The Chair of the U.S. Federal Reserve, Janet Yellen, said she did not believe there would be another financial crisis in her lifetime, citing the strength of reforms instituted in the wake of the 2007-2009 global crash.
“Would I say there will never, ever be another financial crisis?” Yellen said. “You know probably that would be going too far, but I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will be,” according to a report from Reuters.
Yellen said the financial system was stronger due to post-crisis reforms.
“I think the public can see the capital positions of the major banks are very much stronger this year,” she said. “All of the firms passed the quantitative parts of the stress tests.”
Yellen said that the crisis would have been “worse than the Great Depression” without the Fed’s intervention.
The success of recent stress tests has prompted some banks to call for an easing of post-crisis regulations, but Yellen said unwinding the reforms would “not be a good thing,” and she urged those involved in coping with the last crisis to speak out to prevent a rollback. Last week, 34 out of 34 banks made it through the Fed’s annual stress tests with sufficient capital to weather a crisis.
President Donald Trump campaigned on a promise to cut banking regulation, and the Treasury Department has proposed easing restrictions on big banks.
Yellen said she had a good working relationship with U.S. Treasury Secretary Steve Mnuchin. She declined to comment on her relationship with Trump.
She also said the Fed would raise interest rates gradually and reduce its stockpile of bonds “gradually and predictably.”
Yellen was speaking on Tuesday with Lord Nicholas Stern, the president of the British Academy.