President Barack Obama has announced plans to nominate Janet Yellen to be chair of the Federal Reserve. If confirmed by the Senate, she would be the first woman to hold the position in U.S. history. Obama called her "one of the nation's foremost economists and policymakers" and noted that "she knows how to build consensus and listens to competing views." Yellen has served as vice chair since 2010.
The appointment is important because the central bank sets interest rate policy, trying to walk the economic tightrope between encouraging growth and restraining inflation. During current Fed Chairman Ben Bernanke's tenure, the Fed employed extraordinary measures aimed at lifting the economy out of the most difficult crisis since the Great Depression.
During the brief White House ceremony, with Bernanke and Yellen standing alongside him, Obama paid tribute to Bernanke's service. Said Obama, "For nearly eight years, Ben has led the Fed through some of the most daunting economic challenges of our lifetime. For some time now, he's made it clear that he intends to finish his service as chairman at the end of this term, which is this January."
The announcement follows months of contentious maneuvering over a successor to Bernanke, whose term ends in January. The administration floated the possibility of supporting former Treasury Secretary Larry Summers for the post. Facing criticism from Yellen's Democratic supporters in the Senate, Summers took his name out of contention in September, saying the confirmation battle would likely be acrimonious. Before and since the Summers flap, Yellen was seen as the leading contender for the powerful post.
For his part, Summers was upbeat with his reaction. In a statement he said, "Janet Yellen is a terrific choice to lead the Federal Reserve. I have admired and learned from her ever since she taught my first macroeconomics graduate class in 1976."
Senate Banking Committee Chairman Tim Johnson, D-S.D., said he commended "President Obama on his selection of Dr. Yellen to be the first woman to serve as Federal Reserve Chairman. She has a depth of experience that is second to none." Johnson pledged "to move her nomination forward in a timely manner." The committee will hold hearings on the appointment before being considered by the full Senate. Obama urged the Senate to confirm Yellen "without delay."
Sen. Bob Corker, of Tennessee, a Republican member of the committee, issued a statement noting that he'd voted against Yellen's nomination as vice chair two years ago, citing her "dovish" views. Some critics have held that Yellen favors supporting growth over battling inflation, a charge which she adamantly denies.
On the nomination of the first woman to be Fed chair, Diane Swonk, chief economist for Mesirow Financial asks: "What took so long?
Said Obama, "She'll be the first woman to lead the Fed in its 100-year history. And I know a lot of Americans, men and women, thank you for not only your example and your excellence, but also being a role model for a lot of folks out there."
Swonk says, "In terms on monetary policy, she was the favored choice of financial markets, and represents continuity at the Fed."
It was Yellen who headed the central bank's Communications Committee under Bernanke, leading to the decision to begin holding regular news conferences. Swonk says Yellen would be expected to press for further transparency, if confirmed.
"Look for more clarity and emphasis on communications given her roll chairing the communication committee, which included two extremes of views among the Fed presidents. She has already had a lot of practice corralling cats, which is a necessary trait in these uncertain times," she says.
As he revealed his decision to back Yellen, Obama said, "She sounded the alarm early about the housing bubble, about excesses in the financial sector and about the risks of a major recession."
While praising Bernanke's stewardship, Yellen said, "While we have made progress. We have farther to go. Too many Americans still can't find a job and worry how they'll pay their bills and provide for their families."
In a written statement delivered after the announcement, Bernanke said, "Janet is exceptionally well qualified for the position, with stellar academic credentials and a strong record as a leader and a policymaker. "
Yellen, 67, spent much of her career at the University of California at Berkeley's Haas School of Business. She previously served under President Bill Clinton as chairwoman of the Council of Economic Advisors and was president of the Federal Reserve Bank of San Francisco. Her husband, George Akerlof, won the 2001 Nobel Prize for Economics.
What do you think of President Obama nominating Janet Yellen as the first woman Fed chair?
Follow me on Twitter: @hamrickisms