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Weekly Washington Policy Pulse: Bank Capital, Fed Chair, Tariff Vote (Oct 27, 2025)
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Bloomberg Audio Studios podcasts Radio News.
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This is your weekly Washington Policy Pulse on the Balance of Power podcast. I'm Joe Matthew. Every Monday, Bloomberg Intelligence, senior policy analyst and friend of the show, Nathan Dean shares his weekly call on upcoming catalysts in the nation's capital. Listen for the most recent and relevant policy research from our team at Bloomberg Intelligence. Now with today's installment, here's Nathan Dean.
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Good morning and good afternoon everybody. Welcome again to the Washington Policy Pulse. My name is Nathan Dean. I'm a senior policy analyst with Bloomberg Intelligence here in the Washington, D.C. bureau. Wanna say thank you very much for attending our call today and thank you. For those of you who are attending this via or listening to this via the Balance of Power podcast, we always appreciate your listening as well. You know, it's funny, when I was driving in this morning, I was like, I don't think we have much to talk about this week on the Policy Pulse. And then as I started putting together the issues, I was like, yeah, we have quite a bit here. So let's first start off with what's going out in Asia. President Trump left on Friday night for his tour of Asia. Japan, Malaysia, South Korea. We have a significant meeting coming up with President Xi Jinping. So what I wanted to do is for those of you who have terminals, if you go to Beco Research and then Geoeconomics, that's where my friends over at Bloomberg Economics are putting all their pieces. They also have a daily newsletter that comes out every day at noon Eastern that summarizes all of this. You can go to NSUB Fault Lines, just ping me. I'll make sure that you can get attached to this and you'll see this. But for those of you who don't have Bloomberg terminals, bloomberg.com, the Bloomberg News site has a running blog of what's happening here in the region. And I just briefly wanted to talk about what were the issues. Here are the key issues that are at State when it comes to President Trump's meeting with President Xi Jinping. First one is rare earths. We've seen a lot of talk about rare earth minerals. President Trump has talked about tariffs associated with this. There was an investigation that was launched, a tariff investigation that was launched towards rare earth minerals back in April. So obviously that's one of the key things that will happen here. Export controls very, very critical to the technology sector, fentanyl supply, TikTok shipping, levies, soybean trade. This is something that I know that our agricultural clients and agricultural analysts are looking at in additional tariffs. Now, you know, we saw obviously over the weekend when President Trump said a couple months, a couple weeks ago, it felt like a couple when President Trump said a couple weeks ago that he was going to place 100% additional tariffs on China. Long story short is I don't think anybody really in the market really anticipated that happening. Over the weekend. Treasury Secretary Scott Besant said that there was a framework that was being discussed. Look for weekend talks to potentially allow President Trump and President Xi Jinping to sign that framework. Still to be determined on how much of a framework that actually is. Are there details associated with that? So stay close. Again, if you have a terminal, the Bloomberg economics team, they already have analysts out in the region that are writing this up. Again, I can show you where that is on the terminal. If you don't have a terminal, stick to bloomberg.com, there's a running blog or there will be a running blog in which the Bloomberg News articles will be popping up here. So again, stay tuned. There's going to be a lot of stuff happening with President Trump's Asia trip on the shutdown update. I really don't have much of an update for you. The House Republican Caucus is still out of town this week. The Republican senators are essentially just continuing their talking points. The Democratic senators are continuing their talking points. The polling data hasn't really changed. Again, independents slightly blame Republicans more for the shutdown than Democrats. But if you're looking at this from a Republican perspective, you're looking at the same data and you're seeing the significant amount of support that you're getting in your party for this. And ultimately both sides continue to believe that they're in a better position politically. Now, you will see some potential, I don't want to call it negotiations, but you may see some potential chit chat about ideas of reopening the government. As we get close to November 1st, we have a couple catalysts. We have a second military paycheck. Air traffic controllers just missed a paycheck earlier this or late last week. You are going to see additional discussions over SNAP benefits. This is 42 million Americans. This is the program formerly known as food stamps. You know, obviously the Republicans in the White House at the moment have taken the stance that they don't have the authority to pay SNAP benefits. Democrats are coming back and saying, yes, you do. Again, it's just political posturing. But you know, if 42 million Americans can't ask, get their Supplemental Nutritional Assistance Program benefits next week, that may change. We're also seeing more and more delays at airports ticking up over the weekend. For example, I'm flying on November 11th and I'm beginning to get the question of, well, if the shutdown's still occurring, you know, what's going to happen with that. But you know, the general sense here is that you'll see this uptake this week, probably won't see a solution or anywhere close to a solution. I think at this point, I think the next major catalyst, if it's not the additional paychecks that come in November, it's going to have to be Thanksgiving and it's going to have to be this potential for a massive sick out from TSA agents or air traffic controllers leading to widespread disruption. So that's my update on the shutdown. We'll see again what happens. We also have some news coming out to you from the Federal Reserve on financial regulatory matters just last week. Bloomberg News, this is Katanga Johnson. I'm pointing over here