Update 880: Rescissions Cloud Looms over FY26

July 21, 2025 | CFPB, Cryptocurrency, Education, Education Finance, FDIC, FY25, FY26, Genius Act, Hearings, Nominations, OCC, PEPFAR, Recissions, Update, Weekly Round Up | By

Update 880 – Recissions’ Impact on FY26,

Gould’s OK for OCC Lead Week’s Round-Up

Senate Republicans this week debated Trump’s $9.4 billion rescissions package targeting funding for international aid and public broadcasting, which faces a July 18 deadline for a simple majority vote. While the package is small, its passage could cloud negotiations on FY26 funding bills, which usually require bipartisan cooperation and 60 Senate votes and bipartisan support to pass. But passage of the rescissions bill would mean the majority is poised to come back and “change the terms” of a budget deal, increasing the possibility of a shutdown ahead of the 2026 fiscal year that begins in October. 

In other developments this week, the Supreme Court handed more power to Trump to fire federal workers unilaterally. The Education Department is ramping up its collections on student loans, this time targeting SAVE plan borrowers. The Senate also voted to confirm Jonathan Gould to serve as Comptroller of the Currency, with Democrats firmly opposing. Senate Banking continued discussion on digital asset markets as major legislation moves through Congress, and the House Financial Services Committee released a slate of draft legislation that would further attack the Consumer Financial Protection Bureau. We cover these developments below. 

Good weekends all…

Best,

Dana

Headline

Rescissions Debate Complicates FY26 Budget Process 

Senate Republicans this week turned their attention to the Trump administration’s $9.4 billion rescissions package, which would claw back previously appropriated funding for international assistance programs and public broadcasting. The administration sent the rescissions package to Congress on June 3, and the House narrowly approved it in a 214-212 vote the following week. Under the Impoundment Control Act, the Senate must pass the package by July 18 to take advantage of the 45-day period following the request during which it can be enacted with a simple majority rather than the 60-vote threshold for most bills. 

The debate among GOP senators this week revealed that significant divisions still remain over the package. Senate Appropriations Chair Susan Collins (R-ME) and Senator Lisa Murkowski (R-AK) expressed opposition to funding rescissions for some global health programs, namely the President’s Emergency Plan for AIDS Relief (PEPFAR). Collins and Murkowski, in addition to Senator Mike Rounds (R-SD) and Jerry Moran (R-KS), have also voiced concern over the impact cutting funding for public broadcasting could have on rural Americans, given the outsized importance that public broadcasting holds in their communities. 

Senate Republicans will have a chance to address these concerns in a vote-a-rama next week ahead of a probable floor vote on the package. Thune plans to start consideration as early as Tuesday of next week. But House Republicans and the Trump administration have signaled strong opposition to stripping any of the rescissions included in the package, with Trump going as far as to say that dissenters will not have his “support or Endorsement” in a Truth Social post yesterday. Still, the four Senate Republicans who have aired grievances about specific rescissions would be enough to prevent the simple majority required for passage, setting up another contentious week of debate in the Senate. 

Democrats, on the other hand, stand united in opposition to both the package’s contents and the idea of partisan rescissions as a whole. While they do not support cutting funding for the specific programs the rescissions package targets, the bigger issue – especially for Senate Appropriations Ranking Member Patty Murray (D-WA) – is the fact that the administration is trying to claw back funding that was previously approved by Congress under the bipartisan, 60 vote threshold that government funding bills must meet. Democrats have argued that, if Republicans simply resort to rescissions packages that can pass under a simple-majority vote, there is no incentive for them to engage in a bipartisan appropriations process. In other words, how are both sides able to make concessions and strike a deal if the terms of that deal can be changed without the minority’s input at any time? 

With less than three months to go until the end of FY25, the current fiscal year, FY26 government funding may hinge entirely on the success or failure of the rescissions package on the Senate floor next week. Without bipartisan negotiations, which Democrats have signaled can not occur if the package passes, appropriations bills have little to no hope of garnering the 60 votes necessary for passage in the Senate. 

By all indications, the House is proceeding with partisan funding bills in line with the president’s FY26 budget request, which calls for a dramatic cut to non-defense discretionary (NDD) funding of 23 percent, meaning that full-year funding bills are extremely unlikely without bipartisan compromise in the upper chamber. Whether this will lead to Congress “kicking the can” with another continuing resolution (CR) – which would also struggle to get the necessary votes – or a harmful government shutdown remains to be seen, but this year’s process is sure to be far from normal order. 

