US Treasury Secretary Unveils Major Overhaul of FSOC to Boost Economic Growth

On December 11, 2025, U.S. Treasury Secretary Scott Bessent announced a significant overhaul of the Financial Stability Oversight Council (FSOC), aiming to reduce regulatory burdens and promote economic growth. Bessent contends that excessive regulations may impede growth and, paradoxically, threaten financial stability.

The FSOC, established in 2010 under the Dodd-Frank Wall Street Reform and Consumer Protection Act, was created in response to the 2008 financial crisis to monitor systemic risks and coordinate regulatory efforts. Bessent's proposal seeks to reorient the FSOC's focus from stringent financial regulations toward fostering economic expansion.

In a letter released Thursday, Bessent stated, "Too often in the past, efforts to safeguard the financial system have resulted in burdensome and often duplicative regulations." He emphasized that the administration is changing that approach, aiming to identify regulatory areas that impose undue burdens on businesses.

To implement this new focus, the FSOC plans to establish three specialized working groups:

1. Market Resilience Working Group: This group will examine whether existing regulations are distorting key financial markets, such as the Treasury market.

2. Household Resilience Working Group: This group will assess stress in consumer finances, including areas like credit and housing.

3. Artificial Intelligence (AI) Working Group: This group will explore both the benefits and risks that AI poses to financial stability and how regulators can effectively utilize the technology.

These changes align with the Trump administration's broader deregulatory agenda, aiming to ease rules that may hinder growth while maintaining financial system oversight. Bessent announced the changes on the social media platform X, ahead of an FSOC meeting he is scheduled to chair Thursday afternoon.

The proposed overhaul has faced criticism from some quarters. Senator Elizabeth Warren warned that deregulating during a time of visible economic stress—including recent bankruptcies of entities like Tricolor Holdings and Renovo Home Partners—would be reckless and could endanger the financial system.

The FSOC's original mandate was to identify risks to financial stability, promote market discipline, and respond to emerging threats. Bessent's proposal represents a strategic shift in the FSOC's approach, emphasizing the promotion of economic growth alongside its traditional role of monitoring financial system risks.

As the FSOC embarks on this new direction, the balance between regulatory oversight and economic growth remains a critical point of discussion among policymakers and industry stakeholders.