“Janet Yellen doesn’t always fly with the doves.

“Ms. Yellen, the nominee to lead the Federal Reserve, is seen as a leading proponent of the central bank’s ultraloose monetary policy. But in testimony before the Senate Banking Committee on Thursday, she struck a more hawkish tone when it came to too-big-to-fail banks.

“Ms. Yellen didn’t advocate breaking up banks or espouse a radical departure from the Fed’s current regulatory path. But she suggested it may look to tighten the screws on too-big-to-fail firms.

“Namely, she said the Fed is considering a so-called countercyclical surcharge to the amount of capital the biggest banks have to hold. She indicated the Fed could likewise consider a capital charge meant to lessen banks’ reliance on short-term market funding, which it has identified as a systemic risk.”

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