Senate passed their budget resolution

Welcome back to the Golden Apple. Last week, the Senate passed their budget resolution after an all-night session of amendment debate.  Meanwhile, the White House weighed in again to push the more comprehensive House resolution, and the House returns to Washington this week to take up their version on the floor.  We will get into more specifics, as well as provide an overview of administration activity and significant executive orders, below.

Financial Services and Banking Updates

House Financial Services Reviews China Influence: On Tuesday, the full House Financial Services Committee will hold a hearing examining China’s influence across international financial institutions, financial transactions, and numerous industry sectors from a competition standpoint.  The legislative hearing will review 17 policy proposals aimed at combatting money laundering, stemming drug trafficking, and strengthening relative U.S. influence.

Senate Banking Hearing on Digital Assets: On Wednesday, Senate Banking Chair Tim Scott (R-SC) will hold a hearing reviewing digital asset regulatory frameworks. Earlier this month, Scott was joined by colleagues on the Committee including Democrat Kirsten Gillibrand (NY) in introducing stablecoin legislation titled the GENIUS Act.  Stablecoins have been the subject of multiple legislative proposals and much bipartisan negotiation in recent years.  The Senate bill, headed up by Chairman Scott, creates a framework for non-bank stablecoin issuers and provides broad regulatory authority and supervisory over those non-bank issuers to the OCC.  The bill allows states to regulate issuers with assets below $10 billion, though those state-based issuers must transition to federal regulation if they exceed $10 billion in market capitalization.  On the House side, Rep. Bryan Steil (R-WI) has a competing proposal in the STABLE Act, which utilizes the OCC as the regulator as well, but provides a more decentralized regulatory structure across the Fed, FDIC, and NCUA as well.  Furthermore, the Steil bill establishes a regulatory approval process through which non-bank issuers would apply to operate, with a 120-day decision timeline.  House Democrats have promoted their own version of stablecoin legislation, as well.  All this to say that defining a regulatory structure for stablecoins is a bipartisan and bicameral priority, and we are likely to see some blend of the above proposals advance.

Senate Hears Nominations for Pulte, McKernan: On Thursday, the Senate Banking Committee will hold a nomination hearing for William Pulte to be FHFA Director and Jonathan McKernan to be Director of the Consumer Financial Protection Bureau, among others.  Expect discussion about the future of the GSEs, including a potential unwinding from conservatorship and what this might mean for mortgages.  For McKernan, who was until recently an FDIC board member, look for discussion on the future of the CFPB following recent layoffs and ongoing legal battles. There are also a number of Biden-era rules that Republican Senators will likely look to undo, including on overdraft fees, medical debt, so there may be some discussion around what can be done at the agency level on those efforts.

Congressional Updates

Senate Passes Budget Resolution; House to Vote This Week: Early last Friday morning, the Senate adopted their $340 billion budget resolution after an all-night “vote-a-rama” during which more than 30 amendments were offered and debated.  The final vote tally was 52-48, with Republican Rand Paul (KY) joining all 47 Democrats in opposition.  The bill provides money for border security, defense, and energy priorities, but leaves tax cuts for a separate bill.  Also last week, just before the resolution went to the floor, President Trump weighed in, favoring the more comprehensive House version, which includes all priorities including tax cuts.  The House will take up their resolution on the floor this week. The passage of the budget resolutions is a precursor to reconciliation, during which House and Senate leadership and committees will put into writing the bill’s spending priorities and summon the pay-fors. 

House Targets Biden-Era Rules: Using the Congressional Review Act, House Republican leadership has outlined plans to roll back 10 initial Biden-era regulations across a variety of topics and industries.  The discussion of which regulations may be overturned using the CRA has been ongoing since the election; a rule must have been published in the Federal Register within 60 legislative days prior, must be sufficiently high-priority to compete on floor time, and must have the political will to pass along tight party margins.  Several of the 10 top-priority rules are in the energy and environment space.  However, the CFPB’s rule to supervise the largest non-bank companies offering payment transfers and wallet functions is high on the list, as is an IRS rule requiring the reporting of profits of crypto transactions for tax purposes.  Not on the list, but worth watching: Sen. John Kennedy (R-LA) has introduced a resolution to overturn the CFPB’s overdraft rule.

Administration Updates

Trump Issues Executive Order on Independent Agencies: Last week, President Trump issued an executive order expanding control over independent agencies.  The order places OMB Director Russ Vought in a prominent role overseeing independent agencies, including establishing performance standards for agency heads and reviewing agency priorities and expenditures.  Most importantly, the order requires agencies to clear any proposed or final rules through OMB’s Office of Information and Regulatory Affairs (OIRA) prior to publication in the Federal Register.

Second Executive Order Curbs Agency Rules: In a second sweeping executive order last week, President Trump ordered a review of all government regulations to weed out those in conflict with his priorities.  Specifically, the order tasks federal agencies and their DOGE teams to sift through existing regulations to determine those that do not align with the Trump administration’s priorities; OMB will then develop a plan to either rescind or alter the regulations.  The order defines the term ‘regulation’ broadly to include all agency-issued guidance, as well. This order builds upon a similar order during Trump’s first term, which required a rollback of two regulations for every new one issued.  That order, however, was more focused on reducing regulatory duplication and overlap and was less explicitly focused on ideological priorities.

