graham steele
LightNews LightNews
banner
grahamsteele.bsky.social
graham steele
@grahamsteele.bsky.social
3.1K followers 900 following 680 posts
Focused on the law & politics of finance.

Currently Rock Center at Stanford Law School & Roosevelt Institute. Former Assistant Secretary, US Treasury Department & Democratic chief counsel, Senate Banking Committee.

https://law.stanford.edu/graham-steele/
Posts Replies Media Videos
grahamsteele.bsky.social
The Treasury Secretary criticized Fed Chair Powell for asset purchases the Fed made during the COVID pandemic to stabilize the economy... while Trump was president?
Bessent also criticized Powell for asset purchases during and after the Covid-19 pandemic that have led the Fed to run large losses, for not meeting with federal prosecutors last month before they issued grand jury subpoenas in a criminal investigation of the Fed’s building project, and for the resignation of “between four to six” senior Fed officials over their compliance with personal-financial rules and disclosure.
January 20, 2026 at 8:44 PM
grahamsteele.bsky.social
It’s not a hypothetical concern. In this paper I discuss the time that Russia approached China about further destabilizing the US economy by dumping US treasury and agency debt during the 2008 financial crisis.

papers.ssrn.com/sol3/papers....
The role of U.S. sovereign debt as the global reserve asset and safe investment also creates exposures between governments. China’s significant holdings of debt issued by the U.S. housing-focused government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, made them “gravely concerned” about the fate of the GSEs during the Global Financial Crisis and required U.S. officials to keep their Chinese counterparts apprised of GSE bailout and reform efforts.301 It later came to light that Russia sought to coordinate with China to begin selling GSE debt, thereby exacerbating the crisis and raising the costs of the U.S. fiscal response.
January 18, 2026 at 7:52 PM
grahamsteele.bsky.social
I talked a bit about these dynamics in this @justsecurity.org post.

Other countries—even ostensible allies—can seek to turn the exorbitant privilege and the status of the US dollar into a strategic vulnerability.
www.justsecurity.org/125738/what-...
The volatile combination of simultaneous efforts to expand dollarization, increase protectionism, and push deregulation suggests that the Trump administration lacks sufficient appreciation for, or really any coherent theory of, effective and sustainable financial statecraft. Couple these moves with Trump’s efforts to bring the previously independent central bank under his control and it will ultimately lead to a loss of confidence in U.S. economic power, diminishing the role of U.S. financial institutions and markets as global safe havens. Other global actors understand these dynamics well. In response to the Liberation Day tariffs, for example, the European Commission threatened to impose restrictive measures—known fittingly as the “anti-coercion instrument”—to exclude U.S. banks from European government procurement contracts. Policymakers in other countries are already observing that increasing protectionism and fiscal dynamics may be eroding the status of the dollar as the global reserve currency and U.S. Treasuries as safe assets. And the European Central Bank has reportedly tested European banks’ reliance on dollar funding and potential funding vulnerabilities in the event they are denied access to the Federal Reserve’s dollar swap lines due to political influence from Trump. Some of these concerns may be legitimate or they may be strategic arguments made to pressure U.S. policymakers and turn a perceived U.S. geopolitical advantage into a vulnerability. The point is that mismanaging financial statecraft can transform finance from a potential source of strength into a vulnerability.
January 18, 2026 at 7:46 PM
grahamsteele.bsky.social
The Secretary suggests maybe the markets *want* a more politicized central bank.
KRISTEN WELKER: Well, let me ask you because Axios reported that you were not happy about DOJ’s investigation, that you told President Trump as much. Axios writes, “a perturbed Treasury Secretary Scott Bessent told President Trump late Sunday that the federal investigation into the Federal Reserve Chair made a mess and could be bad for financial markets.” That’s according to two sources familiar with the call. Is that accurate? SEC. SCOTT BESSENT: You know what, Kristen? I’m not going to discuss my conversations with the president. But if I said that, I was wrong. Financial markets, stock market went up, bond yields went down. So the markets are the ultimate arbiter of over whether the Fed’s independence is being impugned. And bond yields went down. I can tell you we had two of the best bond auctions that we have had in months for U.S. treasuries. So the market is looking beyond this. And again, maybe the market wants some transparency from the Fed.
January 18, 2026 at 6:38 PM
grahamsteele.bsky.social
Good for Barr. He connects the Powell subpoena to the earlier attempts to fire Lisa Cook, something I have not seen other Fed officials do.
January 15, 2026 at 4:23 PM
grahamsteele.bsky.social
Governor Miran does not believe the Trump administration is meaningfully threatening Federal Reserve independence.

