1 00:00:02,560 --> 00:00:10,680 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is your weekly 2 00:00:10,840 --> 00:00:15,320 Speaker 1: Washington policy Pulse the Balance of Power Podcasts. I'm Joe Matthew. 3 00:00:15,600 --> 00:00:19,200 Speaker 1: Every Monday, Bloomberg Intelligence, senior policy analyst and friend of 4 00:00:19,200 --> 00:00:22,520 Speaker 1: the show, Nathan Dean shares his weekly call on upcoming 5 00:00:22,560 --> 00:00:25,760 Speaker 1: catalysts in the nation's capital. Listen for the most recent 6 00:00:25,760 --> 00:00:29,040 Speaker 1: and relevant policy research from our team at Bloomberg Intelligence. 7 00:00:29,280 --> 00:00:31,560 Speaker 1: Now with today's installment, here's Nathan Dean. 8 00:00:31,840 --> 00:00:33,680 Speaker 2: Good morning, Good afternoon, everybody. 9 00:00:33,720 --> 00:00:37,760 Speaker 3: Welcome again to the Bloomberg Intelligence Washington Policy Pulse. 10 00:00:37,840 --> 00:00:38,760 Speaker 2: My name is Nathan Dean. 11 00:00:38,800 --> 00:00:42,159 Speaker 3: I'm a senior policy host here in Bloomberg Intelligence in 12 00:00:42,159 --> 00:00:45,440 Speaker 3: the Washington DC Bureau, and we just want to extend 13 00:00:45,440 --> 00:00:48,479 Speaker 3: it also a welcome to our listeners coming to you 14 00:00:48,560 --> 00:00:50,680 Speaker 3: from the or coming to us from the Balance of 15 00:00:50,760 --> 00:00:53,440 Speaker 3: Power podcast. As I've said before in this call, this 16 00:00:53,520 --> 00:00:55,760 Speaker 3: call is also going to be included on the Monday 17 00:00:55,880 --> 00:00:59,120 Speaker 3: edition of the Balance of Power Podcasts. So certainly for 18 00:00:59,200 --> 00:01:01,600 Speaker 3: those folks who are listening to us from that vehicle, 19 00:01:01,600 --> 00:01:03,640 Speaker 3: if you'd like to attend these calls, which take place 20 00:01:03,960 --> 00:01:07,240 Speaker 3: Mondays at ten am, please feel free to reach to 21 00:01:07,480 --> 00:01:10,440 Speaker 3: reach out to me at ND ten at Bloomberg dot 22 00:01:10,480 --> 00:01:12,280 Speaker 3: net and we'll make sure that you have the invite 23 00:01:12,319 --> 00:01:15,800 Speaker 3: for that call. So first, let's talk government shutdown. We 24 00:01:15,840 --> 00:01:20,200 Speaker 3: have a led eleven legislative days until September thirtieth. It's 25 00:01:20,240 --> 00:01:23,120 Speaker 3: not a lot of time until the government is scheduled 26 00:01:23,160 --> 00:01:25,440 Speaker 3: to shut down. As a reminder, the US fiscal year 27 00:01:25,760 --> 00:01:28,800 Speaker 3: goes through October first. Now, I've said before in this call, 28 00:01:28,840 --> 00:01:30,440 Speaker 3: and I'll say it again that I think we're at 29 00:01:30,440 --> 00:01:32,920 Speaker 3: a forty percent chance of a shutdown, and that's fairly 30 00:01:33,040 --> 00:01:35,520 Speaker 3: high for me. If you've covered shutdowns with me in 31 00:01:35,560 --> 00:01:37,680 Speaker 3: the past, you know that I rarely ever get above 32 00:01:37,680 --> 00:01:39,920 Speaker 3: twenty five or thirty percent. I find I'm a little 33 00:01:39,920 --> 00:01:42,080 Speaker 3: bit higher right now because of the amount of the 34 00:01:42,080 --> 00:01:44,959 Speaker 3: political rhetoric that we're seeing coming out of both the 35 00:01:44,959 --> 00:01:47,800 Speaker 3: White House and Congress. But let me explain why I 36 00:01:47,880 --> 00:01:49,880 Speaker 3: don't think there is going to be a government shutdown. 37 00:01:50,080 --> 00:01:52,360 Speaker 3: And I should also preface by saying that pretty much 38 00:01:52,480 --> 00:01:55,360 Speaker 3: no shutdowns that we've looked at have much of an 39 00:01:55,400 --> 00:01:58,880 Speaker 3: impact on markets or on companies. There is tend to 40 00:01:58,920 --> 00:02:01,680 Speaker 3: be some headline risks associated with government shutdowns. You'll see 41 00:02:01,680 --> 00:02:04,360 Speaker 3: a lot of scary headlines, but from the market's perspective, 42 00:02:04,360 --> 00:02:05,680 Speaker 3: there really is no impact. 