Janet Yellen pushes back on Trump remarks about lending
Janet Yellen isn’t exactly going out of her way to make nice with President Trump.
The Federal Reserve chair pushed back on Tuesday against Trump’s comments on reduced bank lending — saying that Obama-era regulations haven’t made it harder for people to borrow money.
The remarks come as Trump and his top economic adviser, Gary Cohn, have pledged to dismantle key regulations — especially those that are part of the sweeping Dodd-Frank legislation.
But Yellen, whose power was strengthened because of the beefed up regulations, said that the controversial Dodd-Frank has hardened the financial system.
“They’re lending,” she said of banks in response to a question from Sen. Elizabeth Warren (D-Mass), a frequent Wall Street critic.
“[Banks are] gaining market share, and they remain quite profitable,” Yellen told a Senate committee as part of her semi-annual report to Capitol Hill.
Yellen added that some banks are lending at higher levels than they were during the 2008 peak.
The comments from the top US government banker repudiated a statement made by Trump earlier this month.
“Frankly, I have so many people, friends of mine that have nice businesses that can’t borrow money,” Trump said on Feb. 6.
“They just can’t get any money, because the banks just won’t let them borrow because of the rules and regulations in Dodd-Frank.”
Dodd-Frank, which was signed into law by Obama in 2010, was designed to make the financial markets safer following the 2008 financial crisis.
One of the requirements is that banks hold more capital, rather than use debt, in order to fund loans. That way a bank could pay off its own debts and keep the economy from another Lehman Brothers-like crash.
Its critics, however, have said that the law is too complicated, onerous and costly, and that it’s cut into banks’ abilities to profit.
It’s no surprise that Trump and Yellen don’t see eye-to-eye on economic matters. While campaigning, Trump criticized Yellen’s tenure, saying she should be “ashamed of herself” for her monetary policies.
Yellen’s term at the Fed isn’t up until next year. Trump isn’t expected to nominate her for another term.
Yellen also repudiated comments by Cohn earlier this month that “banks are forced to hoard money because they’re forced to hoard capital and they can’t take any risk.”
“It’s not a requirement that they stick it in a safe and can’t be used,” Yellen said.
Later during the hearing, Yellen threw some red meat at investors who are looking for the direction of future markets.
Yellen hinted that the central bank could raise interest rates again as early as March — but investors didn’t seem to take that too seriously. Major indexes closed at record highs.
“There’s really no pressure on the Fed right now to raise rates,” Lindsey Piegza, chief economist at Stifel, Nicolaus, told The Post.
“The market saw it as a tad bit more hawkish, but overall it was big snoozer,” she said.