Janet Yellen, First Jewish Woman, Wins Confirmation as Federal Reserve Chair

Only Right Wingers Object in 56-26 Senate Vote

getty images

By Reuters

Published January 06, 2014.
  • Print
  • Share Share
  • Single Page

(page 2 of 2)

The entire program, known as QE3 because it is the Fed’s third such effort at so-called quantitative easing, will likely be shuttered by late 2014 so long as the economic recovery proceeds as forecast, Bernanke said.

Many Republicans and several of Yellen’s own Fed colleagues see the wind-down of that program as long overdue and warn that the buildup of bonds on the Fed’s balance sheet could stoke inflation or asset-price bubbles.

The vote count was unusually low because several senators were delayed by bad weather as they attempted to return to Washington. Even so, Yellen’s margin of victory was historically weak. It compares to Bernanke’s weak 2010 re-appointment vote of 70-30, which at the time was the weakest endorsement on record.

“This expansionary monetary policy cannot continue into perpetuity without causing real and lasting damage to our economy,” said Senator Charles Grassley, an Iowa Republican.

Those concerns notwithstanding, analysts by and large expect Yellen to stick with the “dovish” approach to policy that she has long been known for, with a focus on reducing unemployment, particularly if inflation continues to run well below the Fed’s 2 percent target.

“The transition from the Bernanke Fed to the Yellen Fed likely will be a very smooth one,” said Dana Saporta, an economist with Credit Suisse in New York. “While we suspect she may tolerate modestly above-target inflation to promote greater employment gains, Yellen has not wavered in her public support for the Fed’s 2 percent inflation target.”

Yellen has long argued that the Fed should tolerate slightly higher inflation if that is the cost of fighting high unemployment. But she has also advocated interest rate increases when she felt the threat of inflation called for them.

“She is a strong person but she is also one who is open to other people’s opinion and learns quickly,” said Bill Rhodes, president of William R. Rhodes Global Advisors and a former senior vice chairman at Citigroup. “I think there has been a tendency to underrate her ability, frankly.”

Yellen is the first person appointed to an initial term as Fed chair by a Democratic president since Jimmy Carter named Paul Volcker to head the U.S. central bank in 1979. Although both Bernanke and his predecessor Alan Greenspan were reappointed by Democrats, their initial nominations were made by Republicans – George W. Bush and Ronald Reagan, respectively.

And with Obama already one year into his second and last term as president, Yellen’s appointment means his influence on economic policy will extend beyond his presidency.


Yellen’s rise to the top of the world’s most influential central bank marks an important milestone for women, long under-represented in the field of economics and finance.

“She is breaking an incredibly important glass ceiling,” Terry O’Neill, president of the National Organization for Women, a liberal group that advocates for gender equality, told Reuters.

Even with the Fed’s December decision to pare its bond buying and set out a road map for the wind-down, the Yellen Fed will have plenty of discretion. She could wait before making further reductions if the recovery stalls, or dial the program down faster should the job market strengthen unexpectedly.

The Fed sought to soothe investor angst over the reduction in asset purchases with a strengthened pledge to keep benchmark overnight interest rates low for a long time to come.

Maintaining the credibility of this pledge will be key to keeping rates from rising too far, too fast, a key challenge for Yellen as she faces the delicate task of setting the Fed back on the path to more normal monetary policy without rattling financial markets or disrupting the U.S. economic recovery.

As she confronts that assignment, Yellen will draw on years of experience as a top economic policymaker, including her six years as chief of the San Francisco Fed and her more than three years as the central bank’s No. 2 official.

She also served on the Fed’s board in the 1990s when Alan Greenspan was chairman and as a top economic adviser to President Bill Clinton.

Yellen is a well-respected economics scholar and has taught at the Harvard University, the London School of Economics and the University of California, Berkeley.

Her research, some of it conducted with her Nobel-laureate husband George Akerlof, includes papers on topics as disparate as the rise in single motherhood, wage inflation and the negative effects of advertising.

As the Fed’s vice chair, she spearheaded the central bank’s adoption of a 2 percent inflation target and has championed the forward guidance the Fed has used to shape market expectations about the path of interest rates.

The central bank has said since December 2012 that it would hold rates near zero at least until unemployment falls to 6.5 percent, as long as inflation stays in check. Last month it said it expected to hold rates steady “well past” the time the jobless rate threshold is reached.


Obama is expected to nominate former Bank of Israel head Stanley Fischer, an American-Israeli, to replace Yellen as vice chair.

But he will need to fill at least two other seats on the seven-member Fed board. One was left vacant when Elizabeth Duke departed in August and another is expected to be vacated soon when Sarah Bloom Raskin departs for the No. 2 job at the U.S. Treasury.

Yellen’s road to the helm of the central bank was a highly political one that ran through last summer.

Obama only settled on her after his former economic adviser Lawrence Summers withdrew from consideration in the face of fierce opposition from within the president’s own Democratic Party. That opposition, centering on questions about Summers’ temperament for the top Fed job and concern over his part in deregulating the banking industry, raised doubts about his chances of winning Senate confirmation.

The Jewish Daily Forward welcomes reader comments in order to promote thoughtful discussion on issues of importance to the Jewish community. In the interest of maintaining a civil forum, The Jewish Daily Forwardrequires that all commenters be appropriately respectful toward our writers, other commenters and the subjects of the articles. Vigorous debate and reasoned critique are welcome; name-calling and personal invective are not. While we generally do not seek to edit or actively moderate comments, our spam filter prevents most links and certain key words from being posted and The Jewish Daily Forward reserves the right to remove comments for any reason.

Find us on Facebook!
  • What do you think of Wonder Woman's new look?
  • "She said that Ruven Barkan, a Conservative rabbi, came into her classroom, closed the door and turned out the lights. He asked the class of fourth graders to lie on the floor and relax their bodies. Then, he asked them to pray for abused children." Read Paul Berger's compelling story about a #Savannah community in turmoil:
  • “Everything around me turns orange, then a second of silence, then a bomb goes off!" First installment of Walid Abuzaid’s account of the war in #Gaza:
  • Is boredom un-Jewish?
  • Let's face it: there's really only one Katz's Delicatessen.
  • "Dear Diaspora Jews, I’m sorry to break it to you, but you can’t have it both ways. You can’t insist that every Jew is intrinsically part of the Israeli state and that Jews are also intrinsically separate from, and therefore not responsible for, the actions of the Israeli state." Do you agree?
  • Are Michelangelo's paintings anti-Semitic? Meet the Jews of the Sistine Chapel: http://jd.fo/i4UDl
  • What does the Israel-Hamas war look like through Haredi eyes?
  • Was Israel really shocked to find there are networks of tunnels under Gaza?
  • “Going to Berlin, I had a sense of something waiting there for me. I was searching for something and felt I could unlock it by walking the streets where my grandfather walked and where my father grew up.”
  • How can 3 contradictory theories of Yiddish co-exist? Share this with Yiddish lovers!
  • "We must answer truthfully: Has a drop of all this bloodshed really helped bring us to a better place?”
  • "There are two roads. We have repeatedly taken the one more traveled, and that has made all the difference." Dahlia Scheindlin looks at the roots of Israel's conflict with Gaza.
  • Shalom, Cooperstown! Cooperstown Jewish mayor Jeff Katz and Jeff Idelson, director of the National Baseball Hall of Fame, work together to oversee induction weekend.
  • A boost for morale, if not morals.
  • from-cache

Would you like to receive updates about new stories?

We will not share your e-mail address or other personal information.

Already subscribed? Manage your subscription.