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News this week

• SEC Enhances Support for Treasury Clearing Implementation

  The SEC published a dedicated webpage centralizing updates, staff statements, and FAQs to aid market participants in transitioning to central clearing of U.S. Treasury securities.
  Highlights:

  • The SEC is reaffirming its readiness to engage on implementation, interpretive, and operational issues

  • Newly posted FAQ guidance specifically addresses the applicability of the Treasury-clearing rule to mixed CUSIP triparty repos

  • The Commission had earlier extended compliance deadlines to help ensure an orderly rollout

• CFPB’s supervisory/examination priorities and oversight focus
  The CFPB’s strategic priorities for 2025 (especially around protecting veterans, service members, and focusing on high-harm areas) have been publicized.
  This helps frame what types of actions may be expected in coming quarters.

• OCC Announces Updates to Organizational Structure (Sept. 18, 2025)

  • While slightly earlier than your window, this announcement is still practically consequential: OCC restructured its supervision and examination organization effective Oct. 1, splitting into three lines of business—Large & Global Financial Institutions; Regional & Midsize Financial Institutions; and Community Banks. 

  • Under the new design, each line of business will be led by a Senior Deputy Comptroller reporting directly to the Comptroller, aiming for clearer accountability and focus. 

  • This reorganization could influence oversight emphasis, resource allocation, and how institutions interact with OCC examiners.

• CFTC Staff Issues Advisory on Certain Contract Markets (Sept. 30, 2025)

  On Sept. 30, the CFTC published a staff advisory concerning “certain contract markets.” 

  • The advisory provides guidance to contract markets (i.e. exchanges) on compliance and operational expectations under existing statutes and CFTC rules. 

  • While not a rule change, it signals enhanced scrutiny and clarity around exchange behavior and oversight.

• CFTC Announces Participation in World Investor Week 2025 (Sept. 30, 2025)

  Also on Sept. 30, the CFTC’s Office of Customer Education & Outreach (OCEO) announced its involvement in World Investor Week 2025 (Oct. 6–12) to highlight investor protection efforts. 

  • The announcement emphasizes the CFTC’s commitment to raising public awareness of scam trends, red flags, and fraud prevention, especially in digital finance and AI‐enabled platforms. 

  • Sessions will cover relationship investment scams (often dubbed “pig butchering”), government-impostor scams, and crypto/forex frauds via messaging or social media. 

  • The CFTC plans to deploy webinars, social media campaigns, and educational materials during the week.
    

A thought from our Author Norm Osumi 

The October 2025 Shutdown: Healthcare Politics Collide with Government Funding

The federal government entered its eighth day of shutdown on October 8, 2025, with no resolution in sight as Democrats and Republicans remain deadlocked over healthcare subsidies that won't expire for another three months. This impasse has furloughed 900,000 federal workers, halted $100 million daily in small business loans, and created a data blackout that leaves the Federal Reserve making critical interest rate decisions without key economic indicators. The standoff threatens to exceed the 16-day 2013 shutdown within days, occurring at a moment when economic vulnerability makes the stakes particularly high.

How a clean funding bill became a healthcare hostage situation

Congress missed the September 30 midnight deadline to fund fiscal year 2026 operations when zero of the 12 required annual appropriations bills had passed. The House passed H.R. 5371 on September 19 by a narrow 217-212 margin, with every Democrat voting no. This bill would fund government operations through November 21 and include $88 million in enhanced security for federal officials in what Republicans call a "clean" measure.

The Senate has rejected this approach six times as of October 8, with votes falling short at 52-54 (needing 60 to advance). Republicans control 53 Senate seats, requiring at least seven Democratic votes, a mathematical reality that transforms the minority into kingmakers. The Democratic alternative would fund operations only through October 31 but permanently extend enhanced Affordable Care Act premium tax credits.

The core dispute centers on timing and trust. Enhanced ACA subsidies expire December 31 and help 22 to 24 million Americans afford marketplace insurance. Without extension, Kaiser Family Foundation projects average premiums would spike 114 percent from $888 annually to $1,904. Democrats demand an ironclad legislative agreement on healthcare before voting to reopen the government. Republicans insist on passing the funding bill first, promising to negotiate healthcare separately before the December deadline.

