The Crypto Cartel Owns Congress
Liz Goodwin reported yesterday that Trump’s henchmen are threatening Republican senators to vote for all of his crackpot nominees or suffer the consequences, namely Musk-financed dirty primaries. Goodwin, of course, beat around the bush a bit and, reporting for Bezos’ Washington Post, was much less straightforward in how she put it. Even so, she noted that “On the Hill this week some GOP lawmakers faced blistering blowback for questioning the background or behavior of Trump’s Cabinet picks, most notably Pete Hegseth, the former Fox News host tapped to lead the Pentagon, as well as former congresswoman Tulsi Gabbard, whom Trump chose to lead the intelligence community. MAGA influencers dug up negative stories about naysayers and not-so-subtly threatened primaries, and constituents are calling to voice their outrage.”
One senator who has already backed down in terror is Joni Ernst (R-IA) who refused to endorse Hegseth after a meeting. “But,” wrote Goodwin, “a fierce MAGA campaign quickly fomented online, with influencers with millions of followers blasting out accusations about Ernst’s divorce. Brenna Bird, the attorney general of Iowa and someone who is seen as a credible potential primary challenger to Ernst, wrote an op-ed in Breitbart decrying ‘DC politicians’ who ‘ignore’ the base’s desire for Trump to speedily confirm his Cabinet.” Ernst was last seen with her tail between her legs talking how the greatness of Pete Hegseth. Apparently, in Iowa voters love their cowards… [Lisa] Murkowksi told an audience on Thursday that she felt that Ernst had been ‘hung out to dry’ by the incoming administration and questioned what such intimidation accomplished. ‘I think we’re getting a little bit of a preview now of what it’s going to mean to be allegiant to party, and I don’t think that that’s going to help us as a Republican Party,’ she said... The pressure campaign also reflects a new political reality for senators compared with the last time they served alongside Trump. Then, most Republican senators had outperformed Trump on the ballot in 2016 and felt little debt to the political novice. This time, almost every incoming senator in a competitive race rode Trump’s coattails into office, and the party has been remade in his image.”
If this is what’s happening for these lunatic fringe candidates, imagine the lengths MAGA will go when it’s Trump’s extreme Project 2025 agenda up for votes! One top agenda item is deregulating Wall Street. That’s what Trump was paid to do by the robber barons and he has every intention of following through. This week, writing for the Wall Street Journal, Gina Heeb reported that in interviews with potential nominees to lead bank regulatory agencies, Musk’s team “asked whether the president-elect could abolish the Federal Deposit Insurance Corp… Advisers have asked the nominees under consideration for the FDIC, as well as the Office of the Comptroller of the Currency, if deposit insurance could then be absorbed into the Treasury Department… Any proposal to eliminate the FDIC or any agency would require congressional action. While past presidents have reorganized and rebranded departments, Washington has never shut down a major cabinet-level agency and rarely closed other agencies like the FDIC that are not.”
Banksters “are optimistic” that Señor T “will ease a host of regulations on capital cushions and consumer protections, as well as scrutiny of consolidation in the industry. But FDIC deposit insurance is considered near sacred. Any move that threatened to undermine even the perception of deposit insurance could quickly ripple through banks and in a crisis might compound customer fears.” Trump could always count on kool-aid-drinking senators like Tuberville, Mike Lee, Stephen Schmitt and Rick Scott but even careerist cowards up for reelection in ’26 like Ernst, John Cornyn and Thom Tillis might draw the line against something that would likely crash the economy.
After several banks failed last year, customers panicked about whether their deposits were safe at smaller banks. Many fled to the biggest of big banks who are perceived to be so important that the government would never let them fail. Since then, banks have been calling for wider deposit insurance protections to keep smaller banks competitive.
The discussions underscore the drastic approach Trump could take in his attempt to slash the size of the government and ease oversight, including for the highly-regulated financial industry.
Potential bank regulator nominees have interviewed with Treasury Secretary pick Scott Bessent and the new DOGE department…
Musk last month also called for the elimination of the Consumer Financial Protection Bureau, an agency Republicans have long hated. “There are too many duplicative regulatory agencies,” Musk said.
Trump advisers and potential nominees have also discussed plans to either combine or otherwise restructure the main federal bank regulators: the FDIC, OCC and the Federal Reserve, the people said.
