Senator Elizabeth Warren inquired about support for small banks, tax policies, financial stability, and crypto regulation from Treasury nominee Bessent.
Before the Senate Finance Committee’s confirmation hearing for Treasury Secretary nominee Scott Bessent, Senator Elizabeth Warren has posed pointed queries. Bessent’s stance on crypto regulation, financial deregulation, tax policies, and the challenges small banks encounter are the primary focus of her concerns, detailed in a 31-page letter.
Senator Elizabeth Warren Advocates for Treasury Nominee’s Consent Regarding Tax and Crypto Policies
Senator Elizabeth Warren underscored the necessity of transparent crypto supervision in a 31-page letter to Treasury Secretary nominee Scott Bessent. She inquired whether the Treasury’s Office of Foreign Assets Control (OFAC) should be granted authority over stablecoins to mitigate risks such as money laundering and sanctions evasion.
Warren urged Bessent to develop a strategy for regulating crypto companies threatening financial stability.
Furthermore, Warren contested Bessent’s endorsement of the 2017 tax cuts implemented by the Trump administration, which resulted in a $4.5 trillion increase in the federal deficit concerning tax policy. She criticized his “3-3-3” strategy, which involves the reduction of taxation, the reduction of the deficit, and the stimulation of economic development.
The anti-crypto Senator requested specifications regarding how Bessent would enforce the Corporate Alternative Minimum Tax (CAMT) and resolve the carried interest loophole.
Concerns Regarding Financial Stability and Deregulation
Warren also examined Bessent’s support for deregulation, associating it with the 2008 financial crisis and the 2023 demise of Silicon Valley Bank (SVB). She referred to the Federal Reserve’s report, which attributed SVB’s failure to weaken regulations. Furthermore, the Senator who opposed cryptography inquired whether Bessent concurred with the evaluation. Senator Warren inquired,
“Do you agree with this assessment? What’s your plan to ensure deregulation doesn’t cause another banking crisis?”
However, Warren underscored the significance of maintaining the Dodd-Frank Act, which was intended to avert financial crises. She sought assurance that Bessent would enforce these crypto regulations and refrain from implementing policies that could result in an additional economic downturn.
The decline of community banking and small banks
The Senator also noted the decrease in minor banks, from 84% of all U.S. banks in 1994 to 52% by 2022. The survival of community institutions and their role in assisting small enterprises were the subjects of her concerns. Warren questioned Bessent’s approach to guaranteeing the success of lesser banks in the face of financial instability and industry consolidation.
She also requested Bessent’s perspective on proposals to restrict the Federal Deposit Insurance Corporation’s (FDIC) capacity to sell insolvent banks to large institutions. Warren underscored the necessity of bipartisan legislation to increase the deposit insurance limits for small businesses.
Similarly, Elizabeth Warren criticized Republican-led initiatives to reduce the IRS budget by $20 billion. She cautioned against the consequences of requiring large corporations to comply with tax laws. Furthermore, the Senator who opposed crypto questioned Bessent’s ability to preserve audit quality and recoup revenue without sufficient funding.
Ripple CEO Brad Garlinghouse praised Scott Bessent as a pro-innovation candidate for the position of Treasury Secretary, despite Senator Warren’s inquiries regarding crypto policies. Garlinghouse expressed confidence in the potential for XRP and crypto progress under Bessent, suggesting that the Ripple-SEC case may be resolved.
