U.S. Treasury Secretary Scott Bessent has reignited scrutiny of the Federal Reserve, urging a deep review of its operations beyond monetary policy. His sharp criticism, shared in a post on X, warns that the central bank’s growing involvement in non-core functions could threaten its independence.
Fed’s Expanding Role Sparks Debate
Bessent’s remarks come at a time when political pressure on the Federal Reserve is intensifying. He described the Fed’s monetary policy as a “jewel box”—a delicate instrument critical to U.S. economic stability but argued that its reach into broader areas has led to “mandate creep.”
“The Fed’s autonomy is threatened by persistent mandate creep into areas beyond its core mission,” Bessent warned.
His comments have triggered renewed debate about the Fed’s priorities, financial decisions, and the broader implications for America’s economic future.
Controversy Over $2.5 Billion Renovation
One of Bessent’s major concerns centers around the Federal Reserve’s $2.5 billion headquarters renovation project in Washington, D.C. Originally approved in 2017 during Donald Trump’s presidency, the project has since drawn sharp criticism over cost overruns and scope.
President Trump has labeled the project as potentially fraudulent and called for Fed Chair Jerome Powell’s resignation. While Bessent stopped short of a legal assessment, he questioned the optics of such a costly upgrade during a time of financial strain and operating losses at the Fed.
Powell’s Position Secure – For Now
Despite the criticism, Powell’s job appears secure, thanks to a recent Supreme Court ruling that clarified the Fed chair can only be removed “for cause,” not over policy disagreements. His current term runs through May 2026.
In response to the backlash, Powell defended the renovation as necessary, citing infrastructure deterioration, safety upgrades, and removal of hazardous materials.
Meanwhile, Bessent, seen as a possible successor to Powell, sidestepped questions about whether he advised Trump against firing the chair. He stated that such decisions ultimately rest with the president.
A Broader Call for Oversight and Efficiency
Speaking with CNBC, Bessent drew parallels between the Fed’s recent missteps and operational errors seen in agencies like the FAA. He questioned whether the central bank, despite its “PhDs and Ivy League talent,” is truly functioning efficiently.
“If this were the FAA and we were having this many mistakes, we would go back and look at why,” he noted.
What’s Next for the Fed?
As the debate intensifies, Bessent’s call for accountability could mark a turning point in how the Federal Reserve is viewed not just as a policymaker, but as a powerful institution that must operate within defined boundaries.
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FAQs
Bessent has raised concerns over the Fed’s expansion into non-monetary policy areas, calling it “mandate creep” and warning it could threaten the Fed’s independence.
A recent Supreme Court ruling clarified that the Fed chair can only be removed “for cause,” meaning not over policy disagreements, securing Powell’s position until May 2026.
Bessent is rumored to be a potential candidate to succeed Powell, though he has not confirmed this and has deferred decision-making authority to the president.
The renovation of the Fed’s D.C. headquarters has faced backlash due to cost overruns and timing, with critics, including Trump and Bessent, questioning the need for such an expense amid losses.
