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How will US public policy shape business in 2026? · PwC's accounting podcast

0:00
SPEAKER_01: Thought Leadership from PWC's National Office.
0:06
SPEAKER_02: Hello, and welcome to PWC's Accounting Podcast.
0:10
SPEAKER_02: I'm Heather Horn.
0:12
SPEAKER_02: Thanks for joining us again today for an episode on the latest developments in accounting and reporting.
0:18
SPEAKER_02: For today's episode, I'm pleased to welcome our guest host, Kyle Moffitt, PWC's professional and practice leader in the National Office.
0:27
SPEAKER_02: I'll turn it over to Kyle now to introduce the episode and start the conversation.
0:35
SPEAKER_04: In today's episode, we're taking a step back to examine the public policy environment shaping the business landscape in 2026 and what it means for companies navigating regulatory, reporting, and business decisions this year.
0:48
SPEAKER_04: For this discussion, I'm joined by PwC's U.S.
0:51
SPEAKER_04: public policy leader, Roz Brooks, and Michael O'Brien, a senior managing director in our U.S.
0:57
SPEAKER_04: public policy practice.
0:59
SPEAKER_04: Raz, Michael, thanks for joining me today.
1:02
SPEAKER_06: Thanks for having us.
1:03
SPEAKER_04: So, Roz, so so want to start off with just setting the stage of the current policy environment.
1:09
SPEAKER_04: And obviously they're there, you know, narrow majorities and limited runway with midterms ahead.
1:14
SPEAKER_04: Talk about what that means and where businesses might expect the most meaningful regulatory activity in 2026.
1:21
SPEAKER_06: Yeah, so I was talking about this earlier with Michael.
1:24
SPEAKER_06: Actually, I was saying, I feel like a broken record talking to business on this front to say, I feel like for the past couple of administrations, we've kind of said, you know, don't expect large bipartisan action in Congress.
1:36
SPEAKER_06: Don't expect a lot of legislation coming through, you know, you'll see things every now and then, but um, nothing comprehensive.
1:44
SPEAKER_06: And so all the action has been with the administration.
1:47
SPEAKER_06: And that still stands in terms of what business should be paying attention to.
1:52
SPEAKER_06: But I thought because Michael Leeds kind of federal affairs, it would be interesting to hear his take on what the dynamic actually is currently in Congress with the majorities and where people are focused given the midterms.
2:07
SPEAKER_05: Yeah, it's a great point, Raz.
2:09
SPEAKER_05: And traditionally, we would look to the administration for the most activity, specifically the regulatory agencies.
2:16
SPEAKER_05: Uh, one thing we've always said is when a new administration takes hold, you know, you have four years of that party leaving the administration.
2:24
SPEAKER_05: You know, midterms could change the dynamic in Congress, but the party in power currently, the Trump administration, will be there for four years.
2:31
SPEAKER_05: So you have, you know, almost three more years to go.
2:33
SPEAKER_05: So focusing on where the regulatory agencies are and what the regulatory agenda is is always going to be of paramount importance.
2:41
SPEAKER_05: Pivoting to Congress, we do have razor-thin majorities in the House and the Senate.
2:45
SPEAKER_05: The House has been more problematic, only a handful seat majority for the Republicans.
2:50
SPEAKER_05: Uh, due to just pure actuarial data, pure demographics.
2:56
SPEAKER_05: You have people get ill, you have car accidents, you have deaths.
3:00
SPEAKER_05: We've had all of those in this current.
3:02
SPEAKER_05: We're getting the inside baseball here, which leads to a very precarious situation for the leadership in the House to try and get bills across the finish line.
3:11
SPEAKER_05: We've already seen that.
3:12
SPEAKER_05: So it it's very difficult to get things through the House.
3:16
SPEAKER_05: It's difficult to get bipartisan legislation through the Senate because traditionally you need 60 votes to move to let move legislation only during reconciliation, which we can touch on a little bit later.
3:27
SPEAKER_05: Do you need a simple majority?
3:28
SPEAKER_05: So there are challenges there.
3:30
SPEAKER_05: Then, as you said, we also have the midterms coming up.
3:32
SPEAKER_05: So we have a ticking clock until November.
3:35
SPEAKER_05: There are things that they have to get done, one of which is funding.
3:39
SPEAKER_06: Yeah.
3:40
SPEAKER_06: Do they?
3:41
SPEAKER_05: Well, as everybody knows, we'd like them to get done with FY26 funding.
3:46
SPEAKER_05: Yeah.
3:46
SPEAKER_05: And we haven't even begun to think about FY27.
3:49
SPEAKER_05: The fiscal year currently ends on September 30th.
3:53
SPEAKER_05: They need to get funding for next year done by this September 30th, as everybody knows who's been to the airport.
3:58
SPEAKER_05: We still don't have last year's funding done for the DHS.
4:02
SPEAKER_05: So there's a lot of things they're they're going to need to get done between now and election day.
4:06
SPEAKER_05: And with those slim majorities, the the hope for any sort of big bipartisan package of legislation in any area is probably remote.
4:14
SPEAKER_05: Yeah, slim, slim to none.
4:16
SPEAKER_04: Interesting.
4:17
SPEAKER_04: So so obviously we hear a lot about affordability.
4:20
SPEAKER_04: You hear a lot about inflation, you know, gas prices, you know, housing, um, you know, all central themes really leading to economic anxiety, right?
4:30
SPEAKER_04: And what we've seen in the markets, right, is is obviously a reflection on that.
4:34
SPEAKER_04: So so what do we expect to see for 2026 from the perspective of policy tools that are at their disposal, anything that they can do?
4:42
SPEAKER_04: Or are you just telling me what you just said is they can't get anything done and we just kind of like, you know, throw our hands up in the air?
