The Blubber

U.S. Treasury Secretary Scott Bessent said Wednesday that his department will take on a more prominent role in shaping banking regulations, with the aim of better balancing regulatory costs and benefits while ensuring that financial institutions can support economic growth.

In prepared remarks delivered at an American Bankers Association conference, Bessent emphasized the need for "commonsense principles" in banking oversight. He specifically called for easing regulatory burdens on community banks, which he said have long been subject to rules designed for much larger institutions.

Bessent said this increased involvement would come through the Treasury’s participation in the Financial Stability Oversight Council—a body that includes leadership from the Federal Reserve and other banking regulators and meets regularly to assess systemic risks. He also pointed to the President’s Working Group on Capital Markets, which monitors financial trends and has historically convened during times of market stress.

Additionally, Bessent said the Treasury would engage directly with individual regulators, such as the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation, to help drive reform.

“In the past, bank regulators have exercised vast powers on almost every aspect of daily life—without meaningful accountability to the American people,” Bessent said. “Most glaringly, regulation through supervision has too often taken place behind a veil of secrecy that precludes scrutiny by the public and their elected officials.”

While Bessent did not offer detailed proposals for changing capital requirements or regulations, he said the Trump administration would review the capital buffer framework for large banks to ensure it aligns with the law and functions appropriately as a backstop.

He outlined three core principles for regulation: a foundation in clear statutory mandates, including safety, soundness, risk mitigation, and consumer protection; regulatory efficiency, both in terms of minimizing burdens and maximizing regulatory agency effectiveness; and fairness, ensuring rules are applied evenly across institutions.

“Second, regulation should be efficient. That means regulations should strike an appropriate balance between costs and benefits,” he said, also emphasizing the need for regulatory agencies themselves to be efficient in staffing and budgeting.