Wall Street wants Yellen, not Summers, as next Fed chief - page 5
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Yellen will start Fed confirmation meetings next week
White House officials say the have submitted the paperwork necessary to confirm Janet Yellen as the next head of the Federal Reserve.
Ms Yellen will meet US Senators next week as part of the process to install her as the next head of the central bank.
Officials say they are confident that she will secure the 51 Senate votes needed to confirm her position.
However, the hearings are expected to be contentious.
Several Republican Senators have already indicated that they will oppose Ms Yellen's nomination.
Next week, she will first meet with senators on the influential Banking Committee before she testifies in front of the full US Senate.
Two Republican members - Alabama senator Richard Shelby and senator Bob Corker from Tennessee - have both indicated they will be meeting Ms Yellen, despite voting against her appointment as vice-chair of the Federal Reserve in 2010.
A full Senate vote on her nomination is not expected to happen until mid-November.
Mr Obama nominated Ms Yellen on 9 October to replace current chairman Ben Bernanke, whose term expires at the end of January.
If confirmed, she would become the first female chair of the central bank.
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They will place here there in order to raise the QE not to taper
Republican cautions against blocking Yellen's Fed nomination
A senior Republican on the Senate Banking Committee said on Thursday he would oppose efforts to block the nomination of Janet Yellen as Federal Reserve chairwoman with a filibuster unless some disturbing disclosure emerged.
"I don't think I would filibuster a Fed nominee unless something came up that was just horrible," Alabama Senator Richard Shelby told Reuters Insider. "But that doesn't mean I won't speak against them, vote against them, work against them."
Shelby's sentiments are important because Democrats would need to pick up only five Republican votes to clear procedural hurdles to bring Yellen's nomination to a vote in the Senate where confirmation needs only a simple majority.
Democrats control the chamber 55 to 45.
"I don't believe we have ever filibustered a Fed chairman," Shelby said shortly after meeting with Yellen for about 40 minutes. "That job is so, so important. That doesn't mean I haven't voted against some. I have. I have supported some too."
Shelby's views are not shared by all Republicans.
Senator Rand Paul of Kentucky has said he intends to place a "hold" on Yellen's nomination unless the Senate leadership allows for a vote on legislation he has sponsored that would open the Fed's monetary policy decisions to congressional audit.
Senator Lindsey Graham has also vowed an effort to block White House nominees unless the Obama administration comes forward with more information about the 2012 attack on U.S. diplomats in Benghazi, Libya.
Democrats are confident they will be able to round up the votes needed to prevent any attempt to obstruct a vote on Yellen's nomination. President Barack Obama tapped Yellen, currently the central bank's vice chairwoman, to succeed Fed Chairman Ben Bernanke when his term expires on January 31.
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Peter Schiff On Janet Yellen's Mission Impossible
Most market watchers expect that Janet Yellen will grapple with two major tasks once she takes the helm at the Federal Reserve in 2014: deciding on the appropriate timing and intensity of the Fed's quantitative easing taper strategy, and unwinding the Fed's enormous $4 trillion balance sheet (without creating huge losses in the value of its portfolio). In reality both assignments are far more difficult than just about anyone understands or admits.
Unlike just about every other economist, I knew that the Fed would not taper in September because the economy is still fundamentally addicted to stimulus. The signs of recovery that have caused investors and politicians to bubble with enthusiasm are just QE in disguise. Take away the QE and the economy would likely tilt back into an even more severe recession than the one we experienced before QE1 was launched.
Given the Fed's failure to initiate a tapering campaign in recent months (when it was highly expected) it is surprising that most people still believe that it will pull the trigger in the first quarter of 2014. But if the Fed could not take action in September, with Ben Bernanke at the helm and the nation as yet untraumatized by the debt ceiling drama and Obamacare, why should we expect tougher treatment from Janet Yellen? This is particularly true when you consider Yellen's reputation as an extreme dove and the uninspiring economic data that has come in recent months.
Rather than explicitly describing the possibility of a reduction of asset purchases, recent Fed statements have merely said that policy would be "adjusted" according to incoming data. It has never said what direction that adjustment may take. Yet somehow the market has concluded that an imminent reduction is the only possibility. But the opposite conclusion is more likely. Recession avoidance is really the Fed's only concern and it will always come down on the side of accommodation. Therefore an expectation for a 2014 taper is just wishful thinking.
