Bessent calls for internal review of Fed and 'deeper reforms' of big bank rules
He said on X that there should be a review of the central bank's $2.5 billion renovation of its headquarters and a review of its non-monetary policy operations, arguing that 'significant mission creep and institutional growth have taken the Fed into areas that potentially jeopardize the independence of its core monetary policy mission.'
He posted the comments on the same day he spoke at the opening of a Fed conference designed to review the capital framework governing big banks. That conference continues Tuesday.
There he made a separate call for 'deeper reforms' of the regulations governing the nation's biggest banks, arguing that 'outdated capital requirements' impose 'unnecessary burdens on financial institutions.'
Specifically he suggested that regulators scrap a dual capital structure proposed during the last administration but never enacted, calling it 'flawed.'
"We need deeper reforms rooted in a long-term blueprint for innovation, financial stability, and resilient growth," Bessent said in his remarks.
Bessent is among the candidates being considered to replace Jerome Powell as chair of the central bank once Powell's term expires in 10 months.
President Trump and other White House officials have been hammering Powell and the Fed over the slow pace of interest rate cuts, with none being made so far in 2025, as well as the costs involved in the Fed's $2.5 billion renovation of its headquarters complex along the National Mall in Washington.
Bessent joined that chorus on Monday.
'While I have no knowledge or opinion on the legal basis for the massive building renovations being undertaken on Constitution Avenue, a review of the decision to undertake such a project by an institution reporting operating losses of more than $100 billion per year should be conducted,' Bessent said in his Monday post on X.
Trump has considered firing Powell and has encouraged him to resign. Powell has said repeatedly that he intends to serve out his term as chair and that his removal is not permitted by law.
Bessent on Monday expressed support for the Fed's independence on the subject of monetary policy, saying that autonomy is 'a jewel box that should be walled off' and that the Fed's independence 'is a cornerstone of continued US economic growth and stability.'
But the White House has also made it known that it wants greater control over the Fed's operations outside monetary policy, including the supervision of the nation's biggest banks.
Bessent earlier this year said he would be coordinating a broad re-examination of financial regulation, with an eye toward making it easier for banks to lend as a way of boosting the US economy. And he said again Monday that the Treasury would be playing a central role.
"The department will break through policy inertia, settle turf battles, drive consensus, and motivate action to ensure no single regulator holds up reform," Bessent said of the Treasury.
"We need deeper reforms rooted in a long-term blueprint for innovation, financial stability, and resilient growth."
US regulators have already proposed one of the most dramatic rollbacks of bank capital rules since the 2008 financial crisis, saying last month they wanted to alter the so-called enhanced supplementary leverage ratio (eSLR).
Banks have complained that this ratio penalizes them for holding lower-risk assets such as Treasury bonds.
Doing away with it "should simplify bank capital management" and "that will bring down costs and help banks more effectively manage their capital levels," TD Securities analyst Jaret Seiberg said in a Tuesday morning research note.
Even with proposed curtailing this leverage ratio, large banks would still be bound by their risk weighted capital constraints, Seiberg said.
"This is not going to produce material capital relief for banks," Seiberg added.
More regulatory changes for big banks could still be on the way.
Michelle Bowman, the Fed's top banking regulator appointed by Trump, said in a speech last month that revisiting the eSLR requirement is just the start of broader capital rollback considerations.
"More work on capital requirements remains, especially to consider how they have evolved and whether changes in market conditions have revealed issues that should be addressed," she said.
Click here for in-depth analysis of the latest stock market news and events moving stock prices
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
22 minutes ago
- Yahoo
Cleveland-Cliffs (CLF) Surges 20.7% as Firm Looks to Cash in Billions From Idle Assets
We recently published . Cleveland-Cliffs Inc. (NYSE:CLF) is one of the biggest performers recently. Cleveland-Cliffs jumped by 20.67 percent week-on-week to end Friday's trading at $11.44 versus the $9.48 on July 18, as investors took heart from news that it was mulling over the sale of its idle assets for as much as billions of dollars. According to a report by Manufacturing Drive, Cleveland-Cliffs Inc. (NYSE:CLF) is in talks with its investment adviser JPMorgan for the sale of its mills and other assets to potential buyers, including data center developers, as part of its effort to lower its overall debt and rightsize operations. 'These sites…are all uniquely positioned geographically and have what data center developers are looking for—access to power and water with the infrastructure already in place,' Cleveland-Cliffs Inc. (NYSE:CLF) CFO Celso Goncalves Jr. was quoted as saying. In the second quarter of the year, Cleveland-Cliffs Inc. (NYSE:CLF) swung to a net loss attributable to shareholders of $483 million from a $9 million attributable net income in the same period last year. This put its six-month net loss at $978 million, higher by 1,404 percent from the $65 million in the same period last year. Copyright: zenstock / 123RF Stock Photo Revenues for the quarter stood at $4.934 billion, lower by 3.1 percent than the $5.092 billion year-on-year. Revenues for the first semester of the year, however, declined by 7 percent to $9.563 billion from $10.291 billion year-on-year. While we acknowledge the potential of CLF as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the . Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22 minutes ago
- Yahoo
Who Benefits From Tax Changes in Trump's ‘Big Beautiful Bill'?
