Treasury Secretary Bessent Says Fed ‘Must Change Course,’ Demands an Entire Review

Clark Savage

6 days ago

In a bold op-ed published in the Wall Street Journal, U.S. Treasury Secretary Scott Bessent has issued a scathing critique of the Federal Reserve, calling for a sweeping overhaul of the central bank’s operations. Bessent, a key figure in the Trump administration’s economic team, argued that the Fed’s recent policies have fueled inflation, exacerbated wealth inequality, and made housing less affordable for everyday Americans. He demanded an “honest, independent, nonpartisan review” encompassing the Fed’s monetary policy, regulatory functions, communications, staffing, and research efforts.

Bessent’s comments come amid growing tensions between the White House and the Federal Reserve, as President Donald Trump ramps up pressure on Fed Chair Jerome Powell to slash interest rates aggressively. The Treasury Secretary specifically accused the Fed of engaging in partisan activities and misallocating public funds, pointing to expenditures like headquarters renovations and maintaining its own police force. He further suggested that the Fed should cede bank supervision responsibilities to other agencies and limit its bond-buying programs to crisis situations only, to reduce economic distortions.

This push for reform aligns with broader criticisms from within the administration and conservative circles, who view the Fed’s actions as overreaching and detrimental to long-term economic stability. Bessent, who previously served as a hedge fund manager and economic advisor during Trump’s campaign, is actively involved in vetting candidates to replace Powell, whose term expires in May 2026. Potential successors include National Economic Council Director Kevin Hassett, former Fed Governor Kevin Warsh, and current Fed Governor Christopher Waller—figures who have echoed calls for significant changes at the central bank.

The Federal Reserve, for its part, is preparing to initiate interest rate cuts this month to support a softening labor market, though officials have not signaled support for the deep reductions Trump has demanded, such as dropping rates to as low as 1.3% from the current 4.3%. Waller, one of the finalists for the chair position, recently dissented against the Fed’s July decision to hold rates steady, advocating for quicker easing.

Implications for the Energy Sector

While Bessent’s critique focuses on broader monetary policy, the proposed Fed reforms could have ripple effects on the energy industry. High interest rates have historically constrained investment in capital-intensive sectors like oil, gas, and renewables by increasing borrowing costs for exploration, infrastructure projects, and green energy transitions. A more restrained Fed might lead to lower rates, potentially boosting energy investments and easing inflationary pressures on fuel prices. However, critics warn that politicizing the central bank could introduce volatility, undermining confidence in U.S. energy markets that rely on stable financing for long-term projects.

Energy analysts note that the Fed’s quantitative easing programs during non-crisis periods have sometimes distorted commodity markets, including oil futures. Bessent’s call to scale back such interventions could stabilize energy pricing but might also limit liquidity during economic downturns, affecting producers in shale regions or offshore drilling operations.

Steps Toward Reforming or Ending the Federal Reserve Under Trump

The Trump administration has already taken concrete actions to influence the Federal Reserve, though outright ending the institution—established by the Federal Reserve Act of 1913—would require congressional legislation, which remains unlikely without bipartisan support. Instead, the focus appears to be on eroding the Fed’s independence through appointments, nominations, and executive actions, potentially curtailing its ability to set monetary policy without political interference.

Key developments include:

Personnel Changes and Nominations: Trump has moved to remove Fed Governor Lisa Cook over allegations of mortgage fraud, which she denies and is challenging in court.

This unprecedented attempt to oust a sitting governor could shift the balance of the Fed’s Board of Governors. Additionally, the administration nominated White House economic advisor Stephen Miran for an open Fed seat, a move Democrats criticize as compromising independence.

Miran has pledged to uphold the Fed’s autonomy but faces scrutiny during Senate confirmation hearings.

Executive Orders on Financial Regulation: In August 2025, Trump signed the “Guaranteeing Fair Banking for All Americans” executive order, directing federal regulators to address perceived biases in banking practices.

While not directly targeting the Fed, this order signals a broader push to reform financial oversight, potentially stripping the central bank of some supervisory roles as Bessent advocates.

Other 2025 executive orders have addressed regulatory barriers in sectors like energy and infrastructure, indirectly influencing monetary policy by promoting deregulation.

Project 2025 Influence: The conservative blueprint known as Project 2025, which has shaped much of Trump’s second-term agenda, explicitly calls for reducing the Federal Reserve’s authority or even eliminating it entirely.

Proposals include returning to a gold standard, limiting the Fed’s mandate to inflation control only, and curbing its regulatory powers over banks.

While not yet enacted as law, these ideas have informed administration actions, such as efforts to install allies on the Fed board.
Legislative and Political Pressure: Trump has publicly demanded rate cuts and threatened further interventions, with allies in Congress pushing bills to audit the Fed more rigorously or restrict its emergency lending powers. However, experts from institutions like the Brookings Institution and Harvard Kennedy School emphasize that the Fed’s statutory independence makes wholesale changes challenging without new laws.

Recent social media discussions on platforms like X reflect public calls to “end the Fed,” often tied to Trump’s nominations, but these remain grassroots sentiments rather than official policy.

Despite these steps, the Fed’s structure as an independent entity—designed to insulate it from short-term political pressures—poses significant hurdles. Ending or fundamentally altering the central bank would likely require amending the Federal Reserve Act, a process that could face opposition from both parties concerned about economic instability. For now, the administration’s strategy centers on stacking the board with sympathetic figures, as seen in the quiet reshaping of the institution even without firing Powell outright.

As the debate intensifies, energy stakeholders will be watching closely. A less independent Fed could accelerate rate cuts, spurring investment in domestic production and reducing costs for consumers at the pump. Yet, it risks injecting uncertainty into global markets, where the U.S. dollar’s stability underpins energy trade. Bessent’s demands mark a pivotal moment, potentially reshaping how monetary policy intersects with America’s energy future.

I, for one, would like to know where the profits from printing money and the interest payments go. The legislators do not curb spending, print more money, tax us, and then where do the interest payments and profits go? A never-ending treadmill for the working class. The Fed has lost its ability to remain non-partisan and has been detrimental to United States citizens.