Federal Reserve Chair Janet Yellen lashed out at the culture in the nation's biggest banks on Tuesday saying "there may be pervasive shortcomings in the values of large financial firms that might undermine their safety and soundness."
In a speech in New York City, Yellen, who as head of the Federal Reserve is the nation's leading bank supervisor, said that the Fed expects banks to follow the law and act ethically. "Too often in recent years, bankers at large institutions have not done so, sometimes brazenly," she said.
The remarks come amid ongoing investigations and settlements by big banks in key areas of their businesses, including mortgages, currency trading and setting interest rates. They appear to be her strongest comments yet on the issue, going further than previous speeches and other Fed officials in suggesting a pattern.
Yellen's comments come as the issues of bank regulation and financial system reforms are very much alive in the new Republican-controlled Congress. During Yellen's congressional testimony last week, some GOP lawmakers complained that the Dodd-Frank financial reform act had gone too far and was holding the economy back by curtailing lending. From the Democratic side, Yellen and the Fed have taken heat for being too lenient on the big banks.
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-- Steve Liesman, CNBC Economics Reporter