Yellen Tells Bankers Chaos Is About To End

(AmericanProsperity.com) – US Treasury Secretary Janet Yellen said during a Tuesday conference of the American Bankers Association in Washington, D.C., that the period of chaos in the financial sector is about to end, following the collapses of large banks that raised fears of another financial crisis like the one the country experienced in 2008. “The situation is stabilizing,” Yellen said during the conference at the largest trade group for American banks.

She also explained that the main evidence that supports her words is the increased lending that the Federal Reserve is providing to US banks, which includes a new line of credit that has been set up by the central bank and backstopped by tax money. Yellen added that the Treasury has noticed a significant decrease in funds’ transfers from smaller banks to those who were considered “too big to fail” after the 2008 financial crisis.

She also struck a diplomatic tone in regard to controversial statements she made to Congress last week, when she said that, just like it happened with the Signature Bank and the Silicon Valley Bank (SVB), the Federal Deposit Insurance Corporation (FDIC) will only bail out large and “systematically important” banks in the United States. Yellen received plenty of criticism for suggesting that smaller countries are not that important.

In an effort to reduce tensions on this matter, she said that even when big binks are crucial for the American economy, “so do small- and mid-sized banks.” Yellen added that these types of banks are also important since they are engaged in different types of banking services that provide not only financial support but also vital credit to numerous small businesses and families across the country.

Finally, the Treasury Secretary said that everyone needs to reconsider the current bank regulatory and supervisory regime, pointing out that these have played a significant role in the current banking situation. She explained that this reexamination is crucial to make the changes that are needed to eliminate the risks that banks are facing today.