Washington: What to Watch Now
The shutdown of the Department of Homeland Security (DHS) was over. And then it wasn't.
Around 2:30 a.m. on March 27th, the Senate unanimously agreed to a bipartisan plan that would fund DHS for the remainder of the fiscal year, except for some Immigrations and Customs Enforcement (ICE) functions. There was no recorded vote in the Senate as all 100 senators agreed by unanimous consent to pass the bill. The Senate then recessed for the annual two-week Easter break.
Later on March 27th, the House decided not to vote on the Senate-passed bill and instead passed legislation to temporarily fund all of DHS through May 22nd. The House then also recessed for the Easter break. But in order for legislation to be signed by the president, the exact same bill must pass both the House and the Senate. That did not happen and so the DHS shutdown continues. At 45 days, it is now the longest shutdown of a government agency in history.
Neither the House nor the Senate is expected to return to Washington until the week of April 13th. Barring an unexpected development that brings Congress back to Washington before that date, mid-April is now the earliest the DHS shutdown could end.
Trump signs order to pay TSA agents
With the stalemate over funding Homeland Security likely to continue for at least two more weeks, President Donald Trump issued a presidential memo on March 27th directing DHS to pay TSA agents using existing funds. DHS reported on March 30th that most agents will receive paychecks by midweek that include pay for two full pay periods that were missed due to the shutdown. The administration hopes that paying the roughly 50,000 TSA employees will alleviate the long security lines that have plagued airports around the country in recent weeks, with some airports reporting three- to four-hour lines. Normally, only Congress can authorize pay for federal employees, but DHS received extra funding in last year's One Big Beautiful Bill Act. It is believed that the administration is relying on that funding for the payments.
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Labor Department unveils rule to allow alternative assets in 401(k) plans
On March 30th, the Department of Labor (DOL) announced the "Investment Selection Rule." The much-anticipated proposal is ostensibly focused on implementing the president's August 2025 executive order to broaden 401(k) investment options to include alternative assets. But the proposal focuses more broadly on how retirement plan fiduciaries should select and oversee all investment options for a plan.
The proposed rule sets out a "prudent process" with six factors for a "plan fiduciary to objectively, thoroughly, and analytically consider and make determinations about when selecting" investment options for a plan, including performance, fees, liquidity, valuation, performance benchmarks, and complexity. A plan sponsor that follows the process outlined in the proposal with regard to the six factors would be presumed to have met its fiduciary duty, likely shielding it from legal challenges. The DOL called its proposal "asset-neutral" and said that fiduciaries are not directed toward (or away from) any particular investment, though many of the examples in the proposal illustrate how alternative assets like cryptocurrency or private equity would be considered appropriate investment options if the fiduciary follows the process outlined in the rule.
The proposal has broad administration support: both Treasury Secretary Scott Bessent and SEC Chairman Paul Atkins are quoted in the DOL press release endorsing the proposal. The proposal is now open for public comments until June 1st, and the administration hopes to finalize the rule by the end of the year.
Congress may address growing concern over prediction markets
Bipartisan bills have been introduced recently in both the House and Senate to prohibit members of Congress (and their spouses and dependent children), the president, the vice president, and high-ranking executive branch officials (essentially any position that requires Senate confirmation) from trading on the outcomes of political events, policy decisions, and other government actions on the prediction markets. The bills come in response to recent incidents where unidentified bettors were able to profit on predictions that the U.S. would invade Venezuela or attack Iran that were placed just hours before the military action began. A flurry of bills have been introduced recently to curb prediction markets generally, but it remains uncertain whether this recent momentum will turn into concrete action on Capitol Hill.
Fannie Mae to help facilitate crypto-backed mortgages
The mortgage giant Fannie Mae will participate in a mortgage offering that allows home buyers to indirectly fund their down payments with crypto assets. Fannie Mae will not accept the assets as mortgage collateral, but instead will purchase the primary mortgage and bundle it into mortgage-backed securities. One of Fannie's partners for the offering, the mortgage lender Better Home & Finance, will make a crypto-backed loan to borrowers to fund their down payments. Fannie's other partner is Coinbase, which will serve as crypto custodian. Initially, only Bitcoin and USD Coin (a dollar-backed stablecoin) will be accepted. The offering is currently available to a small group of users via a pilot program. The timeline for a broader rollout has yet to be announced.
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