On Capitol Hill, Congress is rushing to pass the six remaining appropriations bills necessary to fund the government for the current fiscal year. Failure to do so before the January 30 deadline could mean another government shutdown. (As a reminder, Congress must pass 12 appropriations bills every fiscal year to fund the government's operations. The current fiscal year ends on September 30.)

The Senate last week passed a package of three funding bills, which have been sent to the president for his signature. The bills provide funding for the departments of Commerce, Energy, Interior, and Justice, as well as the EPA, water projects, and science initiatives. The House passed that package earlier this month.

Also last week, the House passed two other bills that would fund the State Department, the Treasury, financial services agencies, and various White House functions. The Senate, which is in recess this week, is expected to pass that package next week.

On Tuesday, House negotiators also released the text of a massive $1.2 trillion package that includes the remaining four appropriations bills. That legislation includes nearly $840 billion for the Pentagon, as well as funding for the departments of Education, Health and Human Services, Homeland Security, Housing and Urban Development, and Transportation. The House is aiming to pass that bill by January 23, giving the Senate about a week to pass it before the January 30 deadline. The timing is tight, but not impossible.

On Wednesday, the court will hear oral arguments on whether the president can fire a sitting Fed governor. President Trump said he was firing Fed Governor Lisa Cook last August after alleging she had committed mortgage fraud prior to her nomination as a governor. (Cook hasn't been charged with a crime.) Lower courts have allowed Cook to continue serving in her Fed role while the case plays out.

This closely watched case is seen as a test to the central bank's independence, which has been a cornerstone of the global financial system for decades. Legal experts have suggested the administration's case may face some resistance. The administration's subsequent opening of a separate criminal investigation into Fed Chair Jerome Powell—seen as part of a boarder pressure campaign against a Fed unwilling to lower rates as quickly as the president would prefer—could complicate the case against Cook.

In an unrelated case last year about the president's ability to fire members of other independent agencies, the court seemed to go out of its way to signal that the Fed was not like other agencies, calling the Fed "a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States."

There is no timetable for when the Cook case may be decided, though decisions for cases heard at the beginning of the year are often published in June.

On January 16, President Trump said he may be inclined to keep Kevin Hassett in his current role as the president's top economic advisor and chair of the National Economic Council. Hassett, one of four finalists to succeed Powell when his term ends in May, had been considered a favorite for the job.

At a White House event, Trump said of Hassett, "I actually want to keep you where you are, if you want to know the truth."

With that comment, attention turned to former Fed governor Kevin Warsh as a potential nominee. Trump has also interviewed current Fed governor Christopher Waller, and last week spoke with Rick Rieder, the chief investment officer for global fixed income at BlackRock.

Some in the White House reportedly think Rieder would be the easiest for the Senate to confirm. But Bloomberg reported on Tuesday that Trump is "somewhat frustrated by his choices," with each candidate offering positives and negatives.

Treasury Secretary Scott Bessent said Tuesday morning that Trump may announce his choice next week.

The Senate Banking Committee was expected to debate and vote on a crypto-market structure bill last week, but the plan was abruptly canceled after Brian Armstrong, the CEO of crypto giant Coinbase, announced that his company was pulling its support for the bill. The House passed its version of the legislation, known as the Digital Asset Market Clarity Act, last summer.

A bipartisan group of members of the Senate Banking Committee have worked for months to try to find common ground on the bill, which would clarify the roles of the SEC and the Commodity Futures Trading Commission (CFTC) in regulating cryptocurrency, put in place some investor protections, and set the rules of the road for the industry going forward. But bipartisan agreement has been difficult to come by.

Further complicating the bill is a fight between the traditional banking industry and the crypto industry over the latter's paying of "rewards" for customers who hold stablecoins, something banks say is the same as paying interest on deposits but without the regulatory requirements that banks must follow.

Senate Banking Committee Chairman Tim Scott (R-SC) said that committee members are working to resolve their differences but has offered no timetable for when the panel might consider a revised version of the bill.

The president is expected to provide more details for the plan in a speech this week in Europe.

National Economic Council Director Kevin Hassett said last week that one plan under consideration would be to allow individuals to withdraw the equivalent of a 10% home down payment from their retirement accounts, and then put 10% of their home equity as an asset into their 401(k) accounts.

Any plan permitting early withdrawals of retirement funds would likely require legislation and significant changes to tax rules—changes that could be difficult for a narrowly divided Congress to pass. But Congress has allowed exceptions in recent years. SECURE Act 2.0 from 2022, for example, permitted victims of domestic abuse, victims of disasters, and individuals suffering from terminal illnesses to withdraw retirement funds penalty-free.

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