When Janet Yellen became president of the Federal Reserve Bank of San Francisco in June 2004, a massive real estate bubble was building in the vast nine-state area that it oversees. Her staff alerted her that banks were overinvesting in speculative commercial real estate at a time when housing prices in the region were ballooning. But as chief regulator in the Federal Reserve's largest district, Yellen conveyed two starkly different messages. In public remarks across the Western region's nine states, she downplayed risks that were building in the financial sector, reporting positive economic signs even as warning ... (full story)