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Big banks get blasted by Yellen & Buffett

Banks are under fire from some big names in the financial world.

Federal Reserve Chair Janet Yellen told a New York audience on Tuesday "there may be pervasive shortcomings in the values of large financial firms that might undermine their safety and soundness."

Her comments come a few days after Warren Buffett laced into banks in his annual letter to Berkshire Hathaway shareholders. Buffett took aim at Wall Street with jabs including “Money-shufflers don’t come cheap."

Yahoo Finance’s Aaron Task thinks Yellen’s comments have greater implications than those of Buffett.

“You could make a case that the market, the whole game has been rigged,” he says. “Janet Yellen is refreshingly saying 'wait a minute, this is wrong and we’ve got to stop it.' Warren Buffett, he's playing poker, and he's sending little jabs at investment bankers.”

Task adds that those in the finance industry should take note of Yellen’s remarks.

“I think what she is saying is very important, and should be heeded by everyone who works on Wall Street and the banking industry because she is ultimately the regulator of this industry,” he says, adding, “She’s not talking about P/Es or any other valuation. She's talking about the culture of the banks and her words were very tough... Too often in recent years bankers at large institutions have... broken the rules, sometimes done it brazenly.”

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During Yellen’s testimony before congress last week, Senator Elizabeth Warren (D-MA) criticized the Federal Reserve for regulatory capture and questioned the Fed Chair’s stance on Dodd-Frank.

Yahoo Finance Senior Columnist Michael Santoli doesn’t think Yellen’s comments will entail tougher regulations or new legislation.

“It means constant close scrutiny,” he says. “She might as well have addressed this to Senator Warren, because when she was in congress she got burned by people saying 'are you really being tough on the banks or not?' So this is a political message from a supposedly non political person.”

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