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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 afternoon everybody. My name is Nathan Dean. I'm a senior policy analyst with Bloomberg Intelligence here in the Washington, D.C. bureau. Also want to say thank you for those of you who are listening via the Balance of Power podcast. First off, if you are in the Washington, D.C. area or on the east coast, we hope you are safe and sound this afternoon. We're here and there's going to be a lot of strong storms and for what it's worth, my children, my children's school is closing early as a result. But we got a lot of stuff to go through today, so I'm just going to try and do a quick round. Rob, I mean, if there's anything that you want me to talk about in greater detail, please feel free to give me a call or an email at my email ndean tenbird.net or if you have a Bloomberg terminal, obviously feel free to IB me at any time. So let's first talk about Iran and just sort of the key state of player we were this morning. Now Bloomberg News did a lot of reporting this morning. Obviously President Trump just yesterday said that he wants a coalition of the willing, my words, not his, but a coalition of the willing to bring together ships into the Strait of Hormuz to effectively be able to guide these tankers and these ships through the Strait of Hormuz. Because effectively Bloomberg, you know, the straight inform use is closed. There is actually new functionality on the terminal that will show you how many ships not in maps portion but in terms of graphs that our, our economists have put out. So if you need a copy of that, just please let me know. But you know, this coalition, President Trump's call put it out there and said, look, he wants China, he wants the UK he wants Japan, he wants South Korea, wants Australia. And it's been sort of a muted message. Japan has said there's no immediate plans. Australia said there hasn't been any immediate plans. Germany said they haven't had a formal request here. The United Kingdom said there's still polling over it. You get the idea. It doesn't seem that there's many people chomping at the bit at the moment to send more troops or, sorry, more ships to the area. And so President Trump essentially is still going to try and I think put up that political pressure. This press secretary, Caroline Levitt, also said this morning that it wouldn't be unfeasible, or isn't that a word? It wouldn't be unlikely if President Trump were to delay but not cancel his planned summit with President Xi Jinping out of China that's scheduled for later this month. Caroline Levitt said, and I'm just paraphrasing here that, you know, at times of war, the president is not going to leave US Soil. So again, keep that in mind. That's something. Now, currently, as we are talking right now, China and US Officials are negotiating in Paris over tariffs. There have been a couple of headlines that have come out in terms of this. Nothing that I think is worthwhile mentioning at this point. But keep that in mind if you have exposure to China. They are negotiating as we speak. And that meeting, considering that it's getting to be the afternoon in Europe at the moment, I would say that meeting's probably going to end probably in the next couple of hours. A couple other things on Iran, just to keep in mind. There's been a lot of questions about this idea of Iranian supplemental defense bill. You know, Pentagon, Bloomberg News has reported the Pentagon is seeking around 50 billion. I said just last week, keep in mind that farmers are thinking about attaching 15 billion. And when I say farmers, I mean the House and Senate Ag committees are looking at attached $15 billion worth of farm aid to this bill over the weekend. Some of the reporting suggests that this bill is not yet anywhere close to being considered by Congress. It wouldn't be surprising if you saw an ask come up from the White House later this month or maybe next month. But in terms of the congressional appropriators, this is something that they doesn't seem like you're going to get in the spring season. This sounds like this is going to be something that comes up in this summer. And just remember, like we've said many, many, many, many times before, that once you get something out there and you Say, hey, I want $50 billion for the troops. We're going to get $15 billion for the farmers. Well then the insurance industry for disasters is going to get $20 billion. And you get this idea, you know, I guessing that this package will probably be somewhere between 100 to 200 billion. But again, that's just pure guess at this point. But we have plenty of time to think about it. I don't think it's going to come up other than the ask. But at least in terms of Congress approving this, we've got plenty of time for this to figure out. So just last week I want to the senate passed its 21st century for road Housing Act. This is the bill that we've talked about before in terms of the impact of instit institutional investors. Well, it passed the Senate and now it goes to the House. The House has said, look, they're not happy with this bill. There's really three provisions that you need to worry about. And I apologize if I said this last week, I can't remember. But those provisions are cutting regulatory red tape which really doesn't excite us all that much in terms of spurring new homes or affordability. There's a provision related to a central bank digital currency. It would ban it up until 2030. House Republicans, especially the House Freedom Caucus, want to go even further and have a permanent ban. And then there's this provision about institutional investing by firms, sorry, institutional firms buying single family homes. Now there is a language in there called disposal language that would require these single family REITs to essentially that builds a rental community to dispose of it within seven years. Now why would you want to build something if you have to dispose of it fairly soon? So that is still, it's gone through the Senate. That was still attached. It's now gone to the House. And there's two things to keep in mind. One is the House is not happy with this bill. They are not happy being stifled by the Senate. The Senate has jammed them multiple times trying to jam them again here. So look for this bill to fester. Look for this bill. It doesn't have to pass right now. The House can sit on it for a while. So I wouldn't be surprised if you saw the House sit on it. And then secondly, when it comes to that provision related