Yellen: Large banks in better shape since financial crisis
Big U.S. banks are considerably stronger, but regulators must remain vigilant of new risks to the nation’s financial stability, Federal Reserve Chair Janet Yellen said Wednesday.
In prepared testimony, Yellen also said that Congress might consider sparing community banks from two sets of Dodd-Frank Act requirements, including the Volcker rule, which proposes to ban proprietary trading by commercial banks.
Rep. Jeb Hensarling, R- Texas, said he was encouraged by the suggestion, and called for further rollbacks of proposed regulations on banks.
Hensarling, chair of the House Financial Services Committee, also questioned the cost and regulatory burden on requiring large banking institutions to submit resolution plans, or living wills, required under the Dodd-Frank Act. The documents are intended to show regulators that they could go bankrupt without disrupting the overall financial system.
Noting that 11 banking organization had submitted “voluminous” living wills, Hensarling asked, “Does anybody at the Fed actually read this reports? Does anyone actually read a 4,200 page-report cover-to-cover and know what to do with it?”
Yellen replied that yes, staff members at the Fed do read the reports, and that she viewed the cost of producing and reading them worthwhile given the potential cost to taxpayers of having a large U.S. financial institution fail.