Washington Policy Pulse: Government Shutdown, Trump's Fed Pick, and Crypto

Government Shutdown Resolution

• 🏛️ The US is currently experiencing a partial government shutdown, with many DC workers not in the office.
• 🤝 The Senate has passed a bipartisan bill to fund five out of six appropriation bills, with the Department of Homeland Security (DHS) receiving a two-e continuing resolution.
• 📅 Despite political hurdles in the House, the shutdown is expected to end this week, likely by Tuesday or Wednesday.
• ⚠️ Speaker Johnson faces challenges in keeping the Republican party aligned due to the House not being involved in the initial Senate deal.

Kevin Warsh's Federal Reserve Nomination

• 👤 Senator Thom Tillis is blocking the confirmation of Kevin Warsh, President Trump's nominee for Fed chair, until a DOJ investigation involving Jerome Powell is resolved.
• 🚫 Tillis can effectively block the nomination from moving forward from the Senate Banking Committee.
• 📉 Bypassing the committee requires 60 votes, which is unlikely, and changing Senate rules would require 50 votes, also facing opposition.
• ⏳ It's anticipated that Warsh's nomination will be blocked unless the Powell investigation is resolved, and Trump has indicated a willingness to wait until 2027.

Cryptocurrency and Stablecoin Yield Debate

• 🗓️ A White House meeting is scheduled to discuss cryptocurrency and stablecoin yield, with representatives from banks and the crypto industry.
• ⚖️ The Senate recently passed its version of the Clarity Act, though negotiations are ongoing, particularly on the Senate Banking side.
• 💡 The proposed solution involves paying rewards based on activity, similar to airline credit card programs, rather than balances.
• 📈 There's a 60% chance of a bill passing in the first half of the year, influenced by potential shifts in House committee leadership.

Treasury Secretary Testimony

• 🎤 Treasury Secretary Scott Bessent will testify before the House Financial Services Committee on February 4th and the Senate Banking Committee on February 5th.
• 🏦 The House hearing is considered more significant due to its broader scope of questions regarding financial stability and bank deregulation.
• 🔍 Bessent is expected to provide insights on the timing of regulations like Basel 3 endgame and regional bank relief proposals.
• 🗣️ Discussions may also include topics like debanking and Operation Chokepoint 2.0.