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What Wall Street is watching in the GOP megabill

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Congressional Republicans are rushing to advance the crown jewel of President Donald Trump’s legislative agenda — a sweeping tax, energy and border package that they hope will be a boon to businesses and offset the tariff-induced economic turmoil of recent weeks.

But financial firms are watching warily as they lobby lawmakers not to turn Wall Street into a pay-for in the reconciliation package.

A variety of proposals that could eliminate tax breaks used by financial institutions are on the table as Republicans look to pay for tax cuts that Trump has promised. The coming weeks are poised to test GOP lawmakers’ willingness to defy some of their traditional allies in the business world to deliver the “one big, beautiful bill” Trump wants.

The House Financial Services Committee — which oversees Wall Street and its regulators — voted along party lines late Wednesday to approve its portion of the reconciliation package after a nine-hour markup. The legislation, which will be wrapped into the broader reconciliation package, would slash the amount of funding the Consumer Financial Protection Bureau can get by almost 60 percent and fold the U.S.’s top audit watchdog, the Public Company Accounting Oversight Board, into the Securities and Exchange Commission.

Democrats on the panel threw up procedural hurdles to slow the meeting down and offered dozens of amendments that Republicans voted down.

Financial Services Chair French Hill (R-Ark.) said he expects the savings produced by the legislation to exceed the $1 billion in cuts that the panel was required to produce by a budget resolution adopted by both chambers of Congress. But those savings remain a small fraction of what Republicans need to produce to pay for the Trump tax cuts. All eyes are on Congress’ tax-writing committees — House Ways and Means and Senate Finance — which are considering an array of more controversial savings proposals.

Several targets that could touch financial services firms are on the table. Tax writers are expected to release an initial proposal in the coming weeks, but the dynamics could change as the reconciliation bill moves forward and lawmakers look for additional savings.

Most controversially, the Ways and Means panel is weighing whether to close the so-called carried interest loophole, a controversial tax break that gives favorable treatment to the profits earned by private equity firms, hedge funds and venture capital investors. The latest signals suggest Hill Republicans may be souring on the idea, but conversations among tax writers are ongoing. Any effort to kill the tax break would be met with opposition from more business-friendly members, including on Financial Services. Hill told MM last week that the policy “is a major source of economic growth, jobs, that impacts every community in the country — it’s not a loophole.”

Hill and other Financial Services Republicans are also pushing tax writers not to strip municipal bonds of their tax-exempt status. They wrote in a letter to Ways and Means Chair Jason Smith last month that the exemption is “a critical tool that has underpinned American infrastructure and community development for over a century.”

Finally, the U.S.’s credit union lobby is playing defense as lawmakers face calls to strip the institutions of their tax-exempt status — a major lobbying push for community banks. Jim Nussle, the president of America’s Credit Unions and a former Republican lawmaker who chaired the House Budget Committee in the early 2000s, said the industry is “in a strong position going into this.”

But some credit union advocates — like lobbyists representing other segments of the financial services industry — worry that a last-minute deal could put them on the chopping block.

“We take nothing for granted,” Nussle said.

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Congress

White House releases DHS funding offer

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The White House on Tuesday released a letter detailing changes it is willing to make to the Department of Homeland Security as it looks to secure a deal with Democrats to end the nearly five-week long partial government shutdown.

The move is the Trump administration’s attempt to show it is making a good faith effort after Democrats derided their proposal as unserious and comes as staffing issues at the Transportation Security Administration grow more acute — leading to longer wait times at airports across the country.

The White House, in five points, said it was willing to codify a number of policy changes, including an expansion of the use of body cameras for federal immigration agents; the limit of enforcement in certain sensitive locations, including hospitals and schools; greater oversight of DHS detention facilities; the enforcement of visible officer identification and the adherence to existing law prohibiting the deportation or detention of U.S. citizens.

“We feel that this offer is serious — that it is a good faith attempt to continue to try to come to a reasonable and expeditious conclusion to the shutdown, which we are now seeing is becoming ever more disruptive on Americans’ travel plans, as well as the security mission at the department,” said a senior White House official granted anonymity to describe the private talks.

