During a confirmation hearing today, Treasury Secretary nominee Scott Bessent called for less regulation on banks and criticized credit card companies, although he stopped short of endorsing a campaign pledge by President-elect Trump to cap credit card interest rates at 10%. He also expressed his support for community development financial institutions.
Bessent appeared before the Senate Finance Committee to take questions on a range of topics, although much of the hearing was dominated by Bessent’s support for Trump’s tariff plans and a proposed extension of the Tax Cuts and Jobs Act. Asked about his views on the banking sector, Bessent said the “depth and breadth” of the sector was a strength for the U.S. economy, although he expressed concern that five large banks have “too big a share of banking assets,” and that overregulation was driving consumers to the unregulated “shadow banking” sector.
Banking regulation is best seen as a pendulum that can “overshoot” in one direction, according to Bessent. The regulatory scheme from 1999 to the 2008 banking crisis represented one “overshoot,” but since then it has overshot in the opposite direction, he said.
“Since then our banking system has been constrained and if we are going to have the kind of generalized Main Street prosperity that I would like to see over the next few years, it is going to be driven by communities, small banks and small regionals,” he said.
Pressed by committee member Sen. Bernie Sanders (I-Vt.) on Trump’s proposed cap on credit card rates, Bessent said that many credit card companies “have been bad actors throughout history.” However, he did not say whether he would endorse the 10% cap, only that he would support Trump’s decision on the matter.
Bessent didn’t support the U.S. creating a central bank digital currency. Also, when asked, the nominee said he supports the mission of CDFIs. “I believe that the breadth of the U.S. financial services industry is what differentiates the U.S. economy from the rest of the world, and I think the addition of these CDFIs into underserved communities is very important,” he said.
