Agosto 13, 2020

Janet Yellen defends US regulations

27 Agosto 2017, 03:07 | Azura Castelo

Yellen, 71, made clear in her speech on Friday that she believes tighter regulations and standards have made the banking system safer and that while some improvements could be made, they should be modest, not structural.

The dollar fell sharply against the euro after Yellen, appearing at an annual summit of central bankers in Jackson Hole, Wyoming, avoided monetary policy in remarks that defended tougher regulations on banks.

It could be Yellen's final appearance at Jackson Hole as the Fed chair because her term expires in February 2018. Meanwhile, Yellen's potential replacement, Gary Cohn, gave an interview to the Financial Times, saying he's willing to try to make tax reform a bipartisan effort. Cohn might not have helped his chances Friday as he publicly criticized Trump's response to the violence in Charlottesville, Va.

Gold had almost surpassed its threshold of $1,300/oz. on Friday, when a sudden one-minute trade operation of large volumes of the metal sent prices cascading - just ahead of Fed Chair Janet Yellen's speech.

"There is more work to do", she told the audience.

She also said US leadership of global efforts to coordinate regulation through the Basel Committee and the Financial Stability Board have made the system safer.

She acknowledged, though, that lending might be less available to some borrowers with poorer credit histories.

The key word is "efficiently", because it suggests Yellen is open to easing the regulatory burden on banks.

Republicans have long sought changes to Dodd-Frank, which they consider a bloated, overreaching law that suffocates USA business and hurts banks and firms that didn't cause the crisis.

Instead, Yellen's speech offered a defense of the post-crisis regulatory regime.

US Secretary of the Treasury Steven Mnuchin said the US debt ceiling, a hurdle to be crossed before any tax reform can take place, will be raised next month and that after talks with congressional leaders from both parties everyone is "on the same page".

"Yellen's decision to defend core regulations will strengthen the hand of those within the administration who do not favour her reappointment", Krishna Guha, vice-chairman of Evercore ISI, said in a note to clients.

"I would bet that [Trump] renominates her", said Timothy Anderson, managing director at TJM Investments. But Cohn told the Financial Times that he chose to stay on in the administration because he did not want to be forced out by neo-Nazis.

While some observers say Trump still could reappoint Yellen in 2018 due to the perceived chaos in his administration and the standoff with and within Congress, such a reappointment is deemed unlikely from the policy viewpoint. The euro hit a high of $1.1940, its strongest level since January 2015. Cohn said he ultimately chose not to leave because of the duty he feels to his job. "We must all unite together against them".

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