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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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Okay, 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, bringing to you the weekly catalysts that you should be paying attention to in the Washington area. Also, just want to say a special shout out to those of you who are listening to us via the Balance of Power podcast. We always appreciate you coming on board and listening to us as well. So a lot of of random little things this week. And so I'm just going to go through a list. I've got 10 things to talk about. First off, let's talk about the National Defense Authorization Act. This is the ndaa. This is very important for those of you in the defense contracting industry. It's been reported that language would be out on December 1st if Mike Rogers, the chairman of the House Armed Services Committee, has his way. I think you'll see language potentially out later today from what we gather over the weekend is the negotiators are quote, unquote, close. Now, this still has other, you know, it still has some time to cook. It needs to go through the other portions. But lawmakers are really hoping that they can get this done before the end of the year. And just as remember, the NDAA is generally a bipartisan affair, but it's also one of those affairs for other must pass pieces of legislation that you try and attach it to to get it to the president's desk. And the big one that everybody's talking about right now is this legislation to essentially preempt state laws over artificial intelligence. Now, we've talked about this in the past. I don't Want to rehash it. Essentially the story is this, is that it's going to be very challenging to get individuals to agree to preempt state laws on artificial intelligence. This early in the debate over artificial intelligence. And I would just say is, is that if you were to ask most of the defense individuals that are allied to the defense industry, they'd say, get this bill out of here. I don't want to talk about it. Let's just focus on defense. And I think that's ultimately where it plays out. Number two on our list is let's talk about the enhanced supplementally leverage ratio. This is for those of you in the banking space. Just last week the Fed, the FDIC and the OCC finalized its version of the eslr. This is actually big news for me. I've been covering this since the original proposal back in 2016. Certainly made me feel a little bit old. But what the Fed and the FDIC and the OCC did here is that they finalized this idea of a new leverage ratio. So previously it was 5 or 6% depending on the bank. Bank subsidies were 6%, the bank holding company at 5%. And now what they did is they moved it to 3% plus 50%, 50% surcharge based off of a bank's size. So you're looking around 3.5 to 4.3% depending on the bank size. And this equates to about $13 billion in capital returned to the banks. These are the G sibs, the large ones. So again, you know, this is one of those things where it's certainly the first taste of deregulation. Wasn't a lot of change between the proposal and the final. But again, this is the first change, first T to deregulation. And so we're certainly going to see more implementation of this. The effective date is April, but if you want to go early, you certainly can. And I'll have a little bit more thoughts on the implementation of it. And I'll put that on in the terminal as well as my colleague Arnold Kakuda. He will as well. Also in the bank space. Let's talk tomorrow. Tomorrow the House Financial Services Committee is going to have a hearing with those bank regulators. So Fed Vice Chair Michelle Bowman, you know, the Comptroller of the Currency, the Director of the fdic, and we're going to get more tastes of what it looks like from the bank, the regulatory perspective. What I'm most interested is in two things. One is, is the Basel III endgame proposal coming out next year? Is it going to come out with this reportedly increase. Bloomberg News is reporting that there's a 3 to 7% chance or, sorry, a 3 to 7% increase associated with the new reproposed Basel 3 in game. And will that be offset by a proposed G Sib surcharge proposal which ultimately takes it less? Now we've done some initial calculations of scenarios. All that being said is that if the Feds were to come out and increase the Basel III endgame 3 to 7% and then decrease the G Sib surcharge using something called Method one, and we're not entirely sure that they are going to go to what's called Method one, but let's just play. Sure, whatever. If they go to method one, then you're looking at a $58 billion capital reduction for those G Sib banks. So you tack on a 13 billion from the ESLR, 58 billion from the Basel III GSIB surcharge and ultimately then you start talking about real money here that's being returned to the banks. So again, we're going to see the taste of that tomorrow. We'll see. Our general theory on this is that both of those proposals will be in the first quarter of next year. There's a chance they could put something out before the end of the year. Regulators love to do that. But you know, I'm thinking because of the ESLR work that was done last week, maybe this will be the early parts of next year, but we'll see other things going on. President Trump has reportedly selected a new Fed chair. He's told reporters over the weekend that he had made his mind up. Bloomberg News reported just last week that National Economic Council Director Kevin Hassett is the frontrunner for that. No word on when President Trump is going to make that announcement, but ultimately he has said that this would come before the end of the year. And we would also note is that this announcement would most likely. So let's just presume that it is Kevin Hassett. If Kevin Hassett is the next Fed vice chair, the Ned Vex. Sorry, the next Fed chair nominee, he would most likely be nominated to fill Dr. Myron's position. That ends in January. Confirmation hearing would be in February. And then when Jerome Powell's term is up in May, that's when Kevin Hassett would move over to the Fed chair perspective. Now, I've been asked multiple times, do I see any issues of why Kevin Hassett would not get confirmation through the Senate? I don't. I think it'd be a fairly easy vote for the Senate Republicans, maybe get a couple of Democrats. That's a big stretch there. But even if not, I certainly think he has the votes to get there in the Senate. And so again, we'll stay tuned. But the timeline would be President Trump makes the announcement before the end of the year. Then you have those confirmation hearings and the confirmation hearing in February, the confirmation in February. He then goes to the board. And then there would be another nomination for the chair position when Jerome Powell's terms end is in May. Other things number five on our list. Well, we last week, if you weren't on this call last week, I would recommend if you go back