Balance of Power: Weekly Washington Policy Pulse

Episode Date: January 12, 2026
Host: Joe Mathieu (Bloomberg)
Main Guest: Nathan Dean (Bloomberg Intelligence Senior Policy Analyst)
Notable Guest: Elliot Stein (Senior Litigation Analyst, Bloomberg Intelligence)

Overview

This episode dives into a turbulent week in Washington policy, covering high-profile developments and upcoming catalysts from Capitol Hill and the White House. Topics include the DOJ’s investigation into Fed Chair Jerome Powell, President Trump’s surprise social-media-driven policy declarations (credit card interest cap and housing reforms), significant movement on crypto legislation, and quick updates on the federal shutdown risk and the pending Trump tariffs court case. The discussion is lively, data-driven, and marked by political sharpness and Washington insider insights.

Key Discussion Points

1. DOJ Investigation into Federal Reserve Chair Jerome Powell

[01:40–11:54]

• Breaking News: DOJ is investigating Powell’s testimony to Congress regarding Federal Reserve building renovations; subpoenas issued.
• Political Context: Seen as part of President Trump’s ongoing campaign to influence or potentially replace Powell due to policy disagreements, especially on interest rates.
• Legal Framework:
  • President needs “cause” to remove a Fed Board governor (as in the Lisa Cook case); policy disagreement isn’t enough—hence, the effort to suggest Powell lied to Congress.
  • Quote — Elliot Stein:
    “This really, as Chair Powell alluded to in his comments, should be seen as part of President Trump’s efforts…to control the Federal Reserve Board.” [03:42]
• Likelihood of Indictment:
  • Still early, just subpoenas, indictment not certain and proving intent to mislead is difficult.
  • Testimony subject focused on renovation cost overruns, which may have innocent explanations.
  • Supporting FAQ from Fed backs Powell’s statements.
• Unintended Consequences:
  • Could strengthen the Supreme Court's inclination to preserve Fed independence.
  • May prompt Powell to remain as Fed governor (term until 2028), even if stepping down as chair.
  • Senator Thom Tillis
    • Criticized DOJ, questioning its independence.
    • Threatened to block any Fed nominee confirmation until matter is resolved, potentially stalling Trump’s plans.
    • “This move by the Justice Department calls into question the independence of the Justice Department much more than it does the independence of the Federal Reserve.” [08:22]
• Senate Politics:
  • If Tillis upholds his position, committee gridlock is likely (banking committee split 13–11 for Republicans).
  • Senate rarely bypasses committee for high-profile Fed appointments—Powell may remain as chair by default longer than anticipated.
  • FOMC chair is elected by Board governors, not the President, adding complexity.

2. Trump’s Proposed 10% Credit Card Interest Cap

[11:54–16:54]

• Trump’s Announcement: On social media, Trump pledged to impose a one-year 10% cap on credit card interest rates effective January 20.
• Actual Authority:
  • Dean: “I just don’t see the President having the authority to do this. A lot of this is governed by state laws.” [12:25]
  • Congressional legislation required—previous Sanders-Hawley efforts failed.
• Economic Impact:
  • Moving from a 21% average to 10% would cost credit card issuers ~$121B in revenue, tighten credit, and possibly wipe out reward programs.
• Political Alliances:
  • Affordability rhetoric draws Democrat interest (Sanders, Warren), but key Republicans—especially those close to Wall Street—are not on board.
  • Committees (House Financial Services, Senate Banking) likely to assert jurisdiction, further slowing any such policy even if it had crossover appeal.
  • “The powers that be essentially say, look, we’re going to slow this process down…” [13:50]

3. Proposal to Ban Institutional Purchases of Single-Family Homes

[16:54–19:40]

• Trump's Social Media Pledge: Vows to work with Congress to ban corporations from buying single-family homes; plans to elaborate at Davos.
• Bipartisan Legislation:
  • Existing proposals already from Democrats (Sen. Jackie Rosen) and some Republicans (Sen. Bernie Moreno).
• Industry Implications:
  • Real risk for single-family REITs like Invitation Homes and AMH, should restrictions materialize.
  • Private equity like Blackstone less exposed in overall asset mix—overblown negative sentiment.
• Legislative Prospects:
  • Not likely to pass due to lack of consensus (House Financial Services Committee skepticism, election year reluctance, unlikely to reach 60 Senate votes).
  • “When you have a hearing plus studying, plus an issue that really may not get 60 votes, plus an election year, I just don’t see it really going anywhere.” [19:02]