to institutional homes, just look for more negotiations. But the way this would work is because the Senate has passed a bill and the House has already passed a housing bill and it primarily is just cutting regulatory red tape. And both of those bills passed with Overwhelming bipartisan support. There's two options for the House now. They can either adopt the Senate bill or they can go to conference committee. And Senator Kennedy of Louisiana, when he was quoted last week, he said, look, I think the White House is going to have to go over to the House and knock some heads into Pluto. So his view is that the White House is going to go to the House and say, you must pass the Senate bill. Where I'm going with this is we have plenty of time to figure it out. So as you see these headlines come out over the next few weeks, if you have exposure to housing, feel free to call in and we'll walk you through that process. Also, just because that House bill is now done in the Senate, now they get to work on crypto. Senator John Thune has said, he said this to Punchbowl last week, that he thinks the Senate Banking Committee is going to be really hitting hard on crypto in April. So don't be surprised. For the Senate Banking Committee really now starts to start working on this Clarity draft and these negotiations over stablecoin yield get put into overdrive. And we start to see that over the next one to two weeks. Staying on the crypto theme, just I put this out last Tuesday. The OCC has put out a proposal on stablecoins. This is the implementation of the Genius Act. Remember, Genius act passed last year, requires stablecoin issuers to have 100% high quality liquid assets to back up their stable coins, has some registration, has prudential standards, not that big of a deal. But there's one provision here that's really making the crypto industry upset because we just talked about stablecoin yield and how there's this debate over it. Well, the OCC proposal goes further than the Genius Act. It essentially says that if there's any type of handshake agreement, whether it's wink, wink, nod, nod, formal agreement between issuers and third party platforms that are offering yield or sorry, rewards programs for stablecoins, the OCC is going to come in there and say, no, you can't do that. And obviously the crypto industry is not happy with that. They're like, well, look, if it's permissible under Genius act, why did you go further? And so there's going to be some interesting conversations had between the Office of the Comptroller of the Currency and the crypto industry and the banking industry as they go through this rulemaking. But keep in mind, if the Senate bill, the Senate, the Clarity act, if it passes, that would circumvent Anything the OCC does. But again, very interesting that the banks sort of got a win from this proposal on that. For what it's worth, there's a significant comment period on this one. So I don't think finalization will be towards the end of this year. So staying on the financial regulatory theme, this Thursday it's like the super bowl for bank investors. The Basel III endgame is finally being proposed. Now most of you who are covering the Basel III endgame already have seen the speech that Michelle Bowman gave last week. I know because many of you contacted me and we talked about it. But just keep in mind that this is going to be a 90 day count period. Just real quickly back in the napkin math by my colleague Arnold Kakuda. This is two proposals, maybe three, but I think it's two proposals. One is the Basel III endgame, the one is the GSIB surcharge. Now like we've said multiple times, the Basel 3 end game increases capital requirements. The way that the risk weightings look like it's going to be is operational risk and market risk are going to increase and credit risk is going to decrease, especially in the mortgages area. So there's going to be more incentives for banks actually push mortgages and do the mortgage originations. Now I don't know the specifics of it, we'll find out on Thursday. But this will ultimately increase capital requirements. But then the G Sib surcharge comes in and ultimately decreases capital requirements to the tune of about $32 billion for the 6G SIBs. So bank of America, JP Morgan, Wells Fargo, Goldman Sachs, Morgan Stanley and Citigroup, for what it's worth, we're keeping State street at Bacon, New York even though they're G sibs. For this purposes of this calculation, we're keeping them out of this. So you know, take those two proposals in mind. The G SIP surcharge is not a move to method one. I'm not going to get into the method one or method two, but currently it's method two. If it was method one, it would be a much more substantial relief to these banks. But it's not, it's a method two tweak. So that's why it's a little bit more subdued than what anticipations were earlier this year. But 90 day comment period. Don't be surprised if the they try and finalize this right before the December holidays. I think they can get it done if they move quickly. But for those two proposals, and for what it's worth, if there is a third proposal it's just dealing with the standardization models. I think that can be wrapped up into the Basel 3 endgame. But there was a remark that Governor Bowman said that made me think that potentially it was three, but it's not that big of a deal. So that will be out on Thursday. So let's also shift to March Madness. Well, really, my Purdue Boilermakers won the Big Ten tourney last night, so I'm excited about that. Will make them losing to Gonzaga in the second round or third round a little bit less painful, but CFTC actually put out guidance in advance notice of rulemaking last week on prediction markets. Now, if you are looking at Coinbase or CME Group or Robinhood or any of the exchanges, Intercontinental Exchanges, their ownership, their portion ownership of Polymarket. So what the CFTC did here is they put out guidance that effectively said that most prediction markets out there today are considered swaps and therefore they are under the Commodities Exchange Act. The ampr has over 200 questions to market participants and really it asks them to help the CFTC define what is gambling versus what. What factors should people think of in terms of prohibited contracts, for example, those tied to assassination or terrorism or war. So there's lots of questions in the industry. They've put out the proposal. Comments are due in May. But because this is an AMPR and not an npr, because this is just questions, it means