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It is an honor to be speaking here today as the 79th Secretary of the Treasury of the United States. It was only six months ago when President Trump laid out his vision to restore American economic prosperity to this very group. It is a privilege to be here both as a member of the Trump administration and a long-time member of the Economic Club of New York to explain how we will deliver on the President's vision.
Today, I'm going to address three critical pillars of President Trump's America First agenda. America First is about more than just domestic or international policy, more than just economic policy and national security policy. It is a holistic program that serves the goal of improving the lives of every American. To that end, I will touch on three priorities for the Treasury Department, each of which is part of the overall agenda.
In this speech, I will not address tax policy. It is the foundation on which the three pillars rest. Larry Kudlow and I are going to have a detailed discussion in the Q&A on tax policy, including the president's priorities on permanence, current policy baseline, no tax on tips, no tax on social security, no tax on overtime, and deductibility of loans on America-made autos.
First, I will address a critical aspect of our domestic economic agenda, responsibly deregulating the financial sector to accelerate what I call the re-privatization of the economy.
Second, maybe some of you have an interest in this—President Trump's tariff policies have begun the process of reorienting our international economic relations. I'll review our broader international economic policy goals from a first principles basis and discuss how tariffs fit into the picture.
Lastly, economic security and national security are inseparable. At Treasury, our unique financial tools are a critical component of U.S. foreign policy. I'll address how we are updating those tools and give the first real-time example here today.
At Treasury, we will lead a comprehensive and assertive effort across the Administration to empower our nation's banks to finance the economy's pursuit of job growth, wealth creation, and prosperity for all Americans.
I began my career as a financial sector analyst. I quickly learned that a strong, yet efficient regulatory framework is needed to mitigate risk and protect taxpayers’ hard-earned dollars. The regulatory overreach of the past few years in pursuit of political agendas has missed material risk, stymied growth, and squashed innovation.
The Trump administration aims to make financial regulation more efficient, effective, and appropriately tailored. President Trump's recent executive order that requires the Office of the Comptroller the Currency (the OCC), the Federal Deposit Insurance Corporation (the FDIC), and the Federal Reserve to submit regulatory actions for review at the Office of Management and Budget will improve analytical rigor and discipline, while increasing accountability.
The supervisory failures at the heart of the 2023 banking crisis under President Joe Biden should have been a wakeup call. As the Fed's review noted, its supervisors did not fully appreciate Silicon Valley bank's vulnerabilities as it grew in size and complexity. When risks were identified, they did not take sufficient steps to ensure that SVB fixed those problems quickly. The result was the third largest bank failure in United States history. It was a supervisory failure.
Our financial regulatory agenda must start with a fundamental refocusing of supervisors’ priorities. Leadership must drive a culture that focuses on material risk taking, rather than box check checking. As such, I plan to use the Financial Stability Oversight Council, known as FSOC, and the President's Working Group on Financial Markets to drive change in our regulatory environment.
We need our financial regulators singing in unison from the same song sheet. To be clear, this does not mean consolidation of agencies, but coordination via Treasury, such that our regulators work in parallel with each other and industry. I am excited about the dynamic leadership that the President has put in place across the financial regulatory agencies to drive this process.
Our nation's largest banks,’ many of whom are represented here today, role as financial intermediaries has been weighed down by unduly burdensome regulatory requirements and a broken supervisory culture. Backward looking policies in response to an undercapitalized system predating the global financial crisis almost two decades ago should not drive today's approach. Bank regulation and supervision should reflect the current needs of the economy.
For example, the enhanced supplementary leverage restriction, the SLR, can be can risk becoming a binding constraint instead of a backstop. The result is the safest asset in the country. U.S. Treasuries are not treated as such when leverage restriction is applied. Some have suggested that risk free exposures like central bank reserves and short duration Treasuries should not be capitalized even under a risk-insensitive leverage capital restriction, while others have suggested an adjustment to the leverage restriction buffer. I'm not here today making a specific policy announcement – only to make the point that rigorous analysis must be applied to these regulations if we are to appropriately supervise and regulate our banks.
Given my small-town roots, I'm extremely focused on America's community banks. The 4,000 community banks operating nationwide in every county in America are one of the most important reasons for the U.S. economic outperformance in recent decades. Despite holding only 15% of industry assets and deposits, community banks make up 40% of loans to small businesses, 70% of agricultural loans and 40% of commercial real estate loans. They have strong relationships with their customers and tailor their loans to their neighbors’ businesses. They have been increasingly hamstrung with burdensome supervision and regulation. Community banks are indeed overloaded with unproductive reporting requirements that have little to do with reducing material financial risk. Regulatory rating systems have suffered from mission drift as regulators apply subjective standards. Productive and synergistic mergers are often slowed due to immaterial supervisory issues.
Regulations should serve to ensure the safe and soundness of U.S. banks, drive affordability across goods and services and facilitate economic growth. And we are going to accomplish this by improving the efficiency and effectiveness of our financial sector to underwrite and finance domestic activity. De-leveraging the public sector and re-leveraging the private sector begin and end with smartly reinvigorating our regulated financial institutions.
