The POTUS Donald Trump has been issuing controversial executive orders after he took his office at the White House. Recently, he issued an executive order instructing the Treasury department to analyze the existing financial rules and send a report to him in 120 days. The Dodd-Frank Act was introduced by Obama in an attempt to control the banks during the times of global financial recession. Now, Trump claims that those laws are a disaster and they don’t allow the banks to enjoy profits and increase lending power. Federal Reserve chair Janet Yellen has rebutted this claim saying that the banks are safer and profitable.
Yellen commented during the congressional testimony that the lenders of the USA are competitive compared to the European counterparts. The stress tests are important to ensure that the banks have financial stability. The Republicans constantly attack the Dodd-Frank Act saying that small businesses are unable to get the loans they deserve. The Fed defended that there is no substantial data to prove this claim. She said that the US lenders are active in capturing their market share.
Janet Yellen said that she is eager to work with the Treasury Secretary Steven Mnuchin after his review. Yellen, however, said that she agrees with the financial goals and principles present in the executive order. The current executive order wants to prevent bank bailouts using taxpayers’ money. It will result in formulating efficient regulations that prevent the financial executives from taking unwarranted risks.
The Dodd-Frank Act commissioned the role of Vice Chairman for supervision for the Fed, but the role was never filled. Yellen said that she is open to working with a person appointed by Trump for this role. She added that the new appointee can represent the Fed in various international talks about the rules of the banks. Yellen mentioned that the entire Fed board will make the final decisions on rule making. However, the vice chairman can lead the bank-supervision committee of the Fed. He can also provide information about the regulatory work to the congress. The vice chairman can also represent the Fed for Basel Committee on Banking Supervision and other international bodies.
There were speculations that Jenet Yellen, appointed by Barack Obama would step down from her office before her term. In the meeting, Yellen assured that she will continue until her term expires in roughly 12 months. Even though Trump’s new vice chairman can give his opinion on the Fed’s agenda, the chairman will always make the final decisions.
The banks are disappointed with the Fed’s stress testing programs and Senator Pat Toomey urged the Fed to remove the Comprehensive Capital Analysis and Review. Yellen defended this program as she said that it is imperative to improve supervision. The Fed participates in various international talks on bank rules and it is useful in building a stable and strong financial system for the USA. The Republicans wanted to halt international talks until Trump’s officials take over the Fed. However, Janet Yellen has said that she will continue as the Chairman until the end of her term and Fed will continue with its responsibilities.