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Tax Bill Update: House Moves Toward Passage

May 20, 2025

The House plans to consider the full reconciliation bill this week, but House Speaker Mike Johnson (R-LA) continues to negotiate with various Republican factions to advance the bill. 

Why it matters: Johnson has a narrow majority (220 to 213) and has to contend with a variety of “red lines” on SALT, the deficit, Medicaid, IRA programs, and more. Republicans can afford to lose only three votes to pass the legislation, as Democrats are not expected to back it.

The “One Big Beautiful Bill” faced a setback on Friday when five Republicans on the Budget Committee voted with all Democrats to block the bill. 

• As part of reconciliation, the Budget Committee assembles the various titles passed by other committees before it heads to the House floor. 
• Rep. Chip Roy (R-TX) opposed the bill, which he called “back-loaded savings and has front-loaded spending.” 
• Three other Freedom Caucus members joined Roy while one GOP member voted against the bill as a parliamentary maneuver to allow for its reconsideration. 

What they’re saying: Johnson negotiated with the holdouts over the weekend and made promises on accelerating Medicaid work requirements and sunsetting IRA energy tax credits earlier. President Donald Trump also weighed in via social media, urging support, and will attend a House GOP meeting in person today to make his pitch. 

• The committee passed the bill 17-16 late Sunday evening with the four holdouts voting “present.” 
• Despite allowing the bill to advance, the House Freedom Caucus published a statement following the vote noting the bill “still does not meet the moment.” 
• Moody’s credit downgrade of the U.S. government may also give spending critics more sway in reshaping the bill. 

What’s next: The House Rules Committee will be the next stop for the bill before the House floor, offering another opportunity for the Freedom Caucus to weigh in on the bill. 

• Two of the initial objectors on the Budget Committee also sit on the Rules Committee. 
• The Rules Committee will meet at 1 A.M. on Wednesday — yes, 1 A.M. — to set the parameters for consideration on the House floor. 
• House GOP leadership hopes to pass the bill out of the House this week, but they’ve indicated they could stay over the Memorial Day weekend if delays persist. 

Yes, but: Johnson still has to negotiate acceptable SALT cap provisions, which have taken a back seat in the current round of negotiations. 

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Regulatory Update: SEC Agenda, More Color on Rule 15c2-11

May 20, 2025

The Securities and Exchange Commission (SEC) and the Practicing Law Institute (PLI) held their SEC Speaks program on May 19 and 20. 

• This is particularly important given that the Office of Information and Regulatory Affairs has not yet updated its semi-annual regulatory calendar, which provides industry with a roadmap on regulatory policy priorities. The last update was in November 2024.

The event featured remarks from Chair Paul Atkins and Commissioners Mark Uyeda, Hester Peirce, and Caroline Crenshaw. 

• In his opening remarks, according to Politico, Chair Atkins focused on the need for a friendlier regulatory environment for financial start-ups, particularly within the cryptocurrency industry. He said that the SEC has until now been operating with a "shoot-first-and-ask-questions-later" approach to the industry in recent years.
  • He also stated that he has instructed staff to revisit a more than two decades-old rule that limits the ability of closed-end funds to invest in private funds. He is interested in regulatory changes that would allow average investors to participate in private funds.
• Uyeda said that he was pleased to witness the SEC’s “major course correction” since January, returning to its “core mission” of regulating the capital markets. He also shared that he looks forward to “refocusing regulatory resources and tools” with Chair Atkins.
• Peirce, as chair of the SEC’s crypto task force, shared her thoughts on the crypto market and related regulation. She noted, “My short answer to the question—Are crypto assets securities?—is that most currently existing crypto assets in the market are not.” She also noted that “important work lies ahead of us in areas such as expanding access to capital, reinvigorating our public markets, regrounding disclosure in materiality.”
• Crenshaw, the sole Democrat on the Commission, cautioned against the SEC’s deregulatory stance, characterizing it as “playing a game of regulatory jenga.” She said that the agency has rescinded rules and guidance without enough analysis and that with a 15% reduction in staff, the SEC has lost a “deep well of institutional knowledge.”

The conference also featured senior staff at the Divisions of Investment Management, Trading and Markets, Corporation Finance, Enforcement, Examinations, and Economic and Risk Analysis, and the Offices of the Chief Accountant and General Counsel. 

• Saltiel shared that the Division is considering next steps for relief from 15c2-11 for public fixed income. (He noted that the SEC has already provided exemptive relief for the application of Rule 15c2-11 to 144A fixed income securities and, more recently, an indefinite no-action extension for public debt.)
• In response to former SEC Commissioner Elad Roisman’s question about how the industry can best share their 15c2-11 concerns with the agency, Director Saltiel asked for more detail on the challenges in meeting 15c2-11 requirements and the impacts to underlying markets.
• CREFC has been deeply engaged in advocacy related to 15c2-11, both on the exemptive relief and no-action extension, and will continue to meet with SEC leadership and staff on this topic. We will also monitor SEC Speaks today. 

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SEC Publishes No-Action Letter on Conflicts on Interest Rule 192

May 20, 2025

The Securities and Exhange Commission (SEC) published a No Action Letter on May 16 in response to a joint trade group effort requesting clarification of the SEC’s Conflicts of Interest in Securitization Rule (Rule 192). 

• Specifically, it bars certain securitization participants from activities like short sales of ABS, purchasing credit default swaps (CDS) that pay off upon a security’s default, or entering into economically equivalent transactions that benefit from a transaction’s poor performance. 
• Exceptions exist for risk-mitigating hedging, liquidity commitments, and bona fide market-making, provided they meet specific compliance requirements

• In particular, firms were concerned that compliance policies could not adequately address the vagueness of the rule’s third prong prohibiting “economic equivalents” of short positions.
• Employees with no knowledge of a deal could unknowingly violate the rule, and enforcing it could require breaching internal information barriers.
  

“Specifically, the Division will not recommend enforcement action to the Commission under Rule 192(a)(3)(iii) with respect to a transaction entered into by a securitization participant related to an asset-backed security (as defined in Rule 192(c)) subject to the rule’s prohibition against engaging in conflicted transactions (as defined in Rule 192(a)(3)) where the person entering into such transaction is a Non-Deal Team Employee and the following conditions are satisfied:

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