Washington Watch: Tax Cuts Inch Forward, Changes Underway at SEC, CFPB, NCUA

Congress remains in recess, but work is happening behind the scenes and across Washington that will have a tremendous impact on the agenda in coming weeks and the bottom line for companies and consumers alike. In this edition (our first for Prosek’s Unboxed Thoughts blog), we map out next steps for the eagerly awaited tax cut and spending reduction package, see how SEC Chair Paul Atkins is settling in, and take a brief look at how recent Trump administration actions leave many wondering about the fate of independent regulatory agencies.

Tax cuts done by Memorial Day? – House Republicans are working to pass legislation permanently extending President Trump’s 2017 tax cuts by Memorial Day. This is an ambitious goal since Trump has yet to “finalize” his thoughts on the measure, committees have yet to begin hashing out details, and there are significant differences between how Senate and House Republicans envision the package coming together.

In an unexpected plot twist, Republicans have floated a “millionaire’s tax” that would generate approximately $400 billion in revenue over ten years – which would help offset the cost of other popular tax cuts expected in the package. Reaction to the new levy has been mixed, with prominent House Republicans reiterating their preference of lowering – not raising – taxes for individuals.

New SEC Chair takes the helm – Earlier this week, Paul Atkins was officially sworn in as the 34^th Chair of the Securities and Exchange Commission (SEC). While he’s just settling in, his pro-crypto, deregulatory agenda is already underway.

• Crypto task force: On Friday, the SEC’s task force will hold a roundtable exploring crypto custody through broker-dealers and investment advisers as demand for digital asset custody grows. The event will feature leaders from digital asset firms including Kraken, Fireblocks and Anchorage Digital Bank, along with lawyers and members of academia. Keep an eye on this and upcoming May and June roundtable discussions on tokenization and DeFi to see how Atkins drives the agency’s digital asset agenda.
• Fund rules: Last week, the SEC voted to delay the Biden-era fund-reporting rule, which would speed up reporting timelines from quarterly to monthly. Under the extension, large funds now have until November 2027 to comply and smaller funds will have until May 2028. The decision follows President Trump’s pause on new regulation and is intended to give the SEC time to “complete its review of the amendments…and take any further appropriate actions, which may include proposed amendments to Form N-PORT,” which reports on ETFs and registered funds aside from money market funds.

CPFB’s bumpy road continues – Last week, the Consumer Financial Protection Bureau (CFPB) notified employees of massive changes imposed by the Trump administration, including reducing nearly 90% of its workforce and restructuring roles among its remaining employees, half of which would be responsible for supervision and enforcement. The news came a day after the agency outlined new priorities consisting of plans to cut supervision and shift attention from fintechs to banks. A federal judge paused the mass-layoffs on Friday and will revisit them in a hearing next week, with potential testimony from DOGE’s Gavin Kliger and CFPB Chief Legal Officer Mark Paoletta, to assess whether the layoffs violate last month’s court order barring the Trump administration from disassembling the agency.

NCUA firings raise questions about future of independent regulators – Last week, we saw continued upheaval across federal agencies as President Trump ousted two National Credit Union Administration (NCUA) Democrat board members, leaving the body with just one board member remaining: Republican Chair Kyle Hauptman. The decision has opened the door to questions about whether the NCUA can legally operate and if / when other independent agencies might expect a similar dismantling under Trump. All eyes are on Federal Reserve Chairman Jerome Powell, who has repeatedly drawn the ire of President Trump, including recent posts on social media saying his “termination cannot come fast enough.”

This issue isn’t going anywhere and we’ll hear directly from one of the former NCUA board members, Todd Harper, during a fireside chat on the future of credit union regulation hosted by the Brookings Institution on May 1, where we expect the Trump administration’s ability to fire independent regulators to be a center of discussion.

Elected officials and trade associations take action on tariffs – California Governor Gavin Newsom and Attorney General Rob Bonta are the first officials taking legal action against President Trump’s executive orders, claiming the tariffs are “unlawful” and hurtful to the state’s economy. Some trade associations are taking a different tact, with the U.S. Chamber of Commerce choosing to lobby the administration directly, rather than file suit. We’ll see more responses in the coming weeks as consumers begin to understand more of what the new tariffs will mean for their pocketbooks and industry groups mobilize further.

Federal Reserve reduces stress tests – Last week, the Fed voted 6-1 to revamp its annual bank stress tests to minimize the year-to-year volatility. The proposal will average banks’ results over two years (as opposed to one) to formalize capital requirements and give them three months to adjust to the new framework. The Fed also announced more changes to boost transparency are forthcoming, which could include releasing models and scenarios for public comment to “determine hypothetical losses and revenue of banks under stress…before the scenarios are finalized.” We will be monitoring how financial institutions weigh in on the proposals, and how those comments influence upcoming changes.

Latest DOGE activity

• Cuts Likely for SEC with DOGE data request, Atkins confirmation – Last week, DOGE requested access to SEC agency data, including email communications and personnel data, signaling reductions could be on the horizon. Though rumors suggest the cuts are driven by Elon Musk’s grievance against the agency following a 2018 Tesla settlement agreement, new SEC Chair Paul Atkins said he would work with DOGE on “creating efficiencies in the agency.” This is one to keep an eye on since the SEC is not funded through taxpayer dollars and a reduction to its workforce will not generate savings, yet observers have cautioned cuts may “jeopardize the agency’s ability to keep pace with the industries it oversees, including the $26 trillion private funds market and crypto.”
• GAO audit underway – The Government Accountability Office (GAO) – the independent auditing agency for Congress – is conducting an investigation into DOGE’s audits across the Departments of Labor, Education, Homeland Security, Health and Human Services, the Treasury, and the Social Security Administration. Specifically, GAO has requested information, including reports on the “potential or actual misuse of agency systems or data” and documentation of policies and procedures relating to systems DOGE has accessed. The audit is scheduled to be completed by summer.

Executive order tracker – A rundown of President Trump’s 130 orders to-date may be tracked using the Federal Register.