Securities Regulation Daily Wrap Up, EXCHANGES AND MARKET REGULATION—Bessent sees FSOC deregulatory agenda contributing to economic growth, security, (Dec 12, 2025)

By Jeff Williams

Senator Warren warns that the FSOC’s actions are undermining the U.S. financial system.

Amid criticism from some corners regarding the deregulatory path the Financial Stability Oversight Council (FSOC) has set upon during the Trump administration, Treasury Secretary and FSOC Chair Scott Bessent touted the council’s focus on the “twin priorities” of economic growth and economic security that are guiding its “future approach to identifying priorities, evaluating risks, and recommending regulatory or supervisory changes.”

FSOC December meeting. According to his prepared remarks at the FSOC meeting on December 11, Bessent said that the FSOC is working with member agencies to determine where U.S. financial regulations “impose undue burdens and where they harm economic growth,” thereby “undermining” financial stability, he said.

"Too often in the past, efforts to safeguard the financial system have resulted in burdensome and often duplicative regulations,” he said. “Little thought was given to the harms of overregulation, the imbalance between costs imposed and benefits achieved, and the economic stagnation that can follow.”

Economic growth contributes to financial stability by providing “higher earnings and capital cushions for financial institutions that can serve as buffers against unexpected losses” and provides households and businesses with "stronger balance sheets" that make them "more resilient to shocks, less likely to default on debts, and more likely to maintain consumption and investment,” Bessent said.

Bessent also said that economic security needs to be included in the financial stability analysis “Because the fallout from decreasing living standards can contribute to financial instability.”

Ahead of the Council’s meeting, Sen. Elizabeth Warren (D-Mass.) expressed concerns in a letter sent to Bessent about the “apparent failure” of the FSOC under his leadership to “execute its critical mission; identifying and addressing risks to the stability of the U.S. financial system.” The council is “actively sabotaging its own authorities” by taking a “hands-off approach to financial stability” that "would leave our financial system and economy at greater risk in any economic environment,” she argued.

U.S. Comptroller of the Currency Jonathon V. Gould also spoke in favor during the meeting regarding the administration’s financial deregulation stance, saying in prepared remarks that the OCC has taken steps to “strengthen” its supervision and “restore banks to their proper role as financial intermediaries, and undo some of the counterproductive regulatory and supervisory constraints that Dodd-Frank spawned.”

According to his prepared remarks, Gould said that “For too long, financial regulation has impeded our federal banking system from supporting the American economy to its full extent, in some cases pushing banking activities out of OCC-regulated banks.”

Federal Deposit Insurance Corporation Acting Chairman Travis Hill delivered remarks at the meeting detailing nearly a dozen efforts the FDIC has undertaken since the FSOC's September meeting to “improve its supervisory and regulatory approach across an array of issues, while still continuing to fulfill our core mission of insuring deposits, promoting the safety and soundness of banks, and resolving failed institutions.”

Among those efforts, he said, were the rescission of Biden-era guidance on climate-related financial risks and the issuance of a notice of proposed rulemaking (NPR) with the OCC to define “unsafe or unsound practice” for purposes of Section 8 of the Federal Deposit Insurance Act and to establish a new framework for issuing nonbinding supervisory observations, and another NPR to prohibit examiners from “(1) criticizing or taking adverse action against banks on the basis of reputational risk or (2) requiring, instructing, or encouraging an institution to close accounts or take certain other actions on the basis of a customer’s political, social, cultural, or religious views or beliefs, among other reasons.”

In prepared remarks before the Council, Securities and Exchange Commission Chairman Paul Atkins pointed, among other things, to his eagerness to conduct a “thoughtful review” of non-bank designation guidance. “When firms face the prospect of arbitrary and capricious designation, as we have seen too often in the past, they cannot plan for growth or undertake strategic decisions,” he said. “This risk impairs their ability to deploy capital efficiently and serve their customers effectively—outcomes that run completely counter to our shared objectives.”

Other reactions. In other remarks, North Dakota Department of Financial Institutions Commissioner and FSOC State Banking Supervisor Representative Lise Kruse stated that “Cybersecurity remains a threat to financial stability, and we appreciate the Council’s continued focus on cyber and operational resilience.”

National Credit Union Administration (NCUA) Chairman Kyle S. Hauptman said in prepared remarks at the meeting that NCUA is taking a number of actions to right-size its approach to safety and soundness, and to capitalize on the opportunities created by the Trump Administration to foster innovation."

In a statement, Better Markers President and Chief Executive Officer Dennis Kelleher also leveled criticisms against the administration, including that it is “gutting the FSOC and turning it into a vehicle for recklessly pursuing a deregulatory agenda that will only result in the type of bubble growth that inevitably leads to more financial crashes and needless economic harm.”

Companies: Better Markets; National Credit Union Administration

RegulatoryActivity: FinancialIntermediaries ExchangesMarketRegulation RiskManagement