Courtesy of Pam Martens.
Fed Chair Janet Yellen Testifying on February 25, 2015 Before the House Financial Services Committee
Fed Chair Janet Yellen cannot possibly be looking forward to her 10 a.m. testimony before the House Financial Services Committee today. Her last rendezvous with that Committee in February saw tempers flare and angry questioning from both Democrats and Republicans.
At times in February, the typically mild-mannered Yellen answered questions curtly and at one point rolled her eyes at questioning from Congressman Scott Garrett (R-NJ). Garrett insinuated that Yellen has politicized her office by meeting so frequently with President Obama and Treasury Secretary Jack Lew.
Congressman Michael Capuano (D-MA) grilled Yellen about the living wills coming out of the too-big-to-fail banks. Capuano read from a statement by FDIC Vice Chair, Thomas Hoenig, which said these living wills “provide no credible or clear path through bankruptcy that doesn’t require unrealistic assumptions and direct or indirect public support.”
Capuano crisply told Yellen “if they don’t meet your requirements at the third try, what you said is…something along the lines that you’d be upset.” Yellen responded that what she had said was “we will find them to be not credible if we do not see progress…” Capuano interrupted curtly: “Would you break them up?” Yellen responded that the banks would have two years to show that they had made changes.
Capuano retorted: “So five years after Dodd-Frank, they still have potentially three years before there are any serious consequences to prove to you that they no longer offer a threat to the entire U.S. economic system.” Yellen said the Fed had put higher capital standards in place. Capuano responded that these capital standards have been found lacking by everyone who has studied the matter “except the Fed.”
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