Navigating the Conservative Agenda: Unpacking the Mandate for Leadership 2025

The Heritage Foundation's 922-page document, "Mandate for Leadership 2025: The Conservative Promise," has sparked widespread concern despite its 2023 publication. While think tanks often propose policies for governments-in-waiting, this initiative, dubbed "Project 2025," has raised eyebrows across the political spectrum. With more than 100 conservative organizations involved in its creation, the potential impact of these proposals on the financial services and fintech industry in the US is a topic of intense scrutiny.

Reshaping the Financial Landscape: The Conservative Vision

Redefining the Treasury's Priorities

The "Mandate for Leadership 2025" argues that the Biden Administration's Treasury Department has failed to achieve its core objectives, placing "equity" and "climate change" among its top priorities. The document suggests that the next administration must act decisively to curtail activities that fall outside of the Treasury's mandate and primary mission. This includes eliminating initiatives such as the appointment of a counselor for racial equity, the establishment of an advisory committee on racial equity, and the creation of an office for diversity, equity, inclusion, and accessibility within the Treasury Department.The Heritage Foundation believes that the Treasury's focus should instead be on reforming the tax policy, reducing marginal tax rates, reducing the cost of capital, and broadening the tax base to eliminate tax-induced economic distortions. The document also calls for the withdrawal from both the World Bank and the International Monetary Fund (IMF), citing concerns over their involvement in American policy debates and their perceived failure to advance global financial stability.

Embracing Free Banking and Rejecting CBDCs

The "Mandate for Leadership 2025" offers the incoming President the option of free banking, a system that was used in certain regions of the US from 1824 to the 1850s. This approach would effectively abolish the Federal Reserve and limit the Department of the Treasury's role to handling the government's money. The document argues that free banking would strengthen the economy, ensure the US dollar remains the currency of choice globally, and remove the central bank from the equation.In contrast, the Heritage Foundation is staunchly against the institution of a Central Bank Digital Currency (CBDC), claiming that it would provide unprecedented surveillance and potential control of financial transactions without providing added benefits available through existing technologies. The document also criticizes the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) for their "irresponsible" handling of the digital asset area, calling for clarification on the treatment of digital assets.

Restructuring the Financial Regulatory System

The "Mandate for Leadership 2025" proposes a major overhaul of the financial regulatory system, with the goal of promoting financial innovation, improving regulator efficiency, reducing regulatory costs, closing regulatory gaps, eliminating regulatory arbitrage, providing clear statutory authority, consolidating regulatory agencies, and increasing transparency.The document calls for the merger of the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Federal Reserve's non-monetary supervisory and regulatory functions. It also advocates for the repeal of titles of the Dodd-Frank Act that created the Financial Stability Oversight Council (FSOC) and the Orderly Liquidation Authority (OLA), which were established to identify risks, promote market discipline, and respond to emerging threats in the financial system.

Addressing Anti-Money Laundering and Beneficial Ownership Reporting

The "Mandate for Leadership 2025" argues that the costs associated with anti-money laundering and counter-terrorist financing (AML-CFT) efforts are too high, stating that there is little evidence of their effectiveness. The document proposes the repeal of the Corporate Transparency Act (CTA), which requires firms to submit details of their beneficial owners to the Financial Crimes Enforcement Network (FinCEN) in an effort to combat the use of shell companies for illicit activities.The Heritage Foundation believes that the AML-CFT regime is a major contributing factor to the decline in the number of small broker-dealers and the decline in the competitiveness of community banks. The document suggests that the incoming administration should prioritize a comprehensive review of these regulations to determine their true impact and effectiveness.

Addressing the Threat of China and Big Tech

The "Mandate for Leadership 2025" expresses concerns about the growing influence of China and the Chinese Communist Party (CCP) in the technology sector, particularly in the field of artificial intelligence (AI). The document argues that U.S. businesses are "often unwittingly" aiding Beijing by providing access to their high-powered cloud computing services and feeding, training, and improving the AI datasets of companies beholden to the CCP.The Heritage Foundation believes that the incoming administration should put in place a comprehensive plan to stop U.S. entities from directly or indirectly contributing to China's "malign AI goals." The document also calls for reining in Big Tech and its "attempts to drive diverse political viewpoints from the digital town square," emphasizing the need for increased transparency and accountability for these tech giants.Overall, the "Mandate for Leadership 2025" presents a comprehensive conservative vision for reshaping the financial landscape in the United States. While some of the proposed changes may be viewed as drastic, the document's authors argue that they are necessary to address the perceived shortcomings of the current system and to protect the country's economic and national security interests.