U.S. Financial Regulatory Week Ahead

Summer Break Comes to Washington

August 5 - 9 , 2024

Last week, we said the Dog Days of Summer were not officially here.  Well, this week, they are here in force.  Washington collectively ran out of town for the summer holidays.  There is very little going on this coming week – no Fed speeches, no big regulatory agency meetings, no Congressional hearings, not many think tank events or trade association events.  So, for now, we should all enjoy the quiet.

But last week was anything but quiet.  The Federal Deposit Insurance Corporation (FDIC) issued a bipartisan agreement among the board on a proposed rulemaking to step up oversight of asset managers and the amount of shares in banks that they own.  Until now, this has been a self-certification process with the asset managers promising to live by the rules.  No more.  Bank examiners will be looking much more closely at who owns what amount of shares in banks – something the asset management industry does not like.  But when you have the FDIC Board – Republicans included – agreeing more has to be done, that is tough to fight back against.   You can read all the materials  and proposed rulemaking by the FDIC  HERE.

But that was not the only action happening at the FDIC last week: The agency’s Inspector General released a scathing report further detailing the abusive atmosphere allowed to persist among employees, including how FDIC leadership failed to properly address allegations of sexual harassment of employees or to implement programs designed to prevent such misconduct.  The Inspector General also revealed a separate report is forthcoming detailing  “FDIC executives’ knowledge of harassment and related misconduct” as well as “factual findings regarding selected allegations that senior officials personally engaged in harassment or related misconduct.”

Somehow, FDIC Chair Martin Gruenberg continues to hold onto his seat, saying he will step down only when a replacement is confirmed by the Senate – which, considering the Senate Banking Committee failed to move on an expected confirmation vote last week, kicking it into September – makes us believe Gruenberg could be still sitting in the chair for months and months to come.  That is a true scandal in and of itself.

Turning to Congress, the House of Representatives left for the summer break two weeks ago while the Senate was in session last week.  Despite hanging around and extra week, they did not get two expected actions done: First, as mentioned above, the Senate Banking Committee did not move on the nomination of Christy Goldsmith Romero as the next FDIC Chair. Senate Banking Committee Chair Sherrod Brown (D-OH) put it off until September.  But we think he will still have trouble moving the nomination forward as – so far – all Republicans oppose her nomination.

Over at the Senate Agriculture Committee,  Chair Debbie Stabenow (D-MI) pulled back from marking up her crypto regulatory bill, also choosing to wait until the Senate comes back in September.   We have a feeling the dynamics and concerns over the draft bill will be pretty much unchanged by then, ending Stabenow’s efforts (she is retiring at the end of this session).

Meanwhile, the House of Representatives – while out of session – still fired off two missives of note. First, the House Republican Environmental, Social, and Governance (ESG) Working Group—led by Oversight and Investigations Subcommittee Chairman Bill Huizenga (MI-04)—released its final staff report Thursday.  The report is the culmination of the Working Group’s comprehensive examination of the factors contributing to the rise of ESG initiatives and the consequences for everyday investors, in addition to recommendations to protect American capital markets from the threats posed by these politically motivated mandates.

The report calls for legislative action on a number of major points, including:

• Reform the proxy voting system to safeguard the interests of retail investors.

• Promote transparency, accountability, and accuracy in the proxy advisory system.

• Enhance accountability in shareholder voting by aligning voting decisions with the economic interests of shareholders.

• Increase transparency and oversight of large asset managers to ensure their practices reflect the pecuniary interest of retail investors.

• Improve ESG rating agency accountability and transparency to safeguard retail shareholders.

• Strengthen oversight and conduct thorough investigations into federal regulatory efforts that would contort our financial system into a vehicle to implement climate policy.

• Demand transparency, responsibility, and adherence to statutory limits from financial and consumer regulatory agencies.

• Protect U.S. companies from burdensome European Union (“EU”) regulations, safeguarding American interests in global markets.

You can read the full report HERE.

