Federal Reserve Chair Janet Yellen appeared before the Senate Banking, Housing and Urban Affairs Committee Thursday for her second day of testimony on monetary policy.
Most notably today, Yellen laid out some Treasury reforms she warns could send the economy into its next recession — mainly defanging the Consumer Financial Protection Bureau and relaxing lending standards.
During her first day of testimony, Yellen appeared before the House Financial Services Committee, where her dovish comments sent the Dow Jones Industrial average soaring to a new high.
During the second hearing, Yellen expressed her confidence in the economy, saying she doesn’t expect another recession in her lifetime. That is, unless there are key economic changes.
However, Senator Sherrod Brown D-Ohio, asked if she remains confident a recession will not occur if the administration takes the actions suggested in the U.S. Department of the Treasury’s report released last month. More specifically, he asked Yellen for her thoughts on the Treasury's plans for gutting the CFPB and reducing regulations.
The 149-page report makes many suggestions based on observations from Treasury Secretary Steven Mnuchin and his team. It includes suggestions such as gutting the CFPB and overhauling residential mortgage lending regulation.
Yellen explained the Fed agrees with much of what the report lays out, and explained it is even actively implementing some of the suggestions. However, when pressed about the possibility of a recession if the administration suceeds in disovling the CFPB and other regulations, she conceded she would be less certain about the future of the economy.
She expressed that some of the actions laid out in the report, such as actions she says put consumer protections at risk, could send the economy spiraling into its next recession sooner than she currently estimates.
Many Democrats are worried about the repercussions the Treasury’s report could cause.
Ranking Member of the Committee on Financial Services Maxine Waters, D-Calif., said after the report was released in June, “Our nation’s economic security is in grave danger. The report released by Treasury is an attack on protections for consumers, investors and retirees. Make no mistake, the Treasury Department is proposing to take apart Wall Street Reform just like the Wrong Choice Act – they are just trying to make it sound nicer.”
