Magazine article American Banker

Yellen Warns on Bank Culture, Defends Dodd-Frank Progress

Magazine article American Banker

Yellen Warns on Bank Culture, Defends Dodd-Frank Progress

Article excerpt

Byline: John Heltman

WASHINGTON -- Federal Reserve Chair Janet Yellen warned the incoming administration not to roll back the Dodd-Frank Act out of hand, saying that the dire consequences of the housing bubble demonstrated the importance of ensuring that the financial sector is better managed and capitalized.

"This is progress, I would say, that it is very important not to roll back," Yellen said. "There may be some changes that could be made ... but I would urge that it is important to keep this in place."

But she also emphasized that given several egregious cases of wrongdoing by big banks recently, there clearly needs to be more done to fix institutions' culture.

"There have been many ways in which there have been many compliance failures at banking organizations," Yellen said. "This is something that is important. The failings in a number of institutions certainly suggest there is room for improvement."

Speaking at a press conference following the Fed's Federal Open Market Committee meeting on Wednesday, Yellen said that the central bank is in discussions with President-elect Donald Trump's team to ensure that the transition between the administrations is as smooth as possible.

But she said she would ask the new administration and the Republican majorities in the House and Senate to focus their attention on areas of Dodd-Frank reform that have wide consensus: reducing the regulatory burden for community banks and a "modest" increase in the $50 billion asset threshold for banks that triggers enhanced prudential standards. …

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