Federal Reserve Chair Janet L. Yellen said Wednesday that the central bank is trying to tailor its supervision of the nation’s financial system as it undertakes the sweeping reforms mandated by Congress, tightening capital requirements for the biggest banks while easing scrutiny of smaller institutions.

In prepared testimony before the House Financial Services Committee, Yellen said Fed regulations not only have made large financial institutions more resilient in the face of future economic downturns, but also have limited the damage should they fail. In addition, Yellen said officials were focused on reducing the burden of regulations on small- and medium-sized banks.

"When it comes to bank regulation and supervision, one size does not fit all," she said.

The Fed conducts annual stress tests on big banks to determine how they would perform if a financial crisis were to strike. Earlier in the week, Fed governor Daniel Tarrullo outlined proposed changes to the tests that he said would significantly increase the amount of capital that the handful of big banks considered to be “globally systemically important” are required to hold.

In her testimony Wednesday, Yellen said the move would make those institutions more resilient. But she noted that about two dozen banks that are subject to stress tests would not be subject to the tougher standards. She also emphasized that the Fed is considering allowing banks with less than $250 billion in assets and little non-bank or international presence to be exempted from parts of the stress tests and cutting down on the information they must provide to the Fed.

“We can achieve our supervisory goals at most medium-sized banking firms using our normal supervisory program” along with targeted assessments, Yellen said.

The stress tests have become a cornerstone of the Fed’s efforts to strengthen the banking system in the wake of the 2008 financial crisis. But on Wednesday, Texas Rep. Jeb Hensarling, the Republican chairman of the financial services committee, questioned their usefulness and the broad scope of the Fed’s powers.

“The secrecy surrounding the stress test make it almost impossible to measure the effectiveness of the Fed's regulatory oversight or the integrity of the test findings,” he said.

Lawmakers also grilled Yellen over the Fed’s oversight of Wells Fargo, which was accused of opening fraudulent accounts for its customers for years. The bank was fined $185 million by the Consumer Financial Protection Bureau but did not admit guilt. Regulators blamed the bank’s aggressive sales culture for creating a toxic environment for wrong-doing.

“What we would really want to see is robust procedures that ensure that employees are always acting in a legal and ethical manner, and that the incentives that are put in place in these organizations are appropriate and don't serve to foster behavior that could harm the public,” Yellen said at a news conference last week. “This has been and will be a focus of our supervision.”

On Wednesday, Yellen said the Fed oversees the bank holding company but that other regulators have authority over the bank’s retail operations. Minnesota Rep. Keith Ellison (D) called for senior Wells Fargo executives to be held responsible for the fake accounts, a move that Yellen deemed “essential.” California Rep. Brad Sherman (D) demanded that Wells Fargo be broken up, while Rep. Stephen Lynch of Massachusetts (D) had even more pointed advice.

“Make their life hell,” he told Yellen.

The Fed chief also dodged questions about the central bank’s political motivations. New Jersey Rep. Scott Garrett said Fed Gov. Lael Brainard’s donations to Democratic presidential candidate Hillary Clinton created the perception of a “cozy relationship” with the administration.

“Whether you like it or not, the public increasingly believes that the Fed independence is nothing more than a myth,” he said.

The Fed has said that Brainard’s donations met ethical and legal guidelines for political contributions. It also has adamantly denied that politics plays any role in its monetary policy decisions.

“I don’t think there’s a conflict of interest there,” Yellen said Wednesday.