Yellen to get nod as Fed chair
Ms Yellen, 67, has been the Fed's vice-chairwoman since 2010, and she will be the first woman to run the central bank. She is also expected to win bipartisan support for her new role in the Democratic-controlled Senate, but some Republicans could throw up hurdles.
Her nomination was widely expected, but she was not thought to be Mr Obama's first choice. For months, speculation was that the president would opt for Lawrence Summers, a former adviser to the president. But Mr Summers dropped out of the running last month in the face of opposition from Democratic senators. Some in the administration blamed Yellen advocates for churning up opposition to him.
A New York native, Ms Yellen was previously president of the Federal Reserve Bank of San Francisco, a White House adviser, a Fed governor in the Clinton administration and a long-time professor at the University of California, Berkeley.
The most important decisions awaiting her involve how quickly to wind down the expansionary monetary policy engineered by the present Fed chairman, Ben Bernanke. Ms Yellen worked closely with Mr Bernanke, whose term ends on January 31, in shaping and building support for that approach to stimulate the economy and bring down unemployment.
If anything, Ms Yellen has wanted the Fed to take even more aggressive measures to lift growth, believing the risks of inflation are modest. But her views and Mr Bernanke's appear close enough that markets have considered her potential ascension a sign of continuity at the Fed.
Since 2009, Mr Obama had anticipated that he might eventually nominate Mr Summers, who for the first two years of the presidency was chief White House economic adviser as director of the National Economic Council. The president came to admire Mr Summers, a former Treasury secretary in the Clinton administration, for the advice he provided at the depths of the financial crisis. In contrast, he does not know Ms Yellen well.
Ms Yellen, described by one former colleague as "a small lady with a large IQ", forged an academic career at Berkeley as a member of the economics counterculture that attacked the dogma of efficient markets. She has long argued that markets benefit from regulation to prevent abuses and limit disruptions of economic growth.
The Fed's two main tasks are helping to regulate the financial system and altering interest rates in response to economic growth and inflation. Regulating the financial system has become a much more important part of the Fed's responsibilities in the wake of the financial crisis.
Many Democrats believe Ms Yellen is likely to view Wall Street more sceptically than Mr Summers, even though her views are closer to the centrist stance of the administration than to the positions of liberal Democrats on several regulatory issues. Malcolm Maiden — Page 32
Frequently Asked Questions about this Article…
President Obama nominated Janet Yellen, the Fed's vice‑chair since 2010 and a former president of the Federal Reserve Bank of San Francisco, to be the first woman to lead the US Federal Reserve. She has a long academic and policy background – including time as a Fed governor in the Clinton administration, a White House adviser and a longtime economics professor at UC Berkeley.
Markets largely viewed Yellen's nomination as a sign of continuity at the Fed because her views are close to outgoing chair Ben Bernanke. She has supported the expansionary policy used to stimulate growth and reduce unemployment and has even favoured more aggressive measures, believing inflation risks are modest.
A key decision for Yellen would be how quickly to wind down the expansionary monetary policy engineered under Bernanke. She worked closely with him and, while aligned on broad goals, has at times pushed for more aggressive support for growth — which suggests a cautious, growth‑focused approach to raising interest rates.
The article says Yellen was expected to win bipartisan support in the Democratic‑controlled Senate, but some Republicans could still throw up hurdles during the confirmation process.
Yellen comes from an academic tradition sceptical of unfettered markets and has long argued markets benefit from regulation to prevent abuses. Many Democrats expect her to view Wall Street more sceptically than Lawrence Summers, with financial regulation remaining an important Fed responsibility after the crisis.
Yellen's background includes serving as Fed vice‑chair, president of the San Francisco Fed, a Fed governor, a White House adviser and a Berkeley economics professor. That mix of policy, banking‑system oversight and academic work informs her views on growth, inflation and regulation — all issues investors watch closely.
The Fed's two main tasks are regulating the financial system and adjusting interest rates in response to economic growth and inflation. After the financial crisis, regulation became a much more important part of the Fed's role, so investors should watch both policy rates and regulatory actions.
Lawrence Summers had been widely speculated as President Obama's likely pick, but he dropped out of the running last month after opposition from Democratic senators. The article notes some in the administration blamed Yellen advocates for helping to build opposition to Summers, clearing the way for Yellen's nomination.
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