Her selection would
be good politics,
good for the economy
Janet Yellen is expected to be nominated by President Obama to head the Federal Reserev Bank. Click image to enlarge.
Blog note: This was originally posted Sept. 23.
AS CONGRESS RUSHES headlong into a crazy shutdown of the federal government that could wreak havoc on the economy, another development that could come as early as today may prove to be a boost.
The internet was buzzing over the weekend with speculation that President Obama will name – as early as today – Janet Yellen as his nominee to head the Federal Reserve Bank.
This comes just a week after former Treasury Secretary Larry Summers, the president’s first choice, was forced to withdraw his name from consideration.
Yellen, seen as widely supported among the cognoscenti, would make an excellent selection.
THE FIRST INKLING that something is afoot came on Thursday with a report in the Financial Times headlined Janet Yellen moves closer to Federal Reserve nomination. (No link; it’s behind the pay wall.)
The Financial Times story of Sept. 19, the first inkling of a Yellen nomination by President Obama.
Richard McGregor reports: “Janet Yellen has assumed frontrunner status for nomination as the new chair of the Federal Reserve in the wake of Lawrence Summers’ withdrawal.
“The White House has begun contacting the offices of Democratic senators about the nomination process, a sign that President Barack Obama is close to making a decision.
McGregor also notes that the president two months ago put Yellen on his short list.
“Mr. Obama himself singled out Ms. Yellen as one of the leading candidates, along with Mr. Summers and Don Kohn, a former Fed vice-chair, in July,” he wrote.
Then, in a brief item on Friday, Politico advanced the speculation in a story headlined White House pushing Janet Yellen nod to Senate Democrats
The Politico story Friday speculating that a Yellen announcement is imminent.
“Senior White House officials are asking Democratic senators to begin endorsing Janet Yellen, the exclusive front-runner to run the Federal Reserve, a Senate source said Friday,” Jonathan Allen wrote
“Now, the White House has turned to Yellen, who is currently vice chairman of the Fed and who already had won the backing of some Democratic senators, liberal activists, and women’s groups.”
One of the Senators backing Yellen for the top Fed position is freshman Sen. Elizabeth Warren (D-Mass), the best new member of the exclusive Club of 100 in generations.
Sen. Warren has spoken out publicly on at least two occasions in the past couple of months in support of Yellen – even while Summers was still in the running
Sen. Elizabeth Warren (D-Mass.) has endorsed Yellen for the top Fed position. Click image to enlarge.
In an interview with MSNBC, Warren said:
“Janet Yellen would make a terrific Federal Reserve chair. I hope she is nominated. She has great experience, she has great judgment.”
If Yellen is good enough for Sen. Warren, then she’s good enough for me.
Just last week, after Summers pulled out, Warren was again speaking in support of Yellen, this time on Bloomberg News.
“I am a big fan of Janet Yellen,” Sen. Warren said in the
Sept. 16 interview. “I think she is terrific. She’s got the right experience and I think she’ll make a terrific Federal Reserve Chairman.”
Among the reasons Yellen is garnering such support is her track record as an academic economist and experience in other Federal Reserve Bank positions.
A WASHINGTON POST blog item of August 16 was headlined Janet Yellen called the housing bust and has been mostly right on jobs.
In an exhaustive report, Neil Irwin and Ylan Q. Mui, wrote:
“In interviews with more than a dozen people who have worked closely with Yellen, the portrait that emerges is of a careful and deliberate thinker who has been mostly right in her assessments over the tumultuous past six years of crisis, recession and grinding recovery.”
In other words, she would make a excellent steward of the single most important federal government position that has vast influence over the U.S. economy.
The Washington Post story from August that details Yellen’s background and qualifications.
“She has been a strong intellectual force within the Fed, a tough taskmaster for staff and single-minded in her desire to push down joblessness. She has been less inclined to wring her hands over the risks that the Fed’s easy money policies could create new bubbles or stoke inflation,” the Post story added.
After a stint in the Clinton White house as chairman of the Council of Economic Advisers, “Yellen returned to Berkeley in 1999, then re-entered public service in 2004 as president of the Federal Reserve Bank of San Francisco, just as the housing market in California and other western states were entering a full-scale bubble.”
One of her colleagues at Berkeley, noted economist and blogger Brad DeLong, praised Yellen effusively in an op-ed in the Financial Times last week headlined Why Janet Yellen is now the best choice to lead the Federal Reserve (Caution: this link is also behind the pay wall.)
“I have watched her from a distance since she left the corner office next to mine at the Berkeley Economics department and moved across San Francisco Bay to become president of the Federal Reserve Bank of San Francisco in 2004 – and she has shown a better understanding of the state of the economy and the impact of economic policies than most of her peers at the Fed,” De Long wrote.
“She helped steer the Federal Open Market Committee from its late-2009 confidence that monetary policy could be rapidly normalized to its current posture that extraordinary monetary accommodation is likely to be required for years. That is no mean record – and it is all on the record – on which to build a candidacy.”
If, as expected, President Obama nominates Yellen to lead the Fed, he will have wide ranging support from many quarters.
It would be smart politics and the right thing for the economy – assuming the radical right-wingers don’t destroy it first by shutting down the federal government.
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