Regulatory Shift: Treasury Secretary Proposes Overhaul of Financial Stability Oversight Council
In a move that could significantly alter the landscape of financial regulation in the United States, Treasury Secretary Scott Bessent is set to propose a major overhaul of the Financial Stability Oversight Council (FSOC). The proposal, outlined in a letter to be released on Thursday, aims to shift the council’s focus from tightening regulations to promoting a more freewheeling approach to financial oversight.
Details
According to sources close to the matter, the new plan will encourage member agencies to consider the potential impact of regulations on economic growth and financial stability. The letter is expected to state that the council will work with and support member agencies in identifying areas where the U.S. financial regulatory framework may be imposing undue burdens, thereby undermining financial stability.
The FSOC was established in 2010 in response to the financial crisis of 2008, with the aim of monitoring and addressing systemic risk that could lead to another major economic downturn. As the chair of the council, Bessent’s proposal represents a significant departure from the council’s long-standing focus on stronger regulation.
Regulatory Shift and AI Integration
The proposal also includes the formation of a working group tasked with exploring the potential of artificial intelligence (AI) to promote the resilience of the financial system while monitoring potential risks. Bessent is expected to argue that lowering regulatory barriers and oversight will strengthen the financial system and boost economic growth.
While the proposal aligns with the Trump administration’s focus on deregulation, it marks a significant shift in the council’s approach. The move is set to be discussed at an FSOC meeting on Thursday, where Bessent will deliver a letter outlining the council’s updated work plan.
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