Nellie Liang, President Joe Biden’s pick to oversee the $21 trillion market for Treasury securities, signaled that one of her top priorities will be to scrutinize the market following last year’s brief investor panic and consider changes that will help it better withstand turmoil.
“It is critical that we ensure that the Treasury market operates well in periods of stress,” Liang, the nominee for Treasury undersecretary for domestic finance, said in prepared testimony she’s scheduled to deliver Tuesday for her confirmation hearing at the Senate Finance Committee.
“If confirmed, I will endeavor to provide an assessment of changes in this market that have arisen from technological advances and shifts in market participants’ behavior, and recommend policies, as needed, to ensure a resilient Treasury securities market,” she said.
The Treasuries market was shaken in March 2020 as parts of the economy shut down due to the Covid-19 pandemic, stoking fears of a depression and a global rush for dollar cash. While Treasuries are normally a safe haven in times of crisis, many institutional investors rushed to sell even those holdings to obtain cash, causing a liquidity crunch in what is typically the world’s most liquid market.
Before joining the Treasury Department early this year as an adviser to Secretary Janet Yellen, Liang co-authored a paper that proposed “serious consideration” be given to mandating a wider role for central clearing in the Treasuries market as a partial solution.
A former director of the Federal Reserve’s division of financial stability, Liang is also expected to lead other financial regulatory efforts, though she offered only vague hints at her other priorities in her testimony.
“While our dynamic financial system spurs growth, it can also lead to significant regulatory gaps over time,” she said in the prepared remarks. “I will work to ensure that we are adopting policies that recognize these changes, to ensure consumers and investors are informed and protected, and risks to financial stability are mitigated.”
Liang is set to appear alongside three other nominees to fill top posts at the Treasury, including Lily Batchelder, the White House’s pick for assistant secretary for tax policy; Benjamin Harris for economic policy and Jonathan Davidson for legislative affairs.
Batchelder, in her prepared remarks, pledged to help bolster the Internal Revenue Service, which has struggled in recent years with budget cuts. She said she is committed to implementing the expanded child tax credit and improving taxpayer services.