President Trump’s announced tariffs and the related turmoil

Welcome back to the Golden Apple.  Last week, we began this newsletter with a paragraph on President Trump’s announced tariffs and the related turmoil.  If that feels like a distant memory to you, you aren’t alone.  This past week has seen a fast and furious array of announcements impacting the functioning of numerous agencies, and in some cases, court decisions countermanding those orders.  We will attempt to itemize and unpack these updates below.

Financial Services and Banking Updates

Crypto Welcomed on the Hill: The House Financial Services Digital Asset Subcommittee will hold a friendly hearing tomorrow examining the use cases for digital assets and blockchain technology.  The cryptocurrency industry has been greeted warmly by the Trump administration and Capitol Hill Republicans, who have joined the companies in criticizing the Biden administration’s strict approach to crypto regulation.  Last Congress, crypto advocates lobbied on a few high-profile efforts to alter regulatory regimes for digital assets and stablecoins, but were not ultimately successful in seeing legislation signed into law.  Rep. French Hill (R-AR) lead the negotiations for the Republicans in the previous Congress, and is well-situated to continue these discussions from his new position as Chairman of the full Committee.  A Republican Senate and White House will signal a much more favorable environment for cryptocurrency backers, though any legislation will still need Democratic support to reach 60 votes in the Senate.

Powell to Testify in Senate, House: The first of this Congress’ Humphrey Hawkins hearings will take place in the Senate tomorrow, followed by the House on Wednesday.  Fed Chair Jerome Powell will answer lawmakers questions in his first appearance since July.  Some Republicans have voiced frustration with Powell after the Fed voted to hold rates steady at 4.25%-4.5% instead of further cuts; expect Democrats to hone in on continued inflation and high grocery prices.

Congressional Updates

Reconciliation Makes Little Progress: There isn’t much to report on reconciliation this week in terms of actual progress, though there has been a good amount of activity in the last week.  House Republicans met with President Trump at the White House last week, but internal House politics prevented an agreement on a blueprint.  Speaker Mike Johnson attended the Super Bowl yesterday evening with President Trump, where the two were expected to continue talks. Absent a House plan, however, the Senate is making its own moves.  Last Friday, Senate Budget Chair Lindsay Graham released a budget resolution honed toward the upper chamber’s preferred two-bill strategy.  The resolution sets up a bill targeted toward border, energy, and national security, while leaving the wider question of tax cuts for later debate. 

Shutdown Worries: Meanwhile, the continuing resolution passed in December expires on March 14th, and Speaker Mike Johnosn has signaled frustration with Democrats for being unresponsive.  Naturally, that characterization was disputed by Minority Leader Hakeem Jeffries; House Appropriations leaders Tom Cole (R-OK) and Rosa DeLauro (D-CT) also reported progress.  That said, Democrats are certainly upset and frustrated by President Trump’s attempt to disassemble numerous government agencies, and they view this must-pass funding deal as one of the few tools they have to assert leverage.  So we expect Democrats in both the House and the Senate to remain united for a while longer in denying Republicans a deal.

Administration Updates

OCC Names Rodney Hood as Acting Comptroller: On Friday, Rodney Hood was named Acting Comptroller of the Currency, replacing Michael Hsu who has served as the agency’s acting comptroller since 2021.  Hood previously served as chairman of the National Credit Union Administration (NCUA) Board. 

Luke Pettit Nominated for Assistant Secretary for Financial Institutions: Pettit, previously a staffer to Senator Bill Hagerty (R-TN), has been named to lead the Treasury division office that plays a significant role in regulation governing banks, fintechs, and non-bank lenders.  The position requires Senate confirmation.

Scott Turner Confirmed as HUD Secretary: Last Wednesday, the Senate voted 55-44 to confirm Scott Turner to serve as the Secretary of Housing and Urban Development (HUD). Turner previously served in the Texas State Senate and as a White House Aide.  He is tasked with leading the agency at a time when cost of housing and cost of living necessities are a top issue for many Americans.  Turner earned the votes of all Republicans and two Democrats: Peter Welch (D-VT) and John Fetterman (D-PA).

