Policy Environment

Presidential administrations often encounter unforeseen events that can significantly alter the trajectory and priorities of their term. The recent U.S. military strikes in Iran have temporarily shifted focus away from President Trump's domestic agenda. As Congress reconvenes for a brief period before another recess, security briefings are dominating the schedule, detracting from negotiations on the tax bill. The unfolding situation in Iran will determine whether this shift in focus is temporary or represents a long-term change.

The military actions are also challenging Republican leaders' ability to maintain cohesion within their caucus. Divergences in opinion may strain the already fragile majority and affect other legislative areas.

Additionally, the onset of summer brings vacations and outdoor activities, leading to a slowdown in Congressional activities. During this time, members of Congress engage with constituents at county fairs, picnics, and parades, where discussions often revolve around economic issues such as the cost of groceries, gas, and housing but global issues may be top of mind.

Recent rulings by the Senate Parliamentarian present another hurdle for the tax bill that contains much of Trump’s domestic legislative priorities. Key provisions, including provisions from the Senate Banking Committee that eliminates Consumer Financial Protection Bureau (CFPB) funding, reduces Federal Reserve employee pay, and abolishes the Department of Treasury’s Office of Financial Research, have been deemed non-compliant with budget reconciliation criteria.

FHFA Releases Annual Report to Congress

The Federal Housing Finance Agency (FHFA) has issued its Annual Report to Congress. This report, mandated by statute, includes information on FHFA’s examinations of Fannie Mae, Freddie Mac, and the FHLBanks.

The report is available at Annual Report to Congress - 2024 | FHFA

Senate Passes Stablecoin Legislation

The Senate has approved the GENIUS Act with a vote of 68-30. This legislation creates a regulatory framework for payment stablecoins, which are digital assets that issuers must redeem at a fixed value.

Under the bill, only permitted issuers may issue a payment stablecoin for use by U.S. persons, subject to certain exceptions and safe harbors. Permitted issuers must be a subsidiary of an insured depository institution, a federal-qualified nonbank payment stablecoin issuer, or a state-qualified payment stablecoin issuer. Permitted issuers must be regulated by the appropriate federal or state regulator. Permitted issuers may choose federal or state regulation; however, state regulation is limited to those with a stablecoin issuance of $10 billion or less.

The bill now goes to the House, where Republican leaders will decide whether to advance it or reconcile it with other legislation from the House Financial Services Committee.

Federal Bank Regulatory Agencies Seek Comments to Address Payments and Check Fraud

The federal bank regulatory agencies have issued a request for comments on potential actions to help consumers, businesses, and financial institutions mitigate the risk of payments fraud, with a particular focus on check fraud.

Input is requested on the following five potential areas for improvement and collaboration:

• External collaboration among the agencies, Federal Reserve Banks, and industry stakeholders;
• Consumer, business, and industry education by the agencies and Federal Reserve Banks to educate about payments fraud;
• Regulation and supervision to mitigate payments fraud, including opportunities the Board may have related to check fraud;
• Payments fraud data collection and information sharing; and
• Federal Reserve Banks' operator tools and services to reduce payments fraud



Comments must be received within 90 days after the date of publication in the Federal Register.