4:49
SPEAKER_04: Like what can they what can they do?
4:51
SPEAKER_04: And just thinking about obviously midterms and the impact they can have on midterms if they can actually ease any any of these concerns.
4:59
SPEAKER_06: Well, I do think they're it's not for lack of want, I think, in terms of them attempting to, we've got the Road to Housing Act, right?
5:10
SPEAKER_06: That they're that's under consideration.
5:11
SPEAKER_06: As you think about affordability, a lot of the conversation is centered on housing.
5:16
SPEAKER_06: But the reality to what Michael was saying earlier about the narrow majorities and just the the challenges, even from a policy perspective, when you have majorities that are that then, is to try to get everyone in agreement.
5:28
SPEAKER_06: And given the dynamics in the Senate, getting Democrats and Republicans to agree and then House Republicans to agree, that is just challenging.
5:35
SPEAKER_06: So what you've seen is the administration come through, you know, in March, there was an executive order focusing on what the administration perceives are issues to try to negate, you know, regulatory challenges, um, problems with mortgage kind of, you know, like disclosures, like different things that they feel are friction in the system that are driving up costs or keeping um housing supply down or not in an affordable standpoint.
6:05
SPEAKER_06: So you've seen the administration taking efforts to try to do things, but even those efforts, they're not these broad based, like we haven't heard like price caps or or anything, you know, it's it's the focus lately has been where they generally have focused around deregulatory efforts, efforts to kind of use the federal government to remove friction that they believe is in the system that is that is driving up a lot of prices.
6:33
SPEAKER_06: And then, I mean, look, with the exception of recently and kind of the current conflict going on in the Middle East, you had had the president just in February talking about all of the things that the administration had accomplished around affordability when he talked about prices coming down, when he talked about um gas prices, all of that.
6:51
SPEAKER_06: Now, what happens in the next six to eight, I don't know, in the next, you know, short period of time and what the administration tries to do to re to react to that could be worth watching.
7:03
SPEAKER_05: I don't know if you Yeah, everybody understands what the problem is, the affordability crisis.
7:09
SPEAKER_05: Um I mean, that's obvious.
7:10
SPEAKER_05: It the question is, what tools do you have at your disposal to have an impact?
7:15
SPEAKER_05: Uh, and I think that's where the administration and the majorities in Congress are struggling.
7:20
SPEAKER_05: President Trump has tried to use, like countless presidents before him, uh executive authority to dry and you know, impact or effect some sort of a change so that the consumer will see uh, you know, prices go down and the economy get better and the affordability crisis lessen.
7:37
SPEAKER_05: The problem is it's just not that easy.
7:39
SPEAKER_05: Uh, I think that the president and Republicans are hoping that last summer's uh working families tax cuts bill, uh better known as the one big beautiful bill, hopefully that when people are now filing their taxes in April, they'll feel it.
7:54
SPEAKER_05: That they will, then they'll see some sort of impact.
7:57
SPEAKER_05: Uh Raz touched on the current conflict in the Middle East, and obviously it's not happening, it's not helping because what's the the primary tangible result that the consumer sees?
8:08
SPEAKER_05: Forget what's going on in the Middle East, whether it's good, bad, or whatever, uh it's gas prices.
8:14
SPEAKER_05: So now gas prices are rising.
8:16
SPEAKER_05: So we're talking about affordability being the driver of maybe the voter kind of uh enthusiasm, if you will, in November.
8:24
SPEAKER_05: Well, the conflict in the Middle East is having the wrong impact if you're trying to maintain your majorities and so on.
8:31
SPEAKER_05: So it's it the reality is it's just there's not a ton they can do to affect change so quickly.
8:39
SPEAKER_05: We've seen the struggle with the Federal Reserve Board, the conflict between the president uh and Chair Powell.
8:46
SPEAKER_05: It's all about interest rates.
8:48
SPEAKER_05: They're trying to get interest rates lower, trying to help the consumer when it comes to possibly capping credit card interest rates and such.
8:54
SPEAKER_05: So everybody understands what the problem is.
8:57
SPEAKER_05: It's just a question of what tools are at your disposal to get that impact and get it in the near term.
9:03
SPEAKER_04: Yeah.
9:04
SPEAKER_04: No, it's interesting, right?
9:05
SPEAKER_04: Because like you you hear of some of the states that where, you know, a governor may come out and say, you know what, we're actually gonna give like a tax holiday for gas, you know, or we'll keep the, you know, the we'll lower it for a period of time because they want to offset that.
9:19
SPEAKER_04: And you have some states that basically say, no, we're just gonna keep it where it is.
9:22
SPEAKER_04: Um, and I want to talk about certain states that that that have that approach or not, but but there are things that that can be done.
9:28
SPEAKER_04: But I think broadly, like you said, broad strokes that can that can happen, it's it's a lot more challenging.
9:34
SPEAKER_04: Um, so so trade and tariffs, also a big area of focus.
9:38
SPEAKER_04: I think that's completely loaded.
9:40
SPEAKER_04: We know what's been going on with tariffs.
9:42
SPEAKER_04: Um another podcast that will be, you know, that we just released where we'll dive deeper into recent developments and accounting implications.
9:50
SPEAKER_04: So definitely recommend our listeners um, you know, check out that podcast.
9:54
SPEAKER_04: Um, I I do want to get some of your thoughts on where things might be headed.
9:58
SPEAKER_04: So um, you know, obviously with legal constraints emerging, how is this administration adapting its tariff strategy?
10:06
SPEAKER_06: Yeah, I think the thing for our listeners to be aware of, and I think by now we should be, is that the administration is not abandoning its tariff strategy and did not abandon tariffs as a as a tool.
10:20
SPEAKER_06: They are narrowing their focus, they are adapting to the legal kind of realities that they're facing, and they are focused on things like Section 232, Section 301, that things that have been tried and true for some time.
