Treasury chief calls for ‘independent’ review of US Fed
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US Secretary Treasury Scott Bessent called for the Fed to “re-establish its credibility” as an institution in a Wall Street Journal opinion piece.
PHOTO: EPA
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- US Treasury Secretary Bessent wants an "independent, nonpartisan review" of the Federal Reserve due to its expanded mission.
- Bessent believes the Fed's regulatory role over banks creates conflicts, blurring accountability and jeopardising its independence.
- Bessent suggests the Fed focus on monetary policy, with other regulators handling bank supervision, limiting quantitative easing to emergencies.
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WASHINGTON - US Treasury Secretary Scott Bessent called on Sept 5 for an “independent, nonpartisan review” of the Federal Reserve, criticising its expanded mission and arguing that there are risks to its independence.
“At the heart of independence lies credibility and political legitimacy. Both have been jeopardised by the Fed’s expansion beyond its mandate,” Mr Bessent wrote in an opinion piece published by the Wall Street Journal.
He called for the Fed to “re-establish its credibility” as an institution focused only on its statutory mandate of maximum employment, stable prices and moderate long-term interest rates.
His comments come as President Donald Trump’s administration ramps up pressure
Mr Trump also recently moved to fire
Among other issues, Mr Bessent took aim on Sept 5 at the Fed’s regulatory role over banks.
“The Fed now regulates, lends to and sets the profitability calculus for the banks it oversees, an unavoidable conflict that blurs accountability and jeopardises independence,” Mr Bessent wrote.
Instead, he argued that the Fed should be left to focus on “macro surveillance, lender-of-last-resort liquidity and monetary policy.”
Other regulators such as the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency, he added, should in turn be empowered to lead bank supervision.
“Unconventional policies such as quantitative easing should be used only in true emergencies, in coordination with the rest of the federal government,” Mr Bessent wrote. AFP