43 00:02:06,200 --> 00:02:07,960 Speaker 2: So why do I think there's not going to be 44 00:02:08,000 --> 00:02:08,560 Speaker 2: a shutdown? 45 00:02:08,600 --> 00:02:11,919 Speaker 3: Well, look, when it comes to the Republicans, the Republicans 46 00:02:11,960 --> 00:02:14,720 Speaker 3: want to extend the government and they do not want 47 00:02:14,760 --> 00:02:17,360 Speaker 3: a shutdown. They certainly don't want to shut down in 48 00:02:17,400 --> 00:02:19,920 Speaker 3: an election year. And President Trump is said that he 49 00:02:19,919 --> 00:02:22,919 Speaker 3: would prefer a one year cr to get this passed, 50 00:02:23,400 --> 00:02:25,560 Speaker 3: or at least close to the election of next year, 51 00:02:25,600 --> 00:02:28,040 Speaker 3: because there is never going to be a government shutdown 52 00:02:28,400 --> 00:02:31,400 Speaker 3: thirty days before an election. And so you are seeing 53 00:02:31,480 --> 00:02:33,400 Speaker 3: language from the Republicans saying that they would like to 54 00:02:33,480 --> 00:02:36,239 Speaker 3: kick the can potentially up to a year to try 55 00:02:36,240 --> 00:02:39,320 Speaker 3: and push this off and to have additional time to 56 00:02:39,360 --> 00:02:40,880 Speaker 3: work out appropriations bills. 57 00:02:41,600 --> 00:02:43,880 Speaker 2: I don't think many appropriations bills are going to pass. 58 00:02:43,919 --> 00:02:45,880 Speaker 3: I think the NDAA is one, but I don't think 59 00:02:45,880 --> 00:02:48,079 Speaker 3: many of them are going to pass, And as a result, 60 00:02:48,120 --> 00:02:50,720 Speaker 3: I think a continuing resolution, most likely in December, is 61 00:02:50,760 --> 00:02:53,720 Speaker 3: the most likely outcome here. From the democratic perspective, it's 62 00:02:53,760 --> 00:02:55,959 Speaker 3: a little bit trickier because a lot of the folks 63 00:02:55,960 --> 00:02:58,959 Speaker 3: on the progressive side want to be seen fighting President Trump. 64 00:02:59,320 --> 00:03:02,320 Speaker 3: But the question, and I often ask myself is that, Okay, 65 00:03:02,720 --> 00:03:04,840 Speaker 3: if you get into a situation where the government is 66 00:03:04,840 --> 00:03:07,919 Speaker 3: shutting down and you potentially, potentially could take the blame 67 00:03:07,960 --> 00:03:10,120 Speaker 3: for this, what is the endgame and what is the 68 00:03:10,120 --> 00:03:13,519 Speaker 3: strategy here to try and win votes in twenty twenty six. 69 00:03:13,919 --> 00:03:16,240 Speaker 3: And even though it may be popular for progressives to 70 00:03:16,240 --> 00:03:18,760 Speaker 3: be seen fighting President Trump when it comes to Senate 71 00:03:18,800 --> 00:03:22,480 Speaker 3: Minority Leader Chuck Schumer or House Minority Leader Hakim Jeffries, 72 00:03:22,680 --> 00:03:25,480 Speaker 3: we're trying to reach out to also independent voters. A 73 00:03:25,560 --> 00:03:28,680 Speaker 3: shutdown may not be the best thing, especially as you're 74 00:03:28,720 --> 00:03:29,560 Speaker 3: trying to build. 75 00:03:29,320 --> 00:03:30,720 Speaker 2: Momentum into twenty twenty six. 76 00:03:30,760 --> 00:03:32,639 Speaker 3: Now, look, I don't think anybody's going to go into 77 00:03:32,639 --> 00:03:35,160 Speaker 3: the voting vote in November of next year and say, look, 78 00:03:35,400 --> 00:03:37,240 Speaker 3: I'm going to vote a certain way because of what 79 00:03:37,440 --> 00:03:40,880 Speaker 3: happened in the government shutdown fight of September of twenty 80 00:03:40,920 --> 00:03:41,520 Speaker 3: twenty five. 81 00:03:41,960 --> 00:03:44,280 Speaker 2: But it's all about momentum and the other thing. 