What Republicans demand and what Democrats won't accept

Republicans argue that Democrats voted for clean continuing resolutions 13 times during the Biden presidency without policy demands, and that Democrats are "hijacking" the appropriations process. House Speaker Mike Johnson has kept the House in recess since September 19, while Senate Majority Leader John Thune conducts repeated votes attempting to peel off Democratic support. President Trump has framed the shutdown as an opportunity, suggesting "we can cut large numbers of people out" and directing agencies to identify programs for potential elimination.

Democratic leaders have rejected Republican promises of future negotiations. Senate Minority Leader Chuck Schumer demands an "iron-clad legislative agreement" before supporting any funding measure, explicitly rejecting handshake deals. House Minority Leader Hakeem Jeffries called any Republican proposal for a one-year ACA extension "a laughable proposition." Democrats seek permanent extension of enhanced subsidies, estimated to cost $335 to $350 billion over ten years, and cite Trump administration threats of permanent workforce reductions as evidence that Republican promises lack credibility.

Federal operations grind to a halt across agencies

The Department of Homeland Security has over 250,000 employees working without pay, including all TSA agents and border patrol officers. 13,000 air traffic controllers work unpaid while experiencing increased sick calls causing flight delays. Hollywood Burbank Airport operated with zero controllers for six hours on October 7.

The IRS implemented an agency-wide furlough on day eight, creating tax season concerns. Health and Human Services furloughed 41 percent of departmental staff. The CDC suspended public health guidance, FDA halted routine food safety inspections, and NIH stopped admitting new patients to research hospitals except in medical emergencies.

The Small Business Administration completely halted all new loan processing, blocking 320 businesses daily from accessing $170 million in financing. The Department of Defense furloughed 45 percent of its civilian workforce of 334,000 employees, while military personnel continued working without immediate pay. National parks remain physically accessible but with 64 percent of staff furloughed, visitor centers have closed and parks are experiencing trash accumulation and sanitation concerns.

How everyday Americans experience the shutdown

Essential services continue: Social Security checks, Medicare payments, veterans' benefits, military operations, postal service, and airport security all proceed though often with workers laboring without pay. However, Social Security is not issuing new cards or processing new benefit applications efficiently. IRS customer service has collapsed, leaving taxpayers with essentially no telephone support.

The most acute public impact involves WIC serving approximately 7 million pregnant women, new mothers, and young children. WIC funding typically lasts only one to two weeks into a shutdown. The 1.6 million federal households suddenly managing financial uncertainty includes 900,000 furloughed employees and 700,000 working without pay. While back pay is guaranteed by law, workers must manage immediate expenses without income. Federal contractors face worse circumstances; approximately 500,000 affected contractors receive no guaranteed back pay and simply lose income permanently.

This shutdown's place in the troubled history of funding failures

The United States has experienced 21 funding gaps since 1980, with 10 to 11 resulting in actual furloughs. The October 2025 shutdown represents Trump's third, following a three-day January 2018 closure and the record-breaking 35-day shutdown from December 2018 through January 2019. This frequency marks troubling acceleration: no shutdowns occurred during 1996 to 2013, yet three major closures have hit in just seven years.

The 1995-1996 shutdown lasted 21 days and cost $1.4 billion. Public polling showed 46 percent blamed Republicans versus 27 percent blaming Clinton damaging Gingrich politically. The 2013 shutdown lasted 16 days over Affordable Care Act funding, with Standard & Poor's estimating $24 billion removed from the economy. It ended with essentially complete Republican defeat. The 2018-2019 shutdown remains the longest at 35 days, with CBO estimating $11 billion in total economic impact with $3 billion in permanent GDP losses never recovered.

Historical patterns suggest public patience expires after approximately two weeks, and shutdowns extending beyond three weeks face crisis-level pressure typically driven by essential service degradation, particularly in air travel.

Small businesses and contractors absorb financial damage

Federal contractors face payment slowdowns, stop-work orders, and complete procurement halts. Over 500,000 contract employees lost work during previous shutdowns. Unlike federal employees, contractors have no statutory right to compensation. Defense contractors absorbed nearly $4 billion in costs during the previous three shutdowns.

The SBA loan freeze blocks $100 million daily just as the Federal Reserve's September interest rate cut made financing more attractive. The SEC furloughed 91 percent of staff, the FTC completely closed, and export controls, environmental permits, and FHA mortgage approvals all face indefinite waits. The Professional Services Council warned that shutdown combined with workforce reduction threats creates a "diminished talent pipeline" as skilled workers flee government contracting.

