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Risks of Fragmentation in Global Financial Regulation

July 15, 2025

A joint paper published on July 9 by the Bank Policy Institute, GFMA, and the Institute of International Finance argues that fragmentation in global financial regulation puts competition, economic growth, and financial system resilience at risk.

• A 2018 OECD survey estimates that a piecemeal approach to financial sector regulation costs the global economy $780 billion a year.
• A January 2025 World Economic Forum report states that annual economic output losses from fragmentation could range from $0.6 trillion to $5.7 trillion, or about 5% of current GDP.

1. The International Monetary Fund, Financial Stability Board (FSB), and Basel Committee should identify national rules that require financial institutions to establish local subsidiaries or restrict branch operations;
2. Jurisdictions should review whether ring-fencing requirements are properly calibrated;
3. Global regulators and industry should work together to address fragmentation and risks introduced by inconsistencies;
4. The FSB should re-evaluate the functioning of international colleges and case management groups.

In April remarks to the American Bankers Association, Bessent stated:

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Congress Focuses on Crypto and Dodd Frank This Week

July 15, 2025

Now that the One Big Beautiful Bill is signed into law, Congress will pivot to government funding issues ahead of the September 30 deadline and several bipartisan policy priorities. 

• The House has coined this week as “Crypto Week” as they consider landmark pieces of crypto legislation. Additionally, the House will consider the Defense Appropriations bill on the floor and the National Defense Authorization Act (NDAA) will move through committee markup.
• On the Senate side, Senators will continue to work through nominations as Majority Leader John Thune (R-SD) looks to push as many through as possible before the August recess. The Senate will move to consider the Rescissions package beginning on Tuesday, which will reduce previously enacted spending. 
• In addition to cryptocurrency policy, the House Financial Services Committee will hold several hearings, including a review of Dodd-Frank outcomes.

July 15

• House Financial Services Committee hearing on “Dodd-Frank Turns 15: Lessons Learned and the Road Ahead” at 10:00 AM.

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Senate Election Outlook

July 15, 2025

The 2026 Senate elections are shaping up as one of the most fiercely contested political battles in recent memory, with control of the chamber hanging in the balance. 

1. Georgia: Incumbent Sen. Jon Ossoff (D-GA) faces a tough reelection in a purple state where Republicans are betting on a Trump-aligned challenger to flip the seat. Ossoff got a lifeline when current Georgia Governor Brian Kemp decided not to run for the seat, but he has a long way to go toward being re-elected. Still, avoiding a race against a popular Governor certainly helped his chances.
2. Michigan: An open-seat battleground after Sen. Gary Peters’ (D-MI) retirement, with both parties seeing it as one of the best pickup GOP opportunities on the map. 
3. North Carolina: A true toss-up following Thom Tillis’ retirement, the open seat sets up an expensive and bitter fight in a classic swing state. This was predicted to be a bitter re-election fight regardless, but Tillis’ retirement announcement certainly doesn’t help Republicans who will likely have to navigate a tricky primary.
4. Maine: Republican Senator Susan Collins (R-ME) plans to run again, but remains vulnerable in a blue-leaning state, making it one of the GOP’s riskiest holds. If she retires, the seat immediately becomes the best pickup opportunity for Democrats of the whole map.
5. Minnesota: Democratic Sen. Tina Smith’s retirement is unlikely to present a flip opportunity as the state is reliably blue. Republicans have not won statewide since 2006. Still, President Trump’s closer than expected losses may give some in the GOP hope. 
6. New Hampshire: This seat will be highly competitive after Sen. Jeanne Shaheen’s (D-NH) retirement, with Democrats scrambling to defend an open seat in a state Biden carried. 
7. Ohio: Currently held by Sen. Jon Husted (R-OH), who was appointed to fill the vacancy created by VP Vance, a special election adds a layer of unpredictability in a state trending more conservative. If former Senator Sherrod Brown (D-OH) decides to try and make a comeback, Democrats could have a shot at flipping the seat. 

Republican intraparty fighting threatens traditionally safe seats: Despite controlling the Senate, the party is seeing messy and divisive primaries, often pitting Trump-aligned hardliners against traditional conservatives. 

• Texas: Senator John Cornyn (R) is up against a favorite of the MAGA wing of the party, with controversial former Texas Attorney General Ken Paxton, whose close ties to Trump may help him in the primary. Republicans in the state worry Paxton may not fare as well in November and could throw the election to the Democrats. 
• Iowa: Senator Joni Ernst is reportedly torn on whether or not to run for another term. The Senator made headlines at a town hall earlier this year when she said “we are all going to die”, in response to constituents concerns that the Republican reconciliation bill would cause her constituents to lose their healthcare coverage. Her seat has since moved from “safe Republican” to “likely”, a shift in favor of Democrats.

A major wildcard in the race is the sudden entrance of Elon Musk’s new “America” party, which has pledged to run candidates in multiple Senate contests. Although Musk and his new party are unlikely to win any Senate seats, his movement threatens to siphon votes away from Republicans in closely contested states, potentially throwing the advantage to Democrats in places like Georgia or North Carolina. 

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