The U.S. Senate Monday confirmed billionaire investor Scott Bessent, a former Democrat and a one-time partner of liberal philanthropist George Soros, by a 68-to-29 vote as President Donald Trump’s Treasury secretary.
Trump picked the 62-year-old Bessent to lead the U.S. Department of the Treasury where he will advise the president on domestic and international financial, economic and tax policies. While the position usually tends to be short on drama, that may not be the case this time around.
Bessent, who has proven to be a disrupter in the investment world, has already raised the profile and power of the job. The question is whether he will he use his new prominence to undermine Federal Reserve Chairman Jerome Powell.
The founder of the South Carolina-based Key Square Group hedge fund will be the first openly gay Treasury secretary and the second openly gay member of a presidential cabinet, following Biden’s Transportation Secretary Pete Buttigieg. Two others served in acting roles.
Bessent first made a name for himself as an investor while working at Soros Fund Management. In 1992 he helped orchestrate a famous trade against the British pound, which has come to be known as “Breaking the Bank of England.” Because Soros and other investors bet against the currency, the British pound collapsed, losing 25% of its value against the dollar and Soros reportedly made $1 billion in profit.
In recent years, Soros has become more famous for supporting Democratic candidates and liberal causes. Bessent left Soros Fund Management in 2000 to start his own ill-fated hedge fund, which closed in 2005. Bessent returned to the Soros fold and was chief investment officer from 2011 to 2015, where he was involved with another profitable trade in which he shorted the Japanese yen in 2013.
Bessent left Soros for a second time in 2015 to launch Key Square Group, along with another Soros employee Michael Germino. The fund, which was bankrolled by Soros and focuses on international markets, has had something of a mixed record, with the main fund returning 13% in 2016, but in other years not faring as well. While the fund had a strong 2024, assets under management have shrunk in recent years and the number of the fund’s institutional investors has declined. Bessent has announced he is stepping down from the fund after being tapped by Trump to be his Treasury secretary.
Despite the close ties with Soros and once raising funds for Democratic candidates, Bessent has shifted his support to Republicans in recent years. He donated $1 million to Trump’s inaugural committee in 2017. In 2022, he wrote an article praising Trump for alerting the world to the growing dangers of expansionist-minded China. He also was a major fundraiser for Trump in 2024.
Bessent has supported extending Trump’s 2017 tax cuts, as well as Trump’s embrace of tariffs, especially against countries such as China. Bessent has stated that he sees nothing inflationary in Trump’s fiscal policy and maintains that tariffs are a “revenue raiser for the federal budget.” He also expects Trump to use tariffs as a negotiating tool with trading partners.
His more controversial position was one Bessent floated in an October Barron’s interview that Trump could avoid trying to oust the Fed’s Powell, whose term ends in 2026, by nominating and seeking Senate confirmation for a replacement more than a year before Powell’s term is up. The person would be the “shadow Fed chair.”
The replacement would offer perspectives on financial forecasts and future Fed decisions, undermining Powell’s position and authority. Trump has been openly critical of Powell and his handling of interest rates, but Powell has made clear Trump can’t fire him as Fed chair and he’s not stepping down till his term ends. Some see Bessent’s suggestion as a way for Trump to exert more influence on the Federal Reserve.
The suggestion was no slip of the tongue. Bessent continued to talk about the idea in an interview on Bloomberg Radio. Sen. Elizabeth Warren, D-Mass., for one, has criticized the plan. “It would be a serious error for the Trump administration to interfere with the Fed’s independence,” Warren wrote in a statement released in November after the election.
After his confirmation, Warren criticized Bessent as helping the wealthy skirt taxes, saying in a speech from the Senate floor, “There’s a truth no one can escape. Someone has to pay to run this country. Folks like Scott Bessent think the burden should be just a little bit heavier on working people because billionaires like him are smarter than everyone else.”
It remains unclear whether Trump embraces the shadow Fed chair idea. For now, Bessent has announced his priorities are delivering tax cuts, imposing tariffs, slashing spending and “maintaining the status of the dollar as the world’s reserve currency.”