Bloomberg News
Scott Bessent, President Trump’s PICK for Treasury Secretary, appeared poised for confirmation after a calm-headed performance during his Senate confirmation hearing on Thursday and little indication of Republican opposition.
Throughout the session, Bessent addressed questions from lawmakers on both sides of the aisle, presenting relatively detailed responses that aligned with Republicans’ established policy priorities. The legacy of the Trump administration’s tax cuts — and a debate about the merits of extending them, which Trump has promised to do — featured heavily in the hearing.
Bessent — founder of the hedge fund Key Square Capital Management — expressed his commitment to “smart, updated regulation” in his opening statement and throughout the hearing reiterated President Trump’s business-friendly agenda, including extending the 2017 tax cuts.
“If Congress fails to act [on extending the tax cuts], Americans will face the largest tax increase in history,” Bessent said, warning that allowing the cuts to expire would cause an economic disaster. “We must make permanent the 2017 tax cuts and jobs act and implement new pro-growth tax policy.”
While some Democrats, including Sen. Michael Bennet, D-Colo., criticized the cuts for disproportionately benefiting the wealthy, Bessent countered by saying real wage growth among working families benefited during the Trump administration.
Bessent also shed light on how he might approach bank regulation. The nominee said what he characterized as excessive regulation had “perhaps over-capitalized” the sector, especially for smaller banks.
In response to a question from Senate Banking Committee Chair Tim Scott, R-S.C., Bessent attributed the strength of the U.S. economy to the “depth and breadth” of its financial markets but criticized excessive regulations for consolidating power among the largest banks.
“I believe we have likely seen the top five banks become too big a share of banking assets,” Bessent said. “We have seen, because of undue regulation, the shadow banking system gets larger and larger, and to the detriment of community banks, small banks, and small regional banks. So I think we have to take a look at both regulatory and supervisory conditions in those [sectors].”
Bessent posited that after crises regulators sometimes overcorrect, noting that the regulatory regime between the passage of Gramm-Leach-Bliley in 1999 and the Great Financial Crisis of 2008 was likely too lax, whereas the regime that ensued since the passage of Dodd-Frank in 2010 has been too burdensome.
“I think the banking system is well-capitalized — perhaps over-capitalized — and this comes from someone [who] is a financial institutions analyst,” Bessent said. “Since [2008] … our banking system has been constrained, and if we are going to have the kind of generalized Main Street prosperity that I would like to see over the next few years, it is going to be driven by community, small banks and small regionals.”
Bessent also responded to a question from Sen. Mark Warner, D-Va., on the future and promise of Community Development Financial Institutions, which are chartered to serve communities without access to traditional financial services. Warner, who had worked with former Treasury Secretary Steven Mnuchin on CDFI expansion, pressed Bessent on his stance regarding further support for these institutions.
Bessent expressed his commitment to working with Warner and other lawmakers to enhance the role of CDFIs in underserved communities.
“The early part of my career was as a financial services analyst, I believe that the breadth of the U.S. financial services industry is what differentiates the U.S. economy from the rest of the world,” Bessent said. “The addition of these CDFIs into these underserved communities is very important.”
On the subject of the U.S. debt ceiling, Sen. Elizabeth Warren, D-Mass., questioned Bessent about President Trump’s proposal to eliminate it, a rare area of agreement between the President-elect and the progressive Senator.
While acknowledging the complexity of the issue — Bessent stated that the U.S. would not default on its debt under his watch — he compared the debt ceiling to a car’s handbrake, a necessary safety feature. However he did not entirely close the door to Trump’s position.
“The debt limit is a very nuanced convention,” he said. “What I would like to do is get back to you and President Trump and I’d like to do a survey of market participants … Once President Trump takes office, and if I’m confirmed, if he wants to eliminate the debt limit, I will work with him and you on that.”
Bessent’s fiscal conservatism was on display as he voiced concerns about the U.S. government’s ability to act in future emergencies due to current spending levels. His strong stance on fiscal restraint marked him as a fiscal hawk — especially regarding Treasury bonds, an area where he has considerable expertise.
As for the Federal Reserve, Bessent expressed support for the central bank’s independence, specifically with regard to monetary policy, though he did not say the same for bank regulatory matters. He disagreed with claims that Trump sought to unduly influence the Fed’s decisions saying while the president could offer input, the Federal Reserve should remain autonomous in setting interest rates..
“On monetary policy decisions, the FOMC should be independent,” he said. “I actually believe that the notion that President Trump believes he should have influence was, I believe, a highly inaccurate Wall Street Journal article … President Trump is going to make his views known, as many senators did.”
Bessent also addressed the potential for deepening economic sanctions against Russia. In response to a question from Warner — who said sanctions against Russia during the Ukraine conflict should have been more timely and forceful — Bessent agreed to take decisive action if President Trump requested it.
“I believe the sanctions were not fulsome enough,” Bessent said, adding that “if the officials in the Russian Federation are watching this confirmation hearing, they should know that if I’m confirmed, and if President Trump requests, I will be 100% on board for taking sanctions to levels that would bring the Russian Federation to the table.”
When Sen. Bernie Sanders, I-Vt., pressed Bessent on Trump’s campaign promise to cap credit card interest rates at 10%, Bessent acknowledged that credit card companies had acted irresponsibly in some cases but committed only to further discussions with Trump on the matter.
Sen. Marsha Blackburn, R-Tenn., asked Bessent about his stance on Central Bank Digital Currencies, which have gained some interest under the Biden administration. Bessent was opposed to adopting a U.S. CBDC, arguing that there is little need. Such currencies, he said, are typically used by nations with limited investment alternatives.
“In my mind, a central bank digital currency is for countries who have no other investment alternatives,” he said. “I view that many of these countries are doing it out of necessity, whereas the U.S., if you hold U.S. dollars, could hold very secure U.S. assets.”
Bessent singled out the Treasury Department’s current remote work policies as an area he would differ from his predecessor Janet Yellen, particularly after a breach by Chinese hackers targeting the department’s remote networks. He stressed the importance of returning to in-office work.
“I support a return to the office, which is against the [current] policy,” Bessent said. “I intend to be in the building every day that I’m in Washington.”
Claire Williams and John Heltman contributed to this report.