Yellen also talked about the regional banks this Monday.
It said deposit outflows from small and medium-sized banks were declining, but it was watching the situation closely and was “not willing to allow contagious runs to develop” in the country’s banking system.
The head of the Treasury maintained that confidence in the banking system was strengthened by the measures taken by the Treasury, the Federal Reserve (Fed) and the Federal Deposit Insurance Corporation after the bankruptcies of Silicon Valley Bank and Signature Bank.
“My read is that outflows from small and midsize banks are slowing and things are leveling off, but it’s a situation we’re watching very closely,” Yellen said.
When asked whether the Financial Stability Oversight Board, the multi-regulatory body tasked with reining in systemic risks, had spent too much time assessing climate change risks and missed the problems that led to Silicon’s bankruptcies Valley and Signature, Yellen disagreed, saying the agency looks at all potential risks.
“We have focused on a variety of issues, including financial risks and have not put our full focus on climate risks,” he said, adding that the agency had also identified interest rate mismatches as a potential risk.
