Washington Policy Pulse: Fed Chair, Bank Leverage, NDAA, and More

National Defense Authorization Act (NDAA)

• 🛡️ Lawmakers are close to finalizing language for the National Defense Authorization Act, with hopes of passage before year-end.
• 🤖 A key sticking point is preempting state laws on artificial intelligence, which is proving challenging early in the AI debate.

Banking Deregulation and Capital Rules

• 🏦 The Fed, FDIC, and OCC finalized the enhanced supplemental leverage ratio (ESLR), representing a first taste of deregulation for large banks.
• 💰 This change is expected to result in approximately $13 billion in capital returned to GSIBs (Globally Systemically Important Banks).
• 📈 The Basel 3 endgame proposal is anticipated next year, with potential increases in capital requirements that could be offset by a proposed GSIB surcharge reduction.
• 📊 Initial calculations suggest a potential $58 billion capital reduction for GSIB banks if the Basel 3 endgame and GSIB surcharge are implemented in a specific way.
• 🏛️ A House Financial Services Committee hearing will feature bank regulators discussing these and other deregulatory perspectives.

Federal Reserve Chair Nomination

• 🧑‍💼 President Trump has reportedly selected a new Federal Reserve Chair, with National Economic Council Director Kevin Hassett emerging as a frontrunner.
• 🗓️ If confirmed, Hassett would fill Dr. Myron's position in January, potentially becoming Fed Chair when Jerome Powell's term ends in May.
• ✅ Confirmation through the Senate is anticipated to be relatively straightforward.

Other Key Policy Updates

• 🩺 The ACA subsidies (Obamacare subsidies) are in a wait-and-see mode, with a potential vote on their extension before year-end, though premiums could rise if not extended.
• 📊 Appropriations bills are progressing slowly, with a plan to vote on five of the nine remaining bills, potentially reducing government shutdown risk.
• 🗳️ A special election in Tennessee is being closely watched for indicators of the blue wave's momentum.
• 🚀 Jared Isaacman's confirmation hearing for NASA Director is scheduled, highlighting his support for commercial space.
• 🇻🇪 An Oval Office meeting will address Venezuela, potentially impacting the energy sector.
• 🌾 A farm aid package of $12-13 billion is expected, though agricultural analysts suggest the industry prefers trade over aid.
• ⚖️ The Supreme Court's decision on an AIPA case regarding tariffs could lead to significant refunds and chaos if tariffs are found unlawful.