Overview

• Scott Bessent wrote that the Federal Reserve should no longer regulate banks and should undergo an independent, nonpartisan review of its operations.
• He argued the Fed’s roles as regulator, lender and profitability arbiter for banks it oversees create an unavoidable conflict that threatens independence.
• Bessent said bank supervision should be led by the FDIC and the Office of the Comptroller of the Currency, with the Fed focused on macro surveillance, lender-of-last-resort liquidity and monetary policy.
• Fed Chair Jerome Powell has maintained that any changes to the Fed’s structure or authorities rest with Congress and defended efficient, stable banking rules.
• Fed Vice Chair for Supervision Michelle Bowman has launched a review of capital requirements for the largest banks, as the administration intensifies pressure on the central bank and recently moved to fire a Fed governor, according to The Straits Times.