Newsroom

Nov. 15, 2013 – Federal Reserve Board Vice Chair Janet Yellen acknowledged the need for regulatory relief for small institutions – including credit unions – during a Senate Banking Committee hearing Thursday on her nomination as the next Fed Board chair.

In Thursday's hearing before the Senate Banking Committee, Sen. Dean Heller, R-Nev., pointed out to Yellen that credit unions and community banks have been consolidating in recent years, leaving Americans with fewer options for obtaining financial services. Yellen acknowledged that small institutions need to have a different regulatory model that is not as burdensome. She also noted the advantages that big banks gain from being too big to fail need to be addressed.

Many senators also questioned how much longer quantitative easing would continue and when tapering might begin. Yellen said that decision is data-dependent, but she added that the Federal Open Market Committee does evaluate employment and inflation rate markers when it meets to make sure the Fed's policy is still on target. She said the Fed doesn't see risks to financial stability or evidence of an asset bubble developing as a result of continued low rates. She noted that the Fed has a number of tools at its disposal to manage those risks if they do occur.

Senators also questioned the transparency of the Fed and wondered if more could be done to enhance its openness. Yellen said she strongly supports greater openness and transparency at the Fed, but she does not support anything that would diminish its independence. It's critically important to the performance of the economy that the Fed maintain its independence, she said.