Bessent on Fed: If internal review no serious, could be an external review

Bessent on Fed: If internal review no serious, could be an external review

Treasury Secretary Scott Bessent has called for an internal review of the Federal Reserve, suggesting that if the current process is deemed insufficient, an external review might be necessary. This comes amidst increasing pressure from the White House on the Fed, particularly regarding its $2.5 billion renovation of its headquarters and its role in bank supervision [1].

Bessent, who has been mentioned as a potential successor to Fed Chair Jerome Powell, made his stance clear during a CNBC interview. He stated that the Fed's overall function should be examined to determine if it has been successful in its mission [2]. Bessent has also expressed support for the Fed's independence in monetary policy but has called for deeper reforms in the non-monetary policy areas, such as bank regulation [1].

The Treasury Secretary has been critical of the Fed's handling of the renovation project and its cost overruns. He has suggested that a review of the project's decision-making process is necessary [1]. Additionally, Bessent has called for a broader review of the Fed's non-monetary policy operations, arguing that significant mission creep has jeopardized the independence of its core monetary policy mission [1].

The White House has been pushing for greater control over the Fed's operations outside monetary policy, including the supervision of big banks. Trump has considered firing Powell, but Bessent has urged the president not to do so, according to the Wall Street Journal [1]. Powell has stated that he intends to serve out his term as chair and that his removal is not permitted by law.

If the internal review is not deemed serious or comprehensive enough, Bessent has hinted at the possibility of an external review. This could involve independent experts or regulatory bodies to assess the Fed's operations and ensure they align with their core mission. Such a review could provide a more objective and thorough evaluation of the Fed's performance and help address the concerns raised by the White House and other stakeholders.

References:

[1] https://finance.yahoo.com/news/bessent-calls-for-internal-review-of-fed-but-doesnt-think-powell-needs-to-step-down-110437454.html
[2] https://www.msnbc.com/11th-hour/watch/bessent-calls-for-review-of-the-entire-federal-reserve-243603013800