Project 2025, a policy document drawn up by the Heritage Foundation and former Trump officials, calls for the merging of the FDIC, OCC and nonmonetary policy parts of the Fed, along with the National Credit Union Administration. (Trump has said he had nothing to do with Project 2025.)
Rep. Andy Barr, a Republican from Kentucky and Trump ally on the House Financial Services Committee, has backed the plan to eliminate or drastically alter the CFPB and said he wants to get rid of what he calls “one-size-fits-all” regulation for banks.
Banks have a love-hate relationship when it comes to the oversight of multiple regulators. Some like it to the extent it can allow them to shop between regulators for a lighter touch. But they often complain about mixed messages and contradictory rulings.
“We could use some streamlining on financial regulation,” said former FDIC Chair Sheila Bair. “But it is really hard to get done.”
A proposal to eliminate a bank regulator would struggle to gain the support of Congress and the industry, she said.
“Banks may complain, but at the end of the day, they like to have their own regulator they have a relationship with,” Bair said. “They like the status quo.”
…In a separate plan that has been floated with the transition team, the FDIC, OCC and parts of the Fed wouldn’t merge but only one of them would continue to regulate banks, one of the people said. The other agencies would keep only nonregulatory staff.
At the CFPB, consumer-education jobs could replace regulatory and supervisory jobs, another person said.
In any plan, significant job cuts are likely. Trump is expected to reinstate an executive order that made some federal workers easier to dismiss, known as Schedule F. Stricter return-to-office policies that could prompt workers to leave are also being discussed, the people said.
Major bank-regulation changes are uncommon outside of financial crisis. Most banking rules today were implemented after the Great Depression or the 2008-09 financial crisis, when bipartisan groups and popular opinion called for stricter bank protections. Republicans will hold thin majorities in both the Senate and the House next year, but are unlikely to find any Democratic support for dramatic changes.
Democrats were the party after the 2008 crisis to close one banking regulator. Many of the worst offending lenders in that crisis were supervised by the Office of Thrift Supervision, which wasn’t a Cabinet-level agency. The 2010 Dodd-Frank law abolished the agency by folding it into the OCC.
And that leads right to the crypto-cartel which now pretty much owns— or has a major stake in— both political parties, as big a stake as AIPAC, with whom it works to terrorize Members of Congress facing reelection battles. Yesterday, the Republican leadership’s pick to chair the all-important House Financial Services Committee was the aforementioned Andy Barr. But the cartel wasn’t taking any chances. It wanted a completely subservient proven shill and insisted on French Hill (R-AR)— and got him!
Yesterday Freddy Brewster reported that as “skyrocketing crypto prices currently push the global valuation to more than $3 trillion, federal regulators have issued warnings about the nascent industry’s potential to” crash the economy, since the industry has paid off enough members of Congress to guarantee a “lack of regulations, and growing ties to traditional markets. This echoes “alerts issued about the subprime mortgage industry before the 2008 financial crisis. ‘I think you could sort of look at this… as a signpost for the future,’ said Mark Hays, associate director for cryptocurrency and financial technology at the consumer advocate group Americans for Financial Reform. ‘If things go wrong, a report like this is one of those things that you look back on to say, What were the early warning signs?’ The two reports, both from nonpartisan federal agencies, caution about the possible negative ramifications if crypto becomes more entwined with traditional financial institutions, among other concerns. One report also warns about the consequences of an increasing number of consumers taking out loans to finance risky cryptocurrency bets— a process called ‘leveraged trading.’” We’re talking about gambling in a, uninsured volatile marketplace dominated by avaricious criminals.
A second report from the Office of Financial Research, a nonpartisan independent bureau reporting to the Treasury Department, found that zip codes with the highest levels of cryptocurrency holders in recent years saw spikes in households taking out auto and mortgage loans.
“The considerable increase in usage of crypto assets, the values of which are substantially more volatile than other asset classes, could present a financial stability risk if there are spillovers onto household balance sheets or sectors in the real economy,” researchers wrote in a Nov 26 report.
The researchers also stated that future monitoring should focus on low-income consumers with high debt and crypto holdings because economic distress within this group could signify future problems in banks and other financial institutions.