And second, this past Wednesday, the Chairman of the House Financial Services Committee, Patrick McHenry (R-NC), and all the Committee Republicans sent a letter to Federal Reserve Chairman Jay Powell demanding the Fed withdraw and re-propose the Basel III Endgame rulemaking in its entirety, given the substantial changes to its original form. The letter follows Chairman Powell’s testimony before the Committee in support of re-proposal where he suggested it needed substantial re-writes.  You can read the full letter HERE.   It is another hammer blow against the draft rules, which are already on life-support as Fed Vice Chair for Supervision Michael Barr scrambles to salvage the proposal.

Below is a listing of all the other (very few) significant regulatory-related events this coming week:

U.S. Congressional Hearings

U.S. Senate

• The Senate is out for the month of August and returns on September 9. No events are scheduled at this time.

House of Representatives

• The House is out for the month of August and returns on September 9.   No events are scheduled at this time.

US Regulatory Meetings & Events

Federal Reserve Board and Federal Reserve Banks

• Monday, August 5, 4 p.m. – San Francisco Federal Reserve Bank President Mary Daly will discuss monetary policy and economic trends before moderated conversation hosted in partnership with the Hawaii Executive Collaborative in Hawaii.

• Thursday, August 8, 3:00 p.m. – Federal Reserve Bank of Richmond Tom Barkin speaks virtually at The National Association for Business Economics.

U.S. Treasury Department

• There are no significant events scheduled at this time.

Department of Commerce

• There are no significant events scheduled at this time.

Securities and Exchange Commission

• Thursday, August 8, 2:00 p.m. – The SEC holds a Closed Meeting.

Commodities Futures Trading Commission

• There are no significant events scheduled at this time.

FINRA

• There are no significant events scheduled at this time.

Federal Deposit Insurance Corporation

• There are no significant events scheduled at this time.

Office of the Comptroller of the Currency

• There are no significant events scheduled at this time.

The Consumer Financial Protection Bureau

• There are no significant events scheduled at this time.

National Credit Union Administration

• There are no significant events scheduled at this time.

Federal Trade Commission & Department of Justice Antitrust Division

• There are no significant events scheduled at this time.

Farm Credit Administration

• Thursday, August 8, 10:00 a.m. – The FCA Board will meet to receive the annual report on the Farm Credit System’s Young, Beginning, and Small Farmers and Ranchers Mission Performance.

International Monetary Fund & World Bank

• There are no significant events scheduled at this time.

North American Securities Administrators Association

• There are no significant events scheduled at this time.

Trade Associations & Think Tank Events

Trade Associations

• Wednesday, August 7, 12:30 p.m. – The Competitive Enterprise Institute holds a discussion on "A Global Antitrust Paradox?," focusing on "the effects of heightened antitrust scrutiny on U.S. industry and national security."

Think Tanks and Other Events

• Wednesday, August 7, 8:30 a.m. – Politico is hosting an event entitled “Finding Balance: What’s Next for Social Security” in New York.  

• Thursday, August 8, 3:00 p.m. – The National Association for Business Economics holds a virtual discussion with Tom Barkin, president and CEO of the Federal Reserve Bank of Richmond.

Please let us know if you have any questions or would like to be added to our email distribution list.

U.S. Financial Regulatory Week Ahead

June 3 - 7, 2024

It was 90 years ago this week that President Franklin Roosevelt established the Securities and Exchange Commission.  The SEC will celebrate the historic event on Wednesday with a gathering of former SEC Chairs in Washington.

We will also be watching this week as Treasury Secretary Janet Yellen and Acting Comptroller of the Currency Michael Hsu take part, on behalf of the Financial Stability Oversight Council FSOC) in a Brookings Institution conference entitled "Artificial Intelligence & Financial Stability.”   The development of AI is of growing concern to financial regulators on a number of fronts and this conference and the high-level engagement of the Treasury Secretary and Head of the OCC are good examples of how high-level that concern has gotten recently.

Looking back on the last week, the US Supreme Court handed down an important (and unanimous) decision that rejected a broad approach to exempting national banks from state regulations.  The decision requires courts to take a “nuanced” approach to federal laws when coming in conflict with state laws. 

Also last week, House Financial Services Committee Chair Patrick McHenry (R-NC) announced he will hold a hearing on the scandals at the FDIC.  He intends to call FDIC Chair Martin Gruenberg up to testify before the full committee where he will face renewed calls to step down immediately (Gruenberg has steadfastly said he is staying until a replacement is nominated and confirmed by the US Senate, which will likely take not happen until early 2025).

