By Kate Davidson

WASHINGTON -- Federal Reserve Chairwoman Janet Yellen said Thursday that key regulatory changes implemented by the 2010 Dodd-Frank law -- including higher capital standards and enhanced supervision for big banks and new tools to help regulators deal with potential bank failures -- should not be rolled back.

Speaking at a Fed town hall discussion with teachers, Ms. Yellen said, "Dodd-Frank was a very important road map for strengthening the financial system and mitigating the chance of another financial crisis."

While Ms. Yellen said there is room for changes to the law that would help reduce the regulatory burden on small banks, she said Dodd-Frank established many key reforms that made the system "substantially safer and sounder," including new liquidity requirements, derivatives reforms, stress tests, resolution plans and the establishment of the Financial Stability Oversight Council.

Congressional Republicans and President-elect Donald Trump have vowed to dismantle the bulk of the Dodd-Frank law, which they argue will remove regulatory uncertainty for businesses and help promote economic growth.

Ms. Yellen also told teachers she worries "a great deal" about income inequality and its long-term effects on the U.S. economy. She noted that a larger share of income gains in recent years have gone to workers at the top of the income distribution, and that the gap between workers without a high school diploma and those with advanced degrees has grown wider.

And she lamented the underrepresentation of women in the economics profession, as well as among economics majors and in Ph.D. programs, aproblem she said begins in college or even earlier.

The disparity may have to do with a lack of role models for young women in economics, as well as an implicit bias, Ms. Yellen said, citing research that shows women economists receive significantly less credit than their male counterparts for coauthoring academic research papers, especially when their co-author is a man.

"It's something that I do hope will change over time and it may even make a difference in the way that policy is conducted," she said, adding that the Fed is working to improve diversity in its ranks.

In remarks prepared for delivery, Ms. Yellen said that improving education is at the top of her list among initiatives she believes could help spur economic growth and raise living standards. She credited educators with helping students build practical life skills, including the ability to make wise financial decisions, that benefit not just the students but allof society.

"Everyone is engaged in and depends on the economy, and nothing is more critical to a healthy and growing economy than the capability, creativity and productiveness of its workforce," she said.

Ms. Yellen also said all teachers, but especially economics teachers, effectively help further the Fed's mission by educating students and supporting their contributions to the economy.

She didn't comment on monetary policy, interest rates or the economic outlook in her prepared remarks.

Ms. Yellen took questions from teachers Thursday evening at the Fed's main building in Washington and via a webcast on its website.

Former Fed Chairman Ben Bernanke held several similar meetings with teachers during his tenure where he spoke about his own background as a college professor and the importance of financial education.

Ms. Yellen has spent much of her career in academia. She is a professor emeritus at the University of California at Berkeley and has been a faculty member since 1980, with various stints in government in between. Before that, she was a faculty member at the London School of Economics and Political Science, and an assistant professor at Harvard University.

Write to Kate Davidson at kate.davidson@wsj.com

(END) Dow Jones Newswires

January 12, 2017 21:14 ET (02:14 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.