Red state AGs denounce Janet Yellen’s claim that state anti-debanking laws are a threat to national security

 Twenty Republican attorneys general have strongly denounced Secretary of the Treasury Janet Yellen for declaring that state laws banning debanking measures threaten national security – a push that AGs believe is a "disturbing trend of skirting the department's responsibilities" by legislation to satisfy its political interests.

In a letter dated Aug. 1 and signed by Florida AG Ashley Moody and 19 others, the AGs announced their opposition to the latest attempt by the administration of President Joe Biden and Vice President Kamala Harris to allegedly fearmonger and stoke confusion regarding state laws through a recent letter sent by Undersecretary of the Treasury for Terrorism and Financial Intelligence Brian Nelson to Florida opposing its anti-debanking law and others like it. The said laws are aimed at protecting the access of certain organizations to the financial sector, including conservative organizations, gun manufacturers and other groups. The laws argue that banks and other financial services firms have targeted these groups, closing or freezing their accounts.

"We, the attorneys general of Florida, Iowa and eighteen other states write to you today to stand against your radical approach to state laws promoting responsible money management and protecting consumers from discrimination," the letter addressed to Nelson stated. "No consumer or business should be denied services based on political beliefs or religious views or because of some arbitrary social credit score derived from ideological agendas.”  

Previously, the Treasury Department had a rule prohibiting banks from debanking except when a client was documented as unable to meet quantitative, impartial risk-based standards. However, "importing political activism into financial regulation" was what happened in the policy shift as per the AGs.

The legal leaders slammed Biden's Treasury Department for going beyond its statutory role and for allegedly promoting the Biden-Harris administration's "radicalism and fearmongering" to advance "activist's extreme agendas." Now, under Yellen's leadership, the agency is using supposed national security threats to allow large financial institutions and banks to abuse power, the AGs claim.

A department spokesperson told Fox News Digital that the Treasury Department agrees with the bipartisan members of Congress that state laws mustn't increase the risk that international drug traffickers, transnational organized criminals, terrorists, and corrupt foreign officials use the U.S. financial system to launder money, evade sanctions, and threaten our national security."

But the AGs said that Nelson's July 18 letter "deliberately misleads financial institutions about these state laws, for example, by falsely suggesting that laws such as Florida’s HB 989 would prohibit financial institutions from considering whether a consumer is associated with designated terrorist groups." When on the contrary, laws like HB 989 ensure that financial institutions focus on true risk-based factors and stay out of the business of forcing radical social policies, they added.

Treasury Department accused of manipulating market and economy

In yet another controversy, the department is being accused of manipulating the market and economy.

According to a newly published white paper, the Treasury Department's decision to continue financing an outsize chunk of the U.S. debt with short-term Treasury bills is tantamount to deliberate manipulation of the economy. The paper authors called what's transpiring as "activist Treasury issuance."

"By adjusting the maturity profile of its debt issuance, Treasury is dynamically managing financial conditions and through them, the economy, usurping core functions of the Federal Reserve," authors Stephen Miran and Nouriel Roubini said in the paper's introduction.

Based on reports, the agency's excess issuance of bills has had an impact similar on roughly $800 billion in quantitative easing and the Fed's post-crisis bond-buying program, Miran and Roubini contend. They added that this is equivalent to lopping 25 basis points off the 10-year yield or a full percentage point from the federal funds rate.

The Treasury's decision to rely more heavily on bills is neutralizing some of the Fed’s efforts to tighten monetary policy and cool the economy, undercutting the central bank's claims that monetary policy is restrictive, the paper’s authors further said.

The authors concluded that the aggregate level of policy is closer to neutral, which might help explain why financial conditions remain relatively benign even with interest rates at their highest levels in more than 20 years.

The issues raised in the said paper have also been previously raised by Sen. Bill Hagerty (R-Tn), who questioned Fed Chairman Jerome Powell about the Treasury's reliance on bills during a recent Senate Banking Committee hearing.

"Politics has no place in Treasury debt issuance. Sadly, Secretary Yellen's Treasury has manipulated long-term interest rates by dramatically shifting the maturities of U.S. debt, all to boost the economy before November," Hagerty commented. "This back-door quantitative easing undermines the public’s trust in our nation’s debt, and poses significant risks to our government’s ability to respond to future crises."