10:37
SPEAKER_06: They may not be long-lasting, but they give the president what he needs to effect change through negotiation.
10:44
SPEAKER_06: As you've seen a lot of agreements that have been entered into with different countries where he can get extract certain concessions and things based on the fact that he does have these tools at his disposal still.
10:58
SPEAKER_06: Um, and those recognizing over the years is what Congress has delegated to the executive branch, kind of in that respect.
11:05
SPEAKER_06: So rather than using the sweeping kind of powers that they kind of did coming in, they're refocusing and adjusting.
11:13
SPEAKER_06: So it just means that tariffs remain a big risk, like it has not gone away.
11:21
SPEAKER_06: And the uncertainty is still there, like because you don't know what's next or what's, you know, they've gotten more focused, but it doesn't mean they won't turn focus to a particular area that may be of interest to a certain industry or or something from that span.
11:38
SPEAKER_05: And I but I think that's been the biggest frustration for the business community thus far in this Trump administration, specifically with with regard to tariffs, is uncertainty.
11:47
SPEAKER_05: Yeah.
11:48
SPEAKER_05: If you could tell the business community for certain this is the tariff regime, this is what will be implemented, it will not change, and it is now the law of the land on January 1st.
12:00
SPEAKER_05: At least they could strategize and adapt.
12:03
SPEAKER_05: The fact that it's kind of whack-a-mole and you don't know what's happening.
12:07
SPEAKER_05: I think that's a good, that's a good description of it.
12:09
SPEAKER_05: Yeah, the the Supreme Court decision that was just kind of you know looming over all of this, and then finally that came through.
12:15
SPEAKER_05: And then to Raz's point, that you know, Trump just pivoted and used other uh avenues at his disposal that probably historically were not meant, you know, emergency trade authority for this specific kind of way that he's utilizing them, but he will continue to.
12:31
SPEAKER_05: I put this under the umbrella more of, you know, the art of the deal.
12:35
SPEAKER_05: Yeah.
12:36
SPEAKER_05: I think that he's constantly trying to use every kind of lever that he has to try and effect some sort of long-term deal with XYZ countries.
12:46
SPEAKER_05: And the unfortunate part of that is whether or not he is successful or not ultimately, uh, is that there's just so much uh noise in the system while the process is playing out.
12:58
SPEAKER_05: I think that that's where we are right now, especially the chaos that kind of came after the Supreme Court decision.
13:04
SPEAKER_05: What are you gonna do about the tariffs that have already been paid?
13:06
SPEAKER_04: Yeah.
13:06
SPEAKER_04: I mean, and it it obviously created a lot of I mean, obviously why we did a podcast on it, because there's so many complexities to think about in just the pure nature of you know the companies and how they operationalized it, right?
13:18
SPEAKER_04: Like it's not just, hey, we pay these tariffs, but you know, you had companies that were actually figuring out a way to pass those tariffs through to their customers.
13:26
SPEAKER_04: And so all those impacts obviously got to think about and and certainly expect to see a lot of disclosures, I I would think, um, for this this first quarter, um, definitely, um, but throughout throughout the quarterly filings, at least for calendar year companies.
13:42
SPEAKER_04: Um, so you know, I want to switch gears a little bit because it it I do want to talk a little bit about kind of disclosure or whatever.
13:48
SPEAKER_04: So, but broadly speaking, right?
13:50
SPEAKER_04: We a lot of of noise um uh at the SEC, um, but the PCAOB, want to get into a little bit of that.
13:59
SPEAKER_04: We've obviously had some some leadership changes at the SEC, even more significant recent leadership changes, the board at the PCAOB, appointment of almost an entirely new board.
14:10
SPEAKER_04: And so, you know, I I can tell you my own views on it.
14:13
SPEAKER_04: You and I, Roz, we've talked about this.
14:15
SPEAKER_04: Um, we talk about it uh quite often, but wanna get your thoughts on kind of what you're seeing and hearing, um, you know, high-level, you know, big picture priorities focus.
14:27
SPEAKER_04: Um, when you talk to clients, you know, what what what do you share with them?
14:31
SPEAKER_06: So I think it's interesting you use the words priority and focus because I do think under Chair Atkins from the SEC and PCOB standpoint, that has been what he has talked the most about, right?
14:44
SPEAKER_06: Like prioritization focus, getting back to fundamentals, like not thinking about expanding beyond the scope of what it is that the agencies are meant to do.
14:55
SPEAKER_06: Um, and I think for many who are listening, a key thing that I always say is this change in administration and the change of leadership at these agencies, it's not about deregulation.
15:10
SPEAKER_06: It is about kind of the recalibration of the of the regulatory landscape and how we think about auditing and accounting, kind of from that standpoint.
15:21
SPEAKER_06: And you know, kind of from your conversations that you're that you're having, like enforcement isn't stopping.
15:27
SPEAKER_06: It's just you're not maybe seeing the headline grabbing, you know, and for it's more about companies staying back to fundamentals, making sure that you're not committing fraud, making sure that, you know, things are not occurring, your operations um are in a you won't have footfaults that are the SEC to come in and make some kind of judgment call about what's happening.
15:51
SPEAKER_06: So I think generally speaking, you know, you think about some of the prioritizations the the chair has had as he's talked about, even we talked about disclosure.
16:00
SPEAKER_06: You mentioned from the standpoint of disclosure, like the focus is not on expanding disclosure, like they're going through a whole project to take a review, to look and see what's meaningful, what's relevant, like how can we take friction out of the system?
16:15
SPEAKER_06: Like what is is um is key in that respect.
16:18
SPEAKER_06: So, you know, what I talked to people about, it was a big thing I said as people were anticipating kind of what will the new leadership bring, what will we see?