Relatedly, Miran is simultaneously serving on the Fed board and on unpaid leave from his position as a White House economic advisor.
www.wsj.com/economy/cent...
In the Wednesday Q&A, Miran rejected the notion that the Justice Department investigation might undermine the Fed’s credibility in fighting inflation, an outcome that JPMorgan Chief Executive Jamie Dimon warned about on Tuesday. “I don’t really buy that,” Miran said. “I think that inflation is very much headed in the right direction.” He asserted that deeper economic trends, like moderating housing costs, are well on their way to pushing inflation lower and will outweigh political discussions about the Fed’s independence. “This other stuff is just noise,” Miran said.
January 14, 2026 at 6:57 PM
grahamsteele.bsky.social
To Steve’s point, one could substitute “mortgage” for “testimony” and this statement is as true of Cook as it is of Powell.
This new threat is not about my testimony last June or about the renovation of the Federal Reserve buildings. It is not about Congress's oversight role; the Fed through testimony and other public disclosures made every effort to keep Congress informed about the renovation project. Those are pretexts. The threat of criminal charges is a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the President. This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions—or whether instead monetary policy will be directed by political pressure or intimidation.
January 13, 2026 at 9:25 PM
grahamsteele.bsky.social
It was pretty obvious this was where things were headed after the Supreme Court's immunity decision if Trump won in 2024.

An historically terrible decision that has already aged extremely poorly.
On the domestic front, Mr. Trump suggested that judges only have power to restrict his domestic policy agenda — from the deployment of the National Guard to the imposition of tariffs — “under certain circumstances.” But he was already considering workarounds. He raised the possibility that if his tariffs issued under emergency authorities were struck down by the Supreme Court, he could repackage them as licensing fees. And Mr. Trump, who said he was elected to restore law and order, reiterated that he was willing to invoke the Insurrection Act and deploy the military inside the United States and federalize some National Guard units if he felt it was important to do so. So far, he said, “I haven’t really felt the need to do it.”
January 8, 2026 at 8:13 PM
grahamsteele.bsky.social
This strikes me as an apt summary of the president’s general worldview, not just with respect to Venezuela.
Trump brushed off concerns about the legality of the U.S. operation in Venezuela. When asked about criticism from Representative Jim Himes of Connecticut, the top Democrat on the House Intelligence Committee, the president said Democrats were “weak, stupid people.” “They should say great job,” he said in an interview on Fox News. “They shouldn’t say ‘Oh, gee, maybe it’s not constitutional.’ You know the same old stuff that we’ve been hearing for years and years and years.”
January 3, 2026 at 4:56 PM
grahamsteele.bsky.social
When Powell confronted the president face-to-face over the Fed’s renovation, the president ultimately backed down.

As I’ve noted, the Fed was more comfortable making a public show of its independence during the Biden administration.

Worth considering why that is.
www.yalejreg.com/nc/agency-in...
During the Biden Administration, it was the Republican appointees’ turn to dissent, with Trump-appointed Governor Michelle Bowman dissenting nine times from 2022-2024. Prior to President Biden assuming office the Fed joined the Network for the Greening of the Financial System (NGFS), the global coalition of central banks dedicated to addressing the financial risks of climate change. But it otherwise took a narrowly circumscribed view of its climate-related responsibilities, deferring to the “elected branches of government.” Following SVB’s failure, President Biden urged banking regulators to adopt a variety of measures to modify the Trump-era tailoring, but the Fed adopted very few of these recommendations. It made a particular show of its opposition to implementing a Dodd-Frank provision mandating reforms to banks’ incentive-based compensation practices.
December 23, 2025 at 3:13 PM
grahamsteele.bsky.social
An interesting and nuanced look at the Fed’s approach to protecting its independence.

My view is that accommodation hasn’t worked for universities or law firms and it’s a risky strategy for the central bank.

Some new strategies and tactics may be in order.
www.washingtonpost.com/business/202...
Some former policymakers worry the Fed may need a more assertive public defense of its independence and say that each concession to the Trump administration establishes a new precedent that can lead to bigger changes to the institution over time. Although the central bank has long relied on behind-the-scenes engagement with lawmakers to protect its autonomy, that strategy is increasingly tested by what has become a more hostile political environment, with fewer allies on Capitol Hill willing to buck the president than during his first term. The Fed’s reluctance to confront Trump leaves it dangerously exposed, said Graham Steele, a former top Treasury Department official during the Biden administration. “The old strategy of keeping its head down and trusting that markets or Congress would defend its independence isn’t working in the same way that it used to,” said Steele, who also previously worked at the San Francisco Fed. “There are risks that, even if they win some of the smaller fights through a strategy of concessions and nonconfrontation, their independence will be undermined over the longer term. If the Fed doesn’t mount a spirited defense of its own independence in these moments, who else is going to?”
December 23, 2025 at 3:13 PM
grahamsteele.bsky.social
This is the ostensible *moderate* choice from the current short list of Fed chair candidates.

www.wsj.com/politics/pol...
Waller’s inclusion on the shortlist is notable because he doesn’t have a relationship with Trump but offers what other candidates lack: an intellectually consistent set of arguments for rate cuts and a demonstrated record of quietly driving institutional changes that Trump, Bessent and Warsh have said should be a priority. His supporters point to how, from his relatively low-profile position, he has pushed back on race-based hiring programs, worked to eliminate the Fed’s climate-focused initiatives and killed the central-bank digital currency project in favor of private-sector stablecoin development—all moves that Trump is likely to view favorably. He has also overseen budget curbs at the regional Fed banks.
December 20, 2025 at 10:52 PM
grahamsteele.bsky.social
Oh well, it appears the one woman being considered for Fed chair is no longer a contender.

