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Weekly Washington Policy Pulse: Stablecoin Proposal, Reconciliation (June 8, 2026)
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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 Washington, D.C. want to say thank you very much for attending the Washington Policy Post and a special thank you to those of you who are coming to us via the Balance of Power podcast. We always appreciate you listening. Today is June 8, 10:02am Very warm weekend here in Washington. Things have been heating up, pun intended. And let's start with the reconciliation bill that we've talked over the past couple of weeks about. This is that $70 billion deal that actually funds the Department of Homeland Security puts it beyond the end of the Trump administration. So for the rest of the Trump administration, you're not going to see any squabbles over ICE funding or any political disagreements over ICE funding. This is a way to protect the president from those Democratic attacks. And we really didn't see much of a way in the impact. But again, I want to point out, I mentioned this last week, I want to point out this week, the private prison stocks, Geo Group and CoreCivic, they're up 16 to 17% since early May, partially based off of this news, largely due to the idea that if this deal goes through, the Department of Homeland securities will actually be buying assets from those companies. I know they've talked about it recently in a couple of their earnings calls. But again, something to point out. Now, where does the bill go from here? Was passed the Senate. It is now going to go to the House. The House is most likely going to pass it tomorrow. And then it goes to the president's desk. President Trump will sign it and then we'll be done with reconciliation 2.0. That brings up reconciliation 3.0. Now, there have been lots of ideas about reconciliation 3.0. You have the $350 billion worth of defense supplemental funding. You have farm aid, which is about $20 billion. You have ideas for Venezuela aid, you have Obamacare, tax changes, you have other tax changes, et cetera. Where is this, all this going? Well, if you ask one side of the Republican Party, they'll say we're go, we're going to do this thing, we're going to get it done. You know, as a reminder, you can't do it until after September 30th. So this would most likely have to come up in the lame duck session. But nothing prevents the committees from not working on it before September 30th. So there are folks up by Capitol Hill saying, look, let's go forth and let's get this thing, let's get this done. Now if you look at Senator Thune's position though, on the other side, look, it was difficult for him to get this $70 billion Department of Homeland Security building funding through. And this is a pretty non controversial bill from the Republican side. But they had to go through a vote a rama. There was talks about the Save America Act. There was other things out there. So you know, from the Senate perspective, combined with the fact that you now have a lot of people, and I'll talk about this in a minute, who aren't running for Congress anymore, namely Senators Cornyn and Senator Cassidy in Texas and Louisiana because they lost their primaries, can you get everybody on the same page? My answer is probably not. If it was easy, they would have already done it in Reconciliation 1.0. If it was easier, they would have done it in reconciliation 2.0. Now you're getting to the point where, yeah, there are some things out there that are probably easy, like $20 billion worth of farm aid if they specifically keep it to that, that most likely could go through. But this is probably the last legislative achievement that this you have reconciliation 3.0. If they do this in the lame duck, this is probably the last legislative achievement that President Trump has as president. If you Pres. The Democrats are going to take the House of Representatives and there is going to be a very much a desire to get that through. But on the other hand, it's going to be very difficult. So we'll see. But again, stay tuned. But as of right now, my spidey sense is saying it's probably not now what's going on with FISA. So obviously FISA has until June 12th to actually re be. This is section 702 of the FISA Act. This is spy powers. War power, not war powers like spy powers. This was actually set up in the aftermath of 911 and there is actually now a hiccup of whether or not, you can re extend these powers for the national security agencies to continue surveillance programs. This was actually, you know, there were some hiccups related to privacy. The first time that they discussed this, they kicked the can until June 12th. But now you've entered Bill Pulte, who is the FHFA director, and President Trump's name is the acting director of the Department of National Intelligence. President Trump even said over the weekend that he's looking for Acting Director Pulte to essentially, and I'm paraphrasing here, conduct mass firings within the intelligence agencies. That's going to be very difficult for the Democrats to actually support fisa. And they've all said as a result, they're not supporting fisa. Now, I don't really have much of a view on this just because there's really no investing angle here. But just keep this in mind that every day they debate FISA is another day they're not working on housing or crypto. And for what it's worth, I'm not sure they can get a deal done. So expect the headlines to pick up later this week on this. But again, it just means they're not focusing on other things so quickly. Let's talk about testimony last week at the House Financial Services Committee. Let's talk bank regulation for a minute. You know, the bank regulators, namely the Fed, the FDIC and the OCC testified to the House Financial Services Committee last week. Really quickly, three things to keep in mind for the Basel III NDA rulemaking. Really no changes in terms of timing. They didn't really provide much. They did just reiterated, said, look, the proposal is the proposal. I know in the past JP Morgan and specifically Jamie Dimon has voiced some concerns with the proposal. But in reading between the lines, it sounds like the Fed is saying, this is the proposal, stick with it. When it comes to regional bank relief, this is the idea of tailoring rules. And specifically the thresholds are when regulations kick in. So if you're interested in regional bank M and A, this is really the thing that's most important to you is, you know, Vice Chair Bowman said that they are actively pursuing this idea of tailoring these thresholds to nominal GDP, which means if you're a $700 billion threshold for PNC Capital One in US bank and you