Election tightens in final stretch while House debates funding

Topline

• Election status quo prevails; House spars over funding

• Fed will re-propose Basel III capital standards

• Treasury issues Corporate AMT guidance

• AI bills targeting research and small businesses move in Congress

• Private markets roundup

Election remains tight in final stretch; House spars over funding

Congress returned this week to begin the process of funding the government. It didn’t start smoothly, as House Republican efforts stalled before they got started. Despite that, Congress is likely to pass a short-term funding bill before the September 30 deadline that would fund the government through mid-December. 

Despite the funding fight, Washington and the nation largely remain focused on the November election. Vice President Kamala Harris built on her existing momentum with a strong debate performance this week. But despite her strong start, a recent  New York Times poll (released before the debate) indicated that Harris chipped away at Trump’s lead, but still trailed him nationally by one percentage point. Post-debate polling suggests that their performances did little to sway critical undecided voters as the race enters its final weeks. Polls will vary, but all reflect a tight race. Trump subsequently said he will not debate Harris again before election day.

Fed confirms Basel III re-proposal

After months of pressure, the Federal Reserve announced it will re-propose the controversial Basel III Endgame. The initial proposal would have ratched up bank capital standards—the required capital they hold relative to loans or investments they make. Increasing capital requirements may improve safety and soundness of the institution and the banking system by establishing a buffer if loans default, but it also constricts lending and may restrict access to capital for certain industries. For instance, banks are required to hold less capital against loans to a large, stable business with profits and collateral than they are for loans to small businesses with small profits or startups building an ambitious vision. The result: traditional bank loans to startups and small businesses are harder to come by.  

Capital requirements are a balance. Industry pushed back on the banking agencies’ initial proposal, arguing it would increase borrowing costs and limit banks’ capacity for mortgages, auto loans, credit cards, and small business loans. The agencies agreed, and plan to re-propose the rule. 

Why it matters: Access to capital is key for startups and small businesses. Had the Basel III proposal gone into effect, it likely would have further constrained access to capital, making the already hard task of building even harder. 

Treasury issues Corporate AMT guidance

The Treasury Department and the IRS issued long-awaited proposed regulations on the 15% corporate alternative minimum tax (CAMT) enacted by the Inflation Reduction Act. Though this only applies to businesses with $1 billion or more in annual profits, there were earlier efforts to force private equity firms to count combined portfolio companies’ profits toward the $1 billion threshold. This push was defeated and is unlikely to resurface, but with the tax debate coming, we will need to monitor.

What’s next: Feedback on the proposal is due by mid-December. In the interim, Treasury and the IRS also issued Notice 2024-66, providing additional penalty relief with respect to estimated tax payments due for the third quarter on Monday, Sept. 16 and through the end of this year. 

Read the latest edition of Carta Policy Insights: Decoding the Data

This edition of Carta Policy Insights focuses on venture capital performance and highlights how emerging VCs drive innovation, U.S. competitiveness, and investor returns. We also highlight key policies to further support these managers.

AI bills targeting research and small businesses move in Congress

On Wednesday, the House Science, Space, and Technology Committee passed nine AI-related bipartisan bills that will now move to the floor for a vote. These bipartisan measures, which cover a range of topics, aim to bolster U.S. competitiveness by increasing support for AI research and offering artificial intelligence training and educational resources to small businesses, researchers, and workers.

H.R. 9197, one of the bills that was passed, focuses specifically on helping small businesses leverage AI tools. The bill would authorize the U.S. Department of Commerce to work with the Small Business Administration to create and distribute AI training resources and tools to help small businesses use AI in their operations. 

Why it matters: Congress has faced increasing public pressure to pass legislation related to AI. And while there has been plenty of talk about AI, there has not been much legislative movement to date. These bills mark a positive step toward bipartisan collaboration on AI policy, specifically as it relates to ensuring that the U.S. remains competitive in the rapidly evolving field of AI through the focus on research support, education, and small business empowerment. Do not expect a massive shift in federal action, but this is a step forward.

In other news in the private markets

• Blackrock to expand private market distribution. This week, Blackrock announced it is joining with private-equity firm Partners Group to create a private-markets model portfolio that would allow clients to invest in a variety of private-market offerings. The offering will be available early next year to advisers and wealth-management clients who have at least $2.2 million in net worth excluding their primary residence. Blackrock’s move reveals that industry players are moving forward with their own plans to expand access to private markets while the SEC stalls on key policies, such as expanding the definition of accredited investor.

• Fearless fund ends grant program. The Fearless Fund has decided to end its grant initiative for Black women entrepreneurs. This decision comes in the wake of a legal agreement reached with the American Alliance for Equal Rights, an organization founded by Edward Blum. The Alliance had filed a lawsuit against Fearless Fund over a year ago, alleging that the grant program was in violation of an anti-discrimination law. 

• Keurig gets hit with SEC fine. Keurig has agreed to pay $1.5 million in penalties after the Securities and Exchange Commission charged the company with making misleading statements about how recyclable its K-Cup single-use coffee pods are. The fine aligns with the SEC’s continued focus on ESG-related regulations. To date, climate-related enforcement actions have been rare, but the Keurig fine signals it could be heating up.

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News to know

• Nvidia draws antitrust scrutiny as enforcers signal early interest in AI (WSJ)

• California legislature rejects delay to emissions-reporting rules (WSJ)

• BlackRock and Euroclear partner to expand private markets distribution (CityWire)

• Judge: CFTC overstepped authority in rejecting election betting plan (Politico)

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