Yellen: small banks should have Volcker exemption

Community banks should be exempt from the Volcker Rule, but a rollback of the whole Dodd-Frank Act is illogical, according to the chair of the US Federal Reserve.

Speaking at a Senate hearing on Tuesday, Janet Yellen said the Fed is looking at ways in which it can mitigate the regulatory burden for community banks, adding lawmakers should exclude them from the rule which restricts banks’ trading positions.

But she questioned the basis of claims made by President Donald Trump that the Dodd-Frank Act made US banks less competitive, adding they were quite profitable, quite strong, and that they had almost doubled Tier 1 capital, at the Fed’s insistence, following the financial crisis.

She added that more widely the Fed had seen healthy growth in actual lending in the economy, and that only an “extremely low number” of small businesses complained of access to credit as their main problem.