to it, if you care about the healthcare industry, because my colleague Dwayne Wright and I had a discussion about what's going on with the ACA subsidies. Now, in that call, we were operating under the presumption that the White House was going to release its own plan for an extension of two years for these aca, these Obamacare subsidies. And due to congressional pressure, that plan didn't come out. So now Congress is essentially in a wait and see mode. I mean, I think scouring the news reports from Bloomberg News over the weekend, it sounds like a lot of folks are just taking their direction from the White House in the moment and waiting for the White House to make a decision on what they want to do. Because if these Obamacare subsidies aren't extended and premiums go up January 1, from the Democratic perspective, like what Dwayne said last week, that's a message for 2026. So I think everybody's just now in a wait and see mode. The Senate is still promised that they would have a vote. There's only 12 legislative days left between now and the end of the year. And so we'll see when that vote comes up. But everybody's now still in a wait and see mode. Number six on the list. Let's talk about appropriations. Remember, we have a government shutdown in January 31st for nine of the 12 appropriation bills. Now, there's still work ongoing. It's been fairly slow. And honestly, I don't anticipate this really kicking off until January. But the new current thought is, is that they're going to plan another vote to get five of those remaining nine across the line. And it would be Defense, Labor, Transportation, Commerce and Interior. Now, can they do this by the end of the year? Probably in the Senate? Maybe if they get agreement, then it would go to the House and the Senate would most likely jam the House and the House would grumble about it, but ultimately do it. But again, you know, we have plenty of time here. And if you get five of the remaining nine, that's the bulk of discretionary spending. Most of it's with tied with defense. So you get the bulk of discretionary spending. It takes a lot of the shutdown risk away if they were to do this. So we'll see what happens over the next 12 legislative days. And again, there's no deadline here. They can certainly go home for the holidays and come back in January. But that's just the current thinking. A couple other things on our list. Number seven, there is a special election in Tennessee tomorrow that a lot of people in Washington have been paying attention to. This is a district that President Trump won by 20 points points. Obviously it's a very red district, very Republican district. But there's been a lot of news talk about how well are the Democrats going to perform there. A lot of money's been coming in. So a lot of people are paying attention to this race because they want to see evidence of whether or not the blue wave that happened in the Virginia, New Jersey elections continues into this special election in Tennessee. Now, the Republicans likely going to win. That's not my opinion. I think that's, I actually took that from the Cook Political Report because I don't really do political opinions like that. But, you know, we'll have to see how well the Democrat does. So again, just something to keep an eye on. And as you see the headlines coming out tomorrow, number eight, Jared Isaacman is going to have a confirmation hearing to be the director of the of NASA on December 3rd. This is his second attempt at being the director of the NASA. He's actually an astronaut. Flew, flew with, flew with SpaceX. So if you are in that space, you're looking at SpaceX or maybe blue Origin or any type of the commercialized space industry. Certainly want to watch that hearing just because, you know, Mr. Isaacman is fairly very much a proponent of the commercialization of space. And so it'll be interesting to see what comes out at that hearing. Number nine, Venezuela. You know, again, lots of talk about Venezuela again this week. It's been reported that President Trump is going to have a meeting in the oval office at 5pm Eastern today with many of his advisors, Secretary of War Defense Pete Hegseth, Secretary of State Marco Rubio. A lot of individuals are going to be in that Oval office meeting at 5pm so just keep that in mind. If you're looking at headlines, maybe you're in the energy space. You can, you know, you have some exposure to Venezuela in that space, you know, definitely keep an eye on that. And the last thing I want to talk about is if, before I give it up to any questions, if there are is the farm aid. Now, we've talked about this in the past, this $12 to $13 billion package that is coming out for US farmers. We've heard it could potentially come out tomorrow or Wednesday. Again, these are just hearings. It can be pushed back. It can be made. You know, it can do anything. Now that I've said it, wait for President Trump to release this thing tomorrow. But just keep that in mind. You know, Secretary Rollins, the ag secretary, has said that she would most likely put this out the first week of December. Therefore, it makes sense that it would come out Tuesday or Wednesday. And for any of you in the farmer space, you know, our thesis has always been a $13 billion aid package doesn't really get you all that much. Spring season is already really the spring planting season has already really kicked off. You know, it's more of a band aid. And as I've taken from some of our agricultural analysts, the farming industry wants trade, not aid. So again, we'll have to see if more aid is coming. But if you ask the House House Agricultural Committee, they, some of the members over there said that they could potentially see up to $50 billion in aid being passed between this year and next year for the US Farming industry. And actually, just the last thing I want to call out, just spur of the moment, just saw this headline come over the terminal. Just keep an eye on the Supreme Court for this IPA case. We've talked about this many times in the past where President Trump obviously his Liberation Day tariffs, whereas reciprocal tariffs. You know, our analyst Holly Frome just put her update on the terminal that made me think of this off the off the moment is that, you know, her belief is that the Supreme Court is going to find those tariffs to be unlawful. And when that happens, you're going to see a lot of red lines coming over the terminal. You're going to see a lot of that. And then we're going to have to talk about the refund chaos that comes out from after that. So if you need a deep dive on what that is going to look like, Holly's done some work on that. Just give me a contact, send me an IB afterwards, and I'll be more than happy to put you in touch with her. We'll have that conversation. But again, I'm going to pause there. I don't see any other questions. I'm going to say thank you very much for attending. We really appreciate it, and if we can ever be of assistance, please don't hesitate to reach out.