Yellen Rejects Trump Approach to Wall Street Regulation, Says Post-Crisis Banking Rules Make Economy Safer

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ackson Hole, Wyo – Federal Reserve Chairwoman Janet Yellen offered a forceful defense of broad new banking regulations enacted after the 2008 financial crisis, saying the rules safeguard the economy against another crisis and rejecting assertions from President Trump and top aides that they should be rolled back.

Yellen’s speech, delivered here to an annual gathering of central bankers, finance ministers, and economists, comes as Trump considers whether to reappoint her to a four-year term as head of the U.S. central bank.

Yellen, 71, made clear in her speech on Friday that she believes tighter regulations and standards have made the banking system safer and that while some improvements could be made, they should be modest, not structural.

“The evidence shows that reforms since the crisis have made the financial system substantially safer,” Yellen said, according to prepared remarks.

Trump has waffled on whether he would renominate Yellen to the post. She was first nominated by Obama for the four-year term, after having served as president of the Federal Reserve Bank of San Francisco. Trump has said he likes her cautious approach to raising interest rates, but her decision to make clear that rolling bank new banking rules could put a wide chasm between her and the White House.

There are numerous banking regulators that have input in how the financial system is overseen, but none are as powerful or as influential as the head of the Fed.

Yellen’s speech comes just hours after the Financial Times published an interview with Gary Cohn, Trump’s top economic adviser, in which he openly criticized the way Trump handled violence carried out by neo Nazis and white supremecists in Charlottesville.

Cohn was also considered a front-runner for the Fed chairman post, and the separate decisions by Cohn and Yellen to distance themselves from Trump could mean that neither is interested in cozying up to him as a way to try and get the nomination.

Yellen’s speech reflected on the government’s response to the Great Recession.

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Fed Chief Warns Against Rolling Back Post-Recession Financial Rules

GRAND TETON NATIONAL PARK, Wyo. — Janet Yellen, the Federal Reserve chairwoman, delivered a broad rebuttal on Friday to Republican criticism that financial regulation is impeding economic growth.

Ms. Yellen said changes since the global financial crisis, which began a decade ago, have significantly improved the resilience of the financial system.

“The events of the crisis demanded action, needed reforms were implemented and these reforms have made the system safer,” Ms. Yellen said in remarks prepared for delivery Friday morning at an annual monetary policy conference here.

The speech amounted to a warning to the Trump administration, which is pressing regulators to loosen or remove some of those regulatory changes.

“Already, for some, memories of this experience may be fading — memories of just how costly the financial crisis was and why certain steps were taken in response,” Ms. Yellen said.

Ms. Yellen’s forceful support for financial regulation may complicate her prospects for renomination as Fed chairman. Ms. Yellen’s four-year term ends in February, and President Trump has said he is considering whether to name someone else in her place. Gary D. Cohn, Mr. Trump’s chief economic adviser, whom Mr. Trump has described as a candidate for Ms. Yellen’s job, is an architect of the administration’s regulatory plans.

Ms. Yellen rarely spoke about regulatory issues during the early years of her tenure as chairwoman, but she has addressed the topic with regularity since Mr. Trump became president. She has argued consistently that changes were needed after the financial crisis and that those changes should not be reversed.

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