US Financial System ‘Much Safer’ Than Before Financial Crisis - Yellen

WASHINGTON (Sputnik) — The US financial system is much more stable now than it was before the economic decline that started in 2007, Federal Reserve Chair Janet Yellen said in a testimony before the House Committee on Financial Services on Wednesday.

"I believe the financial system is much safer. There is twice as much high-quality capital among the largest firms now than there was before the crisis,” Yellen said at the semiannual testimony on monetary policy and the economy.

Yellen explained in her testimony that the Federal Reserve has started conducting stress testing of big financial institutions to ensure they can survive in worsening economic conditions.

The number of US banks has been declining, while the remaining banks have grown in size, according to the Federal Reserve Bank of Saint Louis. In 2011, the five largest US banks held 48 percent of total assets, and the biggest of them, JPMorgan Chase Bank, had $1.8 trillion of assets, it said.

In February 2014, Federal Reserve Governor Daniel Tarullo said more efforts were needed to end the perception that the biggest banks are “too big to fail” and to reduce risks to the US financial system.

In September 2008, the fourth-largest investment bank in the United States Lehman Brothers declared bankruptcy. The largest bankruptcy in US history almost collapsed the world’s financial system as Lehman held over $600 billion in assets, according to data collection and publication company New Generation Research.