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From Banking and Finance Law Daily, October 9, 2013

Yellen nominated as next Fed chair

By Katalina M. Bianco, J.D.

President Obama has nominated Dr. Janet Yellen to chair the Federal Reserve Board. Prior to her current role as Fed Vice Chair, she served as President of the San Francisco Federal Reserve Bank. If her nomination is confirmed by the Senate, she will replace current Chairman Ben Bernanke, whose second term as Chairman is set to end on Jan. 31, 2014.

Yellen said that she pledged to do her best to carry out the Fed’s responsibilities to “promote maximum employment, stable prices, and a strong and stable financial system.” There has been progress made in recovering from the Great Recession but “we have farther to go,” she said. While noting the need to keep inflation in check and protect the financial system, Yellen spoke most strongly of the need to promote full employment.

Hensarling statement. Reacting to reports that President Obama intended to nominate Yellen, House Financial Services Committee Chairman Jeb Hensarling (R-Texas) issued a statement expressing his hope that Yellen “will lead the Federal Reserve to adopt a more transparent and rules-based monetary policy that aims for price stability and long-term growth.” Hensarling said the committee would work with her to reach that goal.

“Rather than following a rules-based policy, the Fed has effectively conducted both monetary policy and fiscal policy with its unprecedented stimulus efforts,” Hensarling said. “This has camouflaged the true cost of our deficit, encouraged more government spending, and endangered the central bank’s independence and credibility.” Hensarling also said the Fed’s policies have “increased the risk of inflation in the future and in the present transferred wealth from middle income families who save and invest conservatively to the wealthy who can afford to make riskier, higher-yielding investments.”

Corker statement. Senator Bob Corker (R-Tenn) said in his written statement that he voted against the original nomination of Yellen to the Fed in 2010 because of her “dovish views on monetary policy.” He added that “We will closely examine her record since that time, but I am not aware of anything that demonstrates her views have changed.”

Merkley view. In his statement, Senator Jeff Merkley (D-Ore) supported the nomination, saying that she is qualified and experienced and would “look at policy-making through the lens of what’s best for the middle class.” Merkley said that Yellen had been a strong advocate for job creation and the middle class and has been “consistently correct” in the economic predictions she has made as vice-chair. Merkley also noted that Yellen is the first woman to be nominated as Fed chair.

RegulatoryActivity: FederalReserveSystem FinancialStability

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