The White House offer includes some public safety exceptions for the policy changes. For sensitive locations, there is a carve-out for “national security, flight risks and public safety,” and undercover officers would not have to display identification. Undercover officers would also not be required to wear body cameras.

The proposal also doesn’t address two of Democrats main concerns: requiring officials to obtain a judicial warrant before entering private property and prohibiting federal agents from wearing masks. Administration officials have previously said the warrants are a redline.

“We’re trying to move a little bit, but they’ve got to get serious. They are not getting serious,” Senate Minority Leader Chuck Schumer said Tuesday. “The key issues of warrants when you bust in someone’s house. The key issue of identity, of police and no masks. They haven’t budged on that.”

Spokespeople for Schumer did not immediately respond to a request for comment on the White House letter.

It’s the first time in the monthslong negotiation that the White House has released details about its proposal. Republicans have been eager for the White House to share details of its offers to validate their view that the administration had moved toward Democrats on some issues.

The White House letter argued that the majority of Democrats’ demands would “make it impossible to fully protect American citizens from dangerous criminal aliens and expose law enforcement and their families to increasing threats of violence.”

The senior White House official said that at this time, there are no plans for President Donald Trump to meet with Schumer or Democrats to discuss the impasse. The president has tapped border czar Tom Homan — who co-signed the letter with James Braid, the White House director of the Office of Legislative Affairs — to take the lead on working on the policy changes to end the government shutdown.

“There are a lot of technical issues that have to be worked out” for a White House meeting to be a “productive exercise,” the senior official said. “Although, of course, the president is going to make that decision, and at any time, that could be something that does occur.”

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Senate bills survive

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Threats from some hard-right House Republicans to block any Senate bill until the SAVE America Act passes appear to be falling flat.

A bill from Sen. Joni Ernst (R-Iowa) to reauthorize small business grant programs passed 345-41 Tuesday, a day after another Senate bill, aimed at recovering Nazi-looted art, passed on a voice vote.

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Congress

Senate launches debate on SAVE America Act with endgame uncertain

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Senate Republicans voted Tuesday to launch debate on a GOP elections bill President Donald Trump called his “No. 1 priority” in Congress. They are preparing to keep it on the floor at least into next week.

Senators voted 51-48 to take up the House-passed SAVE America Act that would institute new citizenship and photo ID requirements in order to participate in elections. Sen. Lisa Murkowski (R-Alaska) voted against opening debate, and Rep. Thom Tillis (R-N.C.) did not vote. Both had aired concerns about the process.

The Senate is expected to spend days, and potentially weeks, debating the bill in a bid to pacify conservatives and corner Democrats who oppose the new election restrictions. The debate is expected to include some late-night and weekend sessions.

But in the lead-up to Tuesday’s vote, discussions of the bill devolved into an increasingly contentious GOP-on-GOP fight over how far the party should go to try to pass it.

Conservative hard-liners, led by Sen. Mike Lee (R-Utah), want to force a “talking filibuster,” which they argue can overcome the usual 60-vote legislative threshold by requiring Democrats to hold the floor in order to block the bill.

But after weeks of internal conversations, Republicans have rejected that effort, which they fear could tie up the floor indefinitely and potentially let Democrats hijack the Senate agenda by forcing amendment votes on their own priorities.

Instead, Senate Majority Leader John Thune is expected to call up several amendments, including a proposal to expand the bill to include Trump-backed restrictions on mail voting, on transgender women participating in women’s sports and on gender-affirming surgeries for minors.

Thune’s move will limit Democrats’ ability to call up their own amendments and try to sidetrack the bill. Democrats have other options to frustrate the GOP, however, such as moving to adjourn the Senate or killing the bill.

Lee continues to advocate for a more aggressive approach: “If your senators don’t support using the talking filibuster to pass the SAVE America Act, you might need to replace them,” he wrote on X late Monday night.

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