US Treasury Secretary Yellen issues another warning!

On Friday local time, USA Treasury Secretary Yellen warned the incoming Trump administration not to interfere with Banks regulation. She stated that, given the history of bank failures leading to financial crises, aggressive measures to disrupt necessary regulation should not be taken.

Earlier, there were reports that Trump's transition team is exploring the possibility of significantly reducing, consolidating, or abolishing the highest regulatory body in the banking industry.

In addition, there are new movements from Trump. Recently, Trump has been intensively meeting with CEOs in Silicon Valley. Last month, Trump had dinner with Meta CEO Zuckerberg, and this Thursday he met with Alphabet CEO Sundar Pichai. Furthermore, Trump stated that he plans to meet with Amazon founder Bezos next week. There are also reports that Trump hosted Apple CEO Cook for dinner at Mar-a-Lago on Friday night.

Let’s take a look at the detailed report!

Yellen issues a warning.

According to Reuters, US Treasury Secretary Yellen warned the incoming Trump administration on Friday not to interfere with the critically important appropriate regulation of capital levels, liquidity, and risk-bearing in US Banks. Yellen stated that such regulations are crucial for ensuring the health of the banking system.

Yellen has served as Treasury Secretary in the Biden administration since January 2021. She indicated that while the current regulatory system in the USA is not perfect, seeking ways to reduce burdens is reasonable. However, she warned that given the historical precedent of bank failures leading to financial crises, radical measures should not be taken to disrupt necessary regulation.

I do not want to say that what we have is absolutely sacred and inviolable or cannot be touched. But I do not think it has collapsed. We have a good system," Yellen said.

Reports indicate that Trump's return increases the likelihood of a fundamental change in the current structure of the US federal government and the regulatory framework established for overseeing financial services, the banking industry, and digital currency over the past several decades.

Yellen said, "Bankers always complain about excessive regulation. It is reasonable to look for issues with regulatory burdens and try to correct them, but appropriate regulation regarding capital, liquidity, risk-taking, and so on is crucial for a healthy banking system and economy, and should not be interfered with."

Yellen expressed concern over a report stating that Trump's transition team is exploring ways to reduce, merge, or even eliminate Washington's top banking regulatory agencies, but there is no specific understanding of their plans.

"We have seen what happens when banking is poorly regulated," Yellen also stated, "The lesson we have learned from this over 100 years of history is that banks need to be properly supervised and regulated, greatly reducing the likelihood of failures. Deposit insurance is a key factor in promoting system safety, soundness, and confidence, and sufficient liquidity must be available when banks are in distress."

Recently, reports have emerged that Trump is considering abolishing some banking regulatory agencies. Reports indicate that Trump's transition team has begun exploring the possibility of significantly reducing, consolidating, or abolishing the highest regulatory authorities in the banking industry. Sources revealed that during recent talks with potential heads of banking regulatory agencies, Trump's advisors and officials from the newly established government efficiency department raised the question of whether Trump could remove the Federal Deposit Insurance Corporation (FDIC). It was reported that aides also asked potential FDIC chair and Office of the Comptroller of the Currency (OCC) director nominees if deposit insurance could be placed in the Treasury if the FDIC were eliminated.

An insider stated that the Trump transition team has another idea, which is to keep some departments of the FDIC, OCC, and Federal Reserve separate, but have only one department continue to regulate the Banks, while the other departments are responsible for non-regulatory aspects.

Yellen discusses Trump's tariff plans.

Recently, US Treasury Secretary Yellen warned that the plan by the elected president Trump to broadly impose high tariffs on imported goods will increase costs for American families and businesses, disrupt the progress of inflation control, and adversely impact economic growth.

Yellen stated at an event hosted by the Wall Street Journal that Trump's tariff increase plan will significantly raise the prices of goods for American consumers and exert cost pressure on businesses.

Yellen believes that imposing tariffs on goods imported to the USA will adversely affect the competitiveness of certain sectors of the American economy and could significantly increase household costs, which may "undermine" the government's progress in controlling inflation and adversely impact economic growth.

Yellen also expressed concerns about the US government's fiscal situation. She stated that if all the expiring provisions in the Tax Cuts and Jobs Act passed by Congress in 2017 are extended, the US fiscal deficit will increase by $5 trillion over the next 10 years, and she is "very concerned about fiscal sustainability." Yellen indicated that Congress needs to find ways to fill this gap to avoid a "explosive growth" in debt.

The tax cut policies related to the Tax Cuts and Jobs Act are set to expire at the end of 2025. Trump promised during his campaign to extend these measures after taking office on January 20 next year.

Yellen is about to hand over the treasury position to the nominee Scott Bessenet of elected president Trump. Bessenet, a 62-year-old billionaire, is the founder of global macro investment company Key Square Group and has served as the chief investment officer of Soros Fund Management. He provided economic policy advice to Trump during the 2024 presidential campaign.

Talking about advice to his successor Bessenet, Yellen stated: "I had a conversation with him before Thanksgiving. I told him that I think he will find this a very interesting and challenging job, as the Treasury has a very broad mandate that involves not only extensive economic policy but also tax policy, sanctions policy, and international alliances. I also told him that the staff at the Treasury, especially the civil servants, are skilled, professional, and act with integrity, and are capable of providing reliable analysis, which is very important for the financial markets and the economy."

Trump is holding frequent meetings with Silicon Valley CEOs.

Trump's latest movements have also drawn market attention. Recently, Trump held a series of meetings with Company Executives from Technology companies.

According to the Associated Press, informed sources revealed that the USA's President-elect Trump hosted Apple CEO Tim Cook for dinner at Mar-a-Lago on Friday night. It was reported that Cook is the latest among a series of major technology leaders, including OpenAI's Altman, Meta's Mark Zuckerberg, and Amazon's Jeff Bezos, who are seeking to improve their relations with the upcoming president after an unstable relationship during Trump's first term.

It is reported that last month, Trump had dinner with Meta CEO Mark Zuckerberg and met with Alphabet CEO Sundar Pichai on Thursday. Additionally, Trump has indicated plans to meet with Amazon founder Jeff Bezos next week.

Trump will be sworn in on January 20, 2025. On December 13, the Wall Street Journal reported that Amazon plans to donate 1 million dollars to Trump’s inauguration fund. The company's founder, Bezos, and other technology leaders are strengthening their relationships with the new government. Informed sources revealed that as part of the preparation for this donation, Bezos plans to visit Trump at his private club Mar-a-Lago in Palm Beach, Florida next week. A person close to Bezos stated: 'Bezos will make the donation through Amazon.' Amazon will also livestream the inauguration ceremony through its Prime Video service.

Additionally, there are reports that OpenAI's CEO Altman donated 1 million dollars to Trump’s inauguration fund. The AI startup Perplexity also donated 1 million dollars.

Meta recently confirmed that it has donated 1 million dollars to Trump's inauguration fund. This differs from Zuckerberg's and Meta's past practices. USA Federal Election Commission reports indicate that Zuckerberg has supported congressional candidates from both parties over the years and has not generally participated in presidential campaign fundraising activities. Public records show that neither Zuckerberg nor Meta donated to Trump’s 2017 inauguration fundraising committee or Biden’s 2021 fundraising committee.

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