Vought Sidelines CFPB: Last week, we reported that Treasury Secretary Scott Bessent had been named Acting Director of the CFPB in light of Rohit Chopra’s dismissal from the agency.  A week later, newly-confirmed OMB Director Russell Vought has replaced Bessent as Acting Director, announced that the agency would not be taking unappropriated funds, and on Saturday evening issued a stop-work order to the agency’s staff.  Employees were informed that the DC headquarters will be closed, and were ordered to work remotely and/or wait for further guidance from supervisors regarding administrative leave placements.  Some of these actions are familiar, and others are new.  We recall that under the first Trump administration, the CFPB did not take unappropriated funds, but had sufficient resources to continue operations.  The move to shut down supervision and enforcement action, however, is a new and surprising step.  The abrupt shuttering of the agency will certainly draw lawsuits (and in fact already has, though we expect more to follow), so expect court activity to dictate the agency’s next steps.

Musk’s DOGE Disrupts Numerous Agencies: Last week, emissaries from Elon Musk’s DOGE taskforce moved to dismantle the U.S. Agency for International Development (USAID), placing around 2,700 employees on administrative leave, pausing all U.S. foreign aid, ordering some humanitarian workers overseas to return to the U.S., shuttering the agency’s D.C. headquarters, and removing its seal and signage.  These actions were quickly challenged with lawsuits filed by a government workers’ union and association of foreign service workers.  Judge Carl Nichols, who was appointed under President Trump’s first term, issued a limited temporary restraining order, blocking the Trump administration from placing the employees on leave and reinstating those who had already been placed on leave.  There will be a hearing February 12th where the union representatives will present additional arguments. Amid this uproar, DOGE employees also gained access to the Treasury Department’s federal payments system, ostensibly to evaluate disbursements for fraud and abuse.  However, this access triggered alarm across numerous constituencies: Democrats feared Musk’s access to Americans’ personal data as well as sensitive information about Social Security and Medicare recipients.  Grantees on the receiving end of government funds were, in some cases, notified that loans on behalf of the government would not be paid.  And government officials noted that the Treasury’s payment systems were intentionally accessed by a select, nonpartisan few to ensure impartiality and guard against abuse.  A federal judge blocked DOGE access to the payment system on Saturday, with a hearing set for February 14th.  President Trump has identified the U.S. Department of Education as another likely focus on the DOGE taskforce’s efforts.  And, of course, the previously discussed CFPB closure rounds out the week.  All this to say that we are seeing a pattern of dramatic activity by DOGE to stop all agency activity, substantially reduce staff to all but a few essential employees, and/or fully shutter agencies.  Then, amid court activity, agency functions are slowly added back in.  This is reminiscent of Elon Musk’s Twitter playbook, where he dramatically reduced staff only to quickly hire them back. 

Weekly Political Synopsis from Jim Ellis

NATIONAL

Democratic National Committee:  Minnesota Democratic Farm Labor Party chairman Ken Martin was elected as the new chairman of the Democratic National Committee replacing South Carolina’s Jaime Harrison who declined to seek re-election for a second term. 

Mr. Martin has run the Minnesota party operation since 2010.  He defeated Wisconsin Democratic Party chairman Ben Wikler and former Maryland Governor and 2016 presidential candidate Martin O’Malley with more than 57% of the vote.  A total of 428 Democratic National Committee members participated in the vote. 

SENATE

Kentucky:  State House Minority Leader and defeated 2023 Attorney General nominee Pamela Stevenson (D-Louisville) announced her run for the US Senate over the weekend.  Incumbent Sen. Mitch McConnell (R) is presumed headed for retirement, but he has yet to confirm that he will not seek an eighth term in 2026.

Michigan:  The first individual to announce an official candidacy to replace retiring Sen. Gary Peters (D) came forward this week.  State Sen. Mallory McMorrow (D-Royal Oak Township) declared her candidacy. 

A crowded Democratic primary is expected.  Former US Transportation Secretary Pete Buttigieg, Attorney General Dana Nessel, and US Rep. Haley Stevens (D-Birmingham) are all potential Senate contenders, among others.  Former US Rep. Mike Rogers, who came within 19,006 votes of defeating now-Sen. Elissa Slotkin (D) in November, is a probable GOP candidate.

North Carolina:  Former Lt. Governor Mark Robinson (R), whose 2024 gubernatorial campaign was destroyed over a personal scandal revelation, said he will not challenge Sen. Thom Tillis (R) next year.  Mr. Robinson said he has no plans to again seek public office.  Democrats are expected to make North Carolina their top 2026 Senate conversion target.  Sen. Tillis has already announced that he will run for a third term.

