Delamaide: Yellen put on notice on bank rules
by. Darrell Delamaide
Senators let the Fed chair nominee know they expect more progress on bank rules if she’s confirmed to succeed Ben Bernanke.
In her Senate confirmation hearing last week to succeed Ben Bernanke as chairman of the Federal Reserve, Janet Yellen pledged to make it a top priority of hers to solve the problem of banks that are “too big to fail.”
Hopefully, it’s not a promise too big to keep.
“I would agree that addressing too big to fail has to be among the most important goals of the post-crisis period,” Yellen, who is currently vice chair at the Fed, said in response to a question from Ohio Democrat Sherrod Brown. “Too big to fail is damaging, it creates moral hazard, it corrodes market discipline, it creates a threat to financial stability, and it does — unfairly in my view — advantage large banking firms over small ones.”
Addressing the problem, however, is easier said than done.
The Government Accountability Office issued a report last week suggesting that the Fed was dragging its feet on rules mandated by the Dodd-Frank financial reform to remedy too big to fail — notably by limiting the aid it can provide to banks in an emergency.continue reading »