Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and a regular contributor to PostEverything.

Rep. Patrick T. McHenry (R-N.C.), left,, seen in 2015 with House Majority Leader Kevin McCarthy (Calif.), is vice chairman of the House Financial Services Committee. (Lauren Victoria Burke/AP)

The hard-working staff here at Spoiler Alerts has found it difficult to follow through on publicly stated New Year’s resolutions and write about matters other than Donald Trump. I mean, this is what he tweeted out this morning:

When you’re the craziest and the most powerful person in Washington, D.C., it’s hard to look away.

As crazy as Trump’s last week has been, however, it is worth noting that another Washington politician might have managed to out-crazy him. Fortune’s Geoffrey Smith has the story:

Congressman Rep. Patrick T. McHenry (R-NC.), a vice-chairman on the House Financial Services Committee, has sent a blistering letter to Federal Reserve Chair Yellen telling her in no uncertain terms to stop cooperating with other central banks and insurance supervisors over global rules of conduct, at least until the new administration has given her a clear political line to follow.

Bloomberg did a story on it as well. Here’s a link to the full .pdf version of the letter. Here’s a picture:


How to put this gently: This letter covers multiple dimensions of crazy.

First, the Federal Reserve totally has the authority to negotiate international banking standards. While most people know that the Fed runs monetary policy, it is also the primary supervisor and regulator of the banking sector. McHenry might not like what the Fed is doing, but to claim that they don’t have the authority to do so is absurd.

Second, despite the implication in the letter that the Fed is negotiating treaties with other countries, it just ain’t so. As the Financial Times explained in its coverage of this letter, “The Basel committee, which sets minimum bank standards, has no formal treaty or enforcement powers and must work by consensus.” This also applies to the Financial Services Board and the International Association of Insurance Supervisors.

Third, these negotiations are decidedly not opaque for the affected parties — namely, the financial institutions themselves. They are keenly aware of their content and made their voice heard rather loudly during the negotiations over the Basel III set of banking standards (which raised the amount of capital that banks needed to hold in reserve compared with the ill-fated Basel II standards).

Fourth, McHenry offers zero evidence that international banking standards led to slower economic growth in the United States. The Institute of International Finance tried to make a variant of this argument when Basel III standards were being promulgated, but their analyses got laughed out of the room by outside experts. Most analysts agree that the benefits of reducing the likelihood of another financial crisis outweigh any modest loss in lending activity.

Finally — and I can’t believe that I have to remind the vice chairman of the Financial Services Committee of this fact — the United States plays an outsized role in the crafting of international banking standards. I’ve written two books that touch on this subject — here and here. Because the United States has such important capital markets, it holds considerable sway within these committees. If the United States were to abdicate leadership in these forums, the likely result would be more lax banking standards in Europe, which would lead to a race to the bottom in financial standards.

This may well be what McHenry and the U.S. banking sector wants. The Financial Times story notes:

Wayne Abernathy, a senior official at the American Bankers Association, a lobby group, welcomed Mr McHenry’s intervention. “This whole international process is far too opaque and needs more public scrutiny and visibility,” he said.

As examples of problematic Basel regulations, Mr Abernathy cited rules that penalise banks for having heavy exposure to mortgage debt collection businesses, and liquidity rules that do not recognise that Americans tend to see banks as havens in times during crises.

Given the origins and outcome of the 2008 financial crisis, these criticisms sound like very weak beer.

We now have a president who seems perfectly willing to overstep the traditional prerogatives of his office. And there is now a pliant Congress that, on some dimensions, wants to help him. If Republicans politicize how the Federal Reserve acts as a banking supervisor and regulator, however, it would undercut a major source of U.S. strength in global capital markets.

Traditionally, neither the executive nor legislative branches of the federal government like to throw away traditional components of American leadership in the world. Clearly, however, we are dealing with a different breed of GOP officials.