Weekly Political Synopsis from Jim Ellis

SENATE

Georgia:  A new poll was released for the Georgia Senate race, and we again see data showing Gov. Brian Kemp (R) leading first-term Sen. Jon Ossoff (D).  The Quantas Insights survey (2/11-13; 800 GA registered voters; opt-in online panel) found Gov. Kemp holding a 49-42% advantage over Sen. Ossoff.  The Governor has not yet indicated that he will run for the Senate.  Tested against any other potential Republican candidate, Sen. Ossoff holds the advantage.

Rep. Rich McCormick (R-Suwanee) clarified his status.  Originally, it was reported that he is thinking of running for the Senate irrespective of what Gov. Kemp decides.  This week he issued a statement saying that he would yield to the Governor if Mr. Kemp becomes a Senate candidate.  Rep. Buddy Carter (R-Pooler/Savannah) is also interested in the Senate race, but he too would yield to Gov. Kemp.

Kentucky:  This week, Sen. Mitch McConnell (R) officially announced that he will retire, and the campaign to replace him is already under way.  Last week, seven-term Rep. Andy Barr (R-Lexington) indicated that he will run for the Senate in 2026 if Sen. McConnell retires.  This week, the Club for Growth conservative organization launched negative ads against Rep. Barr.  Former Attorney General and 2023 gubernatorial nominee Daniel Cameron (R) immediately announced for the Senate upon McConnell’s public statement. 

Democratic leaders will try to entice Gov. Andy Beshear into the race.  The Kentucky Senate contest will attract a great deal of political attention in the 2026 election cycle.

Minnesota:  Sen. Tina Smith (D) retiring could ignite a political firestorm within the Minnesota Democratic Farm Labor Party.  Lt. Gov. Peggy Flanagan is the first to seriously indicate that she will run for the Senate.  Gov. Tim Walz, who is eligible to run for a third term, is also expressing interest in the Senate seat.  This week, the Down Ballot political blog reported that Rep. Angie Craig (D-Prior Lake), giving no indication that she would yield to either Gov. Walz or Lt. Gov. Flanagan, is also confirming her interest in possibly becoming a Senate candidate.

Therefore, should this high level multi-candidate Democratic primary develop, such a campaign could become divisive.  In an August primary with a short general election cycle, it is probable that the eventual nominee would be more vulnerable than usual in a Minnesota general election campaign. 

A quick Public Policy Polling survey of the Democratic electorate (2/14-15; 688 MN likely Democratic primary voters; multiple sampling techniques) found Lt. Gov. Flanagan opening with a large lead over Rep. Craig, 55-22%.  Gov. Walz was not tested as part of this poll.

On the Republican side, US Rep. Pete Stauber (R-Hermantown/Duluth) confirmed that he will not run for the Senate.  Former national sports telecaster Michelle Tafoya, ex-news anchor Liz Collin, and businessman and former gubernatorial candidate Kendall Qualls are reported as possible Senate candidates. 

HOUSE

CA-40:  Former Chino Valley School Board member and ex-congressional candidate Christina Gagnier (D) announced that she will enter the race to challenge three-term California US Rep. Young Kim (R-La Habra) next year.  Ms. Gagnier was defeated for re-election in 2022 and also lost her congressional race by almost a 2:1 margin to Rep. Norma Torres (D-Pomona) in 2014, but she did qualify for the general election through the jungle primary.

Already in the race is art gallery owner Esther Kim Varet (D).  Joe Kerr, the 2024 general election finalist who lost to Rep. Kim, 55-45%, has also filed papers to create a 2026 campaign committee.  According to the Down Ballot political blog statisticians, President Trump carried this district in November with a 49-47% margin after losing here to Joe Biden 50-48% in 2020.

NY-17:  Rockland County Legislator Beth Davidson (D) announced that she will run for Congress in 2026 in what could be an open seat.  Two-term Rep. Mike Lawler (R-Pearl River) is openly considering launching a campaign for Governor.  Should he run statewide, this district could become the Democrats’ top national conversion target. 

The FiveThirtyEight data organization rates the seat as D+7.  Should Rep. Lawler not seek re-election, we can expect to see a very crowded Democratic primary form.  In November, Rep. Lawler defeated former Congressman Mondaire Jones (D), 52-46%.

OH-13:  Ohio state Sen. Kristina Roegner (R-Hudson) who was thought to be interested in challenging US Rep. Emilia Sykes (D-Akron) next year instead announced her candidacy this week for State Treasurer.  This likely leaves the congressional door wide open for ex-state Senator Kevin Coughlin (R) to run again.  He held Rep. Sykes to a 51-49% victory margin in November.

TN-6:  Despite Sen. Marsha Blackburn (R) making obvious moves to enter the open 2026 Governor’s race and being way ahead in Republican primary polling, Rep. John Rose (R-Cookeville) again this week indicated he will soon announce his gubernatorial effort regardless of who else decides to run. 

