US Treasury Secretary Bessent Calls for Major Bank Regulatory Reforms

US Treasury Secretary Bessent Calls for Major Bank Regulatory Reforms

Washington, July 22 (Reuters) –
US Treasury Secretary Scott Bessent has called for far-reaching reforms to the country’s banking regulatory framework, stating that the current system is flawed and harmful to financial growth.

Speaking at a Federal Reserve regulatory conference, Bessent argued that dual capital requirements for banks are placing excessive strain on financial institutions, leading to reduced lending activity, slower economic growth, and the expansion of risk into the non-bank sector.

“Over-capitalization is suppressing lending, hurting growth, and distorting markets,” Bessent said, advocating for a shift in approach among financial regulators.

He emphasized the need to reassess regulatory burdens, particularly those that encourage financial activity to shift outside traditional banking systems. Bessent's remarks come amid growing concerns about financial stability and the evolving role of non-bank financial intermediaries.

Why This Matters for the US Economy

Capital regulations were designed to safeguard banks, but Bessent suggests they may now be counterproductive, especially when implemented through dual frameworks that increase compliance complexity and cost.

His comments highlight a broader debate in Washington and on Wall Street about the future of financial regulation, and the balance between risk management and economic growth.

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