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Yellen: Trump is completely wrong that banks aren't lending

Fed Chair Janet Yellen rebutted President Donald Trump's claims that banks aren't lending, saying that businesses can get the money they need.

During testimony before Congress, the central bank leader was asked if businesses have access to capital. Sen. Elizabeth Warren (D-Mass.) asked Yellen specifically about remarks from Trump alleging that banks are not lending because of financial reforms adopted after the 2008 financial crisis.

Yellen said commercial and industrial lending specifically surged after the crisis, rising 75 percent since 2010, the year the Dodd-Frank law passed.

"They're lending," Yellen said in response to an earlier question from Sen. Sherrod Brown, an Ohio Democrat. "Their price-to-book ratios are substantially higher than the ratio of banks headquartered in other areas, and they're gaining market share, and they remain quite profitable."

Trump has targeted Dodd-Frank reforms as part of his quest to roll back regulations. The regulations were designed to prevent a recurrence of the 2008 financial crisis.

While he has been critical of big Wall Street institutions, he recently said that banks in general are not lending, which is hindering economic growth.

"Frankly, I have so many people, friends of mine, that have nice businesses that can't borrow money," he said during a White House appearance Feb. 3. "They just can't get any money because the banks won't let them borrow because of rules and regulations in Dodd-Frank."

However, Yellen mentioned a recent survey from the National Federal of Independent Business, in which only 2 percent of respondents cited access to capital as their greatest obstacle.

"Lending has expanded overall by the banking system, and also to small businesses," she said.

Brown also asked how U.S. banks are doing compared with their global competitors.

"U.S. banks are generally considered quite strong relative to their counterparts," Yellen responded. "They've built up quite a bit of capital, partly as a results of our insistence that they do so."

Brown said he worries that weakening Dodd-Frank would be negative for a banking system at the center of the global financial crisis in 2008.

"If the rules are removed, Wall Street will almost assuredly be right back to the risky and reckless behavior right before you took this job, back before the crisis," he said.