16:26
SPEAKER_06: It was always don't think this is about a free pass for anybody, like anybody in the capital market system.
16:32
SPEAKER_06: This is about a little bit more focus, but there will always be, I think, those enforcement aspects that that exist and the in the inspections from our standpoint as we think about audit inspections.
16:46
SPEAKER_04: Yeah, so it's interesting because I think um when I haven't hadn't caught up with you, Roz um since the SEC did their SEC spee conference, um, which was literally like last week or a week ago or so.
16:58
SPEAKER_04: Um, in and in in that they there were a couple of developments that I I found very interesting.
17:03
SPEAKER_04: And the the first one was, and and I'm not sure if you've heard about this, so I maybe breaking news for you, which is bringing it, which I would love to do because I usually get information more information from you.
17:14
SPEAKER_04: Um so they have established, uh the enforcement division has uh set up a SOX office, um, which will now be focused on auditor wrongdoing.
17:25
SPEAKER_04: And what they said at that uh conference um was that they were setting it up because the PCOB, with its reduced budget and lower staffing levels, would not be able to kind of um do the the enforcement side of things.
17:40
SPEAKER_04: And we certainly heard this is something that the SEC's um focused on.
17:44
SPEAKER_04: And and so they they now have to have this office set up.
17:47
SPEAKER_04: They've they put out you know open positions.
17:50
SPEAKER_04: So if you're interested in applying, Michael, you know, but by all means, um, they are looking for people, accountants and attorneys, and probably what whom whomever else.
17:58
SPEAKER_04: But um, I just I didn't know if you had heard about that and what your reaction is to.
18:02
SPEAKER_06: So I had heard about this.
18:04
SPEAKER_06: I had not heard about it as early as the SEC speaks, but I do think what is interesting, and I'm curious, Michael, what you think about this.
18:12
SPEAKER_06: It fits nicely also into, you know, there was a whole debate about you mentioned the PCOB reduced budget and kind of staffing.
18:20
SPEAKER_06: It fits nicely into this political debate that was occurring about should the PCOB main remain an independent kind of agency?
18:29
SPEAKER_06: Is it doing, is it fit for purpose?
18:31
SPEAKER_06: Should some of the functions be contained within the SEC?
18:36
SPEAKER_06: And while there was an effort kind of from a congressional standpoint that didn't result in that kind of happening, something like this, where you see the SEC stepping up at a time when you say the PCOB has reduced budget, reduced capacity over time, you could see it be a situation where it's like, well, the SEC is already doing this.
18:58
SPEAKER_06: The SEC has the ability to do it, it has the resources to do it, and it becomes less of an argument to be made as to, oh, the SEC can't do, they can't take this on.
19:09
SPEAKER_06: They can't.
19:09
SPEAKER_06: So I find it, I think it's a nice flow kind of with the notion of, you know, where the distinction is SEC, PCOB.
19:18
SPEAKER_06: I think there has always been a thought from a Capitol Hill perspective, too, that there might be some overlap from an enforcement standpoint between SEC and and PCOB.
19:28
SPEAKER_06: And I think this is an interesting way to potentially clarify some lane for the SEC in terms of auditor wrongdoing and auditor enforcement.
19:39
SPEAKER_05: Yeah, it also fits uh kind of nicely into the broader narrative that we touched on earlier, which is when Congress can't act in a certain area, the regulatory agencies will try and take it on themselves to act.
19:53
SPEAKER_05: Yeah.
19:54
SPEAKER_05: Uh and I think this is an example.
19:56
SPEAKER_05: Last summer there was an effort during the reconciliation process to fold the PCAOB into the SEC.
20:02
SPEAKER_05: It failed uh on parliamentary grounds.
20:06
SPEAKER_05: Right.
20:06
SPEAKER_05: Uh the parliamentary, liter the parliamentarian literally ruled against the British being included, so it got jettisoned.
20:13
SPEAKER_05: And I think to Raz's point, this is what Atkins is now doing.
20:17
SPEAKER_05: You know, there's always been opinions with regard to the board and the SEC and the relationship and questioning are there certain redundancies uh that you know could possibly greater efficiencies achieved?
20:30
SPEAKER_05: And I think this is an effort by Atkins to say, you know what, enforcement is probably the the the leading area where we could maybe be more efficient.
20:38
SPEAKER_05: And I think that's what you have here.
20:40
SPEAKER_05: Yeah.
20:41
SPEAKER_05: Uh so I I think this is, and also I think Atkins' uh kind of primary goal with the board is audit quality.
20:50
SPEAKER_05: And obviously it's one of the founding tenets of the board is just greater audit quality.
20:54
SPEAKER_05: And I think that fits into that narrative as well.
20:57
SPEAKER_05: That he's just that's where his focus is, and that's where he believes that the board should be focused.
21:02
SPEAKER_05: So this is uh this you know aligned.
21:05
SPEAKER_05: Yeah, it's logical.
21:06
SPEAKER_04: Yeah, yeah.
21:07
SPEAKER_04: So the uh the other development, which which you may not have heard about, uh this we'll see.
21:12
SPEAKER_04: So this was published, it showed up overnight.
21:16
SPEAKER_04: So oh on over the weekend.
21:18
SPEAKER_06: Um I've been on vacation, so you may not have seen this.
21:22
SPEAKER_04: So this is something that it and it's not really been picked up in the press yet.
21:25
SPEAKER_04: So um, but it is something we've been talking about, which is the move to semi-annual reporting.
21:30
SPEAKER_04: So there is um there is a proposed um rulemaking that has been sent to the OMB.
21:38
SPEAKER_04: Um, so essentially, you know, White House review of of this, you know, proposal um that would but potentially I you know not have not seen the details.
