The issue: Highly qualified nominee is the right choice to head the Fed
The head of the Federal Reserve board is one of the most powerful and, outside of financial circles, least known officials in the U.S. government.
THE FED, an independent agency that jealously guards that independence, has $3.8 trillion in assets, sets interest rates and, since the recession, has an open license to intervene in the economy.
The Fed has two mandates that can easily come in conflict — maintain a stable currency, which basically means keeping inflation under control, and try to combat unemployment.
The Fed chair’s semi-annual appearances before Congress — one day each for the Senate and House — are major economic events with the central banker’s testimony closely monitored worldwide.
It’s a safe bet that few Americans have heard of Janet Yellen and even fewer could recognize her, but after a two-hour confirmation hearing before the Senate Banking Committee, Yellen, President Obama’s pick to lead the Fed, seems assured of Senate approval, despite a handful of dissenters.
She would succeed Ben Bernanke, who will step down Jan. 31 after eight years on the job. Yellen, 67, indicated that she would continue Bernanke’s policies that are heavily weighted toward stimulus — super-low interest rates and the monthly purchase of $85 billion in bonds.
Yellen indicated to the committee that she is on board with Bernanke’s plan to keep interest rates near zero until the jobless rate, now 7.3 percent, falls to 6.5 percent. The bond-buying program seems likely to remain in place at its current rate until at least March. Whether to continue it and how long will be one of Yellen’s first major decisions as chair.
HER TESTIMONY before the committee cheered stock markets here and abroad, especially in Asia, where major indexes rose sharply, in some case to record highs.
Yellen has the résumé for the job. Her academic credentials include Harvard, the London School of Economics and UC Berkeley. She was a governor of the Federal Reserve System before becoming chair of President Clinton’s Council of Economic Advisers. From there she became president of Federal Reserve Bank of San Francisco before becoming vice chair of the national Federal Reserve system in 2010.
The Banking Committee may approve her nomination as early as this coming week. When the time comes, the full Senate should confirm her quickly and decisively without the usual political hostage-taking designed to extract concession from the White House.
The last thing our economy needs is more uncertainty.