Banking Crisis Adds New, Challenging Layer to Debt Ceiling Fight
When the 118th Congress began none of the congressional leaders had resolving a banking crisis on their agenda. But here it is – and it will take up significant time and focus over the next several weeks. This is not the 2008 financial crisis. The 2008 crisis, however, wasn’t the 2008 crisis in March of 2008 when bear Sterns fell. It would take months before the collapse of Lehman Brothers and the full-fledged crisis that led to Congress passing the Troubled Asset Relief (TARP) bailout, followed by the Dodd Frank banking reform legislation. We don’t know exactly where we are in this new instability in the banking system. It may stay contained to a few banks, or this could prove to be larger problem that is just getting started. For now, congressional leaders of both parties are giving the regulators the space and support to use the regulatory tools to shore up confidence in the system. But Congress is still beginning to look at what happened and who was responsible. On Friday, House Financial Services Committee Chair Patrick McHenry (R-NC) and Ranking Member Maxine Waters (D-CA) jointly announced that Federal Deposit Insurance Corporation Chairman Martin Gruenberg and Federal Reserve Vice Chair for Supervision Michael Barr will appear before the panel at a March 29 hearing on the crisis.
The turmoil in the financial markets adds a new variable to the toughest issue on the congressional agenda – how to raise the debt ceiling. For many, the trouble in the banking sector increases the risk that a protected standoff over the debt ceiling could have negative consequences for the economy. Markets may now have less tolerance for political gridlock that could lead to U.S. default. For others – particularly those on the right – the crisis and the need for a bailout of depositors underscores the problems that overspending can cause. Finding a way to restrain spending through the debt ceiling negotiations becomes even more important in their view.
The House will vote this week on the Parents Bill of Rights Act (H.R.5) and potentially the veto override of H.J.Res.30, which would nullify the recent Labor Department rule authorizing fiduciaries to consider climate and environmental, social, and governance (ESG) factors in making investment decisions. The Senate will vote on a motion to proceed to legislation rescinding the authorizations for use of military force (AUMF) against Iraq in 1991 and 2002, coinciding with the 20th anniversary of the beginning of the invasion of Iraq.
Over 40 hearings, including several high-profile ones, have been scheduled between Wednesday and Friday:
- TikTok CEO Shou Chew will appear before the full House Energy and Commerce Committee for a hearing (on Thursday at 10AM).
- The House Select Committee on Strategic Competition Between the U.S. and the CCP will convene its second primetime hearing on "The Chinese Communist Party's Ongoing Uyghur Genocide" (on Thursday at 7PM).
- The Committees on Senate Finance (on Thursday at 10AM) and House Ways and Means (on Friday at 9AM) will convene annual oversight hearings on the President’s Trade Policy Agenda, with testimony from U.S. Trade Representative Katherine Tai.
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