that a proposed rule isn't going to be finalized until mid-2027. Now, interesting thing here to mind though is that the CFTC has said that they're going to do a formal rulemaking on this. Now, one would argue, and I'm not taking a stance on this, but some are arguing out there that you don't need a formal rulemaking on this, that you already have the authority over the Commodity Exchange act just to treat these as swaps and guidance is all you need. But because the CFTC is going forward with the rulemaking, a future CFTC that is led by a Democrat that may have a different view on prediction markets. And remember the Biden era, CFTC had a previous guidance on prediction markets that this one withdrew. A future democratic CFTC can't just immediately come in and say, yep, right, that guidance is gone. Now we're going to take new guidance. They're going to have to take steps to actually undo the rulemaking that this rulemaking is putting on. Think of it as icing on the cake. You know it's going to prevent you from getting to the actual cake unless you get slip off the icing. It's a bad analogy, but you get the idea. So if you want to talk prediction markets, feel free. A couple other things, just back to Congress and back to the White House. Just real quickly. President Trump is going have a press conference today around 11:45, right before he gets over at the Kennedy Center. That press conference. Expect lots of Iran information. So if you are exposed, obviously, to geopolitical, keep in mind it will probably be streamed on live go if you have a terminal. If not, it'll be on every single major television network. The SAVE act is coming to the floor this week. So this is probably what you've seen all the news talking about in terms of the SAVE Act. We're not covering the SAVE act because it really does have an investing angle. But the reason why I want to bring it up is we are getting questions on whether or not the filibuster goes away. Remember, the SAVE Act. This is the bill would essentially require U.S. citizens to identify themselves as a citizen in order to go vote. Because for those of you who aren't in the states, please remember that voting is a state issue. So the voting procedures that I have to live under in Virginia are different than the voting procedures that I had to live under when I lived in Illinois. And so because each state has their own different voting procedures and it's deemed by the secretary of State of each state, the SAVE act will come in and say, no, you have to do this on a federal level. And this is how President Trump is really effectively, you know, one of the reasons why he thinks it's very essential to the Republicans keeping the House. Now, Senator Thune. Sorry. Yeah. So Senator Thune is now in a position here where he has to do something that the White House is saying, you must put this on the floor. You must put this on the floor. Well, Senator Thune doesn't have the 60 votes to pass it. So there's this idea of going away with filibuster. We talked about this last week. Now, what Senator Thune is going to do is he is going to put it on the floor as a measure which only requires 50 votes, you know, and then there's going to be some additional amendments, then there's going to be some additional thoughts, and then ultimately it's going to require 60 votes anyway. What you need to know is that the filibuster is not going away. Transferring to this idea of a talking filibuster isn't going away, but Senator Thune has to go through the motions to make the president get on board with the idea that they've tried because remember, President Trump has said that he's not going to sign any legislation until the SAVE act passes. We'll see what happens. But again, Senator Thune is going to be going through a lot of motions this week. Kevin Warsh's nomination. Let's talk about that for a second. So Friday afternoon we saw the U.S. attorney for the D.C. jeanine Pirro, Judge Pirro, come out here and say that actually we saw a judge squash the subpoenas that she had sent to the Federal Reserve about Jerome Powell. Now, my colleague Elliot stein spent about 25 minutes on Bloomberg Television Friday afternoon, and we have a copy of that. So we can send that to you. You spend about. Or just call Elliot. Honestly, just call Elliot. That's you forget the TV stuff. Just call Elliot. But, you know, and he's available on the terminal. Or just call me and I can put you in touch with him. But Elliot spent about 20 minutes going through all the scenarios here of what can happen now. And it sounds like the DOJ is going to appeal that decision. And I'm not going to get into the legality of it. But remember, Senator Thom Tillis, who sits on the Senate Banking Committee, is currently blocking Kevin Warsh's nomination from going to the committee. And because the Republicans have 1311, he can do that. He can just show up and say, vote no 1212 ties. Kevin Warsh's nomination goes nowhere. So Senator Tillis put out a statement, essentially said, look, this doesn't really change anything. Again, I'm paraphrasing here, but because this doesn't change anything, we're in a currently in a situation where you are going to see lots of steps from the White House and the Senate Banking Committee to try and figure out a way to move this forward. Because if there's appeal, that just delays things even further. And Elliott's thesis here is that if we get to May, when Chairman Powell has to step down as chairman, not governor, but as chairman, you could see a scenario where you have acting Chair Myra in the interim. So again, keep that mind our FOMC folks out there if you ever want to talk in advance of the meeting. Ira Jersey is our FOMC expert. So definitely he's got great opinions on this. Well, the last two, last two things, Senator Mullen, Mark Wayne Mullen has his confirmation hearing this week for DHS secretary. I don't really have an update for you on DHS shutdown. We're really still in the status quo. And then finally we're in primary season Illinois primaries are tomorrow. The reason why I bring it up is that the Senate race to replace Senator Durbin has a lot of Democrats Democrats in there. We may get some indication of whether or not a moderate or a progressive Democrat has any success. As a former Illinois resident, I could tell you that it's a very progressive state. But, you know, again, we'll see what happens tomorrow. I apologize, I went about 10 minutes long, but we had a lot of stuff happening today. I want 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.