WASHINGTON Janet Yellen, the president's nominee to head the Federal Reserve Board, pledged Wednesday to continue to use supervisory tools at the central bank's disposal to minimize the chance of another crisis.
"I am committed to using the Fed's supervisory and regulatory role to reduce the threat of another financial crisis," said Yellen in prepared testimony released a day ahead of her highly anticipated confirmation hearing before the Senate Banking Committee.
President Obama nominated Yellen on Oct. 9 to replace Ben Bernanke, whose term expires in January. She has previously served as president of the San Francisco Fed and on the Council of Economic Advisors in the Clinton administration.
Yellen, 67, has already received strong support by Democrats on the panel, including from Chairman Sen. Tim Johnson of South Dakota, who expressed his excitement to cast his vote for the first woman to become the most powerful central banker in the world.
"We need her expertise at the helm of the Fed as our nation continues to recover from the Great Recession, complete Wall Street Reform rulemakings, and continues to enhance the stability of our financial sector," said Johnson, according to excerpts of his opening statement.
In her brief remarks, Yellen, the current No. 2 at the Fed, reiterated her support for capital and liquidity rules and strong supervision as tools to end "too big to fail."
Efforts by financial institutions, the Fed, and other bank regulators have helped to make significant progress in addressing weaknesses in the financial system, she said.
"Banks are stronger today, regulatory gaps are being closed, and the financial system is more stable and more resilient," said Yellen, noting U.S. financial firms are holding more and better quality capital and liquid assets to help weather any stressful economic episode.
"Large banks are now subject to annual "stress tests" designed to ensure that they will have enough capital to continue the vital role they play in the economy, even under highly adverse circumstances," said Yellen.
Anticipating concerns repeatedly aired by lawmakers, Yellen said the Fed should continue to "limit the regulatory burden for community banks and smaller institutions" in future rules being written by policymakers.
Yellen said she would also continue efforts pursed under Bernanke's chairmanship in tying the Fed's monetary policy to its financial stability goals.
"The Federal Reserve has sharpened its focus on financial stability and is taking that goal into consideration when carrying out its responsibilities for monetary policy," said Yellen. "I support these developments and pledge, if confirmed, to continue them."