By James Temple

President Obama is expected to nominate UC Berkeley Professor Emeritus Janet Yellen as head of the Federal Reserve today, a move that, if approved by the Senate, would make her the first woman to lead one of the world’s most powerful financial institutions.

Yellen would replace Fed Chairman Ben Bernanke, who had earlier told Obama he would step down in January from the position he has held since 2006. Her appointment was reported by numerous media sources in Washington on Tuesday afternoon, citing sources within the administration.

Though a native of Brooklyn, Yellen, 67, has deep Bay Area roots, not only from her long tenure at UC’s Haas School of Business but also as the chief executive of the San Francisco Federal Reserve Bank from 2004 to 2010. She is currently vice chairwoman of the board of governors of the Federal Reserve System in Washington.

No serious opposition has emerged to her nomination in the Democrat-controlled Senate, where her confirmation is expected. Former Treasury Secretary Lawrence Summers, said to be Obama’s first choice for the job, dropped out of contention last month after leading liberal Democrats voiced strong opposition to his policymaking and demeanor.

“I think it’s great for the country,” Andrew Rose, associate dean of academic affairs and chair of the faculty at the Haas School, said of Yellen’s nomination. “She’s going to be a terrific Fed chair. She’s extremely well qualified, a very smart person. It is a great choice.”

Unmatched experience

Indeed, Yellen might be the most experienced candidate ever for the Federal Reserve job, given her long tenure within the Fed system, Rose said.

Yellen would enter the job at a critical time, with the U.S. economy recovering from a deep recession but not yet in full swing. The Federal Reserve is responsible for setting interest rates and other monetary policies in a continual effort to strike the right balance between inflation and growth, and regulating the increasingly complex financial system.

While at the San Francisco Federal Reserve Bank, Yellen was among the first public officials to raise alarms about the risks of piggyback loans and other complicated mortgage instruments that ultimately would set off the economic implosion that nearly brought down Wall Street in the summer of 2008. But like most, she didn’t recognize the full extent of the financial crisis unfolding under her watch.

On the whole, Yellen is seen as more skeptical of Wall Street than Summers, and more aggressive than Bernanke in pushing for measures to accelerate economic growth. She has zeroed in on unemployment, rather than inflation, as the Fed’s foremost concern.

Carl Walsh, an economist at UC Santa Cruz who worked with Yellen at the San Francisco Fed, said she “has been instrumental in developing the Fed’s recent strategies to be more transparent and to communicate the Fed’s policy objectives by, for example, being more explicit about its inflation goals.”

A sign of continuity

At the same time, it’s thought that her appointment would be seen on Wall Street as a sign of continuity. She worked closely with Bernanke in designing and promoting the “qualitative easing” policy to stimulate the economy and revive job growth, pumping more money into circulation by buying up government securities from the market.

“I don’t think it will lead to much change at all,” Rose said. “It’s hard to imagine them doing much more to stimulate the economy.”

— Reach James Temple at [email protected]

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