Former chair of Federal Reserve Janet Yellen warned that though economy of US has improved there are certain holes in the system and tools available to deal with these emerging problems are not strong. So, the nation could be looking at another financial crisis if regulators are not able to address problems soon like leveraged loans which was also mentioned by current leadership of Federal Reserve. After the financial crisis the powers of agency regulators had been expanded but the ability of Federal Reserve to lend funds to individual firms to manage crisis were curbed.
The current batch of Federal officials has pushed back against their critics who claimed that their reforms were making the system risky while they were trying to make the system more efficient.Though after leaving office in June 2017 Yellen has said that there may not be another financial crisis in this lifetime as financial reforms have been put in place to aver the crisis, she did warn that deregulatory efforts could undo all the work done. She did not make any visible comments on existing current financial or economic conditions but stated that interest rates which are low at present are likely to remain at this level or fall lower than past decades.
She stated that during typical recession time Federal Reserve cuts interest rates by five percent through the normal level of short-term interest rates are at 3 percent. This means that there is less scope to cut short-term interest rates in the United States. Speaking about the role of Federal Reserve during the financial crisis she said that though some more quantitative easing could have been done but it held back as there was widespread public criticism of its bond-buying program. She is now a scholar at Brookings Institute and said that for a federal officer there is always an agenda of unfinished regulation.