Washington
—
The Federal Reserve should be relieved of its duties regulating the nation’s banks, Treasury Secretary Scott Bessent wrote Friday.
In an essay revealed in The Wall Street Journal, Bessent stated the central financial institution has veered away from what he described as its core mission of selling full employment, steady costs and average long-term rates of interest.
President Donald Trump’s prime financial official is doubling down on an thought he has trumpeted for months: The Fed has overstepped its bounds by taking up banking regulation, and that should cease.
“The Fed now regulates, lends to and sets the profitability calculus for the banks it oversees, an unavoidable conflict that blurs accountability and jeopardizes independence,” Bessent wrote. “There must also be an honest, independent, nonpartisan review of the entire institution, including monetary policy, regulation, communications, staffing and research.”
When the Fed was created in its present kind in 1913, financial institution supervision and regulation weren’t a part of its core tasks. But over time and thru crises equivalent to the Great Depression and Great Recession, the Fed was regularly ceded extra oversight over the nation’s banks.
Advocates for the Fed argue that the soundness of the banking system is interconnected with the nation’s monetary stability, a part of the Fed’s mission as an establishment.
Bank supervision and regulation are presently shared amongst the Fed, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.
This is a growing story and will probably be up to date.