by Pam Martens and Russ Martens, Wall Street On Parade:

Yesterday the Chair of the U.S. Federal Reserve, Janet Yellen, was in London for a wide-ranging financial markets discussion with Nicholas Stern, the President of the British Academy. Making headlines from that discussion was Yellen’s stated belief that there will not be another financial crisis in our lifetimes. Yellen stated to Stern:

“Would I say there will never, ever be another financial crisis? You know probably that would be going too far, but I do think we are much safer, and I hope that it will not be in our lifetimes and I don’t believe it will be.”

While that remark has dominated the news, the more meaningful story is that Yellen (the top monetary authority in the United States; the head of the U.S. central bank; and the top dog at the Federal watchdog that regulates the largest bank holding companies on Wall Street) either intentionally misled the British Academy and global financial media yesterday or is unaware of the systemic risk in derivatives still on the books of the largest insured depository banks in the U.S.

In attempting to reassure global financial markets that the U.S. financial system is now much stronger and safer that at the time of the crisis in 2008, Yellen stated the following:

“We have been very focused on making sure that the core of our financial system has enough capital that we can provide assurance that our major banks would be able to go on lending and providing credit to the economy even after a very severe shock. We do what are called stress tests and the Fed just completed the first half of these stress tests last week and we hit the major banks that we subjected to these stress tests with enormous shocks: unemployment increasing to 10 percent; huge declines in house prices, commercial real estate prices, enormous shocks. And publicized exactly how these firms would fare and what losses they would take in every portfolio, what their capital position would be at the end of that.

“I think the public can see that the capital positions of the major banks are very much stronger at this point. This year all of the firms passed the quantitative part of the stress test….

On the matter of liquidity at the largest banks, Yellen had this to say:

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