21:47
SPEAKER_04: There's there's nothing um that's published yet, um, but that has been sent.
21:52
SPEAKER_04: So it's bit it's it's up on the you know federal register.
21:56
SPEAKER_04: Um I'm assuming that this is like the the Recent, uh, there was a interpret some guidance that was put out on crypto uh a couple of weeks ago, and it took that about about a two-week review.
22:08
SPEAKER_04: I'm guessing this will probably be about a week to to two-week review.
22:12
SPEAKER_04: Um, and then we will see um a published proposal where they will, you know, look for comments from the public um and go through their process.
22:21
SPEAKER_04: And this is just one of many.
22:22
SPEAKER_04: Um there there is an also there's also one that's that's under review as well on the crypto side of things.
22:28
SPEAKER_04: So I want to I wanna kind of so I get your reaction to that.
22:32
SPEAKER_04: Did that does that surprise you?
22:33
SPEAKER_04: It does not surprise me.
22:35
SPEAKER_04: Okay, it doesn't surprise you.
22:36
SPEAKER_04: It doesn't surprise, but I did not know.
22:37
SPEAKER_06: But you did not break some news, right?
22:42
SPEAKER_06: But it's not surprising, right, Kyle?
22:44
SPEAKER_06: Because we knew from the time the president had mentioned that semi-annual reporting is something that that should be looked at and something that should be implemented.
22:53
SPEAKER_06: We knew that the SEC was taking a serious look at it.
22:57
SPEAKER_06: We expected a proposal to come out at some point.
23:01
SPEAKER_06: And what I what I think is interesting to me is I think about, you know, I've thought about, I think a lot of people have thought we would see more rulemaking out of the agencies than we have, wanting more permanence over kind of the interpretive guidance and things that we've seen.
23:18
SPEAKER_06: But the reality is it takes time to put out rules.
23:22
SPEAKER_06: It takes time and staff to get people to kind of do things.
23:27
SPEAKER_06: And so as you prioritize what it is you do, there's also the lingering EO out there that for every rule you put out, like you think about attracting, yeah, you know, 10 or whatever.
23:37
SPEAKER_06: Yes.
23:38
SPEAKER_06: Yeah.
23:38
SPEAKER_06: But what I find interesting is these types of rules, this rule in particular, one that is, even though you're putting out a rule, it's kind of designed to reduce friction in the system or to reduce an imposed burden on issuers.
23:52
SPEAKER_06: Kind of so from that standpoint, maybe you don't have to redo, you don't have to rescind 10 kind of in and prioritizing things that are viewed in the in the line of eliminating the friction, I think could be a win from an agency perspective, not to mention that it it is one that the president has indicated.
24:12
SPEAKER_04: He's been looking forward, he he wanted it in the first, his first term.
24:15
SPEAKER_04: So it's no surprise that this is what's there for the second.
24:19
SPEAKER_06: And I think it will be interesting to see to your point about we haven't yet seen it.
24:23
SPEAKER_06: Like, will it be voluntary?
24:25
SPEAKER_06: Will it be mandatory?
24:27
SPEAKER_06: Will it allow for adoption over time?
24:31
SPEAKER_06: Will it, you know, all of those questions yet to be answered?
24:34
SPEAKER_04: It it will be very interesting.
24:36
SPEAKER_04: I think I certainly think that there will be a firm proposal, like the rule text will be fully baked.
24:44
SPEAKER_04: Um, what it looks like to your point, it's it's up in the air.
24:46
SPEAKER_04: I think what will be interesting is the feedback from from investors, from companies, from trade groups, all you know, all of those, um, all of those parties, and and even the hill, we know the hill will will certainly you know comment as well as as they have on on some of these in the past.
25:00
SPEAKER_04: And um the the other, the other that they actually talked about, you I know you guys would both find this interesting because we've talked about stocks.
25:07
SPEAKER_04: We've talked about the requirement to have an audit over your internal controls over financial reporting.
25:13
SPEAKER_04: And one of the things that that we we know and have heard that they are looking to make fewer companies uh subject to that if if possible.
25:22
SPEAKER_04: Um, the SEC did announce at SEC Speaks that filer status was also on their agenda, which I I would assume um you know might have that an impact on the number of companies that would be subject to 404B, um, the audit.
25:37
SPEAKER_04: So um obviously a lot of very impactful things, I think, that this administration is is focused on.
25:44
SPEAKER_06: Yeah, and 404B is certainly no stranger to us, especially from a Hill perspective.
25:51
SPEAKER_06: And that's another one, as Michael had mentioned, where you may not be able to get it done from a congressional perspective yet to be seen.
25:59
SPEAKER_06: I know Invest Act might have some things in there to try and to allow smaller companies kind of on ramps and different things, but you do have the regulatory agency, in this case the SEC, very focused on it and able to take action where you may not get legislation.
26:16
SPEAKER_05: I also think this is uh a great example of you know something we touched upon earlier and also a great kind of commentary on people who ask from the business community, say what's it like in Washington, D.C.
26:29
SPEAKER_05: What's the environment like right now?
26:31
SPEAKER_05: You know, how do you deal with the initiatives coming from the administration or from Congress?
26:36
SPEAKER_05: In, I believe, September of last year, on a Monday morning, President Trump put out on True Social, so tweeted or whatever it might be, two different things within seven minutes in the 7 a.m.
26:47
SPEAKER_05: hour on a Monday morning.
26:48
SPEAKER_05: One of them was that the new NFL kickoff rule was ridiculous and needed to be changed.
26:54
SPEAKER_05: Seven minutes later, he tweeted out that quarterly reporting is a thing of the past, and we need to give companies more leeway in deciding how and when they report their results.
27:03
SPEAKER_05: So I think that is a great little microcosm of where we are right now.
