(Reuters) -President-elect Donald Trump is expected to pick prominent investor Scott Bessent to take on the role of U.S. Treasury secretary, sources told Reuters on Friday, putting him at the helm of a cabinet position with vast influence over economic, regulatory and international affairs. 

One source briefed by the Trump transition team and a donor briefed on the plans told Reuters of Trump's intention to pick Bessent. The Trump transition team did not immediately respond to a request for comment.

Wall Street has been closely watching who Trump will pick, especially given his plans to remake global trade through tariffs.

Bessent was picked from a crowded field of candidates for the coveted role.

That list included Apollo Global Management Chief Executive Marc Rowan and former Federal Reserve Governor Kevin Warsh. Investor John Paulson had also been a leading candidate, but dropped out while Wall Street veteran Howard Lutnick, another contender, was appointed as head of the Commerce Department.

Bessent has advocated for tax reform and deregulation, particularly to spur more bank lending and energy production, as noted in a recent opinion piece he wrote for The Wall Street Journal.

The market's surge after Trump's election victory, he wrote, signaled investor "expectations of higher growth, lower volatility and inflation, and a revitalized economy for all Americans."  

Bessent follows other financial luminaries who have taken the job, including former Goldman Sachs executives Robert Rubin, Hank Paulson and Steven Mnuchin, Trump's first Treasury chief. Janet Yellen, the current secretary and first woman in the job, previously chaired the Federal Reserve and White House Council of Economic Advisers.

ECONOMY'S QUARTERBACK

As the 79th Treasury secretary, Bessent would essentially be the highest-ranking U.S. economic official, responsible for maintaining the plumbing of the world's largest economy, from collecting taxes and paying the nation's bills to managing the $28.6-trillion Treasury debt market and overseeing financial regulation, including handling and preventing market crises.

The Treasury boss also runs U.S. financial sanctions policy, oversees the U.S.-led International Monetary Fund, World Bank and other international financial institutions, and manages national security screenings of foreign investments in the U.S.

Bessent would face challenges, including safely managing federal deficits that are forecast to grow by nearly $8 trillion over a decade due to Trump's plans to extend expiring tax cuts next year and add generous new breaks, including ending taxes on Social Security income.

Without offsetting revenues, this new debt would add to an unsustainable fiscal trajectory already forecast to balloon U.S. debt by $22 trillion through 2033.

Managing debt increases this large without market indigestion will be a challenge, though Bessent has argued Trump's agenda would unleash stronger economic growth that would grow revenue and shore up market confidence. 

Bessent would also inherit the role carved out by Yellen to lead the Group of Seven wealthy democracies to provide tens of billions of dollars in economic support for Ukraine in its fight against Russia's invasion and tighten sanctions on Moscow. But given Trump's desire to end the war quickly and withdraw U.S. financial support for Ukraine, it is unclear whether he would pursue this.

Another area where Bessent will likely differ from Yellen is her focus on climate change, from her mandate that development banks expand lending for clean energy to incorporating climate risks into financial regulations and managing hundreds of billions of dollars in clean energy tax credits.

Trump, a climate-change skeptic, has vowed to increase production of U.S. fossil fuel energy and end the clean-energy subsidies in President Joe Biden's 2022 Inflation Reduction Act.

FED FACING

The Treasury secretary is also the administration's closest point of contact with the Federal Reserve. Both Yellen under Biden and Mnuchin under Trump typically met weekly with Fed Chair Jerome Powell, often over breakfast or lunch.

Bessent has floated the idea of creating a "shadow" Fed chair. This would entail nominating as early as possible a presumptive Powell predecessor to the Fed Board who would then deliver their own policy guidance so that, as Bessent told Barron's last month, "no one is really going to care what Jerome Powell has to say anymore."

The next seat to open up at the Fed Board is that of Governor Adriana Kugler, whose term runs to January 2026. Bessent has since said he no longer thinks the idea of a shadow chair worth pursuing, the Wall Street Journal reported. 

Powell's term as Fed chair expires in May 2026, and presidents rarely wait until the Fed chief's term ends before nominating a successor.

FROM FINANCE TO DC 

Bessent, 62, primarily lives in Charleston, South Carolina with his husband and two children. He grew up in the fishing village of Little River, South Carolina, where Bessent has said his father, a real estate investor, experienced booms and busts.

Bessent worked for noted short seller Jim Chanos in the late 1980s and then joined Soros Fund Management, the famed macroeconomic investment firm of billionaire George Soros. He soon helped Soros and top deputy Stanley Druckenmiller on their most famous trade - shorting the British pound in 1992 and earning the firm more than $1 billion.

In 2015, Bessent raised $4.5 billion, including $2 billion from Soros, to launch Key Square Group, a hedge fund firm that bets on macroeconomic trends. Key Square's main fund gained about 31% in 2022, according to media reports, but firm assets have declined to approximately $577 million as of December 2023, according to a regulatory filing.