Trump expected to pick pro-tariff billionaire Scott Bessent for Treasury Secretary

Newly-elected US President Donald Trump is preparing to appoint Scott Bessent as his Secretary of the Treasury, several media reported on Friday evening.

The appointment would put him at the helm of a cabinet position with enormous influence over economic, regulatory and international affairs.

Bessent, a longtime hedge fund investor, taught at Yale University for several years.

Wall Street has been keeping a close eye on who Trump will choose, especially given his plans to rebuild global trade through tariffs.

Bessent has advocated tax reform and deregulation, especially to encourage more bank lending and energy production, as noted in a recent op-ed he wrote for The Wall Street Journal.

Bessent was chosen from a busy field of candidates for the coveted role.

That list included Marc Rowan, CEO of Apollo Global Management, and Kevin Warsh, former governor of the Federal Reserve.

Investor John Paulson was also a leading candidate, but dropped out when Wall Street veteran Howard Lutnick, another contender, was appointed to head the Commerce Department.

Bessent, a longtime hedge fund investor, taught at Yale University for several years

Both Bloomberg and the Wall Street Journal were among reputable sources who cited people familiar with the matter surrounding Trump’s pick for the U.S. Treasury Department.

The market’s surge after Trump’s election victory, he wrote, indicated “investors’ expectations of higher growth, lower volatility and inflation, and a revitalized economy for all Americans.”

Bessent follows other financial celebrities who have taken over the job, including former Goldman Sachs executives Robert Rubin, Hank Paulson and Steven Mnuchin, Trump’s first head of the Treasury Department.

Janet Yellen, the current secretary and the first woman in the position, previously chaired the Federal Reserve and the White House Council of Economic Advisers.

Bessent follows other financial celebrities who have taken over the job, including former Goldman Sachs executives Robert Rubin, Hank Paulson and Steven Mnuchin, Trump’s first head of the Treasury Department.

Janet Yellen, the current secretary and the first woman in the position, previously chaired the Federal Reserve and the White House Council of Economic Advisers.

As the 79th Treasury Secretary, Bessent would essentially be the top U.S. economic official, responsible for maintaining the leadership of the world’s largest economy, from collecting taxes and paying the nation’s bills to managing the $28.6 trillion government bond market and the oversight of financial regulation. , including tackling and preventing market crises.

The Treasury Department boss also implements U.S. financial sanctions policy, oversees the U.S.-led International Monetary Fund, the World Bank and other international financial institutions, and manages national security investigations of foreign investments in the U.S.

Bessent, 62, lives primarily in Charleston, South Carolina with his husband and two children

Bessent would face challenges including safely managing federal deficits that are expected to grow by nearly $8 trillion over the next decade due to Trump’s plans to extend the expiring tax cuts next year and generous new breaks including ending taxes on social security income.

Without offsetting revenues, this new debt would add to an unsustainable fiscal trajectory that was already projected to increase the U.S. debt by $22 trillion through 2033.

Managing debt growth of this magnitude without a market indigestion will be a challenge, although Bessent has argued that Trump’s agenda would unleash stronger economic growth that would boost revenues and boost market confidence.

Bessent would also take over Yellen’s role to lead the Group of Seven wealthy democracies, which must provide tens of billions of dollars in economic aid to Ukraine as it fights Russia’s invasion and tighten sanctions on Moscow.

But given Trump’s desire to quickly end the war and withdraw US financial support from Ukraine, it is unclear whether he will pursue this.

Another area where Bessent will likely differ from Yellen is her focus on climate change, from her mandate that development banks expand clean energy lending to including climate risks in financial regulations and managing hundreds of billions of dollars in clean energy tax credits.

Bessent worked for noted short seller Jim Chanos in the late 1980s and then joined Soros Fund Management, the famed macroeconomic investment firm of billionaire George Soros, pictured

Trump, a climate change skeptic, has pledged to increase U.S. energy production from fossil fuels and end clean energy subsidies in President Joe Biden’s 2022 Inflation Reduction Act.

The Secretary of the Treasury is also the government’s closest point of contact with the Federal Reserve.

Both Yellen under Biden and Mnuchin under Trump typically met weekly with Fed Chairman Jerome Powell, often over breakfast or lunch.

Bessent has floated the idea of ​​creating a “shadow” chairman of the Fed.

This would mean appointing a presumptive Powell predecessor to the Fed board as early as possible, who would then provide his own policy guidance so that, as Bessent told Barron last month, “no one really cares what Jerome Powell has to say has. no more.’

The next seat on the Fed board will be that of Governor Adriana Kugler, whose term runs until January 2026.

Bessent has since said he no longer thinks the shadow chair idea is worth pursuing, the Wall Street Journal reported.

Powell’s term as Fed chairman ends in May 2026, but presidents rarely wait until the Fed chief’s term ends before naming a successor.

Bessent, 62, lives primarily in Charleston, South Carolina with his husband and two children.

He grew up in the fishing village of Little River, South Carolina, where Bessent says his father, a real estate investor, experienced highs and lows.

Bessent worked for noted short seller Jim Chanos in the late 1980s and then joined Soros Fund Management, the famed macroeconomic investment firm of billionaire George Soros.

He soon helped Soros and top deputy Stanley Druckenmiller in their most famous transaction: shorting the British pound in 1992, netting the company more than $1 billion.

In 2015, Bessent raised $4.5 billion, including $2 billion from Soros, to launch Key Square Group, a hedge fund firm that bets on macroeconomic trends.

According to media reports, Key Square’s main fund is up about 31% in 2022, but fixed assets are down to about $577 million as of December 2023, according to a regulatory filing.