The White House has nominated Janet Yellen as the first woman to head the United States Federal Reserve, arguably the most important job in global finance. But the decision will likely face stiff opposition by extreme conservatives in the U.S. Senate.
If she is confirmed by the Senate, President Barack Obama will make history by tapping the first woman to head the American central bank in its 100-year history. That will surely make Senate Republicans even angrier.
Current Fed Chairman Ben Bernanke is set to step down early next year.
Yellen was appointed vice-chair of the Fed in October 2010. Previously, she was president and CEO of the Federal Reserve Bank of San Francisco and also served as chair of the Council of Economic Advisers from 1997 to 1999.
An expert on job markets, Yellen was a strong ally of Bernanke as he tried to use low interest rates and so-called “quantitative easing,” in which the Fed pumps some $80 billion a month into treasury markets by buying up bonds, with the hope of re-animating a torpid U.S. job market.
The choice is somewhat surprising as Larry Summers appeared as Obama’s favored candidate. The choice of Yellen signals a concession to Senate Democrats who were unhappy with Summers’ past support for financial deregulation before the world banking crisis of 2008.
Yellen was among a minority of top economists who correctly warned that sub-prime mortgages posed a severe threat to financial stability.
But she has also built a reputation as a so-called “dove,” someone more concerned about keeping interest rates low to reduce unemployment than raising them to avert high inflation.
Far right Republicans will likely oppose her nomination on those grounds, while they argue that the Fed’s low-rate policies raise the risk of high inflation which might increase the risk of bubbles in assets like stocks and real estate.
Inflation in September was 1.5 percent, and annual inflation has remained well below 2 percent for the year, according to the U.S. Bureau of Labor Statistics.
Republican senator Bob Corker of Tennessee, a member of the Senate banking committee, said he voted against her for vice chair in 2010.
By Philip Iglauer (email@example.com)