82 00:03:44,120 --> 00:03:46,000 Speaker 3: That's keeping I think the Democrats a little bit of 83 00:03:46,000 --> 00:03:48,400 Speaker 3: pause in terms of shutting the government down is because 84 00:03:48,440 --> 00:03:50,480 Speaker 3: of OMB director Russ Vote. 85 00:03:50,840 --> 00:03:54,680 Speaker 2: Now. Former OMB director mcmlveney came on bloomber. 86 00:03:54,360 --> 00:03:56,560 Speaker 3: Television last week and he was actually talking about how 87 00:03:56,600 --> 00:03:59,280 Speaker 3: he wished that he was Russ Vote, and that he 88 00:03:59,400 --> 00:04:01,720 Speaker 3: wished that he is in this situation because the power 89 00:04:01,720 --> 00:04:04,240 Speaker 3: that the OMB has, the O ANDB, is the one 90 00:04:04,240 --> 00:04:06,839 Speaker 3: that would decide which government workers are essential and which 91 00:04:06,880 --> 00:04:09,840 Speaker 3: ones are non essential. And if we get into a 92 00:04:09,880 --> 00:04:12,520 Speaker 3: scenario where Director Vote says, look, I'm going to say 93 00:04:12,600 --> 00:04:14,320 Speaker 3: ninety percent of the US government. 94 00:04:14,160 --> 00:04:15,000 Speaker 2: Is not essential. 95 00:04:15,360 --> 00:04:17,680 Speaker 3: They all can go home and let's see if we 96 00:04:17,720 --> 00:04:19,359 Speaker 3: can work with the government shut down for three to 97 00:04:19,400 --> 00:04:19,800 Speaker 3: four months. 98 00:04:19,839 --> 00:04:21,600 Speaker 2: I mean, there have been folks on the Republican side 99 00:04:21,600 --> 00:04:22,080 Speaker 2: of the past and. 100 00:04:22,120 --> 00:04:24,240 Speaker 3: Said, look, let's have a government shutdown on Let's just 101 00:04:24,240 --> 00:04:26,800 Speaker 3: see what happens, because you know, you could get into 102 00:04:26,800 --> 00:04:29,120 Speaker 3: a situation where eighty five or ninety percent of the 103 00:04:29,120 --> 00:04:31,839 Speaker 3: government workers go home and they may not come back. 104 00:04:32,160 --> 00:04:34,120 Speaker 3: So I think from the Democrat point of view is 105 00:04:34,120 --> 00:04:36,760 Speaker 3: that yes, they would like to be seen fighting President Trump, 106 00:04:36,800 --> 00:04:39,440 Speaker 3: but ultimately I don't see where there's an endgame here 107 00:04:39,640 --> 00:04:42,320 Speaker 3: where it works out. Shutdowns occur when the party thinks 108 00:04:42,320 --> 00:04:45,320 Speaker 3: that it's politically advantageous to themselves, and if you get 109 00:04:45,360 --> 00:04:48,320 Speaker 3: an extension into December, then you always have another time 110 00:04:48,400 --> 00:04:49,640 Speaker 3: or another bite at the apple. 111 00:04:49,400 --> 00:04:50,400 Speaker 2: To have a shutdown. 112 00:04:51,279 --> 00:04:53,960 Speaker 3: I would also just say when it comes to government shutdowns, 113 00:04:54,520 --> 00:04:57,040 Speaker 3: keep an eye out from us past pieces of legislation. 114 00:04:57,760 --> 00:04:59,599 Speaker 3: You may have heard me talk about this in the past, 115 00:04:59,600 --> 00:05:01,680 Speaker 3: and in this case, in this area scenario, I think 116 00:05:01,680 --> 00:05:05,440 Speaker 3: it's Senator Durban and Senator Marshall's Credit Card Competition Act. 117 00:05:05,720 --> 00:05:08,040 Speaker 3: What happens is is that when folks they call them 118 00:05:08,080 --> 00:05:11,640 Speaker 3: Christmas tree bills, because you hang this bill on a tree, 119 00:05:12,240 --> 00:05:15,320 Speaker 3: meaning you hang this piece of legislation on another piece 120 00:05:15,360 --> 00:05:19,120 Speaker 3: of legislation and bypass regular order and use that legislation 121 00:05:19,240 --> 00:05:22,320 Speaker 3: to get it to the President's desk. In this case, 122 00:05:22,360 --> 00:05:24,280 Speaker 3: I think what would happen is, don't be surprised if 123 00:05:24,320 --> 00:05:26,280 Speaker 3: Senator Marshall comes out there and says, look, at the 124 00:05:26,360 --> 00:05:28,679 Speaker 3: last minute, I'm going to try and attach my Credit 125 00:05:28,680 --> 00:05:32,360 Speaker 3: Card Competition Act to the