WASHINGTON — The Latest on Federal Reserve Chair Janet Yellen’s testimony to the Senate Banking Committee (all times local):
Federal Reserve Chair Janet Yellen says that the Fed does have the power to remove directors of banks, but she did not give a specific commitment to do so when pressed on the issue by Sen. Elizabeth Warren.
Warren, D-Massachusetts, wants to see the directors of San Francisco-based Wells Fargo replaced.
Warren pressed Yellen by saying that the Wells Fargo board of directors had failed to halt improper practices at the bank that involved thousands of employees creating fake accounts.
“Time after time, big banks cheat their customers and no actual human beings are held into account,” Warren told Yellen.
Yellen described the actions at Wells Fargo as “egregious and unacceptable.” She said the Fed needs to conduct a “full investigation” to understand the root causes of the problems at Wells Fargo. Yellen said the central bank is prepared to take appropriate enforcement actions but did not say whether that action would include removal of any bank directors.
Federal Reserve Chair Janet Yellen is testifying for a second day before Congress. She is expanding on her views on inflation, emphasizing that the dual risks to inflation: prices rising too slowly and prices accelerating too quickly.
Her comments appeared to be an effort to modify the impact of her comments before a House committee on Wednesday. The House remarks were seen as signaling that the Fed might slow the pace of rate hikes if inflation does keep falling below the Fed’s 2 percent target.
In testimony Thursday before the Senate Banking Committee, Yellen stressed that she saw the “risk on inflation as being two-sided.”
Yellen said it was premature to conclude that the underlying inflation trend would continue to fall below the Fed’s 2 percent target, even though price gains have slowed in recent months.