Below is a full listing of what is happening at the financial regulatory agencies this week and in Congress.  Please let us know if you have any questions.

U.S. Congressional Hearings

U.S. Senate

·       Wednesday, June 5, 10:00 a.m. – The Senate Budget Committee holds a hearing on "Riskier Business: How Climate is Already Challenging Insurance Markets."

House of Representatives

·       Tuesday, June 4, 11:00 a.m. – The House Ways and Means Social Security Subcommittee holds a hearing on "The Social Security Trust Funds in 2024 and Beyond."

·       Wednesday, June 5, 9:00 a.m. – The House Financial Services Digital Assets, Financial Technology and Inclusion Subcommittee holds a hearing on "Next Generation Infrastructure: How Tokenization of Real-World Assets Will Facilitate Efficient Markets."

Joint Committees

·       Tuesday, June 4, 2:30 p.m. – The Joint Economic Committee holds a hearing on "Artificial Intelligence and Its Potential to Fuel Economic Growth and Improve Governance."

US Regulatory Meetings & Events

Federal Reserve Board and Federal Reserve Banks

·       Thursday, June 6, 12:00 p.m. – Federal Reserve Board Governor Lisa D. Cook at the Girls Global Academy 2024 Commencement Ceremony, University of the District of Columbia, Washington, D.C.

U.S. Treasury Department

·       Tuesday, June 4, 1:00 p.m. – The Treasury Department holds a virtual meeting of the Federal Advisory Committee on Insurance to discuss climate-related financial risk and the insurance sector, discuss cyber insurance developments and international insurance issues and receive status updates from each of its subcommittees and from the Federal Insurance Office on its activities.

·       Thursday, June 6 & 7 – The Financial Stability Oversight Council  (FSOC) and the Brookings Institution hold a conference on "Artificial Intelligence & Financial Stability.”  Treasury Secretary Janet Yellen and Acting Comptroller of the Currency Michael Hsu will give keynote speeches.

Securities and Exchange Commission

·       Tuesday, June 5, 11:10 a.m. – SEC Chair Gary Gensler will speak at the ISDA/SIFMA Treasury Forum in New York.

·       Wednesday, June 6, 10:00 a.m. – The SEC holds a virtual meeting of the SEC Investor Advisory Committee for a panel discussion examining the new frontier for investment advice, a panel discussion regarding AI regulation: embracing the future, a discussion of a recommendation regarding the protection of self-directed investors when trading complex products and utilizing complex strategies, a discussion of a recommendation on financial literacy and investor education and subcommittee and working group reports.

·       Wednesday, June 6, 1:00 p.m. – The SEC hosts the 90th Anniversary of the Securities Exchange Act at the SEC.

Commodities Futures Trading Commission

·       Tuesday, June 4, 10:00 a.m. – The Commodity Futures Trading Commission holds a meeting of the Global Markets Advisory Committee to hear a presentation from the GMAC's Global Market Structure Subcommittee, Technical Issues Subcommittee, and Digital Asset Markets Subcommittee on various workstreams, and consider recommendations from the Subcommittees on such workstreams.

·       Wednesday, June 5, 12:30 p.m. – CFTC Chairman Rostin Behnam to keynote at the Piper Sandler Global Exchange & Trading Conference 2024 in New York.

FINRA

·       There are no significant events scheduled at this time.

Federal Deposit Insurance Corporation

·       Tuesday, June 4, 9:00 a.m. – The Federal Deposit Insurance Corporation holds a meeting of the FDIC Advisory Committee on Economic Inclusion for updates from committee members about key challenges facing their communities or organizations and panel discussions on the current environment for economic inclusion, including industry and market trends that affect consumer participation in the banking system.

Office of the Comptroller of the Currency

·       Wednesday, June 6, 9:40 a.m. Chicago Time – Acting Comptroller of the Currency Michael Hsu will discuss “The OCC’s Financial Health: Vital Signs Initiative” at the EMERGE Financial Health 2024 Conference in Chicago, Illinois.

The Consumer Financial Protection Bureau

·       There are no significant events scheduled at this time.

National Credit Union Administration

·       There are no significant events scheduled at this time.