…The new reports were released as the crypto industry spent more than a quarter of a billion dollars to help elect pro-crypto candidates to Congress and place key allies in the incoming Trump administration. More than 270 pro-crypto candidates were elected to the House of Representatives and the Senate will have more than 50 pro-crypto lawmakers— making it all but certain that a number of the industry’s demands for loose regulatory oversight will be enacted.
President Joe Biden’s administration repeatedly cracked down on crypto. The Securities and Exchange Commission (SEC), one of the main agencies tasked with regulating crypto, aggressively issued enforcement actions and lawsuits against companies and cryptocurrency creators who failed to properly register their exchanges and products.
This approach is likely to change as Trump has vowed to make the United States the “crypto capital of the planet,” and lawmakers revive a number of shelved crypto-friendly bills for a vote.
…What’s more, Trump just nominated someone who helped grease the skids for the 2008 collapse. Last week, Trump announced Paul Atkins as his nominee to lead the SEC, with crypto titans applauding the decision.
Atkins is a “deregulation zealot and industry cheerleader” who as an SEC commissioner, appointed by former President George W. Bush, from 2002 to 2008 supported policies that helped contribute to the 2008 financial crisis, said Dennis Kelleher, president of the financial markets watchdog group Better Markets. During his time as a commissioner, Atkins pushed rule changes that weakened leverage rations for Wall Street banks, making them more susceptible to economic collapse, and supported the repeal of a rule that prevented manipulative short selling of securities…
Trump also nominated Howard Lutnick to head the Commerce Department, another agency tasked with overseeing crypto. Lutnick is the CEO of Cantor Fitzgerald, a financial firm that allows clients to use Bitcoin as collateral for loans and deals in other crypto services.
Additionally, Trump named venture capitalist David Sacks to be his White House artificial intelligence and cryptocurrency czar. Sacks has personal ties with billionaire Elon Musk, helped recruit a number of wealthy Silicon Valley investors to support Trump this past election cycle, and has been a crypto cheerleader for years.
These crypto boosters could push Trump to further integrate the currencies into traditional financial markets by allowing banks and financial institutions to hold larger amounts of crypto and allow more banking investments into the crypto sector, among other policies.
But the Trump administration should proceed carefully because crypto’s inherent volatility could have dramatic consequences on the broader economy, said Adam Rust, director of financial services at the Consumer Federation of America, a consumer protection group.
…The new regulatory warnings come amid one of the most influential cryptocurrency trade associations issuing a 100-day policy agenda for the Trump administration. The 100-day plan issued by the Blockchain Association calls for the Trump administration and Congress to establish a more friendly market structure for the crypto industry, appoint new chairs at key government agencies and develop a crypto-focused advisory council to work with Congress and regulators. Perhaps most pressingly, the agenda also calls to “end the debanking of crypto.”
“Crypto companies and users have been unjustly denied access to traditional banking rails critical to paying employees, vendors, and taxes,” the Blockchain Association wrote. “This practice should end immediately.”
“Debanking” has become a hot-button issue for the industry. Venture capitalist and crypto funder Marc Andreessen recently highlighted the matter during an episode of the popular podcast, the Joe Rogan Experience, in which he claimed that tech founders were being denied access to banking services. Other tech founders, including crypto exchange Counbase CEO Brian Armstrong, chimed in on social media, claiming they’ve experienced similar treatment.
Regulators overseeing traditional banks and financial institutions have policies that restrict banks from doing business with companies or clients that are financially unstable and have sweeping financial risks, such as cryptocurrencies.
One particular policy that has angered the crypto industry is an SEC staff bulletin that requires financial institutions, including crypto exchanges, to report their customer’s crypto holdings as liabilities— an accounting term that essentially means money owed— on their balance sheets. This would mean that crypto exchanges and other financial institutions that hold users’ cryptocurrencies would have to publicly disclose how much and what kinds of cryptocurrencies they are holding on behalf of their clients.
The crypto industry has “strongly disagreed” with the policy because it could “constrain lending or other income-producing activities, making crypto custody services economically infeasible for many firms, among them banks with valuable experience offering custody services,” wrote DLA Piper, an international law firm that specializes in technology, finance, and other areas.
These regulations helped prevent a more dramatic collapse when multiple banks working with the crypto industry failed in 2023, said Hays.
“I think one can argue reasonably that [regulations] prevented the crash from spreading further, because there weren’t a lot of banks that had exposure to the crypto sector,” Hays said. “They weren’t investing in it, they weren’t holding assets that suddenly disappeared.”
