Bessent calls for overhaul of regulator tasked with spotting systemic financial risks
Treasury Secretary Scott Bessent wants to overhaul a federal regulatory group, launched following the 2008 housing bust, that is tasked with safeguarding the U.S. financial system.
The 15-member panel, known as the Financial Stability Oversight Council (FSOC), was established by the 2010 Dodd-Frank Act to help spot and defuse systemic financial risks.
The council is chaired by the Secretary of the Treasury and includes the leaders from other financial regulatory agencies, such as the director of the Consumer Financial Protection Bureau and the head of the Board of Governors of the Federal Reserve System.
In a letter released Thursday, Bessent called for looser FSOC regulations, saying that "too often in the past, efforts to safeguard the financial system have resulted in burdensome and often duplicative regulations."
"Our administration is changing that approach," Bessent added.
The Treasury Department and the White House did not respond to requests for comment.
Proponents of strong financial regulation criticized the push to revamp the FSOC.
"What you're removing is the smoke alarm for the entire financial system," said Oscar Valdés Viera, private equity and capital markets policy analyst at Americans for Financial Reform, a coalition consisting of over 250 national and local groups.
Bessent's proposal would remove vital safeguards just as financial risks are mounting, such as a potential bubble in AI stocks, Valdés Viera added.
Sen. Elizabeth Warren, a Democrat from Massachusetts, also attacked the decision to loosen financial regulations.
"Going down this path just as cracks are emerging in the financial system and yellow lights are flashing across our economy is especially reckless," she said in a statement, citing the recent bankruptcies of subprime auto lender Tricolor Holdings, auto parts company First Brands and home remodeling platform Renovo Home Partners.