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Yellen says Fed to avoid new rules

WASHINGTON — As the Federal Reserve works to ensure that the nation’s largest banks pose no undue threats to the financial system, it will avoid imposing unnecessary rules on small banks, Fed chair Janet Yellen said Thursday.

In a speech to community bankers, Yellen said the Fed will consider any harmful effects new regulations would have on smaller institutions.

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‘‘We are taking a fresh look at how we supervise community banks and possible ways that supervision can be smarter, more nimble, and more effective,’’ Yellen said in remarks to a policy conference sponsored by the Independent Community Bankers of America.

Yellen said one area the Fed is examining is how to defuse threats resulting from some big banks’ over-reliance on short-term funding. She said it’s too early to say whether or how the Fed would address those risks.

She noted that few community banks rely on the types of short-term funding that could pose threats.

In her comments Thursday, Yellen said conditions at smaller banks had strengthened in the years since the financial crisis.

Yellen said she viewed the loan growth as an encouraging sign that the economy was improving.

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