The new Federal Reserve report laid out what could happen if Congress and regulators allow the crypto industry to become more entwined with one another, he added. For example, the report warned that the interconnectedness of various cryptocurrencies makes them “fragile” to price swings, which could lead to a run on deposits if the crypto markets were to drop in value like it in 2022 and 2023.
“The crypto sector really wants access to banking services, and they want banks to invest in crypto,” Hays said. “And so given that, this [Federal Reserve] report is kind of laying out what could happen if they get really close.”
The Federal Reserve report detailed a variety of cryptocurrency concerns, including the use of loans to finance risky crypto transactions, crypto’s history of dramatic price swings, and scams associated with decentralized exchanges that are hard to police because there is no centralized governing body.
Perhaps the most concerning aspect of the report detailed how consumers use loans to fund cryptocurrency purchases. The Federal Reserve economists highlighted how the practice “appears widespread,” which can leave users exposed to the dramatic price swings that are inherent to the cryptosphere and could make their debt harder to pay back.
“When the value of the debt does not change based on the value of the asset (crypto swings), the borrower’s debt can be worth more depending on price swing, which can lead to greater exposure for the borrower,” economists wrote— adding that as debts come due, users will be forced to sell their crypto, which could lead to further price drops.
Crypto prices are also interconnected, economists found, which means that when one cryptocurrency starts to drop, others tend to follow. Such price fluctuations are often based on popular enthusiasm for crypto that can spread like wildfire through social media.
…The report noted that spotty government regulation of crypto could contribute to some of the wider financial risks of crypto trading. But its authors added that “many features of the digital asset ecosystem are designed to avoid regulation or do not fit neatly into existing regulatory frameworks.” For example, the economists wrote that many crypto companies are headquartered in countries with few financial regulations.
Silicon Valley Bank was another institution that failed in 2023 due its connections with cryptocurrencies— in particular stablesoins, which the report deemed are “funding risk vulnerabilities.” Stablecoins are often backed by traditional currencies like the U.S. dollar, as well as other crypto assets, which leave them vulnerable to valuation swings and could jeopardize banks that hold large amounts of them.
“We argue that [stablecoins] create interconnections that can amplify shocks in the digital ecosystem and have the potential to spill over into the traditional financial system,” Federal Reserve economists wrote.
…While the current crypto price surges have brought in extra money for a number of crypto users, experts warn that the gains may not last— and in Trump’s “crypto capital of the planet,” the fallout from such a downturn could be felt far beyond the cryptosphere.
“People need to watch out, because what goes up usually comes down,” said Hays with Americans for Financial Reform.
Some of the Members of the House who have been most bought out by the crypto-cartel include:
Tom Emmer (R-MN)
Ritchie Torres (D-NY)
Ken Calvert (R-CA)
Sam Liccardo (D-CA)
Nancy Mace (R-SC)
Henry Cuellar (D-TX)
Byron Donalds (R-FL), a former bank robber
Shomari Figures (D-AL)
James Comer (R-KY)
Jonathan Jackson (D-IL)
David Schweikert (R-AZ)
Chrissy Houlahan (D-PA)
French Hill (R-AR)
Jim Costa (D-CA)
Chip Roy (R-TX)
Mikie Sherrill (D-NJ)
Jared Moskowitz (D-FL)
Anna Paulina Luna (R-FL)
Eric Swalwell (D-CA)
Andy Ogles (R-TN)
Josh Gottheimer (D-NJ)
Erin Houchin (R-IN)
Don Davis (D-NC)
Max Miller (R-OH)
Drren Soto (D-FL)
Mariannette Miller-Meeks (R-IA)
Nikki Budzinski (D-IL)
Jason Smith (R-MO)
Rob Menendez (D-IL)
Nancy Pelosi (D-CA)
Young Kim (R-CA)
Suzan DelBene (D-WA)
Diana Harbarger (R-TN)
Jimmy Panetta (D-CA)
Glenn Grothman (R-WI)
Pete Aguilar (D-CA)
Marjorie Traitor Greene (R-GA)
Jasmine Crackett (D-TX)
Andrew Garbrino (R-NY)
Dan Goldman (D-NY)
Andy Harris (R-MD)
Scott Peters (D-CA)
Vern Buchanan (R-FL)
