U.S. Treasury Secretary Scott Bessent signaled a shift in financial oversight priorities Thursday, urging the Financial Stability Oversight Council (FSOC) to streamline supervision and focus on promoting economic growth rather than politically driven regulations.
The meeting, held in executive session at the Treasury Department, marked Bessent’s latest move to reshape financial regulation under President Trump’s administration.
In his opening remarks, Bessent outlined a vision for enhancing the supervisory and regulatory frameworks governing banks and other regulated entities. He emphasized the need to refocus supervision on material financial risks and expressed strong support for banking agencies’ ongoing efforts to eliminate reputational risk as a basis for supervisory criticism. This initiative is seen as a departure from previous administration policies that critics say excessively prioritized social and environmental concerns over core financial stability.
Bessent’s message to the FSOC echoes themes he previously outlined in his interview with Breitbart News and a speech at the Economic Club of New York, emphasizing the need to “unshackle” the regulated banking system and refocus financial oversight on material risks rather than politically-driven agendas. His call for reprivatizing the economy—shifting economic growth from government dependency to private sector empowerment—aligns with his broader strategy of deregulation, enhancing bank lending to small and regional banks, and promoting innovation as the engine of American prosperity.
The Council also received updates on the Treasury market from staff of the Treasury, Securities and Exchange Commission (SEC), and the Office of Financial Research (OFR). Presentations covered the SEC’s Treasury securities central clearing rule, liquidity developments, and OFR’s data collection on non-centrally cleared bilateral repo transactions. Enhancing Treasury market resilience was a key topic of discussion, underscoring the administration’s commitment to strengthening market infrastructure.
Federal Reserve officials briefed the Council on potential financial stability risks associated with cyber incidents, sharing insights from monitoring cyber-related vulnerabilities and past experiences. Bessent emphasized the importance of interagency coordination and information sharing to protect the financial system from emerging digital threats.
The meeting highlighted the Trump administration’s broader effort to reshape financial regulation away from what officials consider politically motivated oversight and toward a growth-oriented, risk-focused approach. Bessent’s agenda signals a marked contrast from the previous administration’s emphasis on reputational risk and environmental considerations.
Observers say Bessent’s approach is likely to be welcomed by business leaders and financial institutions eager to see a more practical and growth-friendly regulatory environment. The administration’s efforts to bolster Treasury market resilience and enhance coordination on cybersecurity risks reflect its focus on safeguarding the core financial infrastructure without stifling economic activity.
Bessent is expected to continue pushing for changes that prioritize economic growth and efficiency over social and environmental factors, a position likely to spark objections from Democrats who have for years sought to use financial regulation to pursue agenda around ESG and DEI goals that they failed to legislate or enact through non-banking regulatory channels.
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