Federal Reserve Chair Janet Yellen said Wednesday that the Fed and other banking regulators have made significant progress in correcting flaws in the financial system that triggered the worst banking crisis in seven decades.
Banking regulators are remaining “watchful” for any areas where further reforms may be needed, she said in remarks at a financial conference.
Yellen cited the need to address the problem of “too big to fail”—the perception among investors that some institutions are so large that the government will step in and save them if they get into trouble.
She said the Fed and other regulators are taking steps to make sure that the collapse of even very large banking institutions can be handled in ways that don’t jeopardize the stability of the entire system.
Yellen’s comments came in a joint appearance with International Monetary Fund Managing Director Christine Lagarde at a conference sponsored by the Institute for New Economic Thinking.