Bessent calls for a sweeping rework of the regulatory body born from the financial crisis
U.S. Treasury Secretary Scott Bessent is advocating a major shift in how the government approaches financial regulation and stability, according to sources familiar with the matter.
In a letter due to be released on Thursday, Bessent will propose altering the mission of the Financial Stability Oversight Council (FSOC).
Rather than primarily tightening rules and tightening oversight of the institutions under its watch, the proposed guidance would encourage a more permissive regulatory posture and a freer framework.
The letter states that the FSOC should “collaborate with and support member agencies in examining whether elements of the U.S. financial regulatory framework impose unnecessary burdens and dampen economic growth, thereby undermining financial stability.”
FSOC was created after the 2008 financial crisis to monitor and address systemic risks that threatened to topple large financial firms and plunge the economy into a downturn akin to the Great Depression. It was established in 2010 as part of ongoing efforts to prevent a repeat of that crisis.
As Treasury secretary, Bessent chairs the council. The proposed shift comes just ahead of an FSOC meeting scheduled for Thursday, during which he will present an update on the body’s work.
The plan aligns with the broader deregulation emphasis associated with the Trump administration, yet it marks a notable departure from FSOC’s traditional emphasis on tighter regulation.
In addition to the policy proposal, Bessent is forming a working group tasked with examining how artificial intelligence could bolster the resilience of the financial system, while also monitoring potential stability risks that AI adoption might introduce.
Bessent will argue that reducing regulatory barriers and easing oversight will fortify the financial system and spur economic growth, even as it invites debate about the potential trade-offs involved.
