November 04, 2015

Yellen: Fed 'actively looking' for reg relief options

Federal Reserve Chair Janet Yellen yesterday told lawmakers she is "actively looking" for ways to decrease the regulatory burden for smaller financial institutions.

"We are actively looking for ways that we can safely diminish burdens particularly on community banks" and other smaller financial institutions, Yellen said in response to a question from Rep. Denny Heck, D-Wash., during a hearing held by the House Financial Services Committee focused on Fed rulemaking and supervision.

Heck was joined by Reps. Rubén Hinojosa, D-Texas, and Robert Pittenger, R-N.C. in emphasizing the need for more regulatory relief for small financial institutions.

Yellen also fielded questions from Rep. Brad Sherman, D-Calif., on the potential impact of an increase in the federal funds target rate on mortgage rates. Sherman discouraged a rate increase this winter, but Yellen said the Fed was "very aware" of the potential impact and that the pace of an increase would be gradual.

NAFCU Chief Economist and Director of Research Curt Long said indications so far are that the Fed is likely to act in December. "The FOMC pointed to a possible rate increase in December in its most recent policy statement," he said. "In her testimony, Janet Yellen did nothing to alter the impression that, barring something unforeseen, liftoff is likely to occur this year."

Yellen said that she and the Federal Open Market Committee believe the economy will continue to grow at a sufficient pace to reach their 2 percent target for inflation.

Several lawmakers also complained about the White House's failure to appoint a vice chairman for supervision, noting that Yellen would not have to appear before the committee herself if the position had been filled.