Scott Bessent Reportedly Blasts Dodd-Frank Rules, Says Its Purpose Was To End ‘Too Big To Fail’ But It Created ‘Too Small To Succeed’

Treasury Secretary Scott Bessent on Thursday reportedly criticized the Dodd-Frank rules, stating that this legislation has left a “trail of destruction” in its wake.

Speaking at the Community Bank Conference in Washington, D.C., Bessent called out the Dodd-Frank legislation for “reinforcing” the economic dynamics between the U.S. heartland and the commercially buzzing coastal parts of the country, according to CNBC.

“The post-crisis framework has left a trail of destruction in its wake, by reinforcing the larger economic dynamics that have hollowed out the American heartland, while enriching the money centers in coastal cities,” he said during his discussion with the Federal Reserve’s Vice Chair for Supervision, Michelle Bowman.

“To be clear, the financial crisis underscored the need for new regulations. The purpose of Dodd-Frank was to end ‘Too Big To Fail,’ but it ended up creating ‘Too Small To Succeed,'” the Treasury Secretary added.

Some of the key provisions of the Dodd-Frank regulations include the creation of the Financial Stability Oversight Council (FSOC) for monitoring systemic risks and the Consumer Financial Protection Bureau (CFPB) for consumer protection. The legislation was sponsored by Sen. Christopher J. Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.).

Bessent’s comments come a day after Fed Governor Michael Barr expressed concerns with the central bank’s deregulation proposal on capital standards, which regulators appointed by President Donald Trump have supported.

“These shifts would not make the system safer; they would leave community banks once again exposed to the fallout if the largest players stumble,” Barr said, noting that the proposed changes threaten protections for small banks.

The Fed governor added that strong banking reforms, including higher capital requirements, tougher liquidity norms, and rigorous stress testing, have helped in safeguarding the U.S. economy. “As community bankers well know, it was not community banks that fueled the 2008 financial crisis — it was the largest, most complex firms whose excessive risk-taking nearly brought down the system,” he said.

Meanwhile, U.S. equities declined in Thursday morning’s trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was down 0.36%, the Invesco QQQ Trust ETF (QQQ) fell 0.4%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) declined 0.45%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bearish’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was down 0.08% at the time of writing.

Also See: Silver Prices Hit $50 For First Time In Over 4 Decades

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