Bessent Fires Back at Warren Over ESF Transaction

U.S. Treasury Secretary Scott Bessent has responded to Senator Elizabeth Warren's criticism of a recent use of the Exchange Stabilization Fund (ESF) in buying yen.

In a letter and social media post, Bessent explained that the ESF transaction was not new congressional appropriation but rather an exchange of existing foreign-currency assets for yen. He stated that Japan owes the U.S. Treasury nothing and there is no risk of Japan failing to repay a debt that does not exist.

Bessent's response comes after Warren questioned his authority on the transaction, citing Section 5302 of the statute, which gives the Secretary with presidential approval the authority to deal in foreign exchange in support of orderly exchange arrangements. Bessent recommended that Warren try reading the statute herself and offered a 'Foreign Exchange for Dummies' tutorial.

The ESF was used to buy yen after the currency dipped to a 40-year low, along with Washington and Tokyo. This marks the first time since 1998 that the ESF has been used in this manner.