WASHINGTON: US Treasury Secretary Scott Bessent warned Wednesday that “excessive regulation” could lead to stagnation in the economy, in prepared remarks to lawmakers at a hearing.
“Rather than preempting crises, regulators have frequently reacted to them after the fact,” Bessent said in comments to the House Financial Services Committee.
He is appearing before the panel to discuss the Financial Stability Oversight Council’s annual report.
Bessent charged that regulators have “preoccupied themselves” with concerns such as climate-related financial risks, saying these have “no clear nexus to safety and soundness.”
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“Besides undermining safety and soundness, regulation by reflex has driven excessive regulation,” he said in the remarks. “That can lead to economic stagnation.”
“In calibrating regulations, federal agencies must avoid the temptation to create a zero-risk financial system,” Bessent added.
The Financial Stability Oversight Council was created to identify emerging risks and avoid a repeat of the 2008 global financial crisis, and is chaired by the US Treasury secretary.
Bessent in December also flagged the “harms of overregulation” and said the council is working with member agencies to consider where the US financial regulatory framework imposes “undue burdens.”
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