Yellen Deflects Critique Over Fed Role in Global Rules TalksBy
Central bank chair responds to Republican lawmaker’s criticism
House’s McHenry said work should be halted for Trump’s review
Federal Reserve Chair Janet Yellen defended the central bank’s work with foreign counterparts to align financial-industry oversight, deflecting a Republican lawmaker’s demand that such efforts be halted for President Donald Trump’s regulatory review.
Participating in development of international banking rules enables the Fed to help shape the standards in ways that promote the U.S. financial stability and the competitiveness of U.S. companies, Yellen wrote in a letter to North Carolina Representative Patrick McHenry.
“In exercising our longstanding authorities and responsibilities for consulting with our foreign counterparts, we share the objective that the whole U.S. government must work constructively to ensure a strong, stable U.S. economy and financial system,” Yellen said in the Feb. 10 letter obtained by Bloomberg.
McHenry, who is vice chairman of the House Financial Services Committee, said in a Jan. 31 letter to Yellen that it was “unacceptable” that the Fed was conducting international talks after Trump took office but before he had a chance to put his own people in place. McHenry also echoed common Republican criticisms over the “secretive structures” of global forums that allow foreign nations to impose their views on U.S. rulemakers.
In her response, Yellen said that the Fed will coordinate with the Treasury Department in its international engagement. She also said that Treasury is a member of several global bodies focused on financial services.
Fed officials often participate as U.S. representatives in international groups including the Financial Stability Board and Basel Committee on Banking Supervision. The Fed is an independent agency, meaning it is largely insulated from White House control, and Yellen has said she intends to finish her term, which doesn’t expire until February 2018.
Fed Governor Daniel Tarullo, the central bank’s point man on financial regulation, said Friday that he will step down in April. His exit will open the door for Trump to name a Fed vice chairman for supervision, an appointee who would play a key role in shaping U.S. regulatory policy.
On Tuesday, Yellen told members of the Senate Banking Committee that she expected that the person in that role would represent the Fed in negotiations on international standards. Trump’s nominee for the role will require Senate confirmation.
— With assistance by Jesse Hamilton