Bessent to propose major overhaul of regulatory body created from financial crisis

Treasury Secretary Scott Bessent is proposing a major change in the approach to how the government approaches financial regulation and stability, CNBC has learned.

In a letter set to be released Thursday, Bessent will recommend changing the approach of the Financial Stability Oversight Council.

Whereas the agency's focus had been tightening regulations and oversight of the institutions it oversees, the new approach will switch that, and push for looser regulation and a freer approach.

The letter will say the Council will work with and support member agencies in considering whether aspects of the U.S. financial regulatory framework impose undue burdens and negatively impact economic growth, thereby undermining financial stability.'

FSOC was formed in the wake of the financial crisis of 2008 to monitor and address the kind of systemic risk that led to the collapse of major Wall Street institutions and sent the economy into its worst slump since the Great Depression. The commission was created in 2010 as an outgrowth of efforts to prevent such a crisis from happening again.

As Treasury secretary, Bessent chairs the commission. The proposal coincides with an FSOC meeting slated for Thursday at which he delivers a letter updating where it stands on its work.

The plan also lines up with the Trump administration's focus on deregulation, but represents a switch from the commission's longstanding tilt towards stronger regulation.

Along with the proposal, Bessent is forming a working group whose mission will be to “explore opportunities for [artificial intelligence] to promote the resilience of the financial system while also monitoring for potential risks to financial stability that might be posed by the adoption of AI.”

Bessent will argue that lowering regulator barriers and oversight will strengthen the financial system and boost economic growth.