US Treasury Secretary angrily denounces Federal Reserve as "untrustworthy," Democrats roar: Don't be the president's puppet!
2026-02-05 09:15:00
U.S. Treasury Secretary Scott Bessant said on Wednesday (February 4) that he believes in the independence of the Federal Reserve, but also believes that the Fed should bear responsibility.
"The Fed's independence is based on the trust the American people have in it, and the Fed has lost that trust when it allowed the worst inflation in 49 years to run rampant and devastate its own workers," Bessant said at a hearing before the House Financial Services Committee on Wednesday.
Bessant further stated that the Federal Reserve should maintain independence in setting monetary policy, but all other projects it undertakes—whether it's over budgetary construction, climate issues, or expressing political views—can affect that independence .
When asked if, as a cabinet member, he would advise the president to verbally and politically interfere with the Federal Reserve's decisions, Bessant said, "That's his right, just like Senator Warren had the right to say in September 2024 whether they should cut rates by 50 or 75 basis points. That's everyone's right here."
California Democratic Representative Juan Vargas expressed disappointment with Bessenter's remarks: "Hearing your defamatory comments about the Federal Reserve, saying that we have lost confidence in the Fed... because of inflation and excessive construction costs... is basically repeating the same accusations the president made against the chairman... is very disappointing."
These remarks come amid escalating tensions between the White House and the Federal Reserve. The Justice Department has launched a criminal investigation into Federal Reserve Chairman Jerome Powell regarding his testimony before the Senate in the summer of 2025 concerning renovations to the Fed's Washington headquarters.
Powell stated that the investigation stemmed from policy disagreements between the president and the Federal Reserve . This has raised concerns from both parties regarding the maintenance of the Fed's independence. Powell's term as chairman will end in May. The president has nominated former Fed Governor Kevin Warsh to succeed him.
At the hearing, Democrats expressed their dissatisfaction with the administration on a range of issues, including tariffs, President Trump's immigration policies, manufacturing, and financial regulation. The atmosphere was tense, with several Democratic lawmakers raising their voices to question Bessant.
New York Democratic Representative Gregory Meeks questioned Bessant about whether he would commit to suspending or strengthening the Office of the Comptroller of the Currency's review of any banking license or permit applications from the President's World Freedom Finance Corporation until the conflict of interest and foreign influence review is completed and reported to Congress.
When Bessant replied, “No, Mr. Congressman. The Office of the Comptroller of the Currency is an independent agency,” Meeks roared, “Stop covering for the president! Stop being a puppet! Serve the American people!”
Bessant's remarks and the ensuing power struggle between the executive and legislative branches are not isolated incidents, but rather part of a series of developments that undermine the Federal Reserve's independence and credibility. Their direct impact is a strong signal to the market that "US monetary policy may face political interference." This erodes the institutional cornerstone supporting the dollar's value (the Fed's independence), increases uncertainty about future economic policy, and exposes deep-seated political risks.
The US dollar index fluctuated narrowly around 97.65 during early Asian trading on Thursday. While the dollar's short-term movement is influenced by multiple factors, the erosion of the Federal Reserve's independence by such political actions is a significant negative factor for the dollar's long-term credibility and value . The market will closely monitor subsequent developments, especially the confirmation process for the new Fed chair and the new chair's policy stance.
(US Dollar Index Daily Chart, Source: FX678)
At 9:13 AM Beijing time, the US dollar index is currently at 97.67.
"The Fed's independence is based on the trust the American people have in it, and the Fed has lost that trust when it allowed the worst inflation in 49 years to run rampant and devastate its own workers," Bessant said at a hearing before the House Financial Services Committee on Wednesday.
The clashes continue, with the partisan battle extending to the Federal Reserve.
Bessant further stated that the Federal Reserve should maintain independence in setting monetary policy, but all other projects it undertakes—whether it's over budgetary construction, climate issues, or expressing political views—can affect that independence .
When asked if, as a cabinet member, he would advise the president to verbally and politically interfere with the Federal Reserve's decisions, Bessant said, "That's his right, just like Senator Warren had the right to say in September 2024 whether they should cut rates by 50 or 75 basis points. That's everyone's right here."
California Democratic Representative Juan Vargas expressed disappointment with Bessenter's remarks: "Hearing your defamatory comments about the Federal Reserve, saying that we have lost confidence in the Fed... because of inflation and excessive construction costs... is basically repeating the same accusations the president made against the chairman... is very disappointing."
These remarks come amid escalating tensions between the White House and the Federal Reserve. The Justice Department has launched a criminal investigation into Federal Reserve Chairman Jerome Powell regarding his testimony before the Senate in the summer of 2025 concerning renovations to the Fed's Washington headquarters.
Powell stated that the investigation stemmed from policy disagreements between the president and the Federal Reserve . This has raised concerns from both parties regarding the maintenance of the Fed's independence. Powell's term as chairman will end in May. The president has nominated former Fed Governor Kevin Warsh to succeed him.
Bessant defends the president, Democrats condemn his remarks.
At the hearing, Democrats expressed their dissatisfaction with the administration on a range of issues, including tariffs, President Trump's immigration policies, manufacturing, and financial regulation. The atmosphere was tense, with several Democratic lawmakers raising their voices to question Bessant.
New York Democratic Representative Gregory Meeks questioned Bessant about whether he would commit to suspending or strengthening the Office of the Comptroller of the Currency's review of any banking license or permit applications from the President's World Freedom Finance Corporation until the conflict of interest and foreign influence review is completed and reported to Congress.
When Bessant replied, “No, Mr. Congressman. The Office of the Comptroller of the Currency is an independent agency,” Meeks roared, “Stop covering for the president! Stop being a puppet! Serve the American people!”
Damages the credibility of monetary policy and weakens the foundation of the dollar.
Bessant's remarks and the ensuing power struggle between the executive and legislative branches are not isolated incidents, but rather part of a series of developments that undermine the Federal Reserve's independence and credibility. Their direct impact is a strong signal to the market that "US monetary policy may face political interference." This erodes the institutional cornerstone supporting the dollar's value (the Fed's independence), increases uncertainty about future economic policy, and exposes deep-seated political risks.
The US dollar index fluctuated narrowly around 97.65 during early Asian trading on Thursday. While the dollar's short-term movement is influenced by multiple factors, the erosion of the Federal Reserve's independence by such political actions is a significant negative factor for the dollar's long-term credibility and value . The market will closely monitor subsequent developments, especially the confirmation process for the new Fed chair and the new chair's policy stance.
(US Dollar Index Daily Chart, Source: FX678)
At 9:13 AM Beijing time, the US dollar index is currently at 97.67.
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