Janet Yellen Quotes
It's extremely important for our banks to have more capital, higher quality capital.
Yellen, Janet L. Transcript of Chair Yellen's Press Conference. Board of Governors of the Federal Reserve System, 17 Sept. 2015.
4 years after the Great Recession where major banks of America needed government bailouts to prevent failure the Administration and Federal Reserve board wanted to increase the capital requirements to increase the safety of the Banks. Essentially the banks would speculate and gamble with depositors’ money. If their investment paid off, there were large profits and bonuses for the executives. If it did not, they ran out of capital as they had very little of their own at risk. The government bailed them out and the executives got their bonuses anyway. The efforts to make the banks speculate with more of their own money were strongly opposed by the banks and bank executives.
Banks often lie. The system encourages them to do so. In a crisis, if a bank honestly says that it is not sure that it has enough cash and other liquid assets, others will not lend it any more money and depositors will rush to withdraw their money, thereby almost insuring a failure. The bank that lies, might weather the storm and survive.
Janet Louise Yellen is an American economist, civil servant and policymaker serving as the United States secretary of the treasury since January 26, 2021. A member of the Democratic Party, she previously served as the 15th chair of the Federal Reserve from 2014 to 2018. She is the first woman to hold either role. She is also a professor emerita at Haas School of Business at the University of California, Berkeley, and formerly a distinguished fellow in residence at the Brookings Institution.
