Senator Warren Questions Fed Chair Nominee Janet Yellen on Fed's Supervision and Regulation of Big Banks
Calls for Fed to put priority on leveling the playing field and holding Wall Street accountable
Washington, DC - Today at a Senate Banking Committee hearing to consider the nomination of Dr. Janet Yellen to be Chair of the Board of Governors of the Federal Reserve System (Fed), Senator Elizabeth Warren questioned Dr. Yellen about the Fed's role in supervising and regulating the biggest financial institutions.
"There has been a lot of talk today about the Fed's use of quantitative easing to try to help the economy get back on its feet," said Senator Warren. "But the truth is, if the regulators had done their jobs and reined in the banks, we wouldn't need to be talking about quantitative easing because we could have avoided the 2008 crisis altogether. So I want to focus on the Fed's regulatory and supervisory responsibilities to keep the big banks in check. I'm concerned that those responsibilities just aren't a top priority for the Board of Governors."
Senator Warren asked, "do you think that the Fed's lack of attention to regulatory and supervisory responsibilities helped lead to the crash of 2008?"
The Senator also pressed Yellen on the Fed's handling of a settlement earlier this year with thirteen mortgage servicers that had engaged in illegal foreclosure practices. "The settlement was for over $9 billion and directly affected more than 4 million families. But the Fed's Board of Governors never voted on whether to accept the settlement. Instead this decision was just left to the staff," explained Senator Warren.
"Now, the Fed has smart, hardworking staff, but the Board of Governors would never delegate critical monetary policy to them, and yet even now after the biggest financial crisis in generations, the Board seems all too willing to delegate critical regulatory and supervisory decisions. So I think we need to make reining in the banks a top priority for the Board."
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