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ISRAEL

McCaul on Israel, Netanyahu and aid

Israeli Prime Minister Benjamin Netanyahu made an urgent plea for U.S. military aid to a group of lawmakers last weekend, according to House Foreign Affairs Committee Chair Michael McCaul (R-Texas).

“Prime Minister Netanyahu said, ‘I need ammo, ammo and ammo — yesterday,’” McCaul told us in an interview.

McCaul went to Israel last weekend with Rep. Greg Meeks (N.Y.), the top Democrat on Foreign Affairs, Reps. Max Miller (R-Ohio), Mike Lawler (R-N.Y.), Madeleine Dean (D-Pa.), John James (R-Mich.) and Jared Moskowitz (D-Fla.).

Netanyahu specifically requested replenishment of the Iron Dome interceptors, precision-guided weapons and 155 mm artillery shells.

“It’s urgent and it needs to happen soon,” McCaul said. “They’re a little anxious, but we reassured them that this was going to pass. It’s just going through a political process.”

Remember: Ukraine is badly in need of 155 mm shells to fight off the Russian invasion, illustrating the difficulties the Pentagon faces in supporting both allies.

McCaul also expressed skepticism over Speaker Mike Johnson’s decision to pair the $14 billion Israel aid package with an equivalent amount of cuts to IRS funding.

“I think we always need pay-fors. Just at the end of the day, I don’t see an Israel package being passed that’s not a clean Israel aid package,” McCaul, who voted for the bill, said. “I don’t really see a path where [Israel aid] can be passed with conditions on it.”

Johnson’s proposal passed the House earlier this month on a nearly party-line vote but realistically faces no chance of being considered in the Democratic-run Senate. The conditioning of aid to Israel is a new standard that Johnson set early in his speakership.

Instead, senators are likely to combine a number of national security priorities — Ukraine, Taiwan and border security — into a larger bill with Israel funding, McCaul said. President Joe Biden has sent Congress a supplemental funding request of more than $105 billion.

“It’ll probably pass the Senate the week after Thanksgiving,” McCaul said of the supplemental. But the Texas Republican said he was less clear on the outlook in the GOP-controlled House because of growing resistance to new aid for Ukraine.

“With the speaker, he’s talking about a Ukraine-border thing. And I’m not sure what he intends to do with the Israel piece,” McCaul noted.

And even McCaul’s Senate timeline seems rosy given how far apart the two parties are on border policy.

On calls for a ceasefire: McCaul said Netanyahu told him Israel supports humanitarian pauses in fighting for a number of hours each day to allow civilians to pass through the buffer zone to southern Gaza.

“But he’s very adamantly opposed to a ceasefire,” McCaul said of Netanyahu. Israeli officials won’t agree to a ceasefire unless Hamas releases the more than 200 hostages it’s holding.

And while Netanyahu acknowledged Israel’s “very existence is at stake,” McCaul said he made clear the United States was at risk too.

McCaul recounted Netanyahu saying this: “We’re the little Satan, you’re the big Satan. And they are a threat to you as well.”

— Max Cohen

FDIC chief’s peril puts the Biden banking agenda on the line

The Federal Deposit Insurance Corp. is navigating its second major political crisis in just under two years. But this time, there’s more at stake than the career of the agency’s Senate-confirmed leader.

As we wrote in the PM edition Thursday night, FDIC Chair Martin Gruenberg has come under heavy political fire this week following a string of investigative reports from the Wall Street Journal. The first, published Monday, disclosed widespread sexual harassment allegations at the agency’s regional offices throughout the country.

Another report, published Wednesday evening, focused on instances in which Gruenberg overlooked purported misconduct in the FDIC’s Washington office.

Banking industry insiders don’t expect Gruenberg to resign in the near term, based on many conversations we’ve had over the past 48 hours with financial lobbyists and others in the industry. Some Senate Republicans have called for Gruenberg’s resignation, but that’s about it.

For now, most lawmakers want to wait for formal investigations to take their course, whether that’s from the FDIC’s inspector general — as Sen. Sherrod Brown (D-Ohio) called for last night — or through more direct congressional oversight, as Rep. Patrick McHenry (R-N.C.) has promised from the House Financial Services Committee.

We’ll also see some older policy proposals get new life with this scandal. We’re told Sen. J.D. Vance (R-Ohio) will revive a legislative push this morning to reduce the number of large banks supervised by the FDIC and Federal Reserve and hand them off to the Office of the Comptroller of the Currency. Vance told us in a statement he had “serious concerns over the FDIC’s ability to effectively supervise and regulate the banking sector.”

But let’s zoom out for a second: Gruenberg’s crisis could pose serious problems for the Biden administration while handing an immense political victory to the U.S. banking sector. The stakes for the future of American economic policy are huge as well.

Within the Byzantine structure of U.S. bank regulation, Gruenberg is one of several officials leading the federal agencies known as prudential bank regulators — the FDIC, Federal Reserve and the OCC. For a major policy to get done, those entities need to agree with each other.

That brings us to the FDIC board of directors, which consists of five officials. Three directors are Democrats, including Gruenberg, acting Comptroller of the Currency Michael Hsu and Consumer Financial Protection Bureau Director Rohit Chopra. The other two are Republican appointees: Directors Jonathan McKernan and Travis Hill.