Federal Trade Commission & Department of Justice Antitrust Division

·       Tuesday, June 4, 11:20 a.m. – FTC Chair Lina Kahn will participate in a fireside chat at the 2024 CNBC CEO Summit in Washington, D.C.

·       Friday, June 7, 10:30 a.m. – FTC Chair Lina Kahn delivers opening comments at the American Constitution Society Annual Conference in Atlanta, Georgia.

Farm Credit Administration

·       There are no significant events scheduled at this time.

International Monetary Fund & World Bank

·       There are no significant events scheduled at this time.

North American Securities Administrators Association

·       There are no significant events scheduled at this time.

Trade Associations & Think Tank Events

Trade Associations

·       Tuesday, June 4 – The American Academy of Actuaries holds a symposium on "Looking Back, Moving Forward: The Employee Retirement Income Security Act at 50’ in Washington, D.C.

·       Tuesday, June 4, 8:00 a.m. – The U.S. Chamber of Commerce holds its 2024 Sustainability and Circular Economy Summit in Washington, D.C.

·       Tuesday, June 4, 1:30 p.m. – The Institute of International Bankers holds their 2024 Foreign Bank Governance Seminar in New York.

Think Tanks and Other Events

Thursday, June 6 & 7  – The Urban Institute holds a summit on "Advancing Housing Justice.”

Please let us know if you have any questions or would like to be added to our email distribution list.

U.S. Financial Regulatory Week Ahead

May 13 - 20, 2024

Last week was electrifying in the otherwise usually staid world of regulation. And the coming week might be just as action-packed. The fireworks were set off when, as we noted in our note last week, an independent investigatory report on the FDIC workplace and FDIC Chair Marty Gruenberg was released, and it was, in a word, damning. Conducted by the law firm Cleary Gottlieb Steen & Hamilton, the report charged, "For too many employees and for far too long, the FDIC has failed to provide a workplace safe from sexual harassment, discrimination, and other interpersonal misconduct."

The report went on to detail numerous incidents of Gruenberg verbally abusing employees and failing to respond to years of employee complaints over workplace culture. Gruenberg has issued a generic apology to staff but refused to step down despite a growing chorus of members of Congress demanding his resignation. As House Financial Services Committee Chair Patrick McHenry (R-NC) said, the report "details his inexcusable behavior and makes clear new leadership is needed at the FDIC."

In an attempt to defend Gruenberg, House Financial Services Committee Ranking Member Representative Maxine Waters (D-CA) issued not one but two strident press releases in response to the report defending Gruenberg. In the first release, Waters tried to divert the fault away from Gruenberg and onto two previous Republican chairs (despite Gruenberg having been Chair for the last three years. Gruenberg first joined the FDIC board in 2005 as Vice Chair, serving until he became Chair in 2011 and serving until 2018. Then he returned to serving as Vice Chair when Jelena McWilliams was named Chair. He then became Chair again in January 2023 after instigating a series of maneuvers to push McWilliams out so he could become Chair again).   

Then, later in the day, Waters issued an updated statement, again attempting to divert the issue away from Gruenberg and the institution as a whole – all the while ignoring the detailed evidence of Gruenberg's bullying and abusive behavior over the years.

The scandal will be brought into the public square on Wednesday and Thursday in Congressional hearings, starting at the House Financial Services Committee. The Committee had already scheduled an oversight hearing on banking regulation in general with Gruenberg, Federal Reserve Vice Chair Michael Barr, and Acting Comptroller of the Currency Michael Hsu testifying. But at this point, we expect the lion's share of the hearing will be spent either bashing or defending Gruenberg. The fireworks show will be replicated the next day when the trio of regulators testify before the Senate Banking Committee.

Last week, a federal appellate court also blocked the Consumer Financial Protection Bureau's regulation on capping credit card fees. We expect the CFPB to appeal the case, which is likely to end up before the Supreme Court.

This past Friday, the Commodity Futures Trading Commission (CFTC) approved a move to ban derivatives contracts tied to political elections, sporting events, and awards shows like the Oscars, in a blow to political analysts like me.  

Also, last week, the Financial Stability Oversight Council agreed unanimously to examine mortgage servicing companies (NMC) more closely. Secretary Janet Yellen separately called on Congress to establish a system for troubled NMCs.  