(It's also fascinating how, after years of conservatives attacking BlackRock as too woke, Trump's short list of Fed chair candidates includes a BlackRock executive.)

www.cnbc.com/2025/12/19/w...
December 19, 2025 at 5:57 PM
grahamsteele.bsky.social
Crypto can only survive long-term if it gets access to the publicly backed banking system.

In one fell swoop, the OCC—the regulator for national banks—just approved five (5) bank charter applications by crypto companies.

www.occ.gov/news-issuanc...
December 12, 2025 at 5:01 PM
grahamsteele.bsky.social
Reflecting on the fact that “economic security” is essential to financial stability according to the same administration that is dismantling the CFPB.

Truly Orwellian stuff.

home.treasury.gov/news/press-r...
December 12, 2025 at 2:12 AM
grahamsteele.bsky.social
Every. Time.

apnews.com/article/carl...
December 11, 2025 at 11:54 PM
grahamsteele.bsky.social
The left is today. On the right is something I wrote about financial deregulation under Trump I.

In 2023, we had a near-banking crisis the proximate cause of which was financial deregulation. This administration is repeating the same failed playbook again.
scholar.law.colorado.edu/lawreview/vo...
December 11, 2025 at 4:02 PM
grahamsteele.bsky.social
The Financial Stability Oversight Council was created after the 2008 financial crisis to prevent future crises by spotting and addressing emerging risks.

The Trump administration is ignoring that history and turning the FSOC’s mission on its head, making it into a tool for deregulation.
December 11, 2025 at 3:24 PM
grahamsteele.bsky.social
The administration’s argument about why the Fed is different from other agencies is that SCOTUS said so in a short, unsigned order which the gov’t isn’t challenging.

Cold comfort given the president is trying to remove a Fed governor based on trumped up (pun intended) mortgage fraud allegations.
December 9, 2025 at 3:10 PM
grahamsteele.bsky.social
Banks are making AI data center loans and then pitching synthetic risk transfers to shift some of the risk to private credit.

This is an obvious thing supervisors should be keeping an eye on, and yet I don't have much confidence they are.

www.bloomberg.com/news/article...
Earlier this year, Morgan Stanley pitched an SRT tied to a portfolio of loans to private market funds. Global sales of SRTs are expected to expand by an average of 11% annually over the next two years, according to a Bloomberg Intelligence survey published in June.
December 3, 2025 at 11:47 PM
grahamsteele.bsky.social
This, from an excellent piece on the Fed Chair selection process, strikes me as a significant difference between Democratic and Republican presidents, particularly of late. Rs prioritize the Fed, Ds don’t as much.
December 3, 2025 at 2:37 PM
grahamsteele.bsky.social
The Fed, FDIC, and OCC have finalized a rule weakening a key post-financial crisis leverage capital rule applicable to the 8 largest US banks.

Barr's dissent (correctly) notes the rule won't achieve its stated purpose of helping Treasury markets. Instead, it will make big banks less resilient.
November 25, 2025 at 7:10 PM
grahamsteele.bsky.social
This piece is timely. Yesterday, the FDIC released its Quarterly Banking Profile showing that banks’ deposit income is increasing (L) as the Fed lowers interest rates (R).

Rate pass-through tends to lag, but it’s a trend worth watching because it reflects banks’ pricing power.
November 25, 2025 at 4:16 PM
grahamsteele.bsky.social
Starting to think that putting a deeply partisan sycophant with no housing policy expertise in charge of US housing policy was not a great idea.
On Saturday evening, Pulte arrived at President Donald Trump’s Palm Beach Golf Club with a roughly 3-by-5 posterboard in hand. A graphic of former President Franklin Roosevelt appeared below “30-year mortgage” and one of Trump below “50-year mortgage.” The headline was “Great American Presidents.” Roughly 10 minutes later, Trump posted the image to Truth Social, according to one of the people familiar, who was with the president at the time.
November 11, 2025 at 3:22 AM
grahamsteele.bsky.social
OpenAI CFO clarifies that when she suggested the US government might “backstop the guarantee that allows the financing to happen,” she didn't really mean they're seeking a government backstop.

Either this was a trial balloon or she's just a bad communicator. I'd assume the former, but who's to say.
November 6, 2025 at 3:03 PM