Garrett Baldwin: Janet Yellen as the Next Fed Chair: Today (Wednesday), U.S. President Barack Obama will nominate Federal Reserve Vice Chairwoman Janet Yellen to replace Ben Bernanke as the head of the U.S. central bank.
If she clears a Senate nomination, Yellen would be the first woman to lead the Federal Reserve and arguably the most experienced Fed chair in decades, based on her extensive tenure at the central bank.
In fact, Yellen maintains far more experience at the Fed than Bernanke, Paul Volcker, or Alan Greenspan, the latter of whom had never worked at the central bank before his appointment. She led the San Francisco Fed from 2004 to 2010 before assuming her current position.
With the Federal Reserve now wading in uncharted waters, her experience will certainly be put to the test…
Yellen would oversee the difficult task of unwinding the extraordinary stimulus designed by the bank after the economic downturn in 2008. But she would also be assuming a leadership role at a time when the government is heavily divided and a number of crippling problems continue to plague the U.S. economy.
Here’s what Yellen’s nomination as the next Fed chair means…
Yellen as Next Fed Chair
For Democrats: Yellen was the consensus pick among liberal Democrats over the president’s preference of Larry Summers, a former Treasury secretary and chief economic adviser. Prior to the nomination, Yellen received widespread support among the liberal base in Congress. In July, 20 Democratic senators signed a letter to the president calling for her nomination. In the letter, they championed her “independence, intellectual rigor and willingness to challenge conventional wisdom regarding deregulation.” Summers’ appointment would have faced opposition from both parties given his history of questionable leadership and inability to foresee crisis. Democrats also have celebrated the idea of her being the first woman to lead the U.S. central bank as a selling point, although her experience is a far greater argument for her nomination.
For Republicans: At a time when the president is in a political battle against Congressional Republicans, Yellen’s nomination as the next Fed chair wouldn’t be expected as much of a battle. The Senate will likely be able to locate six Republicans to reach confirmation. However, Tea Party Republicans like Sen. Rand Paul (R-Ky.) and Sen. Ted Cruz (R-TX) have been fighting to audit the Federal Reserve, and it wouldn’t be surprising to see them publicly address her support for Bernanke’s policies over the last few years. Cruz has said that he sees the nomination process as an opportunity to leverage the debt ceiling debate and to pass legislation to force a deeper audit of the central bank. Nonetheless, that sentiment isn’t necessarily part of the mainstream GOP’s vision. In addition, certain Democrats will likely suggest that opposition is driven by their unwillingness to let a woman be a part of a male-dominated Wall Street club.
For Wall Street: Many Democrats believe that Yellen is open to the idea of increased regulation. In addition, many have cited her ability to foresee crisis and favor certain forms of monetary and fiscal policy to react. But Wall Street also loves the idea of Janet Yellen as the next Fed chair. This year, CNBC conducted a poll of bankers and traders and asked who should be Ben Bernanke’s replacement.
Yellen received 50% of the vote, while Larry Summers only earned 2.5%. The primary reason why Yellen is likely favored centers on her “dovish” views. Yellen will likely continue to favor easy monetary policies and low interest rates. Given Wall Street’s love for a good bubble and sources of easy money, don’t expect anyone to seek the chair to pull the plug on QE Infinity any time soon.(...)Click here to continue reading the original ETFDailyNews.com article: Dow Jones Industrial Average: What Janet Yellen Means For The Markets, EconomyYou are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
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