We will watch closely this coming week as the House Financial Services Committee is expected to markup legislation seeking to limit SEC regulations on consolidated audit trails and crypto regulations.

And circling back to the regulatory calendar this coming week, the big event will be the SEC Division of Investment Management's annual Conference on Emerging Trends in Asset Management. The conference will bring together a variety of asset management industry participants and academics. SEC Chair Gary Gensler will kick off the meeting with a keynote speech. 

Below is a listing of all the other significant regulatory-related events this coming week:

U.S. Congressional Hearings 

U.S. Senate

·       Thursday, May 16, 10:00 a.m. – The Senate Banking Committee holds a hearing entitled “Oversight of the U.S. Financial Regulators: Accountability and Financial Stability”.  Testifying will be Michael Barr, Vice Chair for Supervision, Federal Reserve; The Honorable Martin Gruenberg, Chair, Federal Deposit Insurance Corporation; and Mr. Michael Hsu, Acting Comptroller, Office of the Comptroller of the Currency.

House of Representatives

·       Wednesday, May 15, 10:00 a.m. – The House Financial Services Committee holds a hearing entitled “Oversight of Prudential Regulators.” Testifying will be Michael Barr, Vice Chair for Supervision, Federal Reserve; The Honorable Martin Gruenberg, Chair, Federal Deposit Insurance Corporation; and Mr. Michael Hsu, Acting Comptroller, Office of the Comptroller of the Currency.

US Regulatory Meetings & Events

Federal Reserve Board and Federal Reserve Banks

·       Monday, May 13, 9:00 a.m. – Federal Reserve Board Vice Chair Philip N. Jefferson gives a speech entitled “Communicating About Monetary Policy” at the Cleveland Fed Conference on Central Bank Communications, Cleveland, Ohio.

·       Monday, May 13, 9:10 a.m. – Federal Reserve Board Governor Lisa D. Cook gives a speech entitled “Growth and Change at Community Development Financial Institutions” at the Expanding Access to Capital for CDFIs, hosted by the Federal Reserve Bank of New York in New York.

·       Monday, May 13, 10:00 a.m. (Amsterdam) – Federal Reserve Board Chair Jerome H. Powell participates in a moderated discussion with De Nederlandsche Bank (DNB) President Klaas Knot at the Annual General Meeting, Foreign Bankers’ Association, Amsterdam.

·       Wednesday, May 15, 3:20 p.m. – Federal Reserve Board Governor Michelle W. Bowman gives a speech entitled “Innovation and the Evolving Financial Landscape” at the DC Blockchain Summit 2024 in Washington, D.C.

·       Thursday, May 16, 10:00 a.m. – Federal Reserve Board Vice Chair for Supervision Michael S. Barr will testify at a “Oversight of Financial Regulators” hearing before the U.S. Senate Committee on Banking, Housing, and Urban Affairs.

·       Friday, May 17, 10:15 a.m. – Federal Reserve Board Governor Christopher J. Waller gives a speech entitled “Payments Innovation, Technical Standards and the Federal Reserve’s Roles” at the International Organization for Standardization Technical Committee 68 Financial Services 44th Plenary Meeting in Minneapolis, Minnesota.

·       Saturday, May 18, 5:45 p.m. – Federal Reserve Board Governor Adriana D. Kugler gives the Commencement Speech at the University of Virginia 2024 Commencement Ceremony – Frank Batten School of Leadership and Public Policy, Charlottesville, Virginia.

·       Sunday, May 19, 3:30 p.m. – Federal Reserve Board Chair Jerome H. Powell gives the Commencement Remarks at the Georgetown Law Commencement Ceremony in Washington, D.C.

U.S. Treasury Department

·       There are no significant events scheduled at this time.

Securities and Exchange Commission

·       Thursday, May 16, 9:00 a.m. – The SEC Division of Investment Management will host its annual Conference on Emerging Trends in Asset Management. The conference will bring together a variety of asset management industry participants and academics.  SEC Chair Gary Gensler will kick off the meeting with a keynote speech.

·       Thursday, May 16, 2:00 a.m. – The SEC will hold a Closed Meeting.

