Banks are likely to slow down in lending in light of the fallout from the recent banking crisis and do part of the federal government’s work in cooling inflation, Treasury Secretary Janet Yellen said Sunday.
“Banks are likely to become somewhat more cautious in this environment,” Yellen said in an interview on CNN’s “Fareed Zakaria GPS” program aired on Sunday morning. “That does tend to lead to somewhat greater restriction in credit that could be a substitute for further interest-rate hikes that the Fed needs to make.”
The stunning collapse of Silicon Valley Bank and Signature Bank in March has triggered fears of another banking meltdown of the scale of the 2008 crash. The Treasury Department, working with the Federal Reserve and the Federal Deposit Insurance Corporation, intervened after the regional bank failures and promised that “no losses associated with the resolution will be borne by the taxpayer.”…