Scott Bessent warns the Federal Reserve is losing $100B/year with ‘no accountability.’ Here’s the problem and what to do

Alex Wong/Getty Images

Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.

As the nation’s central bank, the Federal Reserve plays a critical role in the U.S. economy. But Treasury Secretary Scott Bessent is sounding the alarm about how the institution is being run — and is taking direct aim at its chair, Jerome Powell.

“On Chair Powell’s watch, the Fed is now losing $100 billion a year, $100 billion with no accountability,” Bessent said in a recent interview with Newsmax, adding that the U.S. “had the worst inflation in 49 years (1).”

Though not quite 49 years, U.S. inflation did reach its highest levels in decades, with the consumer price index peaking at 9.1% in June 2022 during the COVID-19 pandemic — the highest annual rate since November 1981. Meanwhile, the latest Bureau of Labor Statistics data placed inflation at 2.7% year-over-year, which was a better result than forecasted (2).

Bessent reiterated the annual loss figure in a separate interview with CNBC, arguing that “the Federal Reserve is now losing $100 billion a year because of mistimed asset purchases,” calling the outcome “a big mistake (3).”

Analysts at the Institute for New Economic Thinking have noted that the Fed is running losses “at more than $100 billion a year on an annualized basis” due to sharp rises in short-term interest rates (4). As rates rose, the central bank began paying out more in interest on bank reserves, while income from its long-term securities portfolio remained comparatively low.

Bessent’s comment came after the Department of Justice launched a criminal investigation into Powell, issuing grand jury subpoenas to the Fed that threaten a possible indictment tied to Powell’s testimony before Congress last summer about cost overruns on the central bank’s headquarters renovation project.

Powell has blasted the move as a “pretext” designed to pressure the Fed into lowering interest rates, arguing it undermines the central bank’s long-standing independence (5).

Bessent, however, insists that Fed independence should not come at the expense of transparency or oversight — particularly for an institution with the power to create money.

“[The Fed] is not transparent. And again, that independence does not mean lack of accountability,” he said. “The Fed has a special obligation to the American people because it influences their lives. But they are unelected. They are not subject to appropriations. They have magic money. They print their own money. This big cost overrun for the Fed building… they’ll just print more money. So I don’t think there’s anything wrong with some accountability.”

Whatever one thinks of the Fed’s balance sheet, the reality for most households is very different. Unlike a central bank, everyday Americans don’t have the ability to print money to cover overruns or absorb losses — which makes managing cash flow, cutting waste and keeping costs in check all the more important.

Here are a few simple ways to put that into practice.

Over the past few years, inflation has taken a growing bite out of household budgets across the U.S. One essential expense that has skyrocketed is car insurance. Nationwide, the average cost of car insurance has surged 56% since 2020, according to the Bureau of Labor Statistics (6).

Car insurance is a major recurring expense and many people overpay without realizing it. According to Forbes, the average cost of full-coverage car insurance is $2,149 per year (or $179 per month).

However, rates can vary widely depending on your state, driving history and vehicle type and you could be paying more than necessary.

By using OfficialCarInsurance.com, you can easily compare quotes from multiple insurers, such as Progressive, Allstate and GEICO, to ensure you’re getting the best deal.

In just two minutes, you could find rates as low as $29 per month.

And it’s not just your car that might be costing you more than it should. Home insurance costs have also risen — and it’s another major expense where smart shoppers can save big.

With OfficialHomeInsurance.com, comparing home insurance rates is fast and hassle-free. Just fill in a bit of information and the platform will instantly sort through over 200 insurers to find you the best deals available in your area.

You’ll be able to review all your offers in one place and quickly find the coverage you need for the lowest possible cost, saving an average of $482 a year.

Read More: Approaching retirement with no savings? Don’t panic, you’re not alone. Here are 6 easy ways you can catch up (and fast)

One of the easiest ways to cut financial waste is by putting your spare change to work instead of letting it sit idle. That’s where micro-investing apps like Acorns come in.

When you make a purchase on your credit or debit card, Acorns automatically rounds up the price to the nearest dollar and invests the difference — the coins that would wind up in your pocket if you were paying cash — into a diversified portfolio of ETFs.

Buying a coffee for $3.40? The app rounds it up to $4 and invests the extra $0.60. Over time, those small amounts can add up — especially if you’re consistently spending and saving.

It’s a simple, set-it-and-forget-it way to build wealth from money you might not even miss — and, if you sign up today with a recurring investment, Acorns will add a $20 bonus to help you begin your investment journey.

If you’d prefer a more cash-focused approach, consider parking extra funds in a high-yield account, such as a Wealthfront Cash Account. It can be a great place to grow your emergency funds, offering both competitive interest rates and easy access to your cash when you need it.

A Wealthfront Cash Account can provide a base variable APY of 3.25%, but Moneywise readers can get an exclusive 0.65% boost over their first three months for a total APY of 3.90% provided by program banks on your uninvested cash. That’s eight times the national deposit savings rate, according to the FDIC’s December report.

With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, you can ensure your funds remain accessible at all times. Plus, Wealthfront Cash Account balances of up to $8 million are insured by the FDIC through program banks.

If you want to improve your finances, a key step is understanding where your money actually goes each month. Track all expenses for 30 days and sort them into two categories: essentials — like rent, groceries, utilities and healthcare — and discretionary spending, such as dining out, entertainment, shopping and hobbies.

This breakdown not only shows you where your money is going, but also highlights the hidden leaks — the forgotten subscription, the auto-renew you didn’t notice, or the small impulse purchases that quietly add up.

The good news is you don’t have to manage all of this on your own. Apps like Rocket Money can simplify the process.

Rocket Money tracks and categorizes your expenses, providing a clear view of your cash, credit and investments in one place. It can even uncover forgotten subscriptions, helping you stop unnecessary payments and save potentially hundreds annually.

For a small fee, the app can also negotiate lower rates on your monthly bills, making it a valuable tool for keeping your finances on track.

We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.

@NewsmaxTV (1); U.S. Bureau of Labor Statistics (2), (6); CNBC (3); Institute for New Economic Thinking (4); Board of Governors of the Federal Reserve System (5)

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.