Federal Reserve chairwoman Janet Yellen backtracked Thursday from her earlier prediction that there wouldn’t be another financial crisis in her lifetime, saying safety from crashes is dependent on maintaining strict rules for the banking system.
“We can never be confident that there won’t be another financial crisis,” the central bank head said in a Senate hearing Thursday morning. “But it is important that we maintain the improvements that we’ve put in place.”
Two weeks ago, during a trip to London, Yellen suggested there would not be another financial crisis during the lifetime of the audience.
That unusual expression of confidence attracted some notice, including from Sen. Sherrod Brown of Ohio, the top Democrat on the Banking Commitee.
Brown expressed the fear Thursday that Republicans might use Yellen’s comment to justify efforts to reduce the new post-crisis bank rules, such as the regulatory relief measures spelled out in the Trump Treasury’s financial regulation report.
Yellen agreed some of the recommendations in the Treasury report would make another financial crisis more likely.
Crises are less likely now, she said, because the Fed has implemented stronger capital requirements for banks, regularly subjects them to “stress tests,” and does more monitoring than before the 2008 crash.