government shutdown extension, the Continuing 126 00:05:32,400 --> 00:05:35,000 Speaker 3: Resolution and see if I can get away to pass it, 127 00:05:35,080 --> 00:05:38,520 Speaker 3: because you know, look, it just it makes things a 128 00:05:38,520 --> 00:05:40,919 Speaker 3: little bit more difficult. And the long story short, and 129 00:05:40,920 --> 00:05:43,560 Speaker 3: maybe you know this may be too long, but if 130 00:05:43,560 --> 00:05:45,719 Speaker 3: you go back to the early days at Dodd Frank, 131 00:05:46,040 --> 00:05:48,679 Speaker 3: we had a situation where there was a government shutdown 132 00:05:48,760 --> 00:05:51,920 Speaker 3: right before the holidays, and President Obama at the time 133 00:05:53,360 --> 00:05:56,000 Speaker 3: was trying to figure out do I have a government shutdown. 134 00:05:56,000 --> 00:05:58,640 Speaker 3: He's negotiating with a Republican House, and a couple of 135 00:05:58,640 --> 00:06:01,719 Speaker 3: folks on the Republican side said, look, why don't we 136 00:06:01,760 --> 00:06:05,400 Speaker 3: attach as a Christmas tree bill a repeal of the 137 00:06:05,440 --> 00:06:07,920 Speaker 3: swaps push up provision of dot frank. Now, you remem 138 00:06:08,000 --> 00:06:10,520 Speaker 3: remember back at the time, this was a provision that 139 00:06:10,800 --> 00:06:14,560 Speaker 3: required these investment banks to push their swaps away from 140 00:06:14,560 --> 00:06:18,240 Speaker 3: their fdiiced insured affiliates. And so the Republicans attached it 141 00:06:18,279 --> 00:06:21,279 Speaker 3: to a government shunting bill or a government continuing resolution, 142 00:06:21,760 --> 00:06:24,279 Speaker 3: They sent it to the President's desk, the House passed it, 143 00:06:24,320 --> 00:06:25,240 Speaker 3: and they all left town. 144 00:06:25,600 --> 00:06:27,960 Speaker 2: And they all said President Obama, fine, we've left town. 145 00:06:28,320 --> 00:06:30,599 Speaker 3: So you can either sign this and repeal the swaps 146 00:06:30,640 --> 00:06:33,120 Speaker 3: push up provision, or you can shut the government down 147 00:06:33,560 --> 00:06:35,760 Speaker 3: and we'll have this fight in December or in January, 148 00:06:35,839 --> 00:06:38,920 Speaker 3: and you potentially could take the political blame. And President 149 00:06:38,920 --> 00:06:41,280 Speaker 3: Obama was backed into a political back corner, and he 150 00:06:41,360 --> 00:06:43,960 Speaker 3: ultimately signed the deal, and as a result, the swaps 151 00:06:43,960 --> 00:06:46,080 Speaker 3: push up provision of dot frank is no more. 152 00:06:46,520 --> 00:06:48,880 Speaker 2: Now this tactic is well known. Everybody on both sides 153 00:06:48,880 --> 00:06:50,159 Speaker 2: of the Nile knows this tactic. 154 00:06:50,440 --> 00:06:55,160 Speaker 3: But when you get into these situations right around thirteen twelve, 155 00:06:55,200 --> 00:06:58,920 Speaker 3: eleven days in advance, keep your eyes out because that's 156 00:06:58,960 --> 00:07:00,640 Speaker 3: what could potentially occur. And when it comes to this 157 00:07:00,640 --> 00:07:04,000 Speaker 3: credit card Competition Act, if you've flown through LaGuardia or 158 00:07:04,040 --> 00:07:07,000 Speaker 3: Newark or Dallas, you've seen the ads that this would 159 00:07:07,040 --> 00:07:10,720 Speaker 3: create more competition for Visa and MasterCard. The banks don't 160 00:07:10,760 --> 00:07:12,840 Speaker 3: like this, and the airlines certainly don't like this, but 161 00:07:12,880 --> 00:07:16,040 Speaker 3: the retailers would. So a couple other things that you're 162 00:07:16,040 --> 00:07:17,720 Speaker 3: going to see this week, You're going to see the 163 00:07:17,720 --> 00:07:22,720 Speaker 3: Senate change the rules on nominees. John Thune, the majority 164 00:07:22,800 --> 00:07:25,200 Speaker 3: leader in the Senate, just said today that they're going 165 00:07:25,240 --> 00:07:27,200 Speaker 3: to be doing this. They're going to change sort of 166 00:07:27,200 --> 00:07:29,360 Speaker 3: the nomination rules and the timing of when they can 167 00:07:29,360 --> 00:07:32,000 Speaker 3: put nominees through. It's going to make make it much 168 00:07:32,120 --> 00:07:36,640 Speaker 3: faster for Republicans to speed up its nomination process and 169 00:07:36,680 --> 00:07:40,000 Speaker 3: get a lot more President Trump's folks into their positions. 