HOUSE

AZ-6:  Former Arizona state Sen. Kirsten Engel (D) has lost two close elections to US Rep. Juan Ciscomani (R-Tucson) in the state’s politically marginal southeastern 6th Congressional District, so it is likely that Democratic leaders will look toward another candidate option in 2026.  Such being the case, retired Marine Corps Sergeant JoAnna Mendoza (D) announced her candidacy this week.  Whether she becomes the party standard bearer for the next election remains to be seen, but it is likely that Ms. Engel’s congressional opportunities have come to an end.

NY-21:  Local Democratic County party chairmen have chosen Lisbon, NY dairy farmer Blake Gendebien as their upcoming special election congressional nominee once US Rep. Elise Stefanik (R-Schuylerville) is confirmed as US Ambassador to the United Nations. 

Republican county chairmen have yet to announce their choice.  In New York, vacancies are filled in one election.  There are no special election party primaries.  The local political party leadership in the counties comprising the particular district are given the power to choose the succeeding nominee.

Meanwhile, Democrats in the state legislature are considering drafting legislation to change the special election law in order to delay filling this Republican seat until much later this year.  Their plan is to hold the special congressional election concurrently with either with the June primary or, more preferably from their perspective, the November municipal elections.  The goal is to retain the 21st District, which encompasses all or parts of 15 counties in the northeastern part of the state, as a vacant seat in order to keep the House Republican majority as slim as possible. 

GOVERNOR

California:  Attorney General Rob Bonta (D) announced this week that he will not run for Governor in 2026 when incumbent Gavin Newsom (D) will retire due to term limits.  Mr. Bonta said he will seek re-election and urges former Vice President Kamala Harris to enter the ’26 gubernatorial campaign.

Florida:  The Victory Insights research firm tested the Florida Republican electorate and sees US Rep. Byron Donalds (R-Naples) opening with a big lead.  Though no candidate has formally announced for Governor, Rep. Donalds appears as a definitive bet to run.  The VI poll (1/26-27; 850 FL likely 2026 Republican primary voters; interactive voice response system and text) projects Rep. Donalds as holding a substantial 33-4-3-1% advantage over Lt. Gov. Jeanette Nunez, state Agriculture Commissioner Wilton Simpson, and Miami Mayor Francis Suarez. 

Meanwhile, Lt. Gov. Nunez is now scheduled to resign her position in order to become the interim President of Florida International University.  Gov. DeSantis will then appoint a new Lt. Governor, which could change the outlook for the 2026 gubernatorial campaign to replace him.

Illinois:  The Land of Lincoln is one of 11 states that has no gubernatorial term limits.  This being the case, Gov. J.B. Pritzker (D) confirms that he is considering running for a third term but will announce his decision at some point in the future.  Illinois is one of the Democrats’ strongest states, so winning a third term will largely depend upon clinching renomination in the March 2026 party primary.

Maryland:  Gov. Wes Moore (D) seems secure in what will be his re-election run in 2026, but he has already drawn at least one challenger.  Retired Air Force veteran John Myrick (R), who ran for the US Senate in 2022 but fared poorly in the GOP primary, announced that he will enter next year’s Governor’s race.

Michigan:  Rep. John James (R-Farmington Hill) is way ahead in newly released statewide poll.  The OnMessage firm tested the Michigan Republican primary electorate (1/17-19; 1,000 MI likely 2026 Republican primary voters; text to web) and finds Rep. James leading Sen. Aric Nesbitt (R-Porter Township), former Attorney General Mike Cox, and businessman and former gubernatorial candidate Kevin Rinke, by a huge 46-6-4-3% count.  Rep. James has not indicated whether he will enter the open Governor’s campaign.

For the Democrats, Lt. Governor Garlin Gilchrist moved closer to running for Governor.  Early this week, he released a statement saying he would not enter the open US Senate race leading observers to believe he is taking one more step toward finalizing a campaign for the state’s chief executive position.  Additionally, Genesee County Sheriff Chris Swanson moved ahead to declared his candidacy for the Democratic gubernatorial nomination.

