US Fed Chair Janet Yellen has distanced herself from President Donald Trump, stressing that increased financial regulation since the 2008 global financial crisis has made the banking system healthier, essentially rejecting efforts by Republicans to scrap the 2010 Dodd-Frank law.
“The events of the crisis demanded action, needed reforms were implemented and these reforms have made the system safer,” Ms. Yellen said.
Yellen said that any rollback of those rules should be “modest”.
“Already, for some, memories of this experience may be fading — memories of just how costly the financial crisis was and why certain steps were taken in response,” Ms. Yellen said.
Trump, who is strongly against increased regulation, previously said he’s considering reappointing Yellen as chair.
“She seems to be sending a message that if Trump is interested in renominating her, he needs to know that he’s going to get someone who doesn’t buy into Trump-world’s view of financial regulation.
“In other words, ‘If you want me, this is what you get.”’
The Dodd–Frank Wall Street Reform and Consumer Protection Act was signed into federal law by President Barack Obama on July 21, 2010.
The aim of the legislation is “to promote the financial stability of the United States by improving accountability and transparency in the financial system, to end “too big to fail”, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.”
However, critics have argued that the regulatory barriers affect small banks the most, despite the reforms being intended to target large financial institutions.
In addition, a paper by Francesco D’Acunto and Alberto G. Rossi at the University of Maryland Business School, revealed that the lending regulations of Dodd-Frank redistributed credit away from the middle class toward wealthier Americans.