Federal Reserve Chair Janet Yellen has returned to the congressional banking committees to deliver another round of testimony on monetary policy and other issues. As provided under the regular rotation between the committees, she appeared first at the Senate Banking Committee on July 15 and then will appear at the House Financial Services Committee on the 16th.

In opening statements, Senate Banking Committee Chair Tim Johnson, D-S.D., and Ranking Member Sen. Michael Crapo, R-Idaho, both jawboned Yellen to support an amendment to the pending extension of the Terrorism Risk Insurance Act (TRIA) that would designate one seat on the Federal Reserve Board of Governors to be filled by someone with experience in community banking, either as a banker or a regulator.

Sen. David Vitter, R-La., has been pushing especially hard for this, and a number of senators have spoken in favor of it. Yellen told the committee she is in favor of giving one of the two open seats to such a person but not to enshrine this in statute. She explained that if one totaled up all of the skills needed on the board there wouldn't be enough governors to fill the demand.

This writer can imagine a nightmare scenario in which the number of seats would be expanded to accommodate any interest group that can lobby effectively enough to secure a seat. Even the placement of one community bank adherent on the board creates an in-house lobbyist for this particular interest group.

Vitter contends that the board is now top heavy with academics economists sympathetic to the "too big to fail" banks. Another complaint is that despite a statutory requirement that board members represent specific Fed districts, in reality they tend to represent Boswash. Suddenly the composition of the Fed's board is becoming a live issue.

Yellen's statement, which is presented in identical to each committee, covered the state of the economy, the Fed's monetary policy and the role of so-called macroprudential supervision as a tool to manage the risk created by the Fed's open-handed monetary policy, but Yellen admits that this is another experimental program spawned by the 2008 financial crisis.

This writer has been in the camp from the outset that quantitative easing (QE) is QE-n or QE infinity and the financial crisis, which scholars date to the 1960s and 1970s is a permanent part of the political and financial landscape, and it is inviting to parse the Q&A portion of the hearing for evidence to support this view.

For example, Sen. Chuck Schumer, D-N.Y., who is a member of the Senate Leadership, once again urged the Fed to go slow with the taper, and he also suggested that if action is needed to control bubbles, it should not come in the form of higher interest rates that can slow the economy. This is evidence that Wall Street is still dependent on the steroid-like effect of QE and does not want it to end.

Sen. Elizabeth Warren, D-Mass., cited alarming statistics to question again the Fed's claim that it is making progress in ending the policy of too big to fail. She pointed out that Lehman Brothers, whose failure was a major event in the 2008 crisis, was only a quarter the size of JPMorgan Chase is and that the latter has 15 times the number of subsidiaries that Lehman had.

(Archived video and Yellen's statement can be found here.)