behind me. For those of you who can't see me, that's because Bloomberg News sits over there. Bloomberg News's Katanga Johnson put out a piece that he said that Fed officials are considering with the next iteration of the Basel III endgame for a slight increase of capital requirements somewhere around 3 to 7%. Now, this sort of flies amongst the idea of, okay, well if you're looking at deregulation, why is there an increase in capital requirements? Well, you also have to keep in mind what the Fed's other plans are. And this specifically brings in what is known as the G Sib surcharge. Currently, the G Sib surcharge is calculated under what's known as Method 2. There's been lots of discussions and lots of expectations amongst those of us in D.C. that the Fed is going to move to a method where one, and if you have a combined effort where the Basel III endgame increases capital requirements 3 to 7% and the G Sib surcharge moves to what is known as Method 1. All in all, according to Arnold Kakuda, our BL senior credit analyst for the banks. He put out a piece on the terminal last week essentially saying if you take those two things into account, you're looking at for the G sibs, meaning the big the top six top eight US Banks. This is like bank of New York, bank of America, JP Morgan, Goldman Sachs, etc. You're looking at a net 58 billion DOL capital reduction if you take those two rules and put them together. So if you want a copy of that on the terminal, just please feel free and I'll send that to you. We also saw a proposal that came from the Fed Friday afternoon on stress testing. Think of this as the transparency stress testing proposal. The Fed even said they don't anticipate this impacting capital all that much, but just think of this as providing banks a lot more transparency of what goes into the stress tests. In fact, there's a scenario where the Fed is asking the industry for feedback on what's in the severely advanced the severe stress test. I can't remember. I'm blanking on the name at the moment. I'm gonna have much more detailed thoughts on this out probably on Wednesday. But again, in the interim, if you have any questions on that, please feel free to reach out. A couple of other things going on at the Fed. Treasury Secretary Scott Bessett literally just said a few minutes ago that he had five individuals on his list for the Fed chair. This would be the current Fed Board governors Christopher Waller and Michele Bowman, former Fed Governor Kevin Morsh, White House National Economic Council Director Kevin Hessett, and BlackRock executive Rick Reeder. That's what Treasury Secretary Scott Bessen said on Air Force One just a few minutes ago. He also said that he would have his recommendation for this Fed chair by Thanksgiving to the President and that President Trump later said that he would potentially have that announcement out by the end of the year. So just keep that in mind when you're thinking Fed chair. Things are going to move really quick now that we're going to be in November next week. Other things going on. President Trump has nominated SEC official Mike Selig to be the next CFTC chairman nominee, the next chairperson of the Commodity Futures Trading Commission. Selig is very much a crypto advisory. He's part of the crypto advisory group for Chair Atkins over at the SEC at the moment. So definitely a very good win, I would call it, for the crypto industry. But I also think that Selic has enough experience working at the CFTC to help the CMEs and the ICES of the world so that he could also talk about what's going on in the derivatives space as well. So again, you know, I thought Brian Quintenz would be an easy shoe in for the job when he was nominated for CFTC chair. But again, we'll see what happens with Mike Selig. A couple other things going on. Senate Banking is going to have a hearing later this week with Travis Hill. He's over at the fdic. This is his confirmation hearing. Probably would get a little bit more insight on some of the capital rules. Probably not a ton I'll watch. So if you have any questions on that, feel free to ping me and I'll make sure to give you the insights of what's going on. We have a bunch of senators who are actually doing negotiations on the National Defense Authorization act this week. This is the ndaa. We have a House ndaa. We also have a Senate ndaa. The hope now is that even though the government is shut down, there's a bipartisan group of senators that are working on this. The NDAA tends to not be political. It's one of those. This is the reauthorization for the Defense Department. Usually it's not political, but sometimes, obviously political, macro, political matters get involved, but they're still working on it while the shutdown is gone. So, you know, they said that they hoping to have a framework by Thanksgiving. So again, stay tuned on that. Let's talk about a couple of things about tariffs. We have a Senate vote on a tariff resolution that's going to be taking place later this week. This comes from a bipartisan group of senators, and I call it bipartisan. It's mostly Democrats plus one or two Republicans. This is a resolution that would overturn President Trump's tariffs related to Canada and Brazil. And this has been done before. This comes as what's known as a privileged resolution. So you can put it on the floor without having leadership buy into it. And this very could pass. It's passed in the past. One time it failed due to absence of votes, but there were just a bunch of senators that weren't actually here in D.C. but you know, even if this passes and you see a headline later this week says Senate votes on resolution to overturn President Trump's tariffs, it's symbolic. The House has actually sort of changed its rules a little bit so that there won't be a vote on this in the House. And even it did, President Trump's the one that would have to actually sign the resolution. And again, it's not gonna really go anywhere. It's symbolic in nature. So if you see that headline, just keep that in mind. Finally, on the tariff stuff, President Trump announced that we would see an increase in 10% tariffs on Canada, but we really don't know when that would take place. This was in response to an advertisement from the province of Ontari. President Trump wasn't very happy about this. Announced a 10% increase in tariffs on Canada, but didn't say when it was gonna take place. He's not gonna be at this point meeting with Prime Minister Carney out in Asia, obviously. He