170 00:07:40,280 --> 00:07:42,880 Speaker 3: Same thing will happen to with the Democrats control this House, 171 00:07:42,920 --> 00:07:45,200 Speaker 3: are the Senate and the Presidency in the future, so 172 00:07:45,320 --> 00:07:48,520 Speaker 3: it's really not much of a a dramatic change here, 173 00:07:48,560 --> 00:07:50,640 Speaker 3: But I would just say is that I don't think 174 00:07:50,680 --> 00:07:53,120 Speaker 3: this is going to impact the government's shutdown and fight 175 00:07:53,760 --> 00:07:54,520 Speaker 3: all that much. 176 00:07:55,320 --> 00:07:56,160 Speaker 2: Other things going on. 177 00:07:56,320 --> 00:07:59,400 Speaker 3: Well, last Friday, the Senate Banking Committee released an updated 178 00:07:59,480 --> 00:08:02,040 Speaker 3: version of the Crypto Bill. This is the Responsible Financial 179 00:08:02,040 --> 00:08:06,360 Speaker 3: Innovation Act. This is the Senate version of the Clarity Act, 180 00:08:06,360 --> 00:08:08,840 Speaker 3: which we've talked about on this call before. And I 181 00:08:08,920 --> 00:08:11,320 Speaker 3: should also note that this is the Senate Banking version 182 00:08:11,360 --> 00:08:13,800 Speaker 3: of it. We're still awaiting the Senate ag version of it. 183 00:08:14,200 --> 00:08:16,600 Speaker 3: The real big difference is between what the Senate Banking 184 00:08:16,640 --> 00:08:19,600 Speaker 3: Committee released on Friday versus what they released previously is 185 00:08:19,600 --> 00:08:22,200 Speaker 3: that they included a little bit more language about the 186 00:08:22,200 --> 00:08:25,280 Speaker 3: Commodity Futures Trading Commission, asking the SEC and the CFTC 187 00:08:25,440 --> 00:08:28,640 Speaker 3: to come together and actually write joint rules on how 188 00:08:28,880 --> 00:08:31,800 Speaker 3: they will manage crypto. A lot of the Senate agg 189 00:08:31,920 --> 00:08:34,120 Speaker 3: language that we're anticipating later is going to be dealing 190 00:08:34,120 --> 00:08:35,520 Speaker 3: with this. So I don't think it's going to really 191 00:08:35,559 --> 00:08:37,480 Speaker 3: change things all that much, and I'm still at a 192 00:08:37,480 --> 00:08:39,440 Speaker 3: seventy percent chance that this bill can pass in the 193 00:08:39,440 --> 00:08:42,000 Speaker 3: beginning of next year. The Senate Banking Committee is hoping 194 00:08:42,000 --> 00:08:44,120 Speaker 3: to get this out of committee by the end of 195 00:08:44,120 --> 00:08:46,720 Speaker 3: this month. We'll see what happens with the government shutdown. 196 00:08:46,760 --> 00:08:49,440 Speaker 3: Maybe they maybe have that committee or not. I don't know, 197 00:08:50,240 --> 00:08:52,640 Speaker 3: but I do think a couple of Democrats will eventually 198 00:08:52,640 --> 00:08:55,040 Speaker 3: go with this, and I think come early next year 199 00:08:55,240 --> 00:08:57,760 Speaker 3: they'll be able to get this done. A couple of 200 00:08:57,800 --> 00:09:00,440 Speaker 3: things on the regulatory side that don't want to talk about. First, 201 00:09:00,440 --> 00:09:02,520 Speaker 3: on private funds, I put out a piece of research 202 00:09:02,600 --> 00:09:05,560 Speaker 3: last week talking about what the SEC could do in 203 00:09:05,640 --> 00:09:09,280 Speaker 3: terms of enhancing private markets. You know, we've talked about 204 00:09:09,320 --> 00:09:12,200 Speaker 3: the Department of Labors four to one K changes on 205 00:09:12,240 --> 00:09:14,440 Speaker 3: this