WASHINGTON, Could 8 (Reuters) – U.S. Treasury Secretary Janet Yellen mentioned on Monday that some regional financial institution inventory costs remained underneath stress, however deposits had stabilized and regulators stood prepared to make use of the identical instruments utilized in latest financial institution rescues if extra contagion fears arose.
Yellen advised CNBC in a reside interview that a few of the promoting of financial institution shares was on account of earnings pressure, however added that the “bar is fairly excessive” for imposing any controls on quick promoting of financial institution shares.
“We’re not seeing substantial deposit runoff,” Yellen mentioned. “So there are some pressures on inventory costs however our banking system is nicely capitalized, it has entry to liquidity and regulators stand prepared to make use of the identical instruments we’ve prior to now if there are additional pressures that come up that might create contagion.”
Requested if she would assist a short lived ban on short-selling of financial institution shares to take some stress off of regional banks, she mentioned that was a matter for the Securities and Alternate Fee (SEC) to determine, and the final use of such controls in 2008 might have made issues worse.
“If it had been being discovered that there is market manipulation, that is one thing the SEC actually might take motion towards. However quick promoting extra broadly, the bar is fairly excessive to place controls on,” Yellen mentioned.
Reporting by David Lawder and Andrea Shalal; Enhancing by Jamie Freed
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