Treasury Secretary Bescent discussed the Federal Reserve’s performance on CNBC recently, suggesting the need for a thorough evaluation rather than just adjustments to existing protocols. He drew a parallel to the Federal Aviation Administration, questioning if minor modifications are sufficient in light of repeated failures.
This sentiment reflects an overarching issue with American financial surveillance, which has often been viewed as beyond control. While government agencies tend to react to crises, there’s little scrutiny of whether the foundational structure is still functional. The Federal Reserve, SEC, and other regulatory bodies operate in silos, lacking a unified leadership approach.
Recent bipartisan legislation indicates that reform is attainable when lawmakers emphasize clarity and innovation. However, the realm of digital assets is just one part of a convoluted system, with the real challenge lying in institutional drift.
Reforming in Response to Crisis
Historically, major reforms have come in response to crises. The SEC was established after the 1929 crash, the FDIC emerged following bank failures during the Depression, and the Dodd-Frank Act was a result of the 2008 financial collapse. Each reform made sense at the time, yet they contributed to a framework that often stifles innovation and discourages competition.
Today, fintech startups face regulatory hurdles similar to those of established banks, while small businesses looking for online funding navigate rules meant for larger corporate IPOs. Conflicting regulatory guidance on new technologies often drives entrepreneurs to seek opportunities overseas.
Common Sense Solutions
President Trump has consistently advocated for sensible solutions, as evidenced by his 2025 executive order focused on digital financial technology. This order aims to foster innovation and establish clear jurisdiction without imposing heavy restrictions on American businesses.
The call for a common sense committee on financial modernization seems more urgent now. Such an institution could evaluate whether the existing regulatory framework meets the needs of the current economy or merely serves as a remnant of past crises.
Proposed Committee Goals
- Ensure clarity and consistency in institutional mandates
- Evaluate whether regulations are achieving their intended goals
- Provide recommendations for regulatory adjustments free from politicization
- Create a roadmap for future regulatory improvements, rather than relying on historical precedents
This is not about consolidating power; it’s about reorganizing and rationalizing oversight of a dynamic economy.
Trump has often challenged conventional thinking, and this committee embodies that spirit, questioning outdated practices. If something isn’t working, why do we continue it?
Past Experiences Offer Guidance
During my time at the NYU Global Economic Policy Forum, I gathered leaders from various financial institutions to address issues similar to those we face today. At Fordham, I initiated a symposium on Derivatives and Risk Management, which contributed to impactful reforms.
The lesson is clear: regulators can collaborate effectively and should work towards dismantling silos for improved efficiency.
The proposed Modernization Committee can tackle four fundamental questions about existing regulations:
- Will it enhance America’s global competitiveness?
- Is the language clear for the average American?
- Are financial services accessible and affordable?
- Can innovators progress without an overwhelming legal burden?
This approach isn’t about deregulation; it’s about sensible regulation.
The Time for Action is Now
While recent bipartisan efforts are encouraging, they should serve as a foundation for broader structural reforms.
Secretary Bescent’s comments are a stark reminder: we shouldn’t tolerate errors in financial management that we wouldn’t accept elsewhere, like in aviation.
As we near the 250th anniversary of the United States, it’s crucial to reconsider not just what we regulate, but how we do it. Are we merely patching up outdated systems, or are we laying down a framework for the future?
Trump’s leadership has initiated the modernization of financial oversight. Now is the time to capitalize on that momentum with the establishment of a Common Sense Committee on Financial Modernization, marking the next step forward.
This shift can help pivot from fighting past battles to preparing for future opportunities.
