Andrew Kelly | Reuters
Yellen, who has served as U.S. President Joe Biden’s Treasury secretary since taking office in January 2021, said the current U.S. supervisory system is not perfect, and that there are ways to reduce its regulatory burden. It is permissible to search.
But he cautioned against taking radical steps that would interfere with essential supervision or existing systems for insuring banks’ deposits, given the long history of bank failures that have fueled financial crises.
“I don’t want to say that what we have is absolutely sacrosanct and untouchable. But I don’t think it’s broken. We have a good system,” Yellen told Reuters. Preparing for To President-Elect Scott Besant Donald Trump’s Nominated to be Secretary of the Treasury.
Trump’s return to office raises the prospect of fundamental changes to the federal government’s current structure and a decades-long regulatory framework to oversee financial services and banking, as well as digital currency.
“Bankers always complain about overregulation,” Yellen said. “It is legitimate to look for areas where the burden of regulation outweighs the benefits and try to address it. But proper regulation of capital, liquidity, risk-taking and the like are critical to a strong banking system and economy.” , and should not be interfered with.”
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Yellen said she was worried about one. Report That Trump’s transition team was exploring ways to reduce, merge or even eliminate top bank regulators in Washington, but had little insight into their plans.
“We’ve seen what happens when banks are improperly supervised,” he said, citing the unexpected failures of Silicon Valley Bank and Signature Bank in March 2023, and other failures before them. which “raised the possibility of a contagion financial crisis.”
“The lesson we have learned from these 100-plus years of history is that banks need to be properly supervised and regulated to greatly reduce the likelihood of failure; this is the safety and security of the deposit insurance system. is an important factor in promoting soundness and confidence, and that adequate access to liquidity is needed when banks are in trouble,” he said.
Financial stability
Yellen said U.S. banks were doing “exceptionally well” despite warnings that Dodd-Frank legislation would make it harder for them to compete after the 2008-2009 global financial crisis.
This legislation created the Financial Stability Oversight Council, the Financial Stability Division of the Federal Reserve, and the Treasury Office of Financial Research to assess and assess risks to financial stability.
Yellen, who led the Fed from 2014 to 2018, agreed that the U.S. has a complex system of banking regulation that involves many agencies at the state and federal levels. He said there had been discussions for years about possible consolidation measures at the federal level, and the Office of Thrift Supervision was dismantled without any negative impact from the global financial crisis.
But he added that changing the structure of the system was not high on his agenda.