"There needs to be an honest, independent, and non-partisan assessment of the entire organization, including monetary policy, supervisory activities, communications, personnel, and research," Bessent wrote in a Wall Street Journal op-ed on 5/9, referring to the Federal Reserve (Fed).
He urged the Fed to cease its bank supervision role and minimize its "distorting" impact on the economy, including bond purchases outside of genuine crisis situations.
The treasury secretary called on the Fed to "restore its credibility" as an institution focused solely on three objectives: stimulating job creation, maintaining price stability, and keeping long-term interest rates at reasonable levels.
"The Fed needs a course correction," Bessent emphasized in a separate article in The International Economy magazine. He criticized the central bank for policies that he argued have fueled inflation, benefited the wealthy at the expense of the poor, and exacerbated the US housing crisis.
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US Treasury Secretary Scott Bessent speaks at the White House on 5/9. Photo: AFP |
US Treasury Secretary Scott Bessent speaks at the White House on 5/9. Photo: AFP
In his articles, Bessent was particularly critical of the Fed's bank supervisory role. He argued that the agency simultaneously supervises, lends to, and determines the profitability of the banks it oversees. This, he contended, inevitably leads to conflicts of interest, obscures accountability, and threatens the Fed's independence.
Bessent proposed that the Fed should focus on "macro-prudential supervision, emergency liquidity provision, and monetary policy." Other agencies, such as the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC), should be empowered to lead bank supervision, he said.
The statements follow months of increasing pressure from the Trump administration on the Fed to influence interest rate policy. Trump recently sparked controversy by attempting to dismiss a member of the Fed's Board of Governors, a move that raised concerns about the White House seeking to exert greater control over the independent institution.
On 5/9, Trump revealed that Bessent is among 4 candidates he is considering to replace Fed Chair Jerome Powell when his term ends in 5/2026. However, the treasury secretary stated he is not interested in the position.
Other potential candidates include National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh, and Fed Governor Christopher Waller. A source told Reuters that Bessent has begun interviewing potential successors to Powell.
Trump has long expressed dissatisfaction with Powell, whom he appointed in 2018. In recent months, the president has repeatedly pressured the Fed to cut interest rates and has hinted at firing Powell or wanting him to resign, a suggestion Powell has rejected.
Thanh Danh (AFP, Reuters)