If Rep. Rose vacates his Middle Tennessee 6th District, we can expect a highly competitive and crowded Republican primary battle to form.  The eventual GOP nominee would become a prohibitive favorite to hold the seat in November.

TX-28:  Republicans may have a strong candidate to challenge indicted Rep. Henry Cuellar (D-Laredo) in 2026.  Webb County Judge Tano Tijernia, who became a Republican in December, is weighing his political situation as a possible GOP contender.  It is also unclear if the Trump Justice Department will pursue the indictment of Mr. Cuellar, who is the most bipartisan Democrat in the House. 

Webb County, which comprises about 35% of the 28th Congressional District is 95% Hispanic, yet the domain is turning more Republican.  President Trump became the first Republican national candidate to carry Webb County since 1912 according to the Down Ballot political blog statisticians in defeating Kamala Harris here, 51-48%.

GOVERNOR

California:  The California Republicans have a gubernatorial candidate.  Riverside County Sheriff Chad Bianco (R), as expected, announced that he will join the field in what will be an open California Governor’s race next year since incumbent Gavin Newsom (D) is term-limited.  It will be difficult for any Republican to mount a serious challenge in the state since it would be difficult to raise the $100 million or so in funding to legitimately compete. 

Sheriff Bianco is already under attack for being too far right, and former Vice President and ex-California Sen. Kamala Harris still remains very much in the picture for the Democrats.  At this point, Ms. Harris has not indicated that she will run, but there is clear evidence that she is testing the California political waters.  Early polling suggests a crowded June 2026 jungle primary could be close.  Ms. Harris carried the Golden State in the 2024 presidential election with 58.5% of the vote.

Florida:  President Trump issued a statement of encouragement to Rep. Byron Donalds (R-Naples) in reference to him running for Governor next year.  Polling finds Rep. Donalds jumping out to a big lead, but those surveys did not include Florida First Lady Casey DeSantis’ name.  In what is a precursor to a Trump endorsement for Rep. Donalds, a developing race between he and Mrs. DeSantis would certainly be a campaign to watch.

Iowa:  State Auditor Rob Sand, the only Democratic statewide elected official in Iowa, confirms he is considering challenging Gov. Kim Reynolds (R) next year.  His campaign treasury report, however, suggests he is doing more than just “considering” a run.  Mr. Sand discloses a large cash-on-hand advantage over Gov. Reynolds, rounded to $7.5 million versus $3 million.  Gov. Reynolds is expected to seek a third term but has not yet announced her 2026 political plans. 

Also this week, former state Representative Brad Sherman declared that he will challenge Gov. Reynolds in next year’s Republican primary.  If she runs, the Governor will be a strong favorite for renomination and begin with a major advantage toward re-election.

Kansas:  Former Kansas City Royals President and ex-General Manager Dayton Moore (R) is confirming that he is considering entering the open 2026 Kansas Governor’s race.  Mr. Moore was a long-time Royals’ executive including his time as General Manager when the team won the 2014 World Series.  Gov. Laura Kelly (D) is term limited in 2026, but there has been little activity so far in terms of potential gubernatorial candidates in either party.

New Mexico:  While former US Interior Secretary and ex-Congresswoman Deb Haaland has been working to score an early clinch for the open Democratic gubernatorial nomination, a new former elected official is confirming that he is considering entering the primary campaign.  Former Las Cruces Mayor Ken Miyagishima (D) confirms that he is testing the political waters about his own run for Governor.

Oklahoma:  Ex-state House Speaker Charles McCall entered the open Republican gubernatorial campaign this week.  He will oppose Attorney General Gentner Drummond who announced his candidacy several weeks ago. 

The Republican nomination process will likely determine term-limited Gov. Kevin Stitt’s (R) successor.  The Oklahoma primary will be scheduled for late June with an August runoff if no candidate receives majority support in the initial election.

The regular Oklahoma Sooner Poll that the Cole, Hargrave, Snodgrass & Associates firm conducts (2/10-15; 500 OK registered Republican primary voters; live interview) finds Mr. Drummond leading State Superintendent of Public Instruction Ryan Walters, former Public Safety Secretary Chip Keating, and Mr. McCall by a 44-14-6-5% count.  Only Messrs. Drummond and McCall are announced gubernatorial candidates.

STATE AND LOCAL

Philadelphia County, PA:  Controversial District Attorney Larry Krasner (D), one of billionaire George Soros heavily backed candidates, announced that he will seek a third term later this year.  Mr. Krasner has been consistently labeled “soft on crime” in a county with a high crime rate.  This will be a hotly contested race both in the Democratic primary and general election.  Retired Judge Patrick Dugan is already a Democratic DA candidate.

San Antonio, TX:  Councilman John Courage (D) this week became the 27th candidate vying to replace term-limited Mayor Ron Nirenberg (D).  The San Antonio Mayor’s race will attract a great deal of political attention later this year.  The crowded field suggests a Republican could venture into the general election, which could mean a highly competitive electoral battle in the Alamo City.  The initial election is scheduled for May 3, 2025.  If no candidate receives majority support, the top two finishers will advance to a June 7th runoff vote.