Biden Expected to Pick Janet Yellen, Former Fed Chair, as Treasury Secretary

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WASHINGTON — President-elect Joseph R. Biden Jr. is expected to nominate Janet L. Yellen, the first woman to lead to the Federal Reserve, as Treasury secretary, according to people familiar with the decision.

The nomination will place her into a critical job at a fraught economic juncture. While growth is recovering from pandemic-related lockdowns earlier in the year, coronavirus infections are climbing and local governments are restricting activity again, likely imperiling that rebound. Any additional government relief could require negotiating with a Republican-controlled Senate. Relations with other nations are frayed after four years of aggressive trade tactics by the Trump administration and the national debt is swelling, with the Treasury Department expected to continue issuing huge volumes of bonds into an increasingly fragile market.

That means Ms. Yellen, 74, will need to bring a mix of political, diplomatic and financial savvy to the job. She is well placed to do so, as one of the most recognizable figures in Washington’s economic spheres. Ms. Yellen is well known on Capitol Hill and well connected globally after leading the Fed from 2014 through 2018. Her long career as an economic policymaker has also given her insight into Wall Street and its major investors.

Ms. Yellen declined to comment. Her expected nomination was first reported by The Wall Street Journal.

She is a renowned labor economist who taught at the University of California, Berkeley, among other academic posts. She was also chairwoman of the White House Council of Economic Advisers during the Clinton administration, president of the Federal Reserve Bank of San Francisco, a Fed governor, Fed vice chair and finally the central bank’s first female chair.

Ms. Yellen wanted to be reappointed when her term at the head of the central bank ended in 2018, but President Trump, eager to install his own pick, decided against renominating her. Instead, he chose Jerome H. Powell, the Fed’s current chair, whom Ms. Yellen has consistently praised since leaving the central bank.

In replacing Ms. Yellen, Mr. Trump broke with precedent. The previous three Fed chairs had been reappointed by presidents of the opposite political party.

But it may have paved the way for Ms. Yellen — who became an economist at a time when few women entered or rose in the male-dominated field — to break yet another public policy glass ceiling.

Ms. Yellen has been called many things over the years, including “a feminist hero,” a “small lady with a large I.Q.,” and “Fed chair,” which she preferred over the gendered “chairwoman.”

If confirmed, she will add “Madam Secretary” to the list. That will be a first at the Treasury, which has been led by a white man throughout its 231 year history.

Born in Brooklyn in 1946, Ms. Yellen was raised in Bay Ridge, a middle-class neighborhood across the waterfront from Staten Island. Her mother was a teacher who stayed home to raise Ms. Yellen and her brother. Her father was a family doctor. She was both valedictorian and newspaper editor at her high school.

She attended Brown University and went on to get a doctorate from Yale. She met her husband, George A. Akerlof, now a Nobel laureate, while working in a research position at the Fed in 1977. The economic powerhouse pair have completed influential research on labor market dynamics together.

Ms. Yellen has for decades been an influential player in Washington’s policy sphere. Her time at the Fed saw the central bank undertake the most patient rate hiking cycle in its history — one that drew criticism at the time but laid the groundwork for a strong labor market that drove unemployment to its lowest rate in 50 years before the pandemic.

She has spent her post-Fed years at the Brookings Institution, occupying an office close to Ben S. Bernanke, who preceded her as Fed chair, and other former Fed officials. They call their corridor the “F.O.M.C., Former Open Market Committee,” a play on the name of the central bank’s rate-setting Federal Open Market Committee.

Ms. Yellen is likely to bring a long-held preference for government help for households that are struggling economically and for slightly tighter financial regulation with her to the Treasury. As Fed chair, she gave important speeches — including one at the storied annual conference in Jackson Hole, Wyo. — advocating continued watchfulness and wariness when it came to financial overhauls instituted after the 2008 crisis. She has struck a concerned tone about regulatory rollbacks under the Trump administration.

“It is certainly appropriate to simplify regulations that impose unnecessary burdens, particularly on small community banks,” she said in 2019. “But I’m greatly concerned that the regulatory work needed to address financial stability risk has stalled. There have been some worrisome reversals.”

Ms. Yellen is a Keynesian economist, which means she believes markets have imperfections and sometimes need to be rerouted or kick-started by government intervention.

She is, however, relatively moderate on many topics, including trade. Mr. Akerlof, her husband, recalled in a 2001 biographical note that when he met her: “Not only did our personalities mesh perfectly, but we have also always been in all but perfect agreement about macroeconomics. Our lone disagreement is that she is a bit more supportive of free trade than I.”

She has been a clear champion of continued government support for workers and businesses as the pandemic saps the economy.

“While the pandemic is still seriously affecting the economy, we need to continue extraordinary fiscal support,” Ms. Yellen said in a Bloomberg Television interview in October.

She has also been a major influence on leading officials at the Fed. John C. Williams, who worked for her in San Francisco, now leads the Federal Reserve Bank of New York. Mary C. Daly, who now leads the San Francisco Fed, cites Ms. Yellen as a key mentor.

That, along with her experience working with Mr. Powell, could help facilitate the kind of close relationship needed between the Fed and Treasury, which are collaborating on a variety of crisis response programs.

While running the Fed, Ms. Yellen at times had a testy relationship with congressional Republicans. In one instance, Representative Mick Mulvaney, then a South Carolina Republican, said Ms. Yellen was overstepping her boundaries by talking about inequality.

“You’re sticking your nose in places that you have no business to be,” Mr. Mulvaney said at a hearing in 2015.

But in many ways, those conflicts underline how much Washington has changed over the past five years. Fed officials now regularly talk about inequality, entirely unchallenged. The central bank has formalized something much like Ms. Yellen’s patient approach to interest rate setting as its official policy, which it explicitly hopes will foster more inclusive growth.

“It seems like a pretty subtle shift to most normal human beings,” Ms. Yellen said of that move. But “most of the Fed’s history has revolved around keeping inflation under control. This really does reflect a decisive recognition that we’re in a very different environment.”

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