U.S. Treasury Secretary Scott Bessent has recently brought to light significant concerns regarding the financial stewardship of the Federal Reserve, articulating strong criticisms against its operational effectiveness and the leadership of Chair Jerome Powell. His remarks underscore a growing debate surrounding the central bank's independence versus its obligation for transparency and public accountability. Bessent's statements have resonated across economic and political spheres, prompting a closer examination of the Fed's role and its impact on the American populace.
Treasury Secretary Raises Alarm Over Federal Reserve's $100 Billion Annual Losses and Calls for Increased Accountability
On Thursday, January 22, 2026, U.S. Treasury Secretary Scott Bessent launched a sharp critique against the Federal Reserve, particularly targeting its Chair, Jerome Powell. Speaking in a televised interview on Newsmax, Bessent declared that the central bank is currently incurring losses totaling an staggering $100 billion each year, attributing this to what he described as a “lack of accountability.” He highlighted that during Powell’s tenure, the United States experienced its most severe inflation in 49 years, a period when the consumer price index soared to 9.1% in June 2022, marking the highest annual rate since November 1981 amidst the COVID-19 pandemic. Although recent data from the Bureau of Labor Statistics indicated a decrease in inflation to 2.7% year-over-year, surpassing forecasts, Bessent's concerns remained steadfast.
In a subsequent interview with CNBC, Bessent reiterated his criticisms, specifying that the colossal annual losses were a direct consequence of "mistimed asset purchases" by the Federal Reserve, labeling these decisions as a "big mistake." Analysts from the Institute for New Economic Thinking corroborated these claims, noting that the Fed's losses, exceeding $100 billion annually, stemmed from rapid increases in short-term interest rates. This situation led to the central bank paying out significantly more interest on bank reserves, while income from its long-term securities portfolio remained comparatively low. Adding another layer to this unfolding narrative, the Department of Justice initiated a criminal investigation into Chair Powell, issuing grand jury subpoenas concerning cost overruns for the central bank’s headquarters renovation project. Powell vehemently denounced this investigation as a manipulative tactic aimed at coercing the Fed into lowering interest rates, arguing it compromised the institution’s long-standing independence. However, Bessent countered this stance, emphasizing that independence should not supersede transparency and oversight, especially for an entity with the profound power to create currency. He stressed that the Fed, despite being unelected and not subject to appropriations, possesses "magic money" and thus has a unique obligation to the American people, making accountability paramount.
This ongoing discourse between Treasury Secretary Bessent and the Federal Reserve leadership underscores fundamental questions about economic governance, central bank independence, and public accountability. It compels us to consider the intricate balance between maintaining monetary policy autonomy and ensuring transparent, responsible financial management. For the average American household, this debate highlights the stark contrast between the Fed’s capacity to manage large-scale financial operations and the everyday necessity for individuals to meticulously manage their own finances. It serves as a potent reminder that while central banks operate on a grand scale, the principles of fiscal prudence and accountability remain universally essential, influencing everything from national economic stability to personal financial well-being. The implications of this dispute extend beyond mere financial figures, touching upon trust in public institutions and the very fabric of economic transparency.