Scott Bessent believes that the Federal Reserve is "out of control" and needs an internal review to curb the unmonitored expansion of the central bank.
U.S. Treasury Secretary Scott Bessent made a controversial call for a comprehensive audit of the Federal Reserve, arguing that the organization has "lost control" and needs an internal review to curb unmonitored expansion. In a statement on CNBC on Monday and continued on Fox Business the next day, Bessent emphasized the need for a comprehensive evaluation of the central bank's operations.
Although describing Fed Chairman Jerome Powell as "a dedicated public servant", Bessent remained firm in his view that the Fed needs a comprehensive review. He explained in the interview: "What we need to do is conduct a comprehensive assessment of the entire Federal Reserve institution and see if they are performing their duties well."
Bessent's criticism focused on the Fed's continuous expansion of its scope of operations without appropriate oversight mechanisms. He argued that "all other Fed activities over the years have only continued to expand, expand, and expand", resulting in ineffective control.
The focus of the controversy is Chairman Powell, who is facing serious allegations from the Trump administration, including perjury, poor fiscal management, and lack of leadership. Powell has maintained the target interest rate between 4.25% – 4.50% since December 2024, frustrating President Trump, who desires lower interest rates to reduce the annual interest burden of $1 trillion on the $36.67 trillion national debt.
Multifaceted Controversy about Fed Operations
Beyond monetary policy, Powell has been harshly criticized for the Fed headquarters renovation project in Washington D.C., with a total cost of $2.5 billion, including a $700 million capital overrun. This project has raised allegations of financial misconduct, with Republican Representative Anna Paulina Luna accusing Powell of perjury by providing incorrect information about project details during a congressional hearing.
Senator Cynthia Lummis also condemned Powell for deliberately hindering cryptocurrency companies by abusing the Fed's influence on the banking system. Lummis accused the Fed of categorizing crypto as a "reputation risk" for banks, as part of the "Operation Choke Point 2.0" under the Biden administration.
President Trump has clearly shown his frustration with Powell, calling him the nickname "Too Late" to allude to hesitation in reducing interest rates. Trump wrote on social media: "America is accelerating, inflation is VERY LOW, and we deserve 1%, saving one billion dollars in loan interest each year."
Despite the criticisms, Bessent emphasized that he is not calling for Powell's immediate resignation. Instead, he believes an internal review could help "rationally restructure the Fed's non-monetary functions". This call reflects growing concerns that the Fed has exceeded its traditional role in the U.S. financial system, demanding greater transparency and accountability.
