Yellen: “There Are Gigantic Holes in the System”

via CNBC:

  • “I think things have improved, but then I think there are gigantic holes in the system,” Yellen says.
  • The former Fed chair cites leverage loans as an area of concern and says there remains an agenda of unfinished regulation.
  • She also says rates will remain lower than they have been in past decades.

Former Federal Reserve Chair Janet Yellen told a New York audience she fears there could be another financial crisis because banking regulators have seen reductions in their authority to address panics and because of the current push to deregulate.

“I think things have improved, but then I think there are gigantic holes in the system,” Yellen said Monday night in a discussion moderated by New York Times columnist Paul Krugman at CUNY. “The tools that are available to deal with emerging problems are not great in the United States.”

Yellen cited leverage loans as an area of concern, something also mentioned by the current Fed leadership. She said regulators can only address such problems at individual banks not throughout the financial system. The former fed chair, now a scholar at the Brookings Institution, said there remains an agenda of unfinished regulation. “I’m not sure we’re working on those things in the way we should, and then there remain holes, and then there’s regulatory pushback. So I do worry that we could have another financial crisis.”

 

Former Senate Banking Committee Chair Phil Gramm: “The Debt Threat to the Economy”

“Fighting a trade war and maintaining a strong recovery may be mutually exclusive objectives. To ensure the U.S. has sufficient capital resources to sustain the recovery, the president needs to cut his deal with China.”

285 views