Wall Street Advises Treasury on Debt It Profits From Buying

The same firms that sit on Treasury's advisory committee recommending what bonds to issue are the firms that trade and hold those bonds for profit — and no disclosure rule requires them to say so.

The single most consequential undisclosed conflict of interest in American public finance is not buried in a campaign finance filing or a lobbying disclosure — it sits in plain sight on the U.S. Treasury Department's own website. The Treasury Borrowing Advisory Committee, known as TBAC, is composed of senior executives from Goldman Sachs Asset Management, JPMorgan Asset Management, BlackRock, PIMCO, Citigroup, Morgan Stanley Investment Management, Barclays, and other major financial institutions, all of whom advise Treasury on what securities to issue, in what quantities, and on what schedule — decisions that directly determine the profitability of the securities those same institutions hold in inventory, trade as market makers, or manage in client portfolios. Treasury's own TBAC charter and published meeting transcripts confirm both the committee's composition and its scope of authority over issuance recommendations.

The scale of what is being advised upon is not incidental. The U.S. Treasury manages approximately $36 trillion in outstanding public debt as of 2025, according to Treasury's own Financing the Government disclosures. The quarterly decisions TBAC influences — how much to issue in two-year notes versus ten-year bonds, whether to expand floating-rate note issuance, when to adjust auction sizes — move prices across the world's largest securities market. A recommendation to extend the average maturity of Treasury issuance, for example, increases the duration risk embedded in the existing portfolios of the very firms making that recommendation. Yet no public conflict-of-interest disclosure requirement ties TBAC member recommendations to their firms' current proprietary positions. This gap is documented in the committee's own published charter.

The architecture enabling this arrangement was built for a legitimate purpose. The shift to what Treasury formally calls 'regular and predictable' issuance was a deliberate policy response to market disruptions caused by ad hoc, tactical Treasury offerings during the 1970s fiscal expansion, as documented by Federal Reserve Bank of New York economist Kenneth D. Garbade in the FRBNY Economic Policy Review in March 2007. Prior to 1975, Treasury chose maturities on an offering-by-offering basis. By 1982, it had fully transitioned to scheduled, predictable auctions. The stated rationale was sound: predictability reduced the uncertainty premium investors demanded, lowering government borrowing costs. The unexamined consequence, as Garbade's own research implies, is that predictability also enabled sophisticated institutions to pre-position in futures and options markets with far greater precision than smaller market participants — an information asymmetry that has never been formally priced or regulated.

Layered onto the TBAC dynamic is a second structural conflict involving the twenty Primary Dealers — financial institutions designated by the Federal Reserve Bank of New York that are legally obligated to bid at every Treasury auction and serve as counterparties to Federal Reserve open market operations. The current Primary Dealer list, published by the FRBNY, includes BofA Securities, Barclays Capital, BNP Paribas Securities, Citigroup Global Markets, Goldman Sachs, JPMorgan Securities, Morgan Stanley, and twelve others spanning institutions domiciled in the United States, United Kingdom, France, Germany, Japan, Canada, and Switzerland. Eight of the twenty are foreign-domiciled. No public framework governs how these institutions manage potential conflicts between their U.S. auction obligations and pressures from their home-country regulators or, in some cases, home-country governments. The FRBNY's Primary Dealers List confirms the roster but is silent on this governance question.

A third layer of conflict involves foreign sovereign holders. Japan holds approximately $1.1 trillion in U.S. Treasury securities, managed through its Ministry of Finance and Bank of Japan, according to Treasury's own Treasury International Capital system data published at ticdata.treasury.gov. China holds approximately $750 to $800 billion through the State Administration of Foreign Exchange. The People's Republic of China is simultaneously a major geopolitical adversary subject to active U.S. sanctions deliberations, technology export controls, and trade negotiations. Announced or rumored Chinese selling of Treasuries has caused immediate, documented market disruption on multiple occasions. Treasury's debt management decisions — auction timing, issuance size, maturity composition — must implicitly account for Chinese demand, creating a policy constraint imposed by a geopolitical adversary that is nowhere formally acknowledged. TIC data is published with a two-month lag, meaning real-time shifts in Chinese or Japanese holdings are invisible to the public even as they move markets.

The Federal Reserve adds a fourth structural conflict. Harvard Business School professors Robin Greenwood and Samuel G. Hanson, Brookings Institution fellow Joshua S. Rudolph, and former Treasury Secretary Lawrence H. Summers jointly documented in their Brookings Institution Press volume 'The $13 Trillion Question' that the Federal Reserve functions as a de facto second debt management authority. Through quantitative easing and tightening programs, the Fed alters the net supply of Treasury securities held by the public, sometimes in direct tension with Treasury's own maturity objectives. Their paper identifies cases where Treasury extended maturities while the Fed simultaneously purchased long-term bonds through QE, effectively negating the fiscal strategy. The same paper's authorship carries its own recursive conflict: Summers, who identifies these structural problems as a co-author, served as Treasury Secretary under President Clinton and as Director of the National Economic Council under President Obama — he operated within the system he now critiques, and his subsequent financial advisory relationships are a matter of public record.

What the public record reveals, taken together, is a debt management system in which the government's advisors are also its largest counterparties, the largest foreign creditor is a designated geopolitical adversary, the central bank operates as both fiscal agent and major bondholder, and no integrated surveillance mechanism exists — the SEC and CFTC each hold partial jurisdiction over pre-auction positioning in derivatives markets but operate without a unified cross-market surveillance architecture, as confirmed in Congressional Research Service report R40767. TBAC meeting transcripts are published, but individual member recommendations are not attributed to specific firms. It is structurally impossible for the public to determine whether a given TBAC member advocated for a policy that benefited their institution's proprietary book.

What remains hidden is the granular data that would resolve the central accountability question: Do TBAC member firms' recommendations systematically correlate with their firms' pre-existing portfolio positions? The instrument that would reveal this is a mandatory, real-time conflict-of-interest disclosure requirement for TBAC members, cross-referenced against Primary Dealer inventory data held by the FRBNY, combined with a formal GAO audit of the relationship between TBAC recommendations and subsequent auction outcomes. That audit has never been conducted. The GAO has the statutory authority to perform it. No member of Congress has formally requested it.