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MM warned a couple of months ago that crypto isn’t getting a new U.S. rulebook, with opponents emboldened after the fall of FTX. This week is proving why we were pessimistic.

The lowest-hanging fruit of crypto legislation — rules for so-called stablecoins — appears to have lost the bipartisan momentum that it had last year. That became clear at a hearing Wednesday when House Democrats complained that Republicans were moving forward on a bill without their buy-in.

The public airing of grievances was notable because House Financial Services Chair Patrick McHenry, who is leading the effort, had long stressed that he wanted to work hand-in-hand on the issue with Rep. Maxine Waters, the panel’s top Democrat. The pair hashed out a draft last year when she was chair — a compromise that McHenry at the time called an “ugly baby.”

But, as my colleague Eleanor Mueller put it in a new story, the bill “is looking more like an orphan.”

“We’re starting from scratch,” Waters said.

Republicans came up with “a whole new bill,” Waters said, and so she told McHenry that Democrats would come up with their own proposal.

The two sides haven’t gotten together to figure it out, according to Republicans and Democrats.

Lawmakers have had to reset work on the bill in part because the crypto world has changed since McHenry and Waters negotiated a draft last year, after the FTX meltdown revealed widespread industry weaknesses.

“A lot of things have happened since this draft,” he said as he tried to address Democrats’ concerns, adding that he and Waters believed their initial draft was “imperfect.”

McHenry’s challenge is that he’ll need to win over Democrats and rank-and-file members on both sides of the aisle if he wants to, as he says, “make law.” The road will probably continue to be bumpy.

“The ranking member and the chairman’s staff are not the people who are going to be deciding this,” Rep. Bill Foster (D-Ill.) told Eleanor. “Anything that succeeds in coming out of committee will probably be a bipartisan thing out of the ideological center. … That doesn’t happen naturally when it’s a leadership-driven thing, compared to a wide discussion.”

It’s Thursday — The MM crew is heading to the Milken conference in Beverly Hills the first week of May. Will you be there? Let us know: Zach Warmbrodt, Sam Sutton.

Fed Gov. Christopher Waller talks crypto and central banks at at the Global Interdependence Center at 8:30 a.m. … HUD Secretary Marcia Fudge testifies at Senate Appropriations at 10 a.m. … NCUA’s board meets at 10 a.m. … Treasury Secretary Janet Yellen talks about the U.S.-China relationship at SAIS at 10:15 a.m. …

CFPB reveals huge data breach — Top lawmakers are demanding answers after the consumer bureau said an employee sent the names and account numbers of 256,000 consumers to a personal email. The employee has since been fired.

It’s making the CFPB an even more urgent oversight target for the GOP.

“This breach raises concerns with how the CFPB safeguards consumers’ personally identifiable information,” McHenry said. “Republicans will ensure any bad actors are held accountable.”

Biden dismisses McCarthy debt ceiling plan — President Joe Biden is refusing to entertain Speaker Kevin McCarthy’s proposal to raise the debt limit by $1.5 trillion. McCarthy plans to hold a vote next week on the bill, which would also cut federal funding by $130 billion.

Biden’s response was unsurprising, but it underscored the lack of progress on the issue as the U.S. faces the possibility of default in a couple of months. Biden and McCarthy haven’t talked about it since February.

Yellen draws the line on China — The Treasury secretary this morning will outline the U.S. economic approach to China in a speech at SAIS.

A few early excerpts from her speech:

— “[W]e will secure our national security interests and those of our allies and partners, and we will protect human rights. We will clearly communicate to the PRC our concerns about its behavior. And we will not hesitate to defend our vital interests.”

— “Even as our targeted actions may have economic impacts, they are motivated solely by our concerns about our security and values. Our goal is not to use these tools to gain competitive economic advantage.”

— “[H]ealthy economic competition — where both sides benefit — is only sustainable if that competition is fair. We will continue to partner with our allies to respond to China’s unfair economic practices.”

Fed president says the economy is ‘super confusing’ — Chicago Fed President Austan Goolsbee told Marketpace: “It’s a confusing time. It definitely affects my thinking.”

“Everybody’s got to take a step back … and just try to get a handle on, are we back to normal? Or are we in some, some in-between state? Or is this what the world is going to be forever?”

(He thinks, yes, things are getting back to normal.)

Things look brighter for regional banks — The FT reports that a deposit rebound at Western Alliance, one of the lenders seen as wobbly after Silicon Valley Bank’s failure, helped lift regional bank stocks Wednesday. The Phoenix-based bank said it regained nearly $3 billion in deposits in the past few weeks.

In defense of CDFI changes — The Center for Responsible Lending pushed back on last week’s MM item about Arkansas Republicans who said rural lenders would be hurt by Treasury’s planned rule revamp for Community Development Financial Institutions.

CRL policy counsel Andrew Kushner said: “Treasury’s plan for certification of Community Development Financial Institutions merits strong support. The plan appropriately prevents CDFI designation from going to bad actors that engage in predatory financial practices like lending above 36 percent APR or issuing unaffordable mortgages like those that caused the Great Recession.”