Treasury Secretary Bessent Says Fed Has Lost Public Trust

[Financial News, New York = Lee Byung-chul]U.S. Treasury Secretary Scott Bessent stated that "under the current leadership, the credibility of the Federal Reserve System (Fed) has been damaged." After the Fed was criticized for allowing inflation to surge in recent years, a controversy over renovations at its headquarters has now erupted, reigniting debate over the central bank’s independence and public trust.
Testifying before the House Financial Services Committee on the 4th (local time), Bessent was asked about his views on the Fed’s independence. He replied, "The Fed’s independence rests on the trust of the American people," adding, "The Fed has lost that trust by allowing the worst inflation in 49 years to devastate this country’s workers."
He prefaced his remarks by saying he respects the Fed’s independence, but argued that the current leadership’s credibility has been badly undermined by surging prices and the controversy over the cost of renovating its headquarters. The Trump administration has recently taken the unusual step of launching a criminal investigation into Fed Chair Jerome Hayden Powell over the headquarters renovation. Powell has pushed back, saying this is pressure from the Trump administration to cut interest rates.
Asked whether the president has the authority to dismiss the Fed chair, Bessent answered, "I am not a lawyer," avoiding a direct response, but added that President Donald Trump has the right to express his views on monetary policy.
Meanwhile, the confirmation of Fed chair nominee Kevin Warsh faces an uncertain path in the Senate. Senator Thom Tillis, a Republican member of the Senate Committee on Banking, Housing, and Urban Affairs, has said he will delay the confirmation process until the Trump administration resolves the legal issues surrounding Chair Powell. Tillis has described Warsh as "a qualified candidate with a deep understanding of monetary policy," but maintains he cannot support the nomination until the Justice Department’s investigation into Powell is resolved.
By contrast, Senator Tim Scott, the Republican chair of the Senate Banking Committee, said in an interview with Fox Business that "Senator Tillis will ultimately support Warsh’s nomination," adding, "Chair Powell may have made errors in judgment, but I do not believe he committed a crime."
For Kevin Warsh to take office as Fed chair, he must be confirmed by Congress. The Senate Banking Committee currently consists of 13 Republicans and 11 Democrats. If Senator Tillis votes against the nomination, the committee would split 12–12, preventing the confirmation measure from advancing to the full Senate.


pride@fnnews.com Reporter Lee Byung-chul Reporter