The economic data blackout leaves everyone flying blind

The Bureau of Labor Statistics completely shut down, with the September jobs report delayed indefinitely particularly problematic given unemployment reached 4.3 percent in August. Weekly jobless claims stopped being published. The September Consumer Price Index faces high risk of delay, determining the 2026 Social Security cost-of-living adjustment affecting 70 million Americans.

The Census Bureau suspended all economic indicators: retail sales, housing starts, wholesale trade, durable goods orders, international trade, and business inventories. The Bureau of Economic Analysis suspended GDP estimates, personal income data, and corporate profits. Agricultural markets lost the critical World Agricultural Supply and Demand Estimates report, causing wheat futures to rise 2 to 3 percent and soybean futures to climb nearly 4 percent.

The Federal Reserve must make its October 29 interest rate decision potentially without September jobs numbers or inflation data. Chair Jerome Powell had already warned of a "turbulent period" before the shutdown eliminated key data. Kenneth Kuttner of Williams College stated: "This is probably the worst time for the Fed to be flying blind." Paul Donovan of UBS captured the limitation: "Private sector data is like viewing the economy through a keyhole clear, but with a narrow field of vision."

What makes October 2025 different from previous shutdowns

Stock markets hit record highs on October 1 and 3, following historical precedent where the S&P 500 has averaged 0.3 percent gains during previous shutdowns. Yet analysts warn this confidence may be misplaced.

This shutdown occurs during economic vulnerability: unemployment at a near-four-year high of 4.3 percent, first net job losses since 2020, and inflation rising from 2.7 to 2.9 percent. The Trump administration has explicitly framed the shutdown as an opportunity for permanent restructuring, directing agencies to prepare Reduction in Force plans. The September 24 OMB memo instructed agencies to consider permanent layoffs during shutdown, an unprecedented directive.

The administration has suggested it might not provide back pay to all furloughed workers despite the 2019 law requiring it. When asked about compensation, Trump stated "I would say it depends on who we're talking about." Combined with partisan alteration of federal employees' out-of-office messages and threats of permanent layoffs, this shutdown operates under different rules than predecessors.

Economic forecasters project 0.1 to 0.15 percentage points off quarterly GDP per week but these assume temporary furloughs with guaranteed back pay and rapid return to normal operations. Mark Hamrick of Bankrate estimated a 40 percent probability of recession over the next 12 months even before the shutdown. William Lee of the Milken Institute warned: "The history of shutdowns really has had so little impact on the real economy because essentially everything goes back to the way it was. But this time there may be some big changes."

Where this leads and what it means

The October 2025 shutdown has reached eight days with no visible path to resolution. If it continues through October 15, active-duty military will miss their first paycheck. Federal courts run out of funding around October 17. Air traffic controllers will miss their first paycheck October 28, likely triggering the widespread flight disruptions that ended the 2018-2019 shutdown. ACA marketplace open enrollment begins November 1, the deadline driving Democratic urgency.

The October 2025 shutdown reveals a federal budget process in comprehensive failure. Congress has not passed all 12 appropriations bills on time in over two decades. The Senate's 60-vote threshold creates structural requirements for bipartisan cooperation in an environment where such cooperation has become increasingly scarce. Unified party control no longer guarantees ability to govern when Senate supermajorities prove unattainable.

The permanent legacy may be normalization of shutdowns as routine political weapons. For businesses, contractors, federal workers, and households, consequences concentrate on lost income, delayed payments, disrupted services, and pervasive uncertainty. For the economy broadly, impacts accumulate through reduced spending, decreased consumer expenditure, deferred investment, and erosion of confidence in basic government functions.

The October 2025 shutdown tests whether American fiscal governance retains any mechanism for resolving disputes short of serial government closures. With fundamental disagreements over healthcare policy, government size, and budget priorities showing no signs of narrowing, and with political incentives rewarding inflexibility more than compromise, the structural conditions that produced this shutdown remain firmly in place. Whether this closure lasts days or weeks, whether it ends through Democratic concessions or Republican capitulation, the underlying dysfunction persists. That may be the most concerning finding of all: not that this shutdown happened, but that nothing prevents the next one.

This article was generated with the assistance of Claude.ai, Sonnet 4.5.

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