Nominations

Senate Confirms Gould as Comptroller of the Currency

Jonathan Gould was confirmed as Comptroller of the Currency by the Senate in a 50-45 vote yesterday afternoon, with all opposition coming from Democrats and Senator Angus King (I-ME). Gould will now lead the Office of the Comptroller of the Currency (OCC), the federal banking regulator responsible for supervising and regulating many of the largest nationally chartered banks in the nation. 

Senator Cynthia Lummis (R-WY) voted against the motion to move forward with the confirmation vote, with her office saying that she needed to have further conversation with Gould on the GENIUS Act, the Stablecoin bill that passed the Senate and is up for a floor vote in the House next week. Lummis, who is one of the main backers of the bill, joined the other Republicans in the final vote on his confirmation despite her concerns. 

Ahead of Gould’s nomination hearing before the Senate Banking Committee, Ranking Member Elizabeth Warren (D-MA) sent a letter to Gould raising concerns about his ability to avoid real or perceived conflicts of interest while serving in the position, given his prior clients and work at Bitfury, a Blockchain technology company.

Gould, recently a partner at Jones Day — one of the world’s largest law firms — has committed to recusing himself from work involving the firm and its broad range of clients, but the OCC is responsible for oversight of some of Gould’s prior clients, including JPMorgan Chase and Goldman Sachs.

Gould is set to help the Trump administration weaken financial regulation that protects the safety and soundness of the banking sector. The OCC and other federal banking regulators – the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) – have begun rolling out the administration’s broad deregulatory agenda under new Trump-appointed leadership. This includes regulators’ recent joint proposal to weaken capital requirements for the largest U.S. banks, an expected first step towards significantly weakening the overall regulatory framework. Other Trump-appointed officials have also discussed plans to weaken regulation 

Gould also served as Senior Deputy Comptroller and Chief Counsel at the Office of the Comptroller of the Currency during President Trump’s first term. 

Gould will replace Rodney Hood, who became Acting Comptroller of the Currency in February. Gould will also become the OCC’s first confirmed leader since 2020.

Other Developments

Supreme Court Paves The Way For More Federal Firing

On Tuesday, in a win for Trump’s ability to reshape the federal civil service to his liking, the Supreme Court ruled 8-1 to lift a May 9 ruling by a lower court concerning the case of Trump v. American Federation of Government Employees et al. that blocked mass firings by the Trump administration. The ruling was light on the details, often the case with emergency docket decisions, but it did conclude that the administration’s case was likely to succeed on its merits. The ruling also stated, however, that this was not a final decision on the legality of layoffs in specific agencies; thus, the multitude of lawsuits targeting the administration’s downsizing or dismantling of agencies such as the Department of Health and Human Services or the Consumer Financial Protection Bureau presumably can go forward for now. That said, 17 of the 22 agencies that Trump directed to carry out reduction-in-force (RIF) measures can now proceed with said directive, putting tens of thousands of civil service jobs at risk.

SCOTUS’ ruling states that the Office of Management and Budget and the Office of Personnel Management can move forward with implementing Trump’s executive orders to reduce the federal workforce without addressing the legality of specific RIF measures. Since the order was unsigned, we know that the ruling was 8-1 because the only public dissent to the decision was from Justice Jackson. The other two liberal justices, Kagan and Sotomayor, voted with the conservative majority on the issue, with Sotomayor writing a concurrence that emphasized that the legality of the specifics in Trump’s RIF plans could still be challenged in court. 

Even so, the ruling effectively gives Trump broad latitude to carry out his agenda with the civil service, as while on paper this ruling merely means that Trump can carry out his RIF policies while litigation continues. In practice this almost certainly means that Trump can downsize any agency that is not protected by a more specific lower court injunction, and there is no guarantee that a future ruling finding that Trump’s layoffs were illegal will actually protect the positions of thousands of civil servants.