call before this is where the you know, President 206 00:09:14,480 --> 00:09:18,160 Speaker 3: Trump released an executive order ordering four on one K 207 00:09:18,320 --> 00:09:21,520 Speaker 3: providers to be able to include alternative investments like private 208 00:09:21,520 --> 00:09:24,160 Speaker 3: equity or also crypto. We're still waiting on the Department 209 00:09:24,160 --> 00:09:26,280 Speaker 3: of Labor to move forward on a proposal on that. 210 00:09:26,640 --> 00:09:29,880 Speaker 3: But from the SEC perspective, I also anticipate the SEC 211 00:09:29,920 --> 00:09:32,320 Speaker 3: sometimes over the next six to nine twelve months to 212 00:09:32,360 --> 00:09:36,760 Speaker 3: start looking at things like regulation, a regulation crowdfunding changes 213 00:09:36,800 --> 00:09:40,360 Speaker 3: to the accredited credited investor definition. It's not going to 214 00:09:40,480 --> 00:09:44,360 Speaker 3: dramatically change assets under management for the private equity folks 215 00:09:44,520 --> 00:09:48,240 Speaker 3: or the alternative asset managers more likely. But I definitely 216 00:09:48,400 --> 00:09:50,480 Speaker 3: keep an eye on this because you know, I wouldn't 217 00:09:50,480 --> 00:09:52,240 Speaker 3: saw this, I wouldn't call this a top priority for 218 00:09:52,280 --> 00:09:55,199 Speaker 3: the SEC, but certainly keep an eye on this over 219 00:09:55,280 --> 00:09:57,240 Speaker 3: the next six to twelve months and for what it's 220 00:09:57,240 --> 00:09:58,920 Speaker 3: worth on the SEC, and I should say for all 221 00:09:58,920 --> 00:10:02,359 Speaker 3: the regulators. Just let this week they released their regulatory agendas. 222 00:10:03,240 --> 00:10:05,400 Speaker 3: Not sure if many people know this, but twice a year, 223 00:10:05,559 --> 00:10:08,640 Speaker 3: all the agencies in the federal government, from the SEC 224 00:10:08,800 --> 00:10:12,080 Speaker 3: to the Farm Bureau to the to the Federal Reserve, 225 00:10:12,360 --> 00:10:15,000 Speaker 3: they release what's called their regulatory agendas, and they list 226 00:10:15,040 --> 00:10:18,160 Speaker 3: out all the rules that they're contemplating or they're considering. 227 00:10:18,440 --> 00:10:21,079 Speaker 3: Now in the funny space is that pretty much all 228 00:10:21,080 --> 00:10:22,880 Speaker 3: of the SEC's rules say. 229 00:10:22,720 --> 00:10:24,199 Speaker 2: That they're going to move on it by April of 230 00:10:24,240 --> 00:10:25,000 Speaker 2: twenty twenty six. 231 00:10:25,559 --> 00:10:27,439 Speaker 3: They just put that date because they really don't know 232 00:10:27,480 --> 00:10:29,120 Speaker 3: when they're going to move on it, and they're never 233 00:10:29,200 --> 00:10:31,079 Speaker 3: held to it. But it does give you an indication 234 00:10:31,200 --> 00:10:34,120 Speaker 3: of which rules they're considering. And in the SEC's case, 235 00:10:34,120 --> 00:10:36,360 Speaker 3: they had two rules. They had one just called crypto rules, 236 00:10:36,440 --> 00:10:38,360 Speaker 3: very broad, I know, and the second one they called 237 00:10:38,360 --> 00:10:42,000 Speaker 3: crypto market structure, again very broad, but the private fund 238 00:10:42,040 --> 00:10:45,120 Speaker 3: aspect of it was more so, I think a second tiery, 239 00:10:45,160 --> 00:10:47,440 Speaker 3: So you'd see that towards the end of twenty twenty six, 240 00:10:47,800 --> 00:10:51,200 Speaker 3: things like disclosures, executive compensation disclosures, and so forth. So 241 00:10:51,360 --> 00:10:53,600 Speaker 3: I'm going to be going through those regulatory agendas this week, 242 00:10:53,640 --> 00:10:55,200 Speaker 3: so if you have any questions on that, just feel 243 00:10:55,200 --> 00:10:58,280 Speaker 3: free to reach out and i'll talk about that. Last 244 00:10:58,280 --> 00:11:01,360 Speaker 3: thing on the regulatory front is we read through most 245 00:11:01,400 --> 00:11:02,959 Speaker 3: of the comment letters, or at least most of the 246 00:11:03,000 --> 00:11:05,480 Speaker 3: key comment letters when it came to the Fed's proposal 247 00:11:05,480 --> 00:11:07,440 Speaker 3: and the Enhanced supplementally Leverage ratio. 