On the international economic system, President Trump's bold international economic agenda will also provide the backdrop for his domestic economic policies to succeed. The President has already begun a campaign to rebalance the international economic system. Perhaps we are seeing an early big win with Germany's discussions to dramatically boost its military spending.
The international trading system consists of a web of relationships – military, economic, political. One cannot take a single aspect in isolation. This is how President Trump sees the world, not as a zero-sum game, but as inter-linkages that can be reordered to advance the interest of the American people.
This is contrary to the last several decades, when other countries acted to advance their own interest, while our policymakers largely forgot about the tradeoffs of unconstrained trade misalignment. The result was the United States provided a source of massive demand, acted as arbiter of global peace, but did not receive adequate compensation. For example, today the United States finds itself subsidizing the rest of the world’s under-spending in defense.
This is not just a security issue. The United States also provides reserve assets, serves as a consumer of first and last resort, and absorbs excess supply in the face of insufficient demand in other country’s domestic models. This system is not sustainable.
Access to cheap goods is not the essence of the American Dream. The American Dream is rooted in the concept that any citizen can achieve prosperity, upward mobility, and economic security. For too long, the designers of multilateral trade deals have lost sight of this. International economic relations that do not work for the American people must be re-examined.
This is what tariffs are designed to address – leveling the playing field such that the international trading system begins to reward ingenuity, security, rule of law, and stability, not wage suppression, currency manipulation, intellectual property theft, non-tariff barriers and draconian regulations. To the extent that another country's practices harm our own economy and people the United States will respond. This is the America First Trade Policy.
We are identifying bad actors across a range of criteria, not just tariffs applied to our exports, but also non-tariff barriers, laws which unfairly apply fines to our exporters, government policies which undercut global competition and suppress wages and currency manipulation that enables persistent trade surpluses.
These are not the only metrics in which our global trading partners should be scored. That is increased burden sharing on security is critical amongst friendly nations. No longer should American tax dollars, American military equipment, and in some cases, American lives, be the sole bearers of upholding friendly trade and mutual security. Burden sharing is not a matter of offloading risk, but a matter of all benefiting parties having interest in the system. The shared interest ultimately strengthens the international system as the cost of disruption outweigh any benefits of dissolution.
A 2025 sanctions regime; in the past, I've said that economic security is national security. Nowhere is this more evident than the US Treasury's sanctions actions. In his ECNY speech last September, President Trump expressed his view that overuse of sanctions could affect the US dollar’s supremacy. I couldn't agree more and would add that, not unlike the overuse of antibiotics, the target becomes immune and mutates. Lackadaisical sanctions simply create new markets, which must then be sanctioned and so on.
A major factor that has enabled the Russian war machine’s continued financing was the Biden administration's egregiously weak sanctions on Russian energy. Stemming from worries about upward pressure on US energy prices during an election season. In a craven political move, National Security Advisor Jake Sullivan, raised the Russian sanctions on the way out the door in January. What was the point of substantial U.S. military and financial support over the past three years, without a commensurate and fulsome sanction support.
This administration has kept the enhanced sanctions in place and will not hesitate to go all in should it provide leverage in peace negotiations. Per President Trump's guidance, sanctions will be used explicitly and aggressively for immediate maximum impact. They will be carefully monitored to ensure that they are achieving specific objectives.
Last month, the White House announced its maximum pressure campaign on Iran designed to collapse its already buckling economy. The Iranian economy is in disarray; 35% official inflation, has a currency that has depreciated 60% in the last 12 months, and an ongoing energy crisis. I know a few things about currency devaluations, and if I were an Iranian, I would get all of my money out of the Rial now.
This precarious state exists before our Maximum Pressure campaign, designed to collapse Iranian oil exports from the current 1.5-1.6, million barrels per day, back to the trickle they were when President Trump left office.
Iran has developed a complex shadow network of financial facilitators and black-market oil shippers via a ghost fleet to sell oil, petrochemical and other commodities to finance its exports and generate hard currency.
As such, we have elevated a sanctions campaign against this export infrastructure, targeting all stages of Iran's oil supply chain. We have coupled this with vigorous government engagement and private sector outreach.
We will close off Iran's access to the international financial system by targeting regional parties that facilitate the transfer of its revenues. Treasury is prepared to engage in frank discussions with these countries. We are going to shut down Iran's oil sector and drone manufacturing capabilities.
We have predetermined benchmarks and timelines. Making Iran Broke Again will mark the beginning of our updated sanctions policy. Watch this space. If economic security is national security, the regime in Tehran will have neither.
In conclusion, the three pillars outlined today are linked by the primary vision of this Administration, that every decision and policy of the United States Government should serve the American people.
Thank you all. I look forward to engaging with you in Q&A and my discussion with Larry Kudlow. Thank you.
