WASHINGTON (AP) — U.S. Treasury Secretary Scott Bessent is advocating for a significant transformation of the Financial Stability Oversight Council (FSOC), the regulatory body established after the 2008 financial crisis, proposing to loosen existing financial regulations.
In a letter released on Thursday, Bessent criticized what he termed 'burdensome' regulations that have historically sought to safeguard the financial system. He stated, Too often in the past, efforts to safeguard the financial system have resulted in burdensome and often duplicative regulations. He emphasized that the current administration is shifting its approach.
The FSOC, which includes key financial leaders such as the head of the Federal Reserve System and the chairman of the Securities and Exchange Commission, will seek to identify regulatory aspects that may be hindering economic growth and, consequently, financial stability.
Concerns regarding Bessent's proposal were promptly raised by Senator Elizabeth Warren, a known critic of the Trump administration’s regulatory policies. Taking this hands-off approach to financial stability would leave our financial system and economy at greater risk in any economic environment, she stated. Warren highlighted recent bankruptcies of companies like Tricolor Holdings and Renovo Home Partners as signs of emerging vulnerabilities in the financial landscape.
Critics worry that as economic signs of trouble begin to surface, relaxing financial oversight could further jeopardize the financial sector's health, leading to broader economic repercussions.
The FSOC was initially formed under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, aimed at preventing future economic meltdowns.
