History was made today at the White House when President Barack Obama announced that he has decided to formally nominate Janet Yellen as the next chairperson of the Board of Governors of the Federal Reserve System.
Yellen, who currently serves as vice chair of the board, would be (if confirmed) the first woman and the first Democrat ever to hold the position.
“Janet is renowned for her good judgment,” said President Obama in a speech announcing the nomination at the White House. “She sounded the alarm early about the housing bubble, about excesses in the financial sector, and about the risks of a major recession. She doesn’t have a crystal ball, but what she does have is a keen understanding about how markets and the economy work — not just in theory but also in the real world. And she calls it like she sees it.”
He added, “She’s committed to increasing employment, and she understands the human costs when Americans can’t find a job… America’s workers and their families will have a champion in Janet Yellen.”
Yellen spoke next, expressing her gratitude to the President for choosing her (Obama’s first choice was Larry Summers, but Summers withdrew his name from consideration after Democrats in the Senate signaled they would oppose his nomination) and pledged to serve the country to the best of her ability.
Thank you, Mr. President, I am honored and humbled by the faith you have placed in me. If confirmed by the Senate, I pledge to do my utmost to keep that trust and meet the great responsibilities that Congress has entrusted to the Federal Reserve–to promote maximum employment, stable prices, and a strong and stable financial system.
I’d also like to thank my spouse, George, and my son, Robert. I couldn’t imagine taking on this new challenge without their love and support.
The past six years have been tumultuous for the economy and challenging for many Americans. While I think we all agree, Mr. President, that more needs to be done to strengthen this recovery, particularly for those hardest hit by the Great Recession, we have made progress. The economy is stronger and the financial system sounder. As you said, Mr. President, considerable credit for that goes to Chairman Bernanke for his wise, courageous, and skillful leadership. It has been my privilege to serve with him and learn from him.
While we have made progress, we have farther to go. The mandate of the Federal Reserve is to serve all the American people, and too many Americans still can’t find a job and worry how they will pay their bills and provide for their families. The Federal Reserve can help, if it does its job effectively. We can help ensure that everyone has the opportunity to work hard and build a better life. We can ensure that inflation remains in check and doesn’t undermine the benefits of a growing economy. We can and must safeguard the financial system.
The Fed has powerful tools to influence the economy and the financial system, but I believe its greatest strength rests in its capacity to approach important decisions with expertise and objectivity, to vigorously debate diverse views, and then to unite behind its response. The Fed’s effectiveness depends on the commitment, ingenuity, and integrity of the Fed staff and my fellow policymakers. They serve America with great dedication.
Mr. President, thank you for giving me this opportunity to continue serving the Federal Reserve and carrying out its important work on behalf of the American people.
The news of Yellen’s nomination was enthusiastically received by Senate Democrats. Over a third of the caucus had signed a letter circulated by Sherrod Brown of Ohio urging the President to nominate Yellen (as opposed to Summers). Several Democratic senators took to Twitter or their websites to praise the news:
Janet Yellen is an excellent choice to be the next Chair of the Federal Reserve and I believe she’ll be confirmed by a wide margin. ‑cs
— Chuck Schumer (@SenSchumer) October 8, 2013
“Today is a historic moment for the Federal Reserve, for women everywhere, and for all of us who care about job creation. Governor Yellen will work to prevent future bailouts, boost our housing markets, and give the Fed’s mandate to maximize employment the attention it deserves. In the midst of a fragile economic recovery, it will be more important than ever to have a steady hand and consensus builder at the helm of the Fed. I urge my colleagues to give her full and fair consideration and a prompt confirmation.”
— Sherrod Brown (statement)
Janet Yellen is a great choice for Fed Chair. Thank you @BarackObama for this historic nomination.
— Jeff Merkley (@SenMerkley) October 8th, 2013
Neither of Washington’s two U.S. Senators have responded to the nomination yet. Senator Mike Crapo of Idaho has already expressed his reservations, and he will certainly have an opportunity to ask Yellen a few questions as the ranking member of the Senate Banking Committee, which will be handling the nomination.
The Chair of the Senate Banking Committee, Tim Johnson, welcomed the nomination and predicted Yellen would be confirmed.
Yellen’s confirmation is not a sure thing, but she will have the backing of the Senate Democratic caucus, the business lobby, and many prominent economists ahead of the hearings and the eventual vote. That will count for a lot.
Mark Begich (Alaska), Jon Tester (Montana), Max Baucus (Montana), and Ron Wyden (Oregon) are all expected to be supportive of the nomination.
Assuming a vote takes place after presumptive New Jersey Senate winner Cory Booker is sworn in, at least five Republican votes will be needed to allow Yellen’s nomination to reach the Senate floor. That is, unless Senate Majority Leader Harry Reid attempts to reinterpret the Senate’s rules to work around a filibuster, as he was prepared to do a few months ago.
Lisa Murkowski of Alaska could well end up supplying one of the needed votes.
Jim Risch of Idaho will likely cast a no vote, along with Mike Crapo. (Idaho’s delegation routinely votes against Obama’s nominees).
Other Republicans who might be willing to at least vote to send Yellen’s nomination to the floor include Bob Corker, John McCain, and Susan Collins.
Financial markets also responded positively to Yellen’s nomination. The Dow Jones Industrial Average and S&P 500 both climbed in response to the news.
We at NPI commend the President for picking Janet Yellen. She was the logical choice for the job, and we’re glad to see her nominated at last.
In monetary parlance, she is known for having a “dovish” reputation (being more concerned about unemployment than inflation) which is entirely appropriate, considering that we have had plenty of “hawks” running the Fed over the years, and we’ve seen the consequences of their ideology.
Janet Yellen brings extensive experience and impeccable credentials to the position of Federal Reserve Chair; we look forward to seeing her in action once she takes over from current Fed Chairman Ben Bernanke.