Musk’s Treasury Incursion Puts Entire Financial System at Risk

Elon Musk’s unprecedented access to the US Treasury’s payment system deserves the public outcry that it has received. As former Treasury officials, we fear the situation is even more dire than it might appear.

Musk’s recent actions, days after the Office of Management and Budget’s government funding pause that a federal judge quickly blocked, suggest a big and broad vision for a dramatically consolidated and politicized Treasury. This could have widespread effects on our nation’s financial stability, jeopardize the livelihoods of millions of Americans, and undermine the public’s confidence in our entire financial system.

Our financial system operates on a foundation of trust. Over the past century and a half, rules and protections have been in place to ensure people can trust that their money will be there when they need it. Few people appreciate, or are even aware of, that the Treasury payment system—and the Bureau of Fiscal Service that oversees it—send billions of payments totaling nearly $6 trillion each year.

And that’s not a bad thing. That most people don’t have to spend time worrying if their money is safe is a testament to how well this system has served us and how often things run according to plan. When people lose that sense of trust, panic, bank runs, and financial crises can happen. That trust has been undermined in recent days with the news that Elon Musk and his allies have accessed the Treasury’s payment system.

It’s important to understand that the US Treasury stands behind our entire banking and financial system. It manages and provides financing for the Federal Deposit Insurance Corp.’s program that backstops most customers’ deposits and intervenes in times of crisis to stabilize the banking system. The deposit insurance program stepped up in 2023 when Silicon Valley Bank and others precipitously collapsed.

This administration reportedly is considering eliminating the FDIC, a New Deal-era agency, and consolidating it within Treasury. Like many other financial system tools, the FDIC is most effective when the public trusts that it can and will keep the financial system stable and quickly handle crises should they occur.

If we had another Silicon Valley Bank-style collapse today, there would be deep uncertainty about the Treasury’s role in that process and if people would have access to their money.

The Treasury doesn’t just backstop the banking system. It also provides a foundation for financial markets by issuing US Treasuries. As the world’s safest and most liquid financial asset, Treasuries serve as collateral for financial transactions and a source of stable investment for people and financial institutions alike.

Musk has suggested that he has control over the payments system to deny payments in an attempt to cut what he deems to be wasteful spending. Let’s be clear: The Silicon Valley ethos of “move fast and break things” is a reckless and dangerous approach to the world’s safest financial asset.

The government’s failing to make payments doesn’t amount to cutting spending; it’s a default on our obligations. It would have ripple effects for our nation’s credit rating, borrowing costs, and the Treasury markets. Ultimately, it would destabilize the global financial system.

The takeover of the public payment system by private business interests also raises conflicts of interest that will reduce competition for financial services and undermine confidence in our public payment system. Musk has been blunt about his plans to facilitate his customers’ “entire financial life” on the X platform, recently reaching a deal with Visa to incorporate payments capabilities into the X app.

Musk has also floated “deleting” the Consumer Financial Protection Bureau, the agency born out of the Great Recession when eight million people lost their jobs, and almost four million families lost their homes. Since 2011, the CFPB has won back more than $20 billion for ripped-off consumers, but this week, Treasury Secretary Scott Bessent ordered CFPB staff to halt its consumer protection work until further notice.

With no CFPB and no public payments competitor, Musk could create a nationally or globally dominant private money and payments system and captive marketplace—a so-called walled garden controlled by Big Tech and built on top of his own social-media platform.

Eliminating regulations, consumer protections, and deposit insurance puts working people’s money at risk and makes the financial system more fragile, increasing the frequency and severity of potential crises. Under these circumstances, taxpayers eventually could be called upon to bail out reckless financial institutions and their wealthy executives and shareholders.

The Biden administration—in which we both served—was left to deal with the consequences of the first Trump administration’s deregulation. It was only thanks to a resilient economy, the remaining pieces of Wall Street reform that were left in place, and the hard work of our Biden administration colleagues that none of these problems metastasized into another financial crisis.

Instead of learning from this history, the second Trump term is poised to force us to repeat it.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Graham Steele, who was assistant secretary for financial institutions at the Treasury Department from 2021 to 2024, is an academic fellow at Stanford Law School and a fellow at the Roosevelt Institute.

Emily DiVito is director of finance, corporate regulation, and consumer protection at the Roosevelt Institute. She previously was a policy adviser at the Treasury Department.

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