The structure of the FDIC’s board means that Gruenberg is effectively a deciding vote on any controversial rulemaking, which includes the Biden administration’s Basel III capital proposal. Both McKernan and Hill voted against the proposal, and the banking sector is viciously opposed to the changes.

If the FDIC is left without a fifth board member, a 2-2 vote would stall, and probably doom, politically sensitive banking policy. And that would extend to the other entities responsible for crafting interagency bank regulation — namely the Fed and OCC.

In theory, could the Biden administration put forward a replacement to lead the FDIC as chair? Sure. But with 2024 just weeks away, we’re not bullish Senate confirmation would be a sure thing. And trust us when we say that no one is more excited about that possibility than the U.S. banking sector.

— Brendan Pedersen

RETIREMENT WATCH

Fed up, veteran members heading for the exits

The 118th Congress has been chaotic by any standard. There was the 15-ballot speaker marathon in January, a mini-banking meltdown in the spring, two near-government shutdowns, and an array of impeachment, censure and expulsion efforts. Plus, a speaker who got turned out of office, followed by an absolutely brutal fight to replace him that only succeeded on the fourth try. And we’re still only in the first session of this Congress, mind you.

All of that havoc is driving seasoned House members of both parties to the exits. In the last month alone, nearly a dozen members have announced they’re not running for reelection. Another one, Rep. Bill Johnson (R-Ohio), might soon join them.

“It’s hard to get anything done here,” Rep. Debbie Lesko (R-Ariz.) told us. “I served in the state legislature before here and I was chairman of the Ways and Means, chairman of Senate Appropriations, and we got big things done. In good times, this place is frustrating and hard to get things done, but now it’s especially hard.”

Nearly 30 Republicans and Democrats have so far announced they won’t stand for reelection. That number is expected to grow after members spend time evaluating their futures over the Thanksgiving break.

The lame-duck list ranges from longtime seasoned legislators to newer members who say they can get more meaningful work done elsewhere. Several members told us the dysfunction on Capitol Hill was their main motivation for retiring next year.

“It’s insane and it adds no value to my life,” said Rep. Earl Blumenauer (D-Ore.), who has been in Congress since 1996. “The things I care about, I can do better not here.”

Rep. Ken Buck (R-Colo.), a Freedom Caucus member who occasionally defies the far right, took a direct shot at his party’s agenda, calling it unserious. The Colorado Republican has publicly said for months he’s eyeing other opportunities in law and media.

“It’s stupid, you know,” Buck told us. “Impeach that person, censure that person, it’s all political, so members can go raise money and talk tough back home.”

The House retirements, of course, come amid perpetual conflict within the GOP that’s largely been driven by the hardline conservatives. Far-right lawmakers, more than ever, have been chaos agents upending the congressional agenda.

The House Freedom Caucus and its allies have derailed the appropriations process, demanding tens of billions of dollars in additional funding cuts and loading up bills with culture-war riders that even their own Senate GOP colleagues won’t support.

Now, even with the ascension of new Speaker Mike Johnson, an ally to the right flank, conservatives continue to bristle. Members of the House Freedom Caucus voted against Johnson’s two-step CR plan to avoid a government shutdown and killed the rule to bring the Commerce-Justice-Science funding bill to the floor this week alone.

Retiring Rep. Michael Burgess (R-Texas), who has served in the House since 2002, said he came in with a narrow majority that was able to fulfill basic duties such as passing annual spending bills.

“When I first got here, we had a six-vote majority,” Burgess said. “We passed the budget. We passed our appropriations bills under open rules. So it’s been a little frustrating that we don’t seem to be able to do that because I know we can deal with a small majority. We did it back in 2003.”

Meanwhile, Rep. Bob Good (R-Va.), a Freedom Caucus member who voted to oust former Speaker Kevin McCarthy, reveled in the departure of his colleagues.

“There are members who are part of the problem, not the solution, who’ve been here 20, 30 years and think that Washington’s working,” Good said. “If they don’t like our efforts to fix it for the American people, they shouldn’t stay in Congress.”

Of course, not all members said the House’s dysfunction and disarray were the deciding factors in their decision to leave Congress.

Rep. Victoria Spartz (R-Ind.), John Sarbanes (D-Md.) and Derek Kilmer (D-Wash.) all told us that it was simply a personal decision to step down now. Other members are running for a different office.

— Mica Soellner

PUNCHBOWL NEWS EVENTS

Did you miss our event yesterday with Sen. Catherine Cortez Masto (D-Nev.)? The lawmaker discussed government funding efforts, the 2024 elections, the future of health insurance and more.

Follow this link to watch the full video.

MOMENTS

All times Eastern

10 a.m.: The Capitol Christmas Tree will arrive on the West Front Lawn.

Noon: President Joe Biden will get his daily intelligence briefing.

1 p.m.: Biden will host a bilateral meeting with Mexican President Andrés Manuel López Obrador at the Moscone Center in San Francisco.

2 p.m.: Biden will host the APEC Leaders Retreat.

4:20 p.m.: Biden will depart San Francisco en route to Philadelphia.

9:15 p.m.: Biden will depart Philadelphia for New Castle, Del., arriving there at 9:35 p.m.

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