raise it to nominal GDP, you're now going to get around 950 or even a trillion dollars. That opens up a lot of M and A opportunities, both in terms of organic growth and inorganic growth. So that opens up a lot of Growth opportunities, but not M and A opportunities. Growth opportunities. And that proposal probably will be out at the end of this year or the beginning of next year. It sounds like, when I gather from the hearing, it sounds like they're looking at it, but I don't know if anybody's actually writing this proposal. If they are, it's in the early stages. And then on the stress testing side, there are two proposals out there. Once related to stress testing transparency. The other one's the volatility. The joke I've always made before is that if you're in compliance or risk, this excites you. If you're in the front, if you're on the trading desk, not so much. I actually thought those proposals would be out somewhat earlier. I thought they'd be up by now, meaning they'd be finalized by now. And Vice Chair Bowman said they're hoping to do it by the end of the year. So I take that to be that it's going to be applicable to next year. Look, it's too late to be this year's stress testing cycle, but it'll be applicable to next year's stress testing cycle and it will probably be finalized in conjunction with the Basel III endgame. So that is what's going on over at the House Financial Services Committee. Staying on financial regulation though, for a minute, the OCC had its comment period for stablecoins complete. As a reminder, remember Genius act they put out said, okay, you can't pay yield on Stable coins, but you are allowed to have reward programs through Coinbase, etc. Banks didn't like that. We've talked about this on the call about how they're debating it within the Clarity Act. But what the OCC though, is that they put out a proposal implementing the Genius Act. They went actually a little bit further where they just said, look, if there's any type of a hint of a deal like a handshake or just in an agreement or anything like debt, then those reward programs could be restricted. It could be con as paying yield. Obviously Coinbase doesn't like that. The banks did like this. And so the comment letters actively reflected that. There were a couple of questions about this to Comptroller Gold at last week's House Financial Services Committee. The best I can figure out from that is that Comptroller Gold, I think if I were to give him truth serum, he would say, look, I kind of hope the Clarity act resolves this. For me, this is a difficult position to be in right now, so I really don't have a good feeling of where the OCC would go if the Clarity act doesn't pass. But if the Clarity act passes like I think it will, then the OCC will say, right, you know, this is what we did for the rule. But because the Clarity act says that we can only do reward programs based off of transactions, market making use of product, then we're just going to refer to that and that's going to get us through the rest of the rulemaking real quickly. Just last thing I want to talk about before just more midterm thoughts is on tariffs. So, you know, if you've been listening to this call, you know, I've been talking about tariffs for probably too much lately. But last week the US Trade representative announced new investigations or the completion of investigations and is now moving those ideas into proposal status. So what the USTR did is for 60 countries that they're investigating for unfair labor practices, 45 of them would be proposed to have a 12.5% tariff, 14 countries would get 10% tariff and Brazil would get a 37.5% tariff. Now, where this goes is that they put out the proposals for comment. There's going to be a comment period. There will be testimony because in this situation there is actually a hearing that goes along with this. But the date to keep in mind is July 24th. That's when this has to be wrapped up by. So sometime between now and July 24, the U.S. trade Representative is going to come out and say, look, you know, obviously if you have a deal with us, then that supplements these different additional tariffs here. But additional tariffs are coming through this section 301 investigations. July 24th is the date to keep in mind. So the last question I want to ask is a good question I got from a client last week was how much are we going to see Republicans break away from President Trump between now in the midterms and between now and after the midterms? You know, are we actually seeing a shift in how Republicans think at the moment? And I would argue back and I said, look, yes, you are, but for certain issues. And what I mean by that is, yes, Senator Cornyn has lost his primary race, Senator Cassidy has lost his primary race. You know, there are senators out there like Senators Murkowski and COLLINS and Senator McConnell, Senator Curtis from Utah, for examp. They will vote their way on certain issues. But you're talking about a bloc that votes with President Trump 94% of the time instead of 99% of the time. And President Trump, rightfully or wrongfully, this is his decision will sometimes go to an individual that votes with him on that 5% delta and say, you're just not as supportive of me, therefore I'm kicking you out and endorse the other guy. So are you seeing Republicans break away from President Trump? Yeah, on certain issues, like the FISA thing, I could see if President Trump comes out and says, look, you need to pass this thing, I could see a couple of senators just saying, no, I'm not going to do that. But again, it's not really all that much of a big deal when you look at it at the macro perspective. So I'm going to stop there. I'm going to try and get back to 10 minutes just because it is the summertime and things are going to be moving a little bit, you know, a little bit slower lately. So I'm going to wish you an excellent week. Feel free to IB me or send me any questions if you have them in the interim. I know going to be here pretty much most of the summer, so would love to chat and anyway, we will talk soon. Take care.
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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 n@bloomberg.net and come back to the podcast later today for the latest edition of Balance of Power. At Duke Energy, we deliver reliable energy that powers lives, grows businesses and transforms communities. That's why we're making smart investments to add up to 14 gigawatts of new capacity over the next five years. That's enough to power 10.5 million more homes. Putting customers first, Advancing American progress, Powering the next generation. Learn more@duke-energy.com PoweringAmerica
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