Janet Yellen to run the Fed

Janet Yellen, the vice chairman of the Federal Reserve Board, was nominated by President Obama to head the organization. While the move was expected, it was greeted as good news by the markets and other watchers who wanted Obama to put her in the position. And, she’s the first woman to head the organization. Let’s look at some of the extensive coverage.

USA Today had a straightforward story:

President Obama formally nominated Janet Yellen on Wednesday to chair the Federal Reserve board, calling her “one of the nation’s foremost economists and policy makers.”

Saying she understands “the human costs” of a struggling economy, Obama said during a White House ceremony that “America’s workers and their families will have a champion in Janet Yellen.”

If confirmed by the Senate, Yellen would be the first woman to lead the nation’s central bank, a key player in the global economy — and “a role model for a lot of folks out there,” Obama said.

She would also be the first Democrat to lead the Fed since President Jimmy Carter nominated Paul Volcker in 1979.

In brief remarks, Yellen said that economy is recovering, but more needs to be done, “particularly for those hardest hit by the Great Recession” that began in 2008.

The Wall Street Journal chose to lead with the fact that Yellen will be faced with deciding when to pull back on the Federal Reserve’s economic stimulus and how to communicate that to the markets well in advance:

Janet Yellen‘s job as the Federal Reserve’s next leader would be to define the stopping point of an expansive central bank after Ben Bernanke spent the past six years stretching its monetary powers in service to a crisis-racked economy.

President Barack Obama said Wednesday that Ms. Yellen, beaming at his side during the announcement, was his nominee to become chairwoman of the central bank when Mr. Bernanke’s term ends in January. Her nomination is subject to Senate confirmation.

The selection of the 67-year-old Ms. Yellen was historic on many levels. In one stroke, Ms. Yellen has a chance to become the first woman to run the Fed since its founding in 1913, the most powerful economic policy maker on the globe and one of the most influential women in U.S. history.

It also puts her in a position to place her stamp on one of the most inscrutable but influential institutions in the U.S. government. The Fed was established after a financial crisis in the early 20th century to provide emergency lending to banks during economic panics. Its role and powers have grown since, to regulating banks, stabilizing inflation and softening the blows of a volatile economy on the nation’s workforce. According to a law passed in 1977, the Fed is assigned to achieve what’s known as a “dual mandate” of maximum employment and stable prices.

Tested by the 2008 financial crisis, Mr. Bernanke pushed the Fed’s boundaries in his efforts to stabilize an ailing economy. But the wisdom and effectiveness of his signature programs remain subjects of intense debate inside the Fed, on Wall Street trading floors, in the boardrooms of foreign central banks and in the halls of Congress. Most hotly debated is a bond-buying program often called quantitative easing, or QE, which has vastly expanded the Fed’s holdings of securities.

Ms. Yellen now gets to put her own postscript on programs she helped to write. Her big decisions in the next four years will involve deciding when to pull back from these efforts.

Reuters led with the angle that Yellen will have to focus on jobs and growth in her new job:

At a White House ceremony where Obama announced her nomination, Yellen said she would promote maximum employment, stable prices, and a sound financial system as the top U.S. central banker and noted there was more to do to ensure people who were out of work could find jobs.

“While we have made progress, we have farther to go. The mandate of the Federal Reserve is to serve all the American people, and too many Americans still can’t find a job and worry how they’ll pay their bills and provide for their families,” the 67-year-old former professor said.

The New York Times story talked about the timing of the nomination.

Ms. Yellen’s nomination comes amid one of the most rancorous and fraught battles in years between the political parties over the course of the economy. The federal government is already in partial shutdown because of an impasse over funding in the fiscal year that began Oct. 1, and the Treasury Department is approaching the debt limit next week, jeopardizing its authority to borrow to pay the nation’s bills and forcing emergency actions that could be financially destabilizing at best and provoke a global crisis at worst.

The nomination adds a wild card to the mix, and the need for Senate hearings, debate and votes adds to Congress’s already complicated mix of year-end business. A few Senate Republicans, like Senator Bob Corker of Tennessee, have spoken out against her as too dovish on monetary policy, but Ms. Yellen is widely expected to be confirmed.

Administration officials say the timing of her pick is mostly a coincidence, but it could serve Mr. Obama’s interests in the current budget fight.

It’s nice to see at least part of the government moving forward and hopefully having some continuity at the helm of the Fed will help calm markets in the next week leading up to the deadline for extending the debt limit. While no one wants to see the government default, at least there is someone who’s been privy to all of the Fed’s policy moves lined up to take the role.