Janet Yellen, former Chair of the Board of Governors of the U.S. Federal Reserve, expressed her worries about high leverage lending and financial deregulation in the U.S.

Yellen, now a distinguished fellow at the Brookings Institute, said this in a conversation with economist Paul Krugman, also an op-ed columnist for The New York Times, at the Graduate Center of the City University of New York on the night of December 10.

Compared to the financial crisis a decade ago, Yellen said things have improved, but there are "gigantic holes in the system."

"The tools that are available to deal with emerging problems are not great in the U.S.," she said.

Yellen said she worried a lot about leverage lending to highly indebted corporations.

"Corporate indebtedness is now quite high and I think it's a danger that if there's something else that causes a downturn, that high level of corporate leverage could prolong the downturn and lead to lots of bankruptcies in the non-financial corporate sector," she said.

According to CNBC, the U.S. corporate debt has skyrocketed to $9.1 trillion in mid-2018 from $4.9 trillion in 2007.

She doesn't think the banking agency has sufficient tools to deal with the problem.

Yellen also worried about pushbacks against regulation. "We're entering again, nearly a decade after the [financial] crisis, an era when there's a huge focus on deregulation."

"There' s an agenda of unfinished work… things still need to be worked on," she said. "I'm not sure we're working on those things in the way we should, and then there remain holes, and then there's regulatory pushback. So I do worry that we could have another financial crisis," she added.

(Reporting from New York)

Copyedited by Craig Crowther

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