Commodities Futures Trading Commission

·       Monday, May 13, 11:15 a.m. – CFTC Commissioner Christy Goldsmith Romero will participate on an AI panel at the Asian Pacific American Institute for Congressional Studies (APAICS) at the 2024 Legislative Leadership Summit in Washington, D.C.  The panel is titled How AI is Changing the World.

·       Thursday, May 16, 1:15 p.m. – CFTC Commissioner Christy Goldsmith Romero will speak at the National Futures Association’s (NFA) Board of Directors Spring meeting in Washington, D.C.

FINRA

·       Tuesday, May 14, 10:00 a.m. – FINRA holds its 2024 FINRA Annual Conference in Washington, D.C.

Federal Deposit Insurance Corporation

·       Wednesday & Thursday, May 15 & 16 – FDIC Chair Martin Gruenberg will testify before the House Financial Services Committee and then the Senate Banking Committee.

Office of the Comptroller of the Currency

·       Wednesday & Thursday, May 15 & 16 – Acting Comptroller of the Currency Michael Hsu will testify before the House Financial Services Committee and then the Senate Banking Committee.

The Consumer Financial Protection Bureau

·       Wednesday, May 15, 10:30 a.m. – The Consumer Financial Protection Bureau holds a virtual meeting of the Consumer Advisory Board to discuss broad policy matters related to the Bureau's Unified Regulatory Agenda and general scope of authority.

National Credit Union Administration

·       There are no significant events scheduled at this time.

Federal Trade Commission & Department of Justice Antitrust Division

·       Tuesday, May 14, 11:00 a.m. – The FTC will hold a Compliance Webinar on the Final Noncompete Rule.

·       Thursday, May 16, 10:00 a.m. – The FTC has a scheduling conference before the Administrative Law Judge re: the Tapestry, Inc and Capri Holding Limited deal.

Farm Credit Administration

·       There are no significant events scheduled at this time.

International Monetary Fund & World Bank

·       There are no significant events scheduled at this time.

North American Securities Administrators Association

·       There are no significant events scheduled at this time.

Trade Associations & Think Tank Events

Trade Associations

·       Tuesday, May 14, 11:30 a.m. (London) – the Institute for International Finance hosts the IIF-Fitch Ratings Global Debt Roundtable in London.

·       Wednesday, May 15, 9:30 a.m. – The Institute for International Finance holds the 2024 IIF/Deloitte Insurance Colloquium in Arlington, Virginia.

·       Tuesday, May 14, 4:30 p.m. (Austin, Texas) – The Investment Company Institute and the Association of Securities and Exchange Commission Alumni (ASECA) holds an event entitled “ICI & ASECA: Celebrating 100 Years of the Mutual Fund”

·       Wednesday, May 15, 11:00 a.m. – SIFMA holds the third of a four-part webinar series on China.  This event is entitled “ U.S. Policy On China: What Might Congress and the White House Do in 2024 and Beyond.”

·       Wednesday, May 15, 1:00 p.m. – The National Association for Business Economics holds a virtual discussion on "Climate Change, Risk, and Insurance: How the Landscape for Risk Is Evolving and Implications for Commercial Real Estate Investors/Owners."

Think Tanks and Other Events

·       Tuesday, May 14, 9:00 a.m. – The Peterson Institute for International Economics holds an event entitled “Can auditors better serve investors’ needs?”

·       Thursday, May 16, 2:00 p.m. – The Brookings Institution holds an event entitled “How can markets better value nature and price the benefits of conservation?”

Please let us know if you have any questions or would like to be added to our email distribution list.

CBO Estimates Inflation Reduction Act will Trim $102 Billion off Federal Deficit

The Congressional Budget Office (CBO) has scored the $739 billion “Inflation Reduction Act” (a.k.a. Build Back Better-lite). The CBO forecast the legislation will lead to a net deficit decrease of more than $102 billion over the next ten years.

You can access the CBO report HERE.

The CBO scoring will be seen as a victory for Senate Democrats and clearly helpful to their efforts to get the Reconciliation package voted on in the next week. Moreover, they hope it helps convince Senator Kyrsten Sinema (D-AZ) - whose vote will make or break the deal - to get to a “yes” vote on the deal.

