The biggest worry isn’t “when” the Fed will raise rates, but “how” the Fed should be helping to identify threats to financial stability, Alice Rivlin, the former vice chair of the Federal Reserve, said Thursday.
Speaking at The Atlantic’s Summit on the Economy in Washington, Rivlin stated that “quite accomodative monetary policy, low rates, will be appropriate for some time,” and that the Fed’s real challenge is preventing another financial collapse.
Asked to comment on the Dodd-Frank financial reform law, Rivlin stated that Dodd-Frank is “a step in the right direction,” adding that she feels “very strongly that financial instability is the biggest threat” for the nation. “We can’t do 2008 again; I don’t think we should relax on that.”
While “new tools” were created under Dodd-Frank to help prevent another economic meltdown, “we haven’t seen whether they [those tools] will be used.”
Rivlin said that it’s “likely that at some point we’ll have another financial crash, if we’re not vigilant.” Part of being vigilant, she added, is “Congress and the president saying ‘we need to be vigilant on financial oversight and we can’t let those who are being regulated turn that around.’”