Treasury Secretary Bessent Testifies at FSOC Oversight Hearings
February 10, 2026
On February 4 and February 5, Treasury Secretary Scott Bessent appeared before the House Financial Services Committee (HFSC) and the Senate Banking Committee (SBC), respectively, for Financial Stability Oversight Council (FSOC) oversight hearings.
- Bessent defended the administration's economic agenda, fielding questions on deregulation and Treasury priorities, financial stability, digital assets, and broader macroeconomic questions related to tariffs and taxes.
Deregulation: Republicans pressed Bessent on rolling back Biden-era financial rules, with a focus on deposit insurance reform and community bank support.
- As outlined in the 2025 FSOC report released last week, Bessent emphasized that Treasury is "moving back" to 2019 activity-based guidance for designating systemically important financial institutions.
- Bessent also reiterated the need for more tailored regulatory requirements across the banking sector.
- He said that U.S. regulators would not permit external bodies to determine capital standards for the U.S. financial system. This aligns with what we have heard over the past few months in terms of the banking agencies’ efforts on a forthcoming bank capital proposal.
- The Secretary also noted that community banks provide most of the lending for agricultural, small real estate, and business loans. He stressed that onerous regulations have negatively impacted small and community banks, noting that 50% of community banks have disappeared since the financial crisis.
- Democrats shared their concerns that deregulation could lead to financial instability and reduced credit availability.
Community Development Financial Institutions (CDFI) funds: In response to multiple Democrats noting that fiscal year 2025 CDFI funds have not been released, Bessent said timing sits with the Office of Management and Budget (OMB) apportionment and did not offer a specific date.
- However, he also said that he was “eagerly awaiting the release of these funds from OMB so we can move them forward.”
Tariffs: Bessent defended tariffs as an "essential tool." He argued tariffs are used as leverage to compel other countries to negotiate and reduce their own tariffs and non-tariff barriers.
- He also pointed to San Francisco Fed data that he believes demonstrates that tariffs do not cause inflation.
Given that Bessent is focused on centralizing regulatory policymaking, using his role as FSOC chair to coordinate agency activities, CREFC continues to closely monitor his statements.
- We expect the release of the bank capital proposal in Q1 2026 and will work with members to provide feedback.
Please contact Sairah Burki (sburki@crefc.org) with questions.