Treasury Secretary Scott Bessent took a sharp jab at Senator Elizabeth Warren, suggesting she might benefit from a lesson titled “Foreign Exchange for Dummies,” following her criticisms regarding the government’s intervention to stabilize the Japanese yen. This response came via a letter obtained exclusively by The Post.
In his letter, dated Thursday, Bessent remarked that Warren’s attack highlighted her lack of understanding of foreign exchange markets, claiming she was even less informed than about banking. He pointed out inaccuracies in her initial argument about the source of funds and the nature of the transactions, questioning not just her understanding but that of the media as well.
Warren had previously sent a letter on August 13 requesting information on the Treasury’s use of the Exchange Stabilization Fund (ESF) after the yen fell to a 40-year low. As the ranking Democrat on the Senate Banking Committee, she expressed concerns about potential costs to American taxpayers if Japan was unable to reimburse Treasury, which Bessent strongly disputed.
Bessent clarified that the Treasury simply exchanged its existing foreign currency assets for yen, meaning no new appropriations were needed and Japan owed nothing to the U.S. “Therefore, there’s no risk of Japan failing to repay a non-existent debt,” he asserted.
This intervention marked the first joint effort by the U.S. and Japan to bolster the yen since 1998. Reports indicated that Treasury acted through the New York Fed, trading euros for yen, although the size of the purchase was not disclosed.
Visual evidence, including a Reuters photograph showing Bessent’s notepad, suggested a potential yen purchase of between $5-10 billion, but the actual amount remains unclear. Warren had pressed for specifics regarding the U.S. financial support, taxpayer implications, and the legal basis for accessing the ESF.
Bessent’s response to her legal queries included another dig. He noted that the legal basis could be found in the statute she cited, which authorizes the Treasury secretary to engage in foreign exchange support operations, encouraging her to read it herself.
He further defended the intervention by emphasizing its importance for U.S. economic interests, citing Japan as a major holder of U.S. Treasuries and a vital trading ally. Bessent warned that chaotic yen markets could cause broader economic instability, increasing borrowing costs for American families and businesses.
To reinforce his point, he suggested Warren or her staff might benefit from an introductory course in international finance or, alternatively, he could provide a personalized tutorial.
According to government data, Japan had reportedly spent a staggering $96.5 billion on foreign exchange interventions in late July to August, while Treasury’s own exact purchases of yen were still under wraps. Initially, the yen spiked following these operations, although it later lost significant ground.
Warren also referenced a past instance in which the ESF provided support to Argentina, labeling that intervention as politically motivated. Bessent countered, saying that the action was necessary to prevent a larger regional crisis stemming from acute liquidity issues.
He concluded his letter by implying that crises should be avoided rather than seen as opportunities for government intrusion, leaving a hard-hitting message about oversight grounded in facts rather than rhetoric.
Bessent wrapped up with one last pointed remark, hoping that in her next correspondence, Warren would grasp the distinctions among currency purchases, swaps, and loans.
The Post has reached out to Warren for comment.
