Bessent calls for internal review of Fed and ‘deeper reforms’ of big bank rules
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Bessent calls for internal review of Fed and ‘deeper reforms’ of big bank rules
Treasury Secretary Scott Bessent takes aim at the Federal Reserve and the rules the Fed enforces as a supervisor of big banks. He said there should be a review of the central bank’s $2.5 billion renovation of its headquarters. He also made a separate call for “deeper reforms” of the regulations governing the nation’s biggest banks. Bessen is among the candidates being considered to replace Jerome Powell as chair of the Fed once Powell’s term expires in 10 months. The White House has made it known that it wants greater control over the Fed’s operations outside monetary policy.
He said on X that there should be a review of the central bank’s $2.5 billion renovation of its headquarters and a review of its non-monetary policy operations, arguing that “significant mission creep and institutional growth have taken the Fed into areas that potentially jeopardize the independence of its core monetary policy mission.”
He posted the comments on the same day he spoke at the opening of a Fed conference designed to review the capital framework governing big banks. That conference continues Tuesday.
There he made a separate call for “deeper reforms” of the regulations governing the nation’s biggest banks, arguing that “outdated capital requirements” impose “unnecessary burdens on financial institutions.”
Specifically he suggested that regulators scrap a dual capital structure proposed during the last administration but never enacted, calling it “flawed.”
“We need deeper reforms rooted in a long-term blueprint for innovation, financial stability, and resilient growth,” Bessent said in his remarks.
U.S. Treasury Secretary Scott Bessent. REUTERS/Elizabeth Frantz · REUTERS / Reuters
Bessent is among the candidates being considered to replace Jerome Powell as chair of the central bank once Powell’s term expires in 10 months.
President Trump and other White House officials have been hammering Powell and the Fed over the slow pace of interest rate cuts, with none being made so far in 2025, as well as the costs involved in the Fed’s $2.5 billion renovation of its headquarters complex along the National Mall in Washington.
Bessent joined that chorus on Monday.
“While I have no knowledge or opinion on the legal basis for the massive building renovations being undertaken on Constitution Avenue, a review of the decision to undertake such a project by an institution reporting operating losses of more than $100 billion per year should be conducted,” Bessent said in his Monday post on X.
Trump has considered firing Powell and has encouraged him to resign. Powell has said repeatedly that he intends to serve out his term as chair and that his removal is not permitted by law.
Bessent on Monday expressed support for the Fed’s independence on the subject of monetary policy, saying that autonomy is “a jewel box that should be walled off” and that the Fed’s independence “is a cornerstone of continued US economic growth and stability.”
But the White House has also made it known that it wants greater control over the Fed’s operations outside monetary policy, including the supervision of the nation’s biggest banks.