President Donald Trump signed the One Big Beautiful Bill Act into law, marking the largest tax package in recent American history. The legislation promises sweeping changes across the tax landscape, extending previous cuts while introducing new provisions that affect millions of Americans. However, analyzing the distribution of these benefits reveals a complex picture of who truly gains from these changes — we'll explore this below. For You: Read Next: The Big Winners: High-Income Earners Lead the Pack The One Big Beautiful Bill is projected to reduce federal revenues by about $5 trillion between 2025 and 2034, according to the Tax Foundation. Analysis by ITEP shows that 69% of net tax cuts in 2026 will go to the top 20% of earners and the wealthiest 1% receive an average annual tax cut of $61,000, vastly exceeding benefits for other groups. 'The tax benefits primarily go to the 'rich,' and much of the cuts will negatively impact the 'poor,'' said Jay Zigmont, Ph.D., certified financial planner (CFP) and founder of Childfree Trust. The legislation is also expected to increase the national debt by $3.3 trillion to $4 trillion over ten years. Higher-income households benefit from the temporary SALT deduction increase, with significant relief for those in high-tax states. See More: Estate Tax Changes Favor Ultra-Wealthy Families The legislation permanently raises the estate and gift tax exemption to $15 million per individual or $30 million for married couples, per Tax Foundation analysis. This represents a dramatic increase from previous levels and removes uncertainty around potential reductions. 'The increase in the estate tax exemption to $15 million is a great example of a benefit solely for those with very high net worths,' explained Zigmont. This change primarily affects families with substantial wealth, as most American households fall well below these exemption thresholds. The permanence of this provision ensures wealthy families can engage in long-term estate planning without concerns about future reductions. Middle-Class Benefits Come With Important Limitations The legislation includes several provisions targeting middle-income Americans, though their impact varies significantly by household circumstances. A new $6,000 senior bonus deduction benefits taxpayers aged 65 and older, but phases out for higher earners. According to AARP analysis, the deduction reduces to zero for single filers earning above $175,000 annually. The bill creates tax exemptions for tips and overtime pay, addressing campaign promises from the 2024 election. CNBC reported that workers can deduct up to $25,000 in tip income and $12,500 in overtime pay annually, with both benefits phasing out for higher earners. However, Zigmont shared important limitations: 'The deductions for tips and overtime are limited' and 'both are temporary cuts' lasting only through 2028. New Programs Target Future Generations Trump Accounts represent a novel approach to childhood savings, providing $1,000 government contributions for babies born between 2025 and 2028. According to White House statements, these accounts will be a benefit to children by way of compounded savings. Parents can contribute up to $5,000 annually, with funds growing tax-deferred until age 18. Zigmont shared potential market effects of these. 'The plan is for the government to provide $1,000 for each child when they are born into an account that needs to be invested in a broad market index,' he said. With approximately 3.6 million births annually, this creates substantial ongoing market investment. Significant Cuts Impact Vulnerable Populations The legislation introduces about $1 trillion in Medicaid cuts over ten years, threatening coverage for up to 11.8 million Americans, per the Congressional Budget Office. 'People who rely on Medicaid and SNAP programs are most at risk,' Zigmont said — with $230 billion in SNAP reductions affecting 22.3 million families, Urban Institute reports. 'Women's health in rural areas is likely to be hurt,' Zigmont said, as Medicaid cuts and Planned Parenthood defunding further limit access to essential healthcare in underserved communities, shifting more costs onto states and disproportionately hurting those already struggling. Long-Term Fiscal Consequences Raise Concerns The OBBBA is projected to add between $3.3 trillion and $4 trillion to the national debt over the next decade, according to Zigmont. The Tax Foundation estimates this will push the U.S. debt-to-GDP ratio up by 9.6 percentage points to 126.7% by 2034. This rising debt could force future tax hikes or spending cuts, limiting government flexibility and straining the economy. While the bill delivers substantial, lasting benefits to high-income households, middle-class gains are smaller and temporary. 'At some point that debt is going to be due and we have no solution at this point,' Zigmont added. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates Mark Cuban Says Trump's Executive Order To Lower Medication Costs Has a 'Real Shot' -- Here's Why This article originally appeared on Who Benefits From Tax Changes in Trump's 'Big Beautiful Bill'? Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
22 minutes ago
- Yahoo
Instant payments are the new standard: Can banks keep up?
