The tacit nod of approval from the Fed chief is a good sign for
Wall Street, as a rejection can be costly, though Yellen also made
clear the U.S. central bank will not hesitate to reject certain
plans when it completes its assessment.
"We are certainly prepared to say that they are not credible,"
Yellen told the Senate Banking Committee during the second and final
day of her semiannual testimony to Congress on the economy and
monetary policy.
The questions aimed at Yellen focused more on financial industry
regulation than the timing of an interest rate hike. One topic that
emerged was the threshold for so-called SIFIs.
The 2010 Dodd-Frank financial reform law says that all U.S. banks
with more than $50 billion in assets are labeled systemically
important financial institutions (SIFIs), making them subject to
tougher supervision by the central bank.
![](http://archives.lincolndailynews.com/2015/Jul/17/images/ads/current/ccaonline_sda050208.png) A bill drafted by Republican Richard Shelby, the committee chairman,
and passed by the panel in May proposes allowing banks with assets
between $50 billion and $500 billion to lose the SIFI designation if
the Fed believes they are not systemically risky.
Republican Senator Mike Crapo reminded Yellen on Thursday that Fed
governor and top banking regulator Daniel Tarullo has told the
committee he supports raising the threshold above $50 billion.
"So, like Governor Tarullo, I would be open to a modest increase in
the threshold," Yellen said. She added that it is critical for the
Fed to maintain its discretion over systemically important banks
should the SIFI threshold change.
[to top of second column] |
![](../images/ads/current/richardson_lda_040113.png)
The senators' questions for Yellen centered mainly on the Fed's role
as the top banking regulator. Her appearance before the House of
Representatives Financial Services Committee on Wednesday was marked
by more aggressive questioning focused on transparency and
congressional oversight of the central bank.
The Fed chief gave the same opening testimony in both appearances,
saying that progress in the labor market and a strengthening economy
put the central bank on track to raise interest rates later this
year, though some headwinds remained.
She added that the Fed's decision on when to hike rates will remain
data-dependent.
(Reporting by Michael Flaherty and Megan Cassella; Additional
reporting by Howard Schneider; Editing by Paul Simao)
[© 2015 Thomson Reuters. All rights
reserved.]
Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
![](http://archives.lincolndailynews.com/2015/Jul/17/images/ads/current/memorial_home_sda_061115.png) |