Ohio:  Confirming last week’s released Fabrizio Lee & Associates survey (1/26-27; 600 OH likely 2026 Republican primary voters; live interview & text) that projected businessman and former presidential candidate Vivek Ramaswamy (R) leading Attorney General Dave Yost and State Treasurer Robert Sprague, 52-18-2%, in a preliminary Republican primary gubernatorial poll, the WPA Intelligence firm this week confirms the findings.

According to WPA’s Ohio poll (1/28-30; 600 OH likely Republican primary voters; live interview and text), Mr. Ramaswamy would lead Messrs. Yost and Sprague, 57-26-6%.  The latter two men are announced gubernatorial candidates, while a declaration of candidacy from Mr. Ramaswamy is still forthcoming.

Mr. Sprague just ended his short-lived Governor’s candidacy.  Instead, he is entering the open Secretary of State’s race.  In departing the gubernatorial campaign, Mr. Sprague pledged his support to Mr. Ramaswamy.

South Carolina:  The Down Ballot political blog is reporting that former Palmetto State Governor and ex-US Representative Mark Sanford (R), who concluded his time as Governor in disgrace over an extramarital affair with an Argentinian woman in 2011 only to return to win a US House special election in 2013, but then lost a renomination primary in 2018, says he may attempt another political comeback. 

This week, Mr. Sanford said he is considering again running for Governor when the post comes open in 2026.  Gov. Henry McMaster (R), now the longest-serving chief executive in state history, is ineligible to seek a third full term next year.  Other Republicans considering running for Governor are Lt. Gov. Pamela Evette, Attorney General Alan Wilson, and US Rep. Nancy Mace (R-Charleston).

South Dakota:  We may see a budding Republican gubernatorial primary soon develop.  With Gov. Kristi Noem (R) resigning to become US Homeland Security Department Secretary, Lt. Gov. Larry Rhoden (R) ascended to the Governorship.  Late last week, he indicated to reporters that he had not yet decided whether to run for a full term in 2026. 

At-large US Representative Dusty Johnson (R-Mitchell) is reportedly developing a gubernatorial campaign operation irrespective of Gov. Rhoden running.  It is apparent that this June 2026 Republican primary could be a battle to watch.

Wyoming:  Two-term at-large Wyoming US Rep. Harriet Hageman (R-Cheyenne) is confirming that she is considering mounting another campaign for Governor.  Rep. Hageman came to national political prominence by defeating then-Rep. Liz Cheney in the 2022 Republican primary with a landslide 66-29% victory. 

Ms. Hageman ran in 2018 but lost the Republican primary to now-Gov. Mark Gordon.  Wyoming has a two-term limit on the office, but the state Supreme Court has ruled that the limit is only a statute and not in the state’s Constitution.  Therefore, the law could be challenged.  Gov. Gordon has not ruled out making such a challenge, so the Equality State political picture could become quite active as the 2026 election cycle progresses.

STATE & LOCAL

Boston:  As expected, Josh Kraft, son of New England Patriots owner Robert Kraft and head of the team’s philanthropic entity, announced that he will challenge Boston Mayor Michelle Wu later this year. 

Mr. Kraft attacks the Mayor for abandoning her promise to make the city’s transportation system free and adding too many bike lanes that cause further traffic problems on Boston’s narrow and already congested streets.  Ms. Wu responded saying Mr. Kraft has voted in Republican primaries while never voting in a Boston City Council or Mayor’s election. 

The mayoral jungle primary is scheduled for September.  All candidates are placed on one ballot with the top two advancing to a runoff election if no one receives majority support in the initial vote.

New York City:  Another mayoral poll was released for the 2025 election, and the results confirmed two previously released public polls.  The Honan Strategy Group conducted the latest mayor’s race survey (1/23-26; 769 New York City likely Democratic primary voters; text to web) and found former Governor Andrew Cuomo leading the pack of candidates while Mayor Eric Adams is way behind. 

The initial ballot test question found Mr. Cuomo topping NYC Comptroller Brad Lander and Mayor Adams 35-9-9%, with all other candidates trailing in single digit support.

New York City uses the Ranked Choice Voting system to determine the municipal election winners.  Carried through to a sixth RCV round, Mr. Cuomo would defeat Mr. Lander 58-17%.  Mayor Adams would be eliminated after the fifth round of political overtime voting.  Among the respondents, 85% said that Mayor Adams should not be re-elected.  Rounds continue until one candidate commands majority support.