Ten seconds. That's all it now takes to move money across the eurozone under the SEPA Instant Payments (SEPA IP) initiative. Around the clock, every day of the year, batch processing has become a thing of the past. SEPA Instant Payments has been around for eight years, and with compliance deadlines looming, transformation is accelerating across EU institutions. October's requirement for outbound instant eurozone payments is a major catalyst. Yet there's still a gap between regulatory requirements and operational reality as many European banks are struggling with legacy infrastructure limitations, inconsistent user experiences, and incomplete 24/7 processing capabilities. Meanwhile, non-EU banks are under mounting pressure to keep pace with rising expectations, and modernise their outdated systems. While non-EU banks may have more time on paper, with the EU giving non-eurozone banks until 2027 to comply with SEPA IP for both sending and receiving payments, that breathing space could be a false comfort. Regulatory lag shouldn't be mistaken for strategic leeway – customer expectations are already shifting, and the clock is ticking. Engineering the leap to instant Legacy systems were never designed for instant payments. Historically, banking systems operated comfortably on batch processing schedules - downtimes were predictable and maintenance windows were scheduled. Then SEPA IP came along and eliminated such luxuries, mandating a constant readiness that legacy systems cannot sustain. Unfit technology isn't the only problem non-EU banks face. Their infrastructure often sits in distant time zones, designed for settlement during their own domestic business hours. Banks now have two gaps they must bridge: the tech chasm between current legacy abilities and where they need to be, and the geographical divide between business and customer. They must work out how to bridge them without sacrificing day-to-day service. Minor tweaks to legacy systems are inadequate. Ripping out old infrastructure and replacing it with a modern core is largely unworkable, despite any long-term benefits. So, it's an incremental approach that will help banks bridge these gaps. Incrementally aligning legacy systems with SEPA IP's 24/7/365 model should be an immediate priority for non-EU banks, allowing them to swiftly meet regulatory deadlines and increased customer expectations without major disruption. Liquidity at the speed of now Another consideration for non-EU banks is how real-time transactions fundamentally alter liquidity management. Traditional liquidity frameworks, established around batch processes and fixed settlement windows, now face obsolescence. Yet many banks are still managing liquidity with manual processes and spreadsheets. This won't work with SEPA IP. Under this new system, liquidity needs are immediate and continuous - demanding dynamic management that legacy systems were never designed to accommodate. Banks need to be able to predict and manage liquidity in real-time. Accurate, instant forecasting is crucial in minimising operational risks and avoiding costly liquidity shortages. Automation and analytics tools can be of huge assistance here: a sophisticated analytics platform can provide real-time visibility into liquidity positions and automation technology can instantly reposition funds in response to transactional demands. A further step financial institutions should take is restructuring their treasury operations. They need to ensure these operations are aligned more closely with instantaneous payment flows so they don't slow things down. Such changes, combined with the steps above, allow banks to move from sluggish legacy processes to active, real-time liquidity management that enables banks to boost operational efficiency, significantly reduce system risk exposure, and respond swiftly to changing market dynamics. Rebuilding for real time To deliver true instant payments, banks must do more than patch legacy systems – they need to re-architect for speed. That starts with moving away from monolithic infrastructures in favour of agile, modular platforms built to natively handle ISO 20022 – the global standard underpinning SEPA IP. ISO 20022 doesn't just improve compatibility; it unlocks rich, structured data that powers better fraud detection, customer insights, and cross-border automation. Banks that are able to harness this data will be well-positioned to launch value-added services and enhance the customer experience across every transaction touchpoint. Cloud computing is another critical enabler. Data indicates 25% of banks are still exploring cloud options in 2025, remaining mainly on-premises. Cloud adoption brings the flexibility and resilience needed to scale in real-time, handle unpredictable payment volumes, and reduce latency. Combined with APIs that streamline communication between internal systems and external channels, cloud deployment lays the foundation for more dynamic, responsive banking. 25% of banks are still exploring cloud options in 2025, remaining mainly on-premises. Cloud adoption brings the flexibility and resilience needed to scale in real-time, handle unpredictable payment volumes, and reduce latency. Combined with APIs that streamline communication between internal systems and external channels, cloud deployment lays the foundation for more dynamic, responsive banking. Some non-EU banks have tried starting with a "thin layer" approach, building ISO 20022-compliant gateways to mediate between legacy core systems and the SEPA IP network. This has had limited success, because SEPA IP is about more than just ISO messaging, it requires instant 24x7 clearing and settlement capability, which legacy systems do not have. Competitive leaders have gone further, taking the SEPA mandate as a challenge to introduce native real-time 24x7 components into their payments infrastructure, accelerating both innovation and compliance. Instant isn't optional SEPA IP is more than a compliance deadline – it's a signal that the rules of banking have changed. Speed, data, and seamless infrastructure are now the baseline. Banks that cling to legacy systems risk falling behind, regardless of their location or timeline. The 2027 deadline for non-EU institutions may seem distant, but in a world where customers expect immediacy, the time to act is now. Nadish Lad is Managing Director and Global Head of Strategic Business at Volante Technologies "Instant payments are the new standard: Can banks keep up?" was originally created and published by Electronic Payments International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.