certainly can. And it's also his mantra to say, I'm not gonna meet with somebody and then, oops, we've met at this, you know, at this summit. So I wouldn't be surprised if they ultimately meet. But again, I'm just saying for our clients that are listening, even though he's announced that 10%, there's really no timeline of when that would remember November 5th. So next week we have a Supreme Court oral argument on this related to his IIPA tariffs, not the fentanyl tariffs, but the IIPA tariffs. And remember, this is the Liberation Day tariffs where he picked up the was holding in the Rose Garden. All this, that's on November 5th. President Trump has said that he plans to go to the Supreme Court in person. My colleague Holly Frome is gonna be covering that right now. She continues to say a 60% chance that the Supreme Court is gonna find those tariffs to be unlawful, meaning that you can't reciprocal tariffs anymore. This is what the trade court has found. This is what the appeals court has found. And as Hawley's giving you a 60% chance, the Supreme Court. Now, what happens at that point? Well, Bloomberg News has an article that put out and they are essentially calling it Refund chaos. Treasury Secretary Scott Bessant. And fun fact, because I go on radio a lot, I've always been saying Treasury Secretary Scott Bessant or President Donald Trump. And I've been meeting with other lobbyists and analysts around town, and I continue to say their titles. And they're laughing. They're like, hey, I know who, I know who Bessant is, but apologies. I always, I always have to say Treasury Secretary Scott Bessant. But when Bessant actually was asked about this, he said, look, we're going to refund approximately half of these tariffs that we've brought in. You're looking at somewhere between 85 to 105 billion dollars worth of tariffs that there are going to be refunds for. But the question is, it's refund chaos. I actually don't think the government has a way to issue refunds other than checks. I'm looking into this a little bit more. And so, so I would not anticipate a refund program that's going to be very efficient, especially while the government is shut down. So if you get into a situation where the Supreme Court says, no, no, you gotta refund this, you're gonna most likely be hit with refund chaos. So just keep that in mind. And again, nothing prevents President Trump from going back forth and saying, look, if I can't use an IPA tariff, well, then I'm gonna use a Section 232 tariff or a Section 301 tariff. And we're just going to do this different ways. So, again, you know, keep that in mind. And the last thing I want to point out is you could potentially get a little bit of. Oh, and I'll get to that question. That's a great question on the farmer stimulus. I'll get to that in a second. You may see some AI news coming out of Washington this week, more from the industry perspective as opposed to from the White House. There is a significant AI conference that's being held over at the Capitol or at the Convention Center. It's just a few blocks from here of us at the office. We like to joke, we don't like it when these big conferences go on because then the line at Potbelly's just becomes absolutely astronomic. But you know, there is going to be this AI conference. You know, Nvidia is going to be there. There's going to be a lot of significant AI leaders there. So we're looking for potentially some headlines to come out from the industry at this conference. But it just shows you how important Washington is to the AI sector, is the fact that they chose Washington to be the convention place just steps from the White House. So, again, keep that in mind. Now, the question that came in from the chat, could that be why they haven't sent farmer stimulus? This is a great question. So, you know, as you can imagine, you know, the farming industry has been somewhat hurting at the moment just because there's a lot of supply for a variety of factors. In fact, our analyst Mike McGlone, who does the commodities, he's down in Miami, he just put out a piece this morning about soybeans because, you know, soybeans is one of the things that the US China relationship that a lot of farmers are hoping for. He's also just put out. He's like, look, even if the United States and China announce an agreement on soybeans. There's a lot of soybeans that are actually already in there in terms of supply coming out of Brazil at the moment. So again, farmers in the United States have been asking for a lot of, I don't want to call it aid, because they don't want to call, they don't want to ask for aid, but they're looking for policies that will actually allow these soybeans to be purchased. And in response, the USDA and the White House has come out and said that they were going to announce a farmer aid program. Now. Now they've floated the idea of around $10 to $13 billion in aid. If you remember, back in 2018 and 2019, there was a program that actually paid out $23 billion. Some of the House Ag Committee members on the Republican side have said that farmers could use up to about $50 billion in aid. So we do think that this is coming. But the USDA has said that it's not going to come out until after the government shutdown ends. Now, they have taken some steps. They've reopened some of the Farm Service offices, they've reopened a couple of the loan programs that are going on with farmers. But this $13 billion in stimulus as of right now, they said, is not going to come out until the end of the shutdown. Now, if the shutdown lasts until Thanksgiving, I could see potentially that changes things. But that's why they haven't sent this farmer stimulus at this point. So with that, I'm going to say thank you very much for attending. I apologize that we went about five minutes over, even though I didn't think we were going to have much to say. We had quite a bit to say. So if you do have any questions in the interim, please feel free to reach out Ib me, send me an email. Let's talk. If not, have a wonderful week and we'll talk soon.
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Our thanks to Nathan Dean, Bloomberg Intelligence Senior Policy Analyst, bringing you the latest installment of his weekly Washington Policy Pulse. For more from BI or to join this call live each week you can email nathan@ndeanlumberg.net that's n d e a noomberg.net and come back to the podcast later today for the latest edition of Balance of Power.
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