Treasury Secretary Scott Bessent's Opening Statement on Financial Stability and Economic Growth

Financial Stability Oversight Council's 2025 Annual Report

• 🎯 The Financial Stability Oversight Council's (FSOC) 2025 annual report is a product of extensive collaboration among its members.
• 💡 The report aims to advance President Trump's vision of parallel prosperity, fostering economic expansion where both Wall Street and Main Street can grow.

Critique of Past Regulatory Approaches

• ⚠️ The statement criticizes past regulatory practices as "regulation by reflex," where regulators reacted to crises rather than preempting them.
• 📉 This reactive approach, focusing on issues like reputation risk and climate-related financial risk, distracted from safety and soundness, leading to major bank failures in 2023.
• 🚫 Excessive regulation that stifles economic growth, capital formation, and innovation is identified as a grave threat to financial stability.

FSOC's Agenda for Economic Growth and Security

• 🔑 FSOC's agenda prioritizes economic growth and economic security as essential for financial stability.
• 📈 Economic growth strengthens balance sheets and creates capital buffers, while economic security reinforces domestic production and reduces vulnerability to external shocks.
• 📊 The report focuses on four key policy areas: Treasury markets, cybersecurity, regulatory modernization, and AI.

Key Policy Area Initiatives

• 🏛️ Efforts are underway to ensure the US Treasury market remains deep and liquid, with ongoing monitoring and reforms.
• 💻 The council is taking action to protect the financial system from cyber attacks through information sharing, joint monitoring, and emphasizing third-party risk management.
• 🛠️ Commitment to modernizing supervisory and regulatory frameworks for banks and credit unions, focusing on material risk, transparency, and reducing burdens for smaller institutions.
• 🤖 Prioritizing the responsible use of artificial intelligence to enhance financial stability while monitoring emerging risks.

Enhancing the Annual Report's Utility

• 🔍 This year's FSOC report shifts focus from identifying nearly every sector as a vulnerability to a new structure centered on fostering economic growth and security.
• ✨ This approach aims to tune out noise and concentrate on the most critical issues for US financial stability.