WASHINGTON (11/15/13)--The Federal Reserve should continue to limit regulatory burdens for small financial institutions, taking into account their distinct role and contributions, Federal Reserve Board Chair nominee Janet Yellen said during a Thursday confirmation hearing.
Yellen made her remarks before the Senate Banking Committee.
She said the Fed could also work to level the playing field between large, too-big-to-fail institutions and smaller institutions. Yellen in later remarks also said the Fed needs a model for supervision of smaller institutions that's different and less onerous.
Sen. Pat Toomey (R-Pa.) during the hearing remarked that the regulatory compliance burden for institutions that pose no systemic risk is too large. Yellen told Toomey she would do something about this issue as Fed chair.
In other prepared remarks, the Fed nominee said she was "committed to using the Fed's supervisory and regulatory role to reduce the threat of another financial crisis." Capital and liquidity rules and strong supervision are important tools for addressing the problem of financial institutions that are regarded as too big to fail, she said.
Overall, the Federal Reserve has sharpened its focus on financial stability and is taking that goal into consideration when carrying out its responsibilities for monetary policy, Yellen said. "I support these developments and pledge, if confirmed, to continue them," she added. Yellen also pledged to make the Fed a more open and transparent institution during her potential tenure.
Other topics touched on during the hearing include:
- Unemployment rates;
- Quantitative easing and general fiscal policy; and
- Basel III regulations.
Committee Chair Tim Johnson (D-S.D.) praised Yellen's "strong track record in evaluating trends in the economy," noting that she provided early warning that housing prices were creating a bubble, and was first on the Fed to recognize the recession of 2008. "Such accurate economic judgment would be a tremendous quality of a Fed chair...We need her expertise at the helm of the Fed as our nation continues to recover from the Great Recession, completes Wall Street Reform rulemakings, and continues to enhance the stability of our financial sector," Johnson said.