27:08
SPEAKER_03: That I would love those are the two things that were off of my Michael for us to dive into the NFL rule because I am not a huge fan of that either.
27:16
SPEAKER_05: Um I kid you not, on a Monday morning, as I was getting prepared for my day in my week, I looked and he had tweeted two things within seven minutes.
27:24
SPEAKER_05: Those were the two things.
27:25
SPEAKER_05: Wow.
27:26
SPEAKER_05: So great.
27:28
SPEAKER_05: But but you know, the the the point there is that this does come from the president.
27:32
SPEAKER_05: And what did we just say earlier that you know the executive authority that you know leaning putting his shoulder into certain issues is gonna have an impact.
27:41
SPEAKER_05: And in this case, it's the SEC doing exactly what you and Rob.
27:45
SPEAKER_05: Yeah, yeah.
27:46
SPEAKER_04: So so Raj, you mentioned the Invest Act, and and we obviously there's a lot going on with digital assets, I mean all sorts of of things.
27:54
SPEAKER_04: I mean, anything that you guys wanted to mention there, like what what where do we expect things to head?
28:00
SPEAKER_04: What you know what?
28:01
SPEAKER_04: Well, if we knew where things were headed, like you'd be on one of these markets in making predictions.
28:10
SPEAKER_04: I would.
28:10
SPEAKER_04: Yeah, yeah, yeah, yeah.
28:11
SPEAKER_06: Like I would have made some money.
28:14
SPEAKER_06: As long as you were in the right state.
28:15
SPEAKER_06: That's that's true, too.
28:16
SPEAKER_06: But um look, it's been sitting with the Senate, right?
28:21
SPEAKER_05: Yeah, I think this is uh there's a broader frustration here between the House and the Senate.
28:27
SPEAKER_05: So not even really between Republicans and Democrats.
28:30
SPEAKER_05: I'd say the majority in the House, majority in the Senate, aren't really seeing eye to eye on how to move some of these priorities.
28:37
SPEAKER_05: Uh Raz mentioned the road to housing bill that passed overwhelmingly in the Senate, but it is very different from the bill that passed the House.
28:46
SPEAKER_05: So there's kind of a stalemate there.
28:48
SPEAKER_05: When it comes to capital formation and the Invest Act, Chairman French Hill of the House Financial Services Committee is very proud that he passed that bill with over 300 votes.
28:57
SPEAKER_05: So incredibly bipartisan bill.
29:00
SPEAKER_05: Uh, and that is just kind of lingering.
29:03
SPEAKER_05: Uh, there's a frustration that the Senate Banking Committee is not taking up that piece of legislation.
29:07
SPEAKER_05: Now, that's the type of thing we might see this summer, but I don't know that we're going to get a capital formation bill without some sort of resolution to the disagreements they have on the housing bill.
29:18
SPEAKER_05: So these things are all kind of up in the air until they figure out exactly what they can achieve and when.
29:25
SPEAKER_05: So I don't know where I don't know where the capital formation bill will end up, but since it passed the House with such overwhelmingly bipartisan vote, you'd think that it does have a chance of possibly, you know, reaching some sort of agreement with the Senate.
29:39
SPEAKER_04: Yeah, that it's going to be interesting, right?
29:40
SPEAKER_04: Because I think there certainly are things the SEC certain, you know, could do um and and they will do, but but you know, obviously the you know, an action like this would really require that to happen.
29:53
SPEAKER_04: And there are things within the Sarbanes Osley Act or the Dodd Frank Act or all these acts that you know over the years, these these uh these laws um that that have impacted where we are today.
30:04
SPEAKER_04: And so it it does make it more complex for the SEC to take action that's going to overnight really um you know encourage the the capital formation.
30:14
SPEAKER_04: So um again, I think it's just to kind of wait and see.
30:17
SPEAKER_06: Yeah, I mean, it's again why we're likely to see guidance, right, as opposed to actual rulemaking in these areas.
30:26
SPEAKER_06: One, for the reason you said you have so many acts that have come before that require certain things to kind of be in.
30:32
SPEAKER_06: But as people have said for many years, personnel is policy.
30:36
SPEAKER_06: If you have people in the seats who are providing guidance on a particular rule or an existing rule in a certain way that lends itself toward what they believe is the best environment for capital formation, it's easier to do that than to try to go through the process of instituting a new rule and having challenges to that rule as the legal arena has become the the place to challenge every age.
31:00
SPEAKER_06: Every every rule.
31:02
SPEAKER_04: And I don't think that's gonna stop.
31:03
SPEAKER_06: Yeah.
31:03
SPEAKER_06: No, no, no.
31:03
SPEAKER_04: Yeah, it's the new world.
31:04
SPEAKER_04: Yeah.
31:05
SPEAKER_04: Yeah.
31:05
SPEAKER_04: So of course, I do want to touch briefly on AI, right?
31:10
SPEAKER_04: And obviously AI governance, it is a a topic of of you know, federal and state uh, you know, governments, legislation.
31:17
SPEAKER_04: I mean, what do we expect to see?
31:19
SPEAKER_04: Talk about what we've seen, discuss, you know, what states are doing, why the states are outpacing and what the federal government's doing.
31:26
SPEAKER_04: I think I think I kind of can infer from for the conversation why.
31:30
SPEAKER_04: But any thoughts on that?
31:32
SPEAKER_06: Yeah.
31:32
SPEAKER_06: I came ready for you this time, Kyle.
31:34
SPEAKER_06: So on the on the state, I have a few facts for you.
31:37
SPEAKER_06: Oh state level level.
31:39
SPEAKER_06: So uh uh Marcus Rayner also leads our state and local government affairs efforts.
31:44
SPEAKER_06: Marcus isn't here today, but in Marcus's place, we have a few facts.