4. Cryptocurrency Market Structure, Stablecoins, and Legislation Update

[19:40–20:48]

• Upcoming Markups: Two planned, likely only one will actually proceed.
• Chances of Passage:
  • 70% if markups are successful and only moderately partisan.
  • Likelihood drops if partisan language dominates.
• Key Fighting Point:
  • Dispute centers on yield for stablecoins (Genius Act).
  • Both banks and crypto lobby refusing to support bill without their interests addressed.
  • White House expressed exasperation with the protracted bickering: “Stop complaining… the current situation is untenable.”
• Outlook:
  • If Democrats emerge forcefully opposed after markup, odds of passage diminish.
  • Dean encourages listeners to check in after Friday’s markups for strategies and outlook.

5. Federal Government Shutdown Risk and Congressional Calendar

[20:48–21:50]

• Shutdown Odds: Holding at 30% chance.
• Current Activity: Mini-omnibus bill covering Commerce, Justice, Energy, and Interior is under consideration; likely delay pushes decisions into March.
• Senate Calendar:
  • Currently occupied with Venezuela War Powers Authorization.
  • Upcoming MLK holiday and subsequent recess push real negotiations up to the Jan 31 deadline.
  • Likely scenario: short-term continuing resolution, further extending the threat of shutdown (“kick the can” to February/March).

6. Trump Tariffs Litigation Update (IIBA Case)

[21:50–22:47]

• Case Status: No Supreme Court decision last Friday; next expected opportunity is Wednesday at 10am.
• Potential Market Impact:
  • If tariffs ruled unlawful, markets eye refund mechanisms (now to be done via electronic funds transfer, not paper check).
  • Uncertainty remains whether SCOTUS will allow refunds.
• What’s Next:
  • Even if existing tariffs ruled unlawful, President Trump has mechanisms to restart tariffs via new investigations—though these take time and may not align with election-year incentives.
  • “My Spidey sense is tingling on that… I’m not convinced that President Trump would immediately come back and say, look, we’re going to plate these tariffs back on that are extremely unpopular... before an election.” [22:39]

Notable Quotes & Memorable Moments

• Elliot Stein, on Powell Investigation:
  “It’s going to be very difficult for the Justice Department to establish that Chair Powell intended to mislead and or lie to Congress in his testimony in June.” [05:07]
• Nathan Dean, on Trump’s Credit Card Cap:
  “The bully pulpit from the White House is very real… I just don’t see how the president can actually implement it.” [14:09]
• On Housing Policy Reality Check:
  “At the very least the House Financial Services Committee is going to run a wrap the issue, grab it back and say, we’re going to study it, we’re going to have a hearing…” [18:36]
• Dean, on Government Shutdown:
  “I think they come back after the recess, they say, right, we need more time. They do a continuing resolution… and then they have the shutdown threat if it happens at that point as well.” [21:33]

Timestamps for Key Segments

• Powell Investigation and Senate Politics — [01:40–11:54]
• Trump’s Credit Card Interest Cap — [11:54–16:54]
• Proposal to Ban Inst. Housing Purchases — [16:54–19:40]
• Crypto Legislation Update — [19:40–20:48]
• Government Shutdown Odds & Congressional Calendar — [20:48–21:50]
• Tariffs Litigation Update — [21:50–22:47]

Final Takeaways

• The week opens with major uncertainty for the Federal Reserve’s leadership and independence amid DOJ scrutiny and political pressure.
• Trump’s campaign-style, populist social media announcements on affordability—credit, housing—fuel headlines but face substantial legal and institutional barriers.
• Crypto regulation is churning forward, but divisive details around stablecoins loom large.
• A shutdown threat lingers—expect continuing resolutions to prolong uncertainty.
• Tariff litigation could have immediate consequences, but the mechanics and timing of any White House response remain up in the air.

Stay tuned for rapid developments—Washington’s volatility shows no signs of slowing this year.