SCOTUS’s ruling is already having an impact on the federal civil service. This morning, AP News reported that the State Department was moving forward with firing 1,300 employees, supposedly in the name of “streamlining domestic operations.” While SCOTUS’ ruling allows lawsuits against these firings to play out, that will be of little comfort to civil servants who will remain furloughed in the meantime, assuming that they choose to go forward with legal action at all. As employees are fired and furloughed, Americans across the country will be impacted.

Charges Resume for Millions of Student Loan Borrowers

On Tuesday, Bloomberg reported that the Department of Education had plans to restart interest charges for the 7.7 million borrowers enrolled in President Biden’s Saving on a Valuable Education (SAVE) plan, payments that had been on pause as the legality of the program worked its way through the courts. In confirming this development, the Department stated that payments will resume on August 1. The Department further claimed that the move was necessary to comply with the court injunction that blocked the repayment plan, though that injunction has been in place for a year now without any apparent legal issues regarding the pause on interest charges. More likely, this is part of the Trump administration’s efforts to scale back student loan relief for the roughly 42.7 million student borrowers who owe roughly $1.78 trillion in debt.

Naturally, this resumption will mean increased economic hardship for student borrowers on the SAVE plan. According to the Student Borrower Protection Center, these borrowers will now need to pay $3,500 more annually – or $300 more a month – to cover these interest charges. In total, these borrowers will pay $27 billion in the next year alone. This is in addition to the economic hardships brought on by the resumption of federal student loan collections announced last month, which put millions of student borrowers at risk of default. All of this makes it clear that Trump is embracing a higher education policy that is fairly draconian towards those seeking higher education.

Hearings

Senate Banking Hearing on Crypto Market Structure

On Wednesday, the Senate Banking Committee held a hearing on digital asset markets, which was an opportunity for the Senate GOP to further map out its plans for a digital asset market structure bill. The Senate GOP wants to ride the bipartisan momentum for crypto legislation generated by the passage of the GENIUS Act to put its own mark on whatever market structure bill ends up passing through Congress, which will either be their own bill or the House’s CLARITY Act. As expected, Chairman Tim Scott (R-SC) praised the passage of GENIUS through the Senate while stressing the need for a larger crypto bill, while Ranking Member Elizabeth Warren (D-MA) called for greater consumer protections and reining in Trump’s use of crypto to enrich himself.

What was less expected was how members of the Committee deviated from the positions of their respective party leadership. For Republicans, it was Senator John Kennedy raising his doubts that the Senate was making an informed decision on crypto market structure, stating, “I am really worried we’re going to get this wrong” in reference to how the Senate addresses the differences between digital assets and other commodities and securities. For Democrats, it was making clear that they support broad crypto market structure legislation, but also making clear their concerns about the potential use of digital assets to enable corruption.. Senator Raphael Warnock (D-GA), for example, brought up the potential for the use of memecoins for political corruption, especially with memecoins such as those released by Trump. Going forward, it appears that corruption will continue to be a big issue for Democrats who would otherwise support crypto legislation. 

HFSC Releases Slate of Largely Dangerous Bills 

The House Financial Services Committee released a slate of legislation ahead of a hearing that was previously scheduled for this week, but later cancelled as the House went out of session. The 14 bills include 3 previously introduced bills and 11 draft bills, which are likely to be discussed at a future hearing and could be included in the Committee’s markup later this month. 

The slate includes a draft of the Credit Access and Inclusion Act of 2025 led by Representative Young Kim (R-CA). The companion bill was introduced in the Senate by Senate Banking Chair Tim Scott (R-SC) in April and would add rent and utility payment information to consumers’ credit reports, preempting state and federal laws that protect consumer privacy. Scott and Committee Republicans who joined him on the bill claim it would help “credit invisible consumers” who do not have any credit history with one of the three nationwide credit reporting companies, but in reality the bill would harm consumers, including by overriding state laws that protect renters from tenant screening abuses and reducing their control over their data. 20/20 Vision joined the National Consumer Law Center and over 65 other organizations in opposing the bill last month, and we encourage House Democrats to oppose the bill as it moves forward. 

The noticed bills also include a draft of the Small Dollar Loan Certainty Act led by Representative Kim which would exempt small-dollar credit products from certain requirements under the Truth in Lending Act and draft legislation to eliminate the Consumer Financial Protection Bureau’s market monitoring function, which the agency uses to gather information on consumer financial products and services from companies. 

Look Ahead

Tuesday, July 15

Wednesday, July 16

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