Financial Stability a Decade After the Onset of the Crisis
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Financial Stability a Decade After the Onset of the Crisis

Janet L. Yellen
Federal Reserve Board, 2017
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Editorial Rating

8

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Recommendation

A speech Federal Reserve Chair Janet L. Yellen gave at a Fed symposium in August 2017 reveals this influential figure’s views on the recovery of the global financial system since the 2008 crisis, as well as her thoughts on where improvements are in order and where potential dangers still lurk. The tone of her speech is, in general, positive, and it gives reason for cautious optimism about the future: “Banks are safer,” she says. Even so, Yellen warns about complacency in the face of continuing complexity and the “unexpected side effects” that regulation could cause. getAbstract recommends this brief but illuminating text to financial professionals, investors and Fed watchers.

Summary

The causes of the 2008 economic crisis were not so different from those that spurred previous crises. Banks engaged in risky activities, such as lowering borrower qualifications for mortgage loans, causing a housing bubble to form. At the same time, derivatives such as mortgage-backed securities created new levels of risk for financial institutions. After the collapse of the housing and credit markets, the United States and other countries quickly moved toward reforms to shore up the financial system. Chief among them were measures to “increase the loss-absorbing capacity of banks,” regulate...

About the Author

Janet L. Yellen was the chair of the Board of Governors of the US Federal Reserve System from 2014 to 2018.

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