U.S. Treasury Secretary Scott Bessent criticized the Federal Reserve for several ethical lapses and policy missteps, which he said have resulted in losses amounting to several billion dollars a year.
Bessent Slams Fed’s ‘Mistimed Asset Purchases’
On Tuesday, Bessent said the Federal Reserve was losing $100 billion a year due to “mistimed asset purchases,” referring to the operating losses linked to bond purchases made during the pandemic and the sharp increase in interest rates that followed, during an interview with CNBC from Davos.
“I think that was a big mistake,” he said, while criticizing several other ethical oversights at the central bank over the past few years.
Bessent argued that the Federal Reserve’s independence does not exempt it from scrutiny, saying the institution wields enormous influence over Americans’ daily lives while operating with limited “accountability.”
The central bank, he said, is “unelected,” “not subject to appropriations,” and able to generate money on its own, adding that it has access to what he described as “magic money,” thus making it crucial for the institution to be held accountable for its actions.
Bessent highlighted the cost overruns at the Federal Reserve’s headquarters renovation project, saying that the institution will just “print more money” to deal with it.
Besides this, he also called out the multiple resignations by senior officials at the Fed in recent years. He said that “under Chair Powell’s watch,” between “four to six governors and presidents” have stepped down over ethical issues, calling the situation “not transparent.”
Fed Independence Does Not Mean ‘No Oversight’
On Monday, Bessent said that President Donald Trump was “committed” to the independence of the Federal Reserve, while adding that “independence does not mean no oversight.”
This comes amid Trump’s Department of Justice threatening the Federal Reserve with a “criminal indictment” over its $2.5 billion headquarters renovation project and Fed Chair Jerome Powell’s testimony before the Senate Banking Committee.
The Federal Reserve did not immediately respond to Benzinga’s request for a comment on this. The story will be updated as soon as we receive a response.
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