Trump will tap Treasury Secretary Scott Besent to lead the Treasury Department, sources said

President-elect Donald Trump is expected to nominate prominent investor Scott Bessent to take over the role of US Treasury Secretary, sources told Reuters on Friday, placing him in a cabinet position with significant economic, legal and international influence.

One source briefed on Trump’s transition team and a donor briefed on the plans told Reuters of Trump’s intention to pick Bessent. Trump’s transition team did not immediately respond to a request for comment.

Wall Street is watching closely for Trump’s nominee, especially given his plans to reshape global trade through tariffs.

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

That list included Apollo Global Management Chief Executive Marc Rowan and former Federal Reserve Governor Kevin Warsh. Investor John Paulson was also a leading member, but he stepped down, and Wall Street veteran Howard Lutnick, another contender, was named head of the Commerce Department.

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

The market rally after Trump’s election victory, he wrote, showed investors “prospects for higher growth, lower volatility and inflation, and a revitalized economy for all Americans.”

Bessent follows other financial giants who have taken the job, including Goldman Sachs executives Robert Rubin, Hank Paulson, and Steven Mnuchin, Trump’s first Treasury chief. Janet Yellen, the current secretary and first woman in the job, was previously the chair of the Federal Reserve and the White House Council of Economic Advisers.

ECONOMIC TEST

As the 79th Treasury secretary, Bessent will be the top US economic official, responsible for keeping the world’s largest economy afloat, from collecting taxes and paying the national debt to managing the $28.6 trillion Treasury bond market and overseeing financial regulation, including managing and preventing market crises. .

The Treasury Secretary also administers US financial sanctions policy, oversees the US-led International Monetary Fund, the World Bank, and other international financial institutions, and manages the country’s security screening of foreign investment in the US.

Bessent will face challenges, including safely managing a federal deficit that is projected to grow by nearly $8 billion over a decade because of Trump’s plans to extend tax cuts that expire next year and add new breaks, including ending the Social Security income tax.

Besides reducing revenue, this new debt will add to an unsustainable fiscal system that is already predicted to balloon the US debt to $22 billion by 2033.

Managing the debt hike without disrupting the markets will be a challenge, although Bessent argued that Trump’s agenda would produce strong economic growth that would boost incomes and bolster market confidence.

Bessent will also inherit the role carved out by Yellen to lead the Group of Seven wealthy democracies to provide tens of billions of dollars in economic support to Ukraine to fight Russian aggression and tighten sanctions on Moscow. But given Trump’s desire to quickly end the war and withdraw US financial support for Ukraine, it is unclear whether he will pursue this.

Another area where Bessent may differ from Yellen is her focus on climate change, from her mandate that development banks expand clean energy lending to include climate risks in financial policies and administration of hundreds of billions of dollars in clean energy tax credits.

Trump, a climate change skeptic, has vowed to increase US fossil fuel production and end clean energy subsidies in President Joe Biden’s 2022 Inflation Reduction Act.

FED FACING

The Secretary of the Treasury is also the closest administrative point of contact with the Federal Reserve. Both Yellen under Biden and Mnuchin under Trump usually met weekly with Fed Chairman Jerome Powell, usually over breakfast or lunch.

Bessent has floated the idea of ​​creating a “shadow” Fed chair. This will include the early appointment of Powell’s presumptive predecessor of the Fed Board who will then bring their own policy to, as Bessent told. This is Barron’s site last month, “nobody’s going to care what Jerome Powell has to say.”

The next seat to be opened on the Fed’s Board is for Governor Adriana Kugler, whose term begins in January 2026. Bessent said that since then he has not considered the idea of ​​a shadow seat to follow, The Wall Street Journal report.

Powell’s term as Fed chairman ends in May 2026, and presidents rarely wait until the end of a Fed chief’s term before appointing a successor.

FROM FINANCE TO DC

Bessent, 62, lives in Charleston, South Carolina, with her husband and two children. He grew up in the fishing village of Little River, South Carolina, where Bessent said his father, a real estate investor, experienced booms and busts.

Bessent worked for well-known short trader Jim Chanos in the late 1980s and then joined Soros Fund Management, the famous investment firm of billionaire George Soros. He soon assisted Soros and senior associate Stanley Druckenmiller in their most famous trade—devaluing the British pound in 1992 and 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. Key Square’s biggest fund gained about 31% in 2022, according to media reports, but solid assets fell to about $577 million as of December 2023, according to the official filing.

–Written by Steve Holland and Alexandra Ulmer

(Reporting by Steve Holland, Alexandra Ulmer, David Lawder, Lawrence Delevingne, Ann Saphir, Costas Pitas, Nathan Layne and Jasper Ward; Editing by Megan Davies and Rod Nickel)