248 00:11:07,480 --> 00:11:08,480 Speaker 2: This is the ESLR. 249 00:11:08,880 --> 00:11:10,640 Speaker 3: So if you're looking at the big banks, if you're 250 00:11:10,640 --> 00:11:13,280 Speaker 3: looking like a Bank America or JP Morgan, currently the 251 00:11:13,440 --> 00:11:16,280 Speaker 3: sl is required to be at a five percent leverage ratio. 252 00:11:16,520 --> 00:11:18,800 Speaker 3: This would drop it to three percent plus fifty percent 253 00:11:18,880 --> 00:11:21,480 Speaker 3: of a g SIP surcharge, so you're looking around three 254 00:11:21,480 --> 00:11:23,440 Speaker 3: and a half to four point four percent, depending on 255 00:11:23,480 --> 00:11:27,040 Speaker 3: the bank. Now, I read most of the comment letters, 256 00:11:27,160 --> 00:11:30,120 Speaker 3: and I really had three themes from these comment letters 257 00:11:30,160 --> 00:11:32,400 Speaker 3: as we think what the Fed's going to do. The 258 00:11:32,440 --> 00:11:35,200 Speaker 3: first one is most of the market participants were comfortable 259 00:11:35,240 --> 00:11:37,480 Speaker 3: with this idea of going from five percent to three 260 00:11:37,520 --> 00:11:40,440 Speaker 3: percent plus a fifty percent GESIP surcharge. There wasn't much 261 00:11:40,800 --> 00:11:44,080 Speaker 3: discord over that. The main question was what do we 262 00:11:44,160 --> 00:11:48,160 Speaker 3: do from treasuries from the denominator, because you recall Secretary 263 00:11:48,160 --> 00:11:51,040 Speaker 3: Bessett has said that the ESLR is a restriction on treasuries, 264 00:11:51,080 --> 00:11:52,880 Speaker 3: and there's been a lot of ideas out there to 265 00:11:53,080 --> 00:11:56,720 Speaker 3: exclude treasuries from the ESLR, and eighteen months ago I 266 00:11:56,720 --> 00:11:59,280 Speaker 3: thought it was going to happen, but instead the proposal 267 00:11:59,320 --> 00:12:02,080 Speaker 3: came out and did not exclude treasuries from the SLR. 268 00:12:02,400 --> 00:12:05,240 Speaker 3: And instead, these market participants said in these letters, and 269 00:12:05,280 --> 00:12:08,840 Speaker 3: I'm paraphrasing here, we wish that the regulators would just 270 00:12:08,960 --> 00:12:12,560 Speaker 3: reaffirm their ability to exclude treasuries from the denominator of 271 00:12:12,600 --> 00:12:15,679 Speaker 3: the ESLR in times of stress. AKA, if we get 272 00:12:15,679 --> 00:12:18,200 Speaker 3: into another situation like we did during the COVID pandemic 273 00:12:18,480 --> 00:12:20,600 Speaker 3: and the FED says, look, you can just exclude treasuries 274 00:12:20,600 --> 00:12:23,199 Speaker 3: from the ESLR and you're good to go. As long 275 00:12:23,240 --> 00:12:25,439 Speaker 3: as the regulators reaffirm that they have that right, I 276 00:12:25,480 --> 00:12:27,839 Speaker 3: think the market participants will be fine and then the 277 00:12:27,880 --> 00:12:29,800 Speaker 3: last thing was somewhat interesting is a lot of folks 278 00:12:29,880 --> 00:12:32,920 Speaker 3: were actually asking for changes to the long term debt 279 00:12:33,000 --> 00:12:35,839 Speaker 3: and to the t LAC rules. If we go back 280 00:12:35,880 --> 00:12:37,400 Speaker 3: to some of the calls that we had almost a 281 00:12:37,480 --> 00:12:39,960 Speaker 3: year ago, the Office of the Control of the Currency 282 00:12:40,040 --> 00:12:42,400 Speaker 3: had a proposal on retail our long term debt for 283 00:12:42,640 --> 00:12:46,080 Speaker 3: regional banks. I think that's gone. I don't think so. 284 00:12:46,160 --> 00:12:48,839 Speaker 3: I think this was these letters were geared towards more 285 00:12:48,880 --> 00:12:52,280 Speaker 3: of like asking