- Title: Fed's Yellen says bank leaders must be held accountable for wrongdoing
- Date: 28th September 2016
- Summary: WASHINGTON, D.C., UNITED STATES (SEPTEMBER 28, 2016) (UNRESTRICTED POOL) WIDE OF FEDERAL RESERVE CHAIR JANET YELLEN AT HOUSE OF REPRESENTATIVES FINANCIAL SERVICES COMMITTEE HEARING (SOUNDBITE) (English) FEDERAL RESERVE CHAIR JANET YELLEN, SAYING: "I think it is very important that senior management be held accountable." YELLEN (SOUNDBITE) (English) REPUBLICAN REPRESENTATIVE SCOTT GARRETT, SAYING: "The Fed has an unacceptable cozy relationship both with the Obama administration and with higher ups in the Democratic Party." YELLEN (SOUNDBITE) (English) FEDERAL RESERVE CHAIR JANET YELLEN, SAYING: "I have absolutely no awareness of that." (SOUNDBITE) (English) REPUBLICAN REPRESENTATIVE SCOTT GARRETT, SAYING: "There have been published media reports talking about that, so you're not familiar with those media reports?" (SOUNDBITE) (English) FEDERAL RESERVE CHAIR JANET YELLEN, SAYING: "What's important to me is whether or not in our decision making, our collective decision making, I see politics being brought to bear in reasoning about our decisions. And I have never seen that on the part of any of my colleagues." HOUSE OF REPRESENTATIVES FINANCIAL SERVICES COMMITTEE HEARING CHAIRMAN, JEB HENSARLING (SOUNDBITE) (English) FEDERAL RESERVE CHAIR JANET YELLEN, SAYING: "We're now considering making several changes to our stress testing methodology and process." COMMITTEE (SOUNDBITE) (English) FEDERAL RESERVE CHAIR JANET YELLEN, SAYING: "When it comes to bank regulation and supervision, one size does not fit all. To effectively promote safety and soundness and to ensure that institutions comply with applicable consumer protection laws without creating undue regulatory burden, rules and supervisory approaches should be tailored to different types of institutions, such as community banks." YELLEN (SOUNDBITE) (English) FEDERAL RESERVE CHAIR JANET YELLEN, SAYING: "Standards for the largest, most complex banking organizations are now significantly more stringent than the standards for small and medium-sized banks, which is appropriate, given the impact that the failure or distress of those firms could have on the economy." COMMITTEE (SOUNDBITE) (English) FEDERAL RESERVE CHAIR JANET YELLEN, SAYING: "Monetary policy is accommodative. We want to make sure that the expansion is won and the good performance of the job market is sustainable over the medium term. If we allow the economy to overheat, we could be faced with having to raise interest rates more rapidly than we would want, which could conceivably jeopardize that good state of affairs that we have come close to achieving. So we expect to see the unemployment rate fall farther, we expect to see solid job growth continue. But we do need, if things continue on their current course, to gradually remove the accommodation that is there. Now it's probably not that much. Our estimate of how much accommodation there is has come down over time as economists have reconsidered what is a neutral stance of policy, but nevertheless there is accommodation and well, there's no fixed timetable for removing it. Many of my colleagues indicated in their recent projections, the majority, that they would see it is appropriate to make a move to take a step in that direction this year if things continue on the current path and no significant new risks arise." YELLEN (SOUNDBITE) (English) FEDERAL RESERVE CHAIR JANET YELLEN, SAYING: "This is really something I'm not an expert on what the appropriate programs are for Puerto Rico to deal with its long-standing problems and I think that's squarely a matter for Congress and the administration to consider." PAN FROM YELLEN TO COMMITTEE
- Embargoed: 13th October 2016 18:57
- Keywords: Janet Yellen Fed Federal Reserve Wells Fargo Lael Brainard
- Location: WASHINGTON, D.C., UNITED STATES
- City: WASHINGTON, D.C., UNITED STATES
- Country: USA
- Topics: Budget/Taxation/Revenue,Government/Politics
- Reuters ID: LVA00151HEM2V
- Aspect Ratio: 16:9
- Story Text: Federal Reserve Chair Janet Yellen was thrust into the election-year boxing ring during a congressional committee hearing on Wednesday (September 28), taking and landing punches on Wells Fargo and other banks considered too big to fail, addressing accusations of political conflicts of interest and defending the central bank's regulatory role.
At a House of Representatives Financial Services Committee hearing, Yellen told the committee that the Fed was reviewing whether the largest U.S. lenders are complying with banking rules in the wake of the Wells Fargo scandal in which the bank settled charges that it opened as many as 2 million unauthorized customer accounts.
"I think it is very important that senior management be held accountable," Yellen told the House panel.
Republican Representative Scott Garrett pressed Yellen over media reports that Fed Governor Lael Brainard might take a top job in the next administration if Democrat Hillary Clinton wins the Nov. 8 election.
"The Fed has an unacceptably cozy relationship both with the Obama administration and with higher ups in the Democratic Party," Garrett said.
Yellen said she was unaware of any contact between Brainard and Clinton.
Yellen also provided details on the changes the central bank is considering making to the annual stress tests it gives U.S. banks. It would move to a more risk-sensitive, firm-specific approach.
"Standards for the largest, most complex banking organizations are now significantly more stringent than the standards for small and medium-sized banks, which is appropriate, given the impact that the failure or distress of those firms could have on the economy," she said.
Yellen also said she felt the labor market had more room to run before it could overheat.
"If we allow the economy to overheat, we could be faced with having to raise interest rates more rapidly than we would want, which could conceivably jeopardize that good state of affairs that we have come close to achieving," she said.
"So we expect to see the unemployment rate fall farther, we expect to see solid job growth continue. But we do need, if things continue on their current course, to gradually remove the accommodation that is there. There's no fixed timetable for removing it. Many of my colleagues indicated in their recent projections, the majority, that they would see it is appropriate to make a move to take a step in that direction this year if things continue on the current path and no significant new risks arise."
Puerto Rico, currently mired in a financial meltdown, also came up frequently in the hearing, but Yellen said a solution to its fiscal crisis should come from the White House or Congress. - Copyright Holder: POOL (CAN SELL)
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