This is Washington Edition, the newsletter about money, power and politics in the nation’s capital. Today, economic policy and national security editor Nick Wadhams looks at other potentially vulnerable Trump nominees after Matt Gaetz withdrew his bid to be attorney general. Sign up here and follow us at @bpolitics. Email our editors here.

Along with his preferred attorney general, Donald Trump just lost his first major battle over the makeup of his new administration — leaving Washington wondering who might be the next nominee to take a fall.

The president-elect wanted Matt Gaetz to overhaul the Justice Department. But the former Florida congressman – under intense scrutiny over a House Ethics Committee probe into allegations of sexual misconduct – withdrew from consideration for the post on Thursday, Bloomberg’s Chris Strohm reports.

Gaetz, who has denied any wrongdoing, said he was pulling out because the storm around his appointment was “becoming a distraction” to Trump’s agenda. He likely didn’t have enough support in the Senate to get confirmed anyway – raising the question: who else on Trump’s cabinet wishlist fits that description?

Among the candidates who look vulnerable are Pete Hegseth, Trump’s pick to lead the Pentagon, and Tulsi Gabbard, who’s been nominated to head national intelligence.

Hegseth had drawn skepticism from some Republican senators even before sexual assault allegations against him surfaced. The Fox News host denies any wrongdoing, and he got a boost on Thursday when Republican senators – after a meeting with Hegseth that was organized by Trump’s running mate JD Vance – came out in support of his candidacy.

Still, he’s drawn criticism over his lack of experience and his argument that women shouldn’t serve in combat roles. “I look forward to having him vetted,” said Senator Joni Ernst, a member of the Armed Services Committee who’s been a leading voice taking on sexual assaults in the military.

Gabbard is a former Democrat and before switching her allegiance to Trump, she openly criticized many of his policies, including his decision to quit the Iran nuclear deal, and to kill Iranian General Qassem Soleimani in a drone strike. She’s also met with Syrian leader Bashar al-Assad, and said the US could have prevented the Ukraine war — positions that are not popular with Republican hawks.

On her podcast, Nikki Haley — who was Trump’s main rival for the Republican presidential contender — called Gabbard a “Russian sympathizer” and criticized her nomination. 

The conventional wisdom had been that Republicans could safely challenge one of Trump’s picks and let through the rest, however reluctantly. Since Gaetz jumped so quickly, GOP senators may feel that their powder is still dry.

Trump’s search for a Treasury secretary remains in flux, with the president-elect telling allies and advisers in recent days that he’s yet to be completely sold on  candidates interviewed so far.

SEC Chair Gary Gensler, whose ambitious agenda drew fierce resistance from Wall Street and the crypto industry, plans to step down on Jan. 20.

The Justice Department and a group of states proposed major changes to Alphabet Inc.’s Google — including a forced sale of the company’s Chrome web browser — in a court filing that followed a landmark monopoly ruling.

Federal Reserve Bank of Chicago President Austan Goolsbee said he sees interest rates moving “a fair bit lower” over the coming year.

White-supremacist groups are escalating efforts to recruit new members over the Telegram social media app, where they’ve amplified racist conspiracies while posing as men-only fight clubs.

The US sanctioned Gazprombank, the last major Russian financial institution exempt from penalties, a move that could disrupt gas flows to Europe.

Applications for US unemployment benefits unexpectedly fell last week to the lowest level since April, another sign that the job market is holding up. 

Today on Bloomberg Television’s Balance of Power early edition at 1 p.m., hosts Joe Mathieu and Kailey Leinz interviewed Don Beyer, a Democratic congressman from Virginia, about Gaetz’s withdrawal and other potential developments in the Trump transition.

On the program at 5 p.m., they talk with New Jersey congresswoman Mikie Sherrill and Bob McNally of Rapidan Energy about Cabinet appointments and possible clashes in Congress.

On the Odd Lots podcast, Bloomberg’s Tracy Alloway and Joe Weisenthal talk to historian Odd Arne Westad about his book on China’s economic transformation. Listen on iHeart, Apple Podcasts and Spotify.

Sales of previously owned US homes are projected to rise steadily in the coming two years, according to Fannie Mae — though it’ll be late 2026 before they cross the 5 million mark, a level that was routinely exceeded before the Federal Reserve started hiking interest rates. The firm's researchers expect a "significant improvement" in existing home sales in 2026 as affordability improves, the lock-in effect weakens, and pent-up demand to move is unleashed. Incentives offered by homebuilders are expected to boost new home sales in both 2025 and 2026. Still, affordability remains the primary constraint. Fannie’s analysts now expect higher mortgage rates, given the recent increase in bond yields. In their latest forecast released Thursday, the typical 30-year fixed-rate mortgage is seen holding around 6.3% by the end of 2025, 70 basis points higher than the previous projection. — Alexandre Tanzi

The University of Michigan’s final read of consumer sentiment in November will be released tomorrow.

New home sales for October will be reported on Tuesday.

Data on personal income and spending in October will be released next Wednesday.

The deadline for state certification of presidential electors is Dec. 11.

The Federal Reserve’s next meeting is Dec. 17-18.

The new Congress is sworn in on Jan. 3.

Inauguration day is Jan. 20.

Detroit’s Big Three and other automakers are strategizing over how to ask the incoming administration to keep in place federal regulations that require the industry to sell EVs, the New York Times reports. 

The nomination for Health secretary of Robert F. Kennedy Jr, who’s vowed to crack down on artificial dyes used in cereal, has put Froot Loops and its maker WK Kellogg Co. at the heart of US food politics, the Wall Street Journal reports.

Activist groups emboldened by Republican election wins are planning aggressive new campaigns against people and organizations that help women get abortions, according to the Washington Post.

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