the occ to officially rescind that proposal 286 00:12:52,360 --> 00:12:54,800 Speaker 3: rather than keeping it on the books and then changes 287 00:12:54,840 --> 00:12:56,960 Speaker 3: the TA lack. I don't think it's coming anytime soon, 288 00:12:57,080 --> 00:13:00,960 Speaker 3: unless it's small, minor changes. You know, we've talked about 289 00:13:00,960 --> 00:13:03,360 Speaker 3: what the FEDS are going to do on being capital 290 00:13:03,400 --> 00:13:06,199 Speaker 3: before and so puzza three in game, Jesus of charge 291 00:13:06,240 --> 00:13:09,400 Speaker 3: stress capital for stress testing and so forth, and just 292 00:13:09,400 --> 00:13:11,240 Speaker 3: for what it's worth, you know, I think a couple 293 00:13:11,280 --> 00:13:13,000 Speaker 3: of those proposals from the Fed could be out as 294 00:13:13,000 --> 00:13:14,760 Speaker 3: soon as next week or the week after. 295 00:13:14,840 --> 00:13:16,520 Speaker 2: So my spidy sense is tingling on that. 296 00:13:17,280 --> 00:13:20,160 Speaker 3: The last two things are more on the geopolitical front. 297 00:13:20,880 --> 00:13:23,280 Speaker 3: President Trump just said over the weekend that he's not 298 00:13:23,440 --> 00:13:26,800 Speaker 3: happy with Russia and his patients is running thin again 299 00:13:26,880 --> 00:13:31,400 Speaker 3: my words I'm paraphrasing here over Russia Ukraine negotiations. As 300 00:13:31,440 --> 00:13:34,280 Speaker 3: a result, I'm going to be looking for language coming 301 00:13:34,280 --> 00:13:37,400 Speaker 3: from Senator Lindsay Graham to potentially move forward his Russian 302 00:13:37,440 --> 00:13:39,880 Speaker 3: Sanctions bill. This is the bill that would allow the 303 00:13:39,880 --> 00:13:43,240 Speaker 3: President as a tool to implement up to five hundred percent, sorry, 304 00:13:43,280 --> 00:13:46,840 Speaker 3: at least five hundred percent tariffs on countries that purchase 305 00:13:46,920 --> 00:13:51,800 Speaker 3: Russia oil, including Russia, but other countries like China, Turkey, India, 306 00:13:51,840 --> 00:13:54,600 Speaker 3: and Brazil. So again, my spidy sense is tingling on 307 00:13:54,640 --> 00:13:56,800 Speaker 3: this one, So look for headlines to start popping up 308 00:13:56,800 --> 00:13:58,559 Speaker 3: next week or maybe even this week on it. 309 00:13:58,920 --> 00:14:00,720 Speaker 2: And then finally it happened Friday nights. 310 00:14:00,720 --> 00:14:03,720 Speaker 3: But in response to some of the EU finds that 311 00:14:03,920 --> 00:14:07,480 Speaker 3: Google and rest of the technology sector has been talking about, 312 00:14:07,520 --> 00:14:10,400 Speaker 3: President Trump threatened to Section three oh one investigation on 313 00:14:10,559 --> 00:14:13,160 Speaker 3: Europe for that. So we're waiting to see if we 314 00:14:13,200 --> 00:14:15,960 Speaker 3: get any more headwinds out of that later this week. 315 00:14:16,440 --> 00:14:18,319 Speaker 3: So I'm going to stop there. I'm going to say 316 00:14:18,360 --> 00:14:20,520 Speaker 3: thank you very much for attending. We always appreciate it, 317 00:14:20,560 --> 00:14:21,640 Speaker 3: thank you for listening. 318 00:14:21,360 --> 00:14:22,920 Speaker 2: And we wish you a great week. Thank you. 319 00:14:25,320 --> 00:14:29,200 Speaker 1: Our thanks to Nathan Dean, Bloomberg Intelligence Senior policy analyst, 320 00:14:29,280 --> 00:14:32,960 Speaker 1: bringing you the latest installment of his weekly Washington Policy Pulse. 321 00:14:33,360 --> 00:14:36,160 Speaker 1: For more from BI or to join this call live 322 00:14:36,360 --> 00:14:40,040 Speaker 1: each week, you can email Nathan at ndan at Bloomberg 323 00:14:40,120 --> 00:14:43,920 Speaker 1: dot net. That's nd EA n at Bloomberg dot net 324 00:14:44,080 --> 00:14:46,520 Speaker 1: and come back to the podcast later today for the 325 00:14:46,560 --> 00:14:48,320 Speaker 1: latest edition of Balance of Power.