31:48
SPEAKER_06: That being the fact that there have been 1,200 AI-related bills alone in 2025 at the state level.
31:56
SPEAKER_00: Wow.
31:57
SPEAKER_06: Just in case you were interested, a hundred have been enacted.
32:01
SPEAKER_06: Um, basically, states like California, Colorado, Texas, Illinois, and New York have either enacted or finalized AI rules that affect public private companies, many for 2026.
32:14
SPEAKER_06: So that being said, as we all know, there is no federal AI statute or comprehensive legislation in the works that would generally kind of overall regulate AI.
32:28
SPEAKER_06: And it's we're headed down the same road we were heading on privacy, right?
32:31
SPEAKER_06: Like it is easier for the states to act kind of in their individual capacities.
32:37
SPEAKER_06: We have a number of states that have trifecta's where they have the the House, the city, they have the legislature and the governor's office.
32:46
SPEAKER_06: And so it's easier to kind of get things out there and to get um laws enacted.
32:51
SPEAKER_06: And it is just a mire of jurisdictional issues, of policy issues, of you know, you get mired in so much stuff at the federal level that it makes it difficult.
33:04
SPEAKER_06: And even with the the administration's focus on kind of deregulation and allowing innovation to flourish, we had the efforts to try to restrict what the states would could do around AI.
33:18
SPEAKER_06: And that got a lot of pushback, if you think about it, um, even from members in certain states who may have been, you know, more focused on AI regulation than others.
33:31
SPEAKER_06: And so that kind of went nowhere.
33:33
SPEAKER_06: So we're in a fragmented space.
33:35
SPEAKER_06: If you're a business kind of operating, looking at the AI regulatory landscape, you're going to be looking at it like the privacy.
33:42
SPEAKER_06: It's going to be a fragmented landscape for you with no current thoughts of federal preemption occurring.
33:50
SPEAKER_06: And so in that environment, what do we always say?
33:53
SPEAKER_06: We're like, you know, best to set your standards at a high level and kind of just kind of push forward from that standpoint in terms of so you won't, you won't, you know, trip or run afoul of any particular not good news necessarily.
34:09
SPEAKER_06: And, you know, look, like I was saying earlier, the the reasons are a myriad at the federal same reason, you know, you've got issues at the federal level that they do have broad agreement on and that they do want to do something about that we can't get over the finish line.
34:27
SPEAKER_06: Because so when you get into the particulars around, you know, some people are focused on the the detriment that AI will cause.
34:35
SPEAKER_06: Some people want to focus on just provide guardrails and a lot, you don't need kind of the the restrictive prescribed kind of approach.
34:43
SPEAKER_06: That is in and of itself is is challenging from you know getting Congress together.
34:48
SPEAKER_06: And then meanwhile, you know, the EU and Europe kind of had gone on about their business and like they did with privacy, although it seems a little quicker.
35:00
SPEAKER_06: They do tend to do that, although it seems there are there's more debate and conversation happening um with respect to those things.
35:08
SPEAKER_06: But I see it just kind of how we saw the privacy play out.
35:13
SPEAKER_05: Yeah, which was you know, not be able to reach consensus.
35:16
SPEAKER_05: And I think from the pushback from the states, that's a bipartisan pushback.
35:19
SPEAKER_05: You have blue states and red states that are both enacting laws here in whatever manner uh appropriate to each state, but they're telling their federal representatives don't pass anything that's gonna preempt what we're doing at state level.
35:33
SPEAKER_05: Well, we're making progress, yeah.
35:36
SPEAKER_05: Uh, I don't think in the near term we're gonna have any sort of comprehensive action from the federal government.
35:41
SPEAKER_05: Yeah.
35:41
SPEAKER_05: I think the best you could hope for is the piecemeal approach and maybe finding common ground on little advances, uh, chat bots right now is an area where there's bipartisan agreement that there needs to be some sort of regulation to make sure they're talking to someone and not talking to you know an AI bot, uh fraudulent representation of images and likenesses, things like that.
36:03
SPEAKER_05: I could see little progress, but I also believe that because this is such a burgeoning new technology, those leadership at the in the federal government is still trying to get their arms collected.
36:16
SPEAKER_05: That's like crypto around absolutely like it's like it's like crypto, but it's like crypto maybe four years ago, you know.
36:22
SPEAKER_05: It is it's still in its infancy, yeah.
36:24
SPEAKER_05: Yeah, and and but it's gonna happen overnight, though.
36:26
SPEAKER_05: Like that's the other thing.
36:27
SPEAKER_05: We know it's quicker.
36:29
SPEAKER_05: Agreed.
36:29
SPEAKER_05: But and listen, there could be an argument also.
36:31
SPEAKER_05: Do we want the federal government kind of running in roughshod when they don't really know what would be the most efficient way to kind of ring fence where we are right now on AI?
36:40
SPEAKER_05: So I do think it's gonna be it's gonna take time.
36:43
SPEAKER_05: And I don't think it's it's in the near-term horizon at all.
36:46
SPEAKER_05: Yeah, yeah.
36:47
SPEAKER_04: So, guys, I look, I think this has been a great conversation.
36:50
SPEAKER_04: Um, I'm not gonna ask you what's gonna get done by you know before you know the end of the year or their fiscal year.
36:57
SPEAKER_04: Um, doesn't sound like there's gonna be much that they actually will get done, but I I will throw it out to to both of you.
37:04
SPEAKER_04: Any kind of final words, like what what what would you tell, you know, as our listeners, right?
37:10
SPEAKER_04: And they're as they're thinking about the quarter, they're thinking about the the rest of this year.
37:15
SPEAKER_04: What should they be thinking about?
37:16
SPEAKER_04: What should they be paying attention to?