As of this writing, Sinema has yet to comment on the bill, saying she wanted to see how the Senate Parliamentarian ruled on the package (e.g., will it qualify as a Reconciliation worthy bill, or will certain parts be struck as not meeting the Reconciliation standard).

Washington Look Forward:

March 21-25, 2022

Spring is finally in the air in Washington, and the famed Cherry Blossoms are starting to pop on the Tidal Basin in D.C.  But it is going to be another busy week in Washington and internationally. Here is a quick run-down of what we are watching:

• Ukraine and the Meeting of Western Leaders in Brussels and then Visit Poland: Ukraine continues to dominate Washington’s focus, particularly President Biden’s. We will see President Biden travel to Brussels for meetings Thursday and Friday with fellow NATO heads of state. He will begin Thursday with a NATO Extraordinary Summit to discuss the Russia-Ukraine conflict. In particular, the focus will be to reassess the Alliance’s long-term strategy and also take the opportunity to show strong support for the Baltic nations who are feeling increasingly at risk from Russia.  

  Biden will then join a meeting of the European Council Thursday and again on Friday to further discuss diplomatic efforts and the US-EU alliance.  Watch for the NATO meeting and E.C. meetings to result in further sizeable commitments for increased defense and security spending by all member states.

  Biden will then travel on Saturday to Poland to show solidarity with Poland, who, like the Baltic states, are feeling the risk of Russia on their border. There has been chatter of Biden then making a surprise visit to Kyiv, Ukraine, to meet with Ukraine President Zelensky – something British Prime Minister Boris Johnson apparently expected to do later this week. We note the Prime Ministers of Poland, the Czech Republic, and Slovakia made such a trip to Kyiv last week. However, the White House has said the President “has no plans” to make such a dangerous trip, but we will closely watch if this changes.

• Is Congress Getting Closer to Passing the CHIPS Act?: We have written previously about this critical piece of investment legislation and how it has struggled for focus and passage in both the House and Senate. To briefly recap, the bill has seen four previous iterations but has languished in Congress for a variety of odd reasons. 

  However, Senate Majority Leader Chuck Schumer (D-NY) filed motions late Friday for the Senate to take up the House version of the bill (H.R. 4521) this week. The bill would shower tens of billions of dollars on the semiconductor industry to encourage re-shoring of semiconductor chip manufacturing to the U.S. as well as pouring tens of billions of more money on R&D efforts to grow and expand the U.S. technology base. The legislation is seen by both Democrats and Republicans as a means of competing more strongly versus China, and we expect the final product will garner considerable bi-partisan support.  

  But, with all things Congress, there is one potential sticking point: Several Democratic senators want to include a provision that would give the Federal Maritime Commission more power to regulate large container ships to help “fix” the supply chain challenges out there.  There will likely be considerable push-back on this provision from those who do not see the container shipping industry as the culprit to supply chain issues and growing inflation.

  The big question we have is around timing. Whatever the Senate ends up passing this week after amendments are added will be different than what the House passed last month, meaning the two chambers will have to iron the differences in a conference session in the coming weeks and maybe months. We believe they are much closer to an agreement than further apart, thus the conference negotiations will likely be short.  We will keep you updated.

• Russia is about to Lose Normal Trade Relations with the U.S.: Late last week, the House passed legislation revoking Russia’s Normal Trade Relations with the U.S. What does that mean with all the heavy sanctions already in place on Russia? Not much. President Biden would be empowered to bring hefty tariffs on Russian goods and services. But considering the fact Biden has already banned the import of Russian energy, seafood, alcohol, and luxury goods, this may be less impactful than meets the eye.

• Supreme Court Confirmation Hearings: This week, Congress will be primarily focused on the confirmation hearing of Judge Ketanji Brown Jackson for the Supreme Court. The hearings kick off today (Monday). Unlike the last few Supreme Court nominations, we do not expect this one to be very controversial. By and large, Republicans seem much more at ease with Judge Jackson’s nomination for two reasons 1) she is clearly qualified, and; 2) she is replacing a liberal justice, not a conservative one. Therefore the balance of the Court is not being altered. Our guess is the full Senate confirms her in the next two to three weeks – and three or four Republican senators will vote for her confirmation.

 We hope this helps you get a general perspective of what is going on in Washington this week.  Please let us know if you have any questions.