What to Know in Washington: Leaders Slow-Walk Banking Changes

Speaker Kevin McCarthy (R-Calif.) and Senate Majority Leader Chuck Schumer (D-N.Y.) don’t agree on much, but neither party leader in the US Congress is in a rush to push legislation addressing the failures of Silicon Valley Bank and Signature Bank.

Political divisions among Democrats and Republicans’ hardening stance against a legislative response diminish the chances that Congress will heed mid-size banks’ calls to increase the Federal Deposit Insurance Corp. cap or toughen supervision. In the coming weeks, the House and Senate will instead focus on hearings exploring the root causes of the collapses.

McCarthy and other Republicans blame regulators — rather than a lack of regulations — for the failures and the troubles at First Republic Bank. They also point the finger at the rippling effects of inflation, which they say occurred on the Democrats’ watch, as well as spiked interest rates, weakening the banks’ long-term securities holdings.

Bloomberg

Senate Majority Leader Chuck Schumer and Speaker Kevin McCarthy

A number of moderate Senate Democrats voted for an 2018 easing of regulations and so far aren’t saying they were wrong to do so.

Progressive Democrats want to impose stress tests and tighter liquidity and capitalization standards on mid-size banks. But Schumer, once known as “the senator from Wall Street” and the No. 2 Senate recipient of funds from commercial bank employees and their political action committees, wants to find a bipartisan solution — not an easy task in the current political climate.

Erik Wasson, Laura Litvan, and McKenzie Wilson walk through the possible options before Congress.

MORE ON THE FINANCIAL FALLOUT

• Treasury, Fed and FDIC officials will brief lawmakers on the Senate Banking Committee today by Zoom, Sen. Kevin Cramer (R-N.D.) told Bloomberg. Read more
• The Senate Banking Committee will hold the first of several hearings on the collapse of Silicon Valley Bank and Signature Bank on March 28, committee Chair Sherrod Brown (D-Ohio) said in statement. Read more
• Wall Street leaders and US officials discussing an intervention at First Republic Bank are exploring the possibility of government backing to encourage a deal that would shore up the lender, people with knowledge of the situation said. Read more
• Sen. Elizabeth Warren (D-Mass.) said Tuesday she doesn’t think multibillion-dollar banks should get an increase in federal insurance without tighter regulation. Read more

Also Happening on the Hill

CONGRESS’ SCHEDULE

• The House returns at noon and votes on a number of foreign affairs-related bills under expedited procedure.
• The Senate convenes at 11 a.m. to consider a judicial nominee and a measure to repeal the authorizations for use of military force against Iraq.

McConnell Is ‘Chomping at the Bit’ to Return to US Senate

Senate Minority Leader Mitch McConnell (R-Ky.) is taking calls from his colleagues and is eager to return to Capitol Hill as he recovers from a concussion suffered earlier this month, a GOP senator said.

Sen. John Cornyn (R-Texas), one of McConnell’s closest friends in the Senate, said he sounds “sharp” but there is no timetable as far as when he would come back. “He’s chomping at the bit,” Cornyn added.

TikTok CEO Will Tell Congress China Has No Sway Over US App

TikTok Chief Executive Officer Shou Chew plans to tell Congress his app does more to protect young users than rival social media and that Beijing has no authority over its data, invoking familiar arguments to head off a US ban or forced sale.

Moderna Confronts ‘Poster Child’ Label as Price Crackdown Looms

Sen. Bernie Sanders (I-Vt.) is pressing his case that drugmaker Modernais the “poster child” for pharmaceutical companies’ corporate greed and an example of why Congress should expand the government’s power to lower drug prices in the US.

Bipartisan Group Pushes for Stepped-Up Basis Tax Rule Protection

A bipartisan group of lawmakers is trying to protect a tax provision that reduces the capital gains tax on inherited property, saying elimination would hurt farmers and businesses.

Elections, Politics & Probes

Trump Allies and Foes Milk His Legal Jeopardy to Raise Cash

Friends and foes of Donald Trump have joined him in an unprecedented money grab to boost their own campaign coffers ahead of the former president’s possible indictment in connection with hush payments to an adult film star.

Judge Convinced Trump Misled Lawyers on Classified Docs

Prosecutors in special counsel Jack Smith’s office have presented preliminary evidence that Trump deliberately misled his own attorneys about his retention of classified materials after leaving office, former federal judge Beryl Howell wrote Friday in a sealed filing, ABC News reports, citing unidentified people with the knowledge of the content.

Fox News Hosts’ Emails Shown to Judge in Dominion Suit

Emails and texts by Tucker Carlson, other Fox News hosts and executives were shown to the judge overseeing Dominion Voting Systems’s $1.6 billion defamation suit against the network for broadcasting 2020 election-fraud claims.

Rudy Giuliani Defends Lags in Election Workers’ Defamation Suit

Rudy Giuliani and his lawyer appeared before a judge Tuesday to explain last-minute canceled depositions and delays turning over evidence in a defamation case brought by two Georgia election workers against Trump’s longtime adviser.

Chertoff Firm That Signed Off on Leak Probe Had High Court Ties

A consulting firm headed by former Homeland Security Secretary Michael Chertoff did work for the US Supreme Court multiple times prior to being asked to assess the investigation into last year’s leak of its abortion opinion draft.

Around the Administration

BIDEN’S AGENDA

• Biden hosts a reception celebrating Women’s History Month at the White House at 5 p.m.
• White House Press Secretary Karine Jean-Pierre gives a briefing at 3 p.m.

Biden Teases 2024 Run While Honoring Celebrities at White House

President Biden teased his expected reelection run while honoring celebrities at the White House on Tuesday, with pointed quips to singer Bruce Springsteen and author Colson Whitehead.

US Offers Deals to Get Industries to Show Clean Tech Can Go Big

As the Biden administration ramps up efforts to cut carbon from heavy industries, it’s seeking ways to sweeten the deal for massive plants it hopes will demonstrate that clean technologies work.

US Condemns Israel Over Reversal on West Bank Settlements Law

The Biden administration condemned an Israeli parliament vote repealing a 2005 law that barred settlers from parts of the West Bank, calling the move “provocative and counterproductive.”

To contact the reporter on this story: Michaela Ross in Washington at mross@bgov.com

To contact the editors responsible for this story: Giuseppe Macri at gmacri@bgov.com; Andrew Small at asmall@bgov.com