether an institution meets statutory safety and soundness standards before approving stablecoin issuance.

• Under the proposal, the FDIC would assess factors such as capital, liquidity, and risk management. The NPRM also sets out application procedures, review timelines, and an appeals process for denied applications. Stakeholder comments will be due 60 days after publication in the Federal Register.

• In a statement, FDIC Chair Travis Hill emphasized that this is the agency’s first step in implementing the GENIUS Act, with additional rulemakings and guidance coming to provide further clarity.

• This action is the first concrete regulatory step by a federal banking regulator since the GENIUS Act was enacted in July, as the banking and crypto industries await parallel implementation efforts from other bank regulators.

SEC Crypto Task Force Examines Privacy Priorities

On Monday, the Securities and Exchange Commission’s (SEC) Crypto Task Force convened a roundtable to examine how financial surveillance frameworks intersect with privacy, civil liberties, and the migration of regulated financial activity onto the blockchain.

• SEC leadership and panelists raised concerns that legacy surveillance regimes, including the Bank Secrecy Act and tools like the Consolidated Audit Trail, may be ill-suited for decentralized technologies, warning against treating privacy-enhancing tools or non-custodial developers as inherently suspicious.

• Participants argued that privacy-preserving technologies, such as zero-knowledge proofs and selective disclosure, are essential for enabling compliant, on-chain financial markets without resorting to mass data collection. They emphasized that privacy is both a civil liberty and a functional requirement for market integrity and competitiveness.

SEC Holds Roundtable on National Market Structure Reforms

The SEC held a roundtable to discuss potential changes to a rule that prohibits trade-throughs in the National Market System (NMS). Rule 611, known as the Order Protection Rule and which seeks to ensure investors receive the best available price, has been under consideration for significant revisions at the securities regulator.

• Panel discussions considered the impact on other rules under Regulation NMS in the event of changes to the Order Protection Rule.

• Particular focus was placed on the role of caps to access fees, which brokers charge for order execution. Many panelists argued in favor of slight modifications to fee caps while stressing their importance to the National Best Bid and Offer (NBBO) system.

• Other topics included whether changes to Rule 611 would require changes to definitions under Rule 600 or guidance on best execution practices for brokers.

USTR Briefs Congress as SCOTUS Tariff Ruling Looms

U.S. Trade Representative Jamieson Greer briefed the House Ways and Means Committee and Senate Finance Committee on December 16 and 17 on the operation of the USMCA ahead of the July 1, 2026, joint review, telling lawmakers he has not yet decided whether to recommend a full 16-year extension of the agreement to President Trump.

• Separately, the Trump administration published a Federal Register notice retroactively reducing tariffs on imports from Switzerland and Liechtenstein from 39 percent to 15 percent, formalizing a trade agreement announced in November.

• In a White House address on Wednesday, President Trump again credited tariffs with supporting U.S. economic performance and announced a $1,776 “warrior dividend” for service members before Christmas, funded in part by tariff revenue.

• Meanwhile, the Administration continues to await a Supreme Court decision on the legality of the President’s use of national emergency authorities to impose tariffs. A decision is expected in January, according to Treasury Secretary Scott Bessent.

Deferred Data Gives Mixed Signals on Economy

Several tranches of economic data released this week showed easing inflation paired with a hiring slowdown, offering policymakers a murky picture of the overall economic outlook.

• On Thursday, the Bureau of Labor Statistics (BLS) released the shutdown-delayed November jobs report, which signaled a weakening U.S. labor market, characterized by modest and uneven job growth, rising unemployment, and slower wage gains.

• The BLS also released the November Consumer Price Index (CPI) report, also disrupted by the October shutdown, showing that inflation unexpectedly eased to 2.7 percent year over year and core inflation to 2.6 percent.

• This uncertainty about the state of the economy will continue to factor into the Federal Reserve’s monetary policy decision, with the next Federal Open Market Committee meeting set for January 26 and 27.

Contact Us

Carolyn Coda | Noah Marine | Jennie Jacoby | Alex Cisneros | Alden Knowlton | Peter Wells | Audrey Neumann | Ethan Billips | Ben Wiener

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