Yellen signals more bond purchases until recovery improves

Public Address

Yellen publicly voiced her views for the first time in seven months on the unprecedented monetary stimulus that she’s supported and that some lawmakers have used to justify voting against her. Yellen refrained from publicly engaging in the asset-purchase debate, while she was under consideration to succeed Chairman Ben S. Bernanke, whose term expires Jan. 31. Her last public address, on regulation, was delivered June 2. She has not given a speech on monetary policy since April 16.

If confirmed, Yellen will also lead the Fed’s efforts to finish implementation of the most sweeping overhaul of financial regulation since the 1930s. Rules on proprietary trading and bank capital are pending.

Yellen said “important work lies ahead” in making the financial system safe and stable. Her comments on how she would curtail risk at the largest banks upheld the Fed’s current strategy.

Crisis Prevention

U.S. regulators are trying to ensure that a failure at one of the largest banks won’t threaten a repeat of the financial crisis that required bailouts of banks including Citigroup Inc. and Bank of America Corp. The Dodd-Frank Act requires banks to write plans on how they would wind operations down, and it empowers the Federal Deposit Insurance Corp. to reorganize a failing bank while imposing losses on shareholders and creditors.

Yellen signaled support for capital and liquidity rules, as well as “strong supervision,” to help reduce the perception that some banks are too big to fail.

“In writing new rules, however, the Fed should continue to limit the regulatory burden for community banks and smaller institutions, taking into account their distinct role and contributions,” she said.

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