WASHINGTON (11/5/15)-- Federal Reserve Board Chair Janet Yellen Wednesday spoke about the importance of strengthening the regulation and supervision of the largest banks, while looking at ways to provide relief to community banks.
She was testifying before the U.S. House Financial Services Committee Wednesday presenting the Fed's semiannual congressional testimony. (See related story: Dec. fed funds rate increase now more likely.)
Yellen added, “We are well aware that regulatory and compliance costs can impose a burden that is disproportionate to the risks these (smaller) institutions pose to taxpayers and financial stability.
"We are committed to ensuring that the supervision of smaller institutions is tailored appropriately to their risk.”
Ryan Donovan, CUNA chief advocacy officer, said of Yellen's remarks, “If regulators put the Fed chair's commonsense words about smaller financial institutions into action, credit unions would be exempt from the vast majority of the Consumer Financial Protection Bureau’s rulemakings and the National Credit Union Administration would refrain from applying policies and practices designed for too-big-too-fail banks to credit unions.
“But that's not happening and, as a result, credit unions face a crisis of regulatory burden. If Washington doesn't end the crisis, consumers will pay the price because fewer credit unions will be there to offer them great financial services at reasonable costs."