- - Financial oversight body adopts new stance: Looser regulations to boost growth, financial safety

Jennifer SchonbergerDecember 12, 2025 at 1:21 AM

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The Financial Stability Council voted to adopt changes that Treasury Secretary Scott Bessent, who chairs the council, put forth Thursday, including scaling back “undue burdens” that he argues dent economic growth.

“In the past, efforts to safeguard the financial system have resulted in burdensome and often duplicative regulations,” said Bessent.

“Policymakers have not routinely considered the cumulative burdens of regulatory and supervisory regimes … or how a failure to modernize regulations can hurt both resilience and growth.”

The changes are designed to boost economic growth, which Treasury officials say is essential to financial stability. Bessent says stronger economic growth helps boost profits and cushion capital for banks, which can serve as buffers against unexpected losses. He also argues that households and businesses with stronger balance sheets are more resilient to shocks, less likely to default on debts, and more likely to continue spending and investing.

U.S. Department of the Treasury Scott Bessent speaks before President Donald Trump arrives at the Mount Airy Casino Resort in Mount Pocono, Pa., Tuesday, Dec. 9, 2025. (AP Photo/Matt Rourke) ()

The Financial Stability Oversight Council was established after the 2008 financial crisis to identify risks to the stability of the US economy that could arise from banks. During the financial crisis, there were risks interconnected between banks that nearly brought down the financial system.

The council is also forming a new household resilience working group that will monitor the financial resilience of consumers and look for early warning signs of potential stress by analyzing household borrowing, credit access, and developments in the housing and mortgage markets. Bessent stressed that financially resilient households can better withstand shocks, maintain essential consumption, and avoid costly debt cycles.

The FSOC is also targeting economic security, looking to strengthen protections against cyberattacks and bolster resilience in the Treasury market.

The body is also creating a new AI working group to look for ways AI can promote the resilience of the financial system while also monitoring potential risks AI might pose to financial stability.

“We want to make sure credit goes to the economy, that small businesses gain access to that credit. They're the backbone of growth,” Joe Lavorgna, counselor to the Treasury secretary, said in an interview with Yahoo Finance. “These changes [are] prudent to get credit flowing more freely and make sure we're not doing things that don't make any sense and hold the economy back from its full potential.”

Jennifer Schonberger covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram.

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Source: “AOL Money”