President Barack Obama nominates Janet Yellen to be the next Federal Reserve Chair

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.

Her remarks:

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.