37:19
SPEAKER_05: I'll I'll start with just what might be a hot take, and that is that I do think that they can get some stuff done between now and election day, and for a host of reasons.
37:30
SPEAKER_05: Uh primarily when we talked about the affordability issue, obviously the president, republicans in Congress, they're trying whatever they can do to get some sort of impactful legislation.
37:40
SPEAKER_05: If you look at Democrats, they might say, oh, the easiest thing for us to do is just not pass anything.
37:45
SPEAKER_05: Why would we play wrong?
37:46
SPEAKER_05: But I think that there are Democrats that look at certain issues like housing.
37:50
SPEAKER_05: Housing is a yeah, like crypto.
37:52
SPEAKER_05: Right.
37:52
SPEAKER_05: Look at uh at the market structure bill.
37:54
SPEAKER_05: I think there are Democrats out there that see an opportunity to enact comprehensive legislation that they've been trying to say for housing for many Congresses, for crypto.
38:05
SPEAKER_05: Some people say that right now is the time we have to get some sort of framework together in order for this new technology and this new commodity and this new asset class to really grow.
38:16
SPEAKER_05: I do think that there will be a window this summer where Democrats and Republicans will look at the 60 and finding ground.
38:24
SPEAKER_05: And I think housing is one of them.
38:25
SPEAKER_05: I think maybe capital formation.
38:27
SPEAKER_05: And I do think I'm in the minority on this, but I do think that market structure in the digital space, I think.
38:34
SPEAKER_05: He's an optimist on it.
38:35
SPEAKER_05: I am on that.
38:36
SPEAKER_06: He's an optimist.
38:38
SPEAKER_06: He is an optimist for sure.
38:41
SPEAKER_06: Um, and I would say, look, taking into consideration what Michael has said, and let's say you don't even believe that that that's possible.
38:51
SPEAKER_06: I think the biggest mistake you can make as a business leader is to assume that nothing is happening because there is still action happening on the regulatory front as we we spent the last, I don't know how long this podcast will end up being.
39:05
SPEAKER_06: Hopefully, we still have people here at the end.
39:08
SPEAKER_06: But no matter They're all depends on they're waiting.
39:11
SPEAKER_04: They want to hear this.
39:12
SPEAKER_06: If you think about what we've talked about, you've got SEC and PCOB actions that are definitely going to happen.
39:20
SPEAKER_06: They are they are doing things.
39:21
SPEAKER_06: They are now kind of they have the capacity to do something.
39:25
SPEAKER_06: So guidance.
39:26
SPEAKER_06: Um there's gonna be digital asset clarification via the agencies, if nothing else.
39:32
SPEAKER_06: Like you've gotta have you've gotta have that.
39:35
SPEAKER_06: We talked about state level AI kind of stuff that is gonna continue that we're gonna see going through.
39:40
SPEAKER_06: And then we cannot forget that the administration has not forgotten trade and tariffs.
39:46
SPEAKER_06: And so that is gonna continue as a as a thorough to all of this that that we've talked about.
39:52
SPEAKER_06: So I just think there is a lot going on.
39:55
SPEAKER_06: We may, you know, we can divide it into who's doing what, but from a Washington standpoint, as we think about it, there is a lot of activity.
40:04
SPEAKER_06: And the mistake would be to assume that nothing substantial is happening.
40:07
SPEAKER_05: And I I'll also say that as you're looking to, you know, strategically plan out the next near-term months, but also long-term years, and you look at the public policy space, the landscape, when you look at something that maybe won't get enacted, you know, falls by the wayside because of whatever it might be, it's still important to keep an eye on that piece of legislation about that idea because unfortunately, bad ideas don't go away.
40:32
SPEAKER_06: Right.
40:33
SPEAKER_05: So say something gets introduced and it actually they don't get it done, but it would have a negative impact on your business.
40:40
SPEAKER_05: That's something that you and your team then need to keep an eye on, because I guarantee you it's coming back again.
40:44
SPEAKER_05: And now you might have new majorities in Congress starting in January.
40:48
SPEAKER_06: So Absolutely, you know, we didn't talk about, and I'm not suggesting we do, so let's not go there, but I'm just gonna mention that.
40:54
SPEAKER_06: We did talk about the possibility of another reconciliation package, right?
40:59
SPEAKER_06: But there's more and more talk happening about that.
41:02
SPEAKER_06: And Chair Smith recently they said, so what kind of pay fors would you be looking for?
41:07
SPEAKER_06: And he said, and I quote, the goodies.
41:11
SPEAKER_06: And like that's the point about it's they're oldies but goodies.
41:14
SPEAKER_06: Like they may be on the shelf, they may have come been talked about, and we didn't get around to them in before, but they're still sitting there.
41:21
SPEAKER_06: Still there.
41:21
SPEAKER_05: So it's loopholes.
41:23
SPEAKER_05: Yeah, you know, we're gonna have to address the loopholes we didn't address in last year's reconciliation.
41:27
SPEAKER_05: So again, if you're deemed to be a quote unquote loophole and you have a dollar figure associated with you, you're on the menu.
41:34
SPEAKER_06: Yeah.
41:35
SPEAKER_06: I think it's more about your your point about you can never not pay attention to any piece of legislation that kind of starts to gain momentum or get some some steam because it it may not get passed now, but it will come back around in terms of its ideas.
41:52
SPEAKER_04: So look, that's great advice from the two of you.
41:56
SPEAKER_04: Raz, Michael, really appreciate you taking the time and sharing with our audience today.
42:01
SPEAKER_04: Thanks, Kyle.
42:02
SPEAKER_04: Thank you.
42:03
SPEAKER_02: That's our show for today.
42:06
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42:09
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42:11
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42:16
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42:26
SPEAKER_02: From Thought Leadership at PwC, I'm Heather Horn.
42:30
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42:41
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