WASHINGTON — Treasury Secretary Janet Yellen pointedly refused to take a position on the bank agencies' Basel III endgame proposal, a striking move amid an
Yellen told several lawmakers, including House Financial Services Committee ranking member Rep. Maxine Waters, R-Calif., that she would leave the Basel questions to the bank regulators. The Basel III endgame proposal would raise capital standards for the largest banks, and has been
"I'm not going to take a position on the details with the rule," she said.
Yellen's comments come as she testified in front of the House Financial Services Committee for the annual report of the Financial Stability Oversight Council. She'll head to the Senate Banking Committee on Thursday for a similar hearing.
Lawmakers
"It's important to ensure that credit availability is not significantly diminished," she said.
To Rep. Andy Barr, R-Ky., Yellen said that having strong capital, liquidity and resolution standards diminishes systemic risk.
"I think we've seen a clear example of this in the ability of the banking system to weather the pandemic," she said.
Rep. Bill Huizenga, R-Mich., chairman of the House Financial Services Oversight Subcommittee, pressed Yellen on her decision to avoid commenting on the specifics of Basel.
Yellen said that she gives her thoughts on a regular basis to the head of the banking agencies at the FDIC, OCC, and Fed. She said that she hasn't had a meeting with the president on the topic.
"I can't come to any conclusion other than you're sharing those insights with others, that you're not willing to share them with Congress," Huizenga said. "Which is your choice. I think it's a bad choice."
Yellen did, however, weigh in on another Biden administration rule. She said that she "has had some concerns" on the Securities and Exchange Commission's safeguarding rule and how it would affect banks.
The conflict centers on SEC's proposed requirement that qualified custodians, such as banks, segregate clients' cash in an account designed to protect the assets from the bank's creditors in the event of failure. The proposal is a reaction to the rapid growth of the cryptocurrency and stablecoin industries, as well as questions about the cryptocurrency exchange FTX's handling of money that backed digital assets before it collapsed.
Federal Reserve Chairman Jerome Powell and acting Comptroller of the Currency Michael Hsu
"The fact that the prudential regulators have confirmed that the SEC did not consult with them is alarming enough," Barr said in a Friday interview with American Banker. "But the fact that they don't agree, that they have concerns with what the SEC is doing is I think even more troubling. That's what we haven't seen before."
Yellen also took criticism from Republicans on the
"These regulations are not necessarily appropriate for institutions that may engage in different activities and therefore pose different risks," said House Financial Services Committee Chairman Rep. Patrick McHenry, R-N.C., "Given the significant consequences associated with the systemic risk designation, Congress did not intend for this designation to be politicized nor weaponized. This move, taken with the apparent failure to identify and respond to emerging risks, calls into question the effectiveness of the FSOC."
