Janet Yellen is scheduled to replace Ben Bernanke as chairman of the Federal Reserve once his term expires on Jan. 31st of 2014.
As the likely future chairman of the Federal Reserve there are a number of issues that she must deal with during her tenure. For instance it’s still uncertain at what point the Fed will finally feel comfortable with pulling back some of the support it has been lending to the housing market with its bond buyback program.
Too little action could risk undermining the recovery efforts thus far and too much interference could trigger inflation. It is within this terrain that the Federal Reserve under the leadership of Janet Yellen would have to navigate.
Who is Janet Yellen?
Prior to her nomination as chairman of the Federal Reserve, Mrs. Yellen served as the Vice Chair of the Board of Governors at the Federal Reserve. Before that she was the Chair of the White House Council of Economic Advisers under President Bill Clinton. She was also a professor emeritus at the University of California, Berkley’s Haas School of Business.
The former Federal Reserve Chairman Alan Greenspan described her as ‘very bright’ and said that he would often go to her for an explanation of academic economic developments that he didn’t understand.
Perhaps one of the reasons that Yellen was chosen to replace Ben Bernanke as leader of the Federal Reserve is to initiate a continuation of the policy that the Fed has already taken up. No one is anticipating that Yellen is going to depart from current Fed policy in order to pursue some new strategy. Setting aside any judgments about whether or not the Fed’s policies have helped the recovery in the long run, at the very least this has created stability.
“Yellen is not going to rock the boat in terms of her approach to monetary policy,” said David Jones, chief economist at DMJ Advisors and the author of several books on the Fed. “But it will be her challenge to reverse this prolonged and unprecedented period of monetary ease.”
Opposition to Yellen’s Nomination
Rand Paul, a senator from Kentucky whom many suspect of having presidential aspirations, has threatened to block her nomination. Senator Paul has insisted that the Senate and the House take up a vote on his Fed transparency bill. The bill if passed would eliminate audit restrictions that the Fed has enjoyed and force the Federal Reserve to undergo an audit by a specific deadline.
“There’s no time to waste. Right now, the U.S. Senate is preparing to debate and confirm the new Obama nominee to chair the Federal Reserve,” Paul said in a voiceover. “I say not so fast. I say vote no on a new Fed chairman without a vote on my Audit the Fed bill.”
The possibility of auditing the Fed has been a long term point of fascination by many libertarians in congress. However, some have even argued that the proposals don’t go far enough. Congressman Ron Paul, Senator Rand Paul’s Father, has famously argued that the Federal Reserve should be abolished all together.
In the end it remains unlikely in the near future that either the Fed will be audited, abolished or that Janet Yellen’s nomination will be withdrawn.