But that does not mean that QE will go on forever. It will come to an end, but not because the Fed wants it to, but because the currency markets give it no choice. A dollar crisis would ultimately force the Fed's hand, and the longer the Fed succeeds in postponing the inevitable, the more damage its policy mistakes will inflict on our economy.
Yellen's second task will be equally impossible. Since the QE campaign began in 2010 the Fed has more than quadrupled the amount of bonds that it holds on its balance sheet,to more than $4 trillion of Treasury and mortgage-backed bonds. To accumulate this massive cache, the Fed has become by far the largest buyer in both markets. Its purchases have pushed up the prices of those bonds and have kept long term interest rates low for both consumers and businesses.
When the QE was first launched, Ben Bernanke tamped down fears of the program by saying the Fed would one day sell the bonds that it was buying. But as the Fed's balance sheet ballooned, many in the market began fearing that the unwinding of these trades would crush the market for Treasuries and mortgage-backed securities. Bernanke soon allayed these fears by saying that the Fed would not actively sell, but would simply allow bonds to mature. But this is just a convenient fiction.
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YELLEN: Monetary Policy Will Stay Easy Long After We Cross Our Unemployment And Infla
U.S. monetary policy will probably remain very easy for a long while even after either the Federal Reserve's interest rate hike threshold on lower unemployment, or inflation, has been crossed, Fed Vice Chair Janet Yellen said in a letter to a U.S. lawmaker.
Yellen also said the jobless rate threshold was not a trigger for action.
She was responding to a written question for the record from Massachusetts Democratic Senator Elizabeth Warren following her hearing last week before the Senate Banking Committee to become the next Fed chair.
"Monetary policy is likely to remain highly accommodative long after one of the economic thresholds for the federal funds rate has been crossed," she said in her written answer.
Warren asked in her letter if it would be helpful to lower the Fed's unemployment rate target.
Yellen, nominated by President Barack Obama to replace current Fed chair Ben Bernanke when his term expires on January 31, would be the first woman to lead the U.S. central bank. She is expected to win confirmation with relative ease.
The Fed has pledged to hold rates near zero at least until the U.S. unemployment rate hits 6.5 percent, provided the outlook for inflation remains under 2.5 percent. The jobless rate in October was 7.3 percent.
"It is also important to note that the thresholds are not triggers - that is, once a threshold has been crossed, the (Fed's policy-setting) committee will not necessarily raise the federal funds rate target immediately," Yellen said.
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Yellen’s Nomination as Fed Chairman Approved by Senate Panel
anet Yellen’s nomination to be chairman of the Federal Reserve won support from the Senate Banking Committee today in a 14-8 vote, moving her bid to be the Fed’s first female head to the Senate for confirmation.
Yellen was backed by 11 of the 12 Democrats on the banking committee, and three of the panel’s Republicans. Republican Senators Mark Kirk of Illinois, Bob Corker of Tennessee and Tom Coburn of Oklahoma supported her. Joe Manchin of West Virginia was the only Democrat to vote against her.
“As we saw in her testimony last week, Dr. Yellen understands the challenges facing our economy and the balance the Fed must strike as we navigate the path back to full employment,” said Senator Tim Johnson, the South Dakota Democrat who chairs the banking committee.
Yellen, a main architect of record Fed stimulus, indicated in her Nov. 14 confirmation hearing that she’ll press on with accommodation until she sees a robust recovery. She downplayed risks that stimulus is inflating asset price bubbles, saying she doesn’t see “bubble-like conditions” in stock prices.
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US Senate Republican leader McConnell to oppose Yellen
U.S. Senate Republican leader Mitch McConnell said on Tuesday he will oppose President Barack Obama's appointment of Janet Yellen as the next head of the Federal Reserve, citing concerns about her willingness to defend the dollar.
Yellen, who nonetheless is expected to win Senate confirmation this week, has stirred McConnell's concerns "about her commitment to the most important job of the central bank - maintaining the purchasing power of the dollar. After years of federal stimulus, we need a Fed chairman who is unquestionably committed to a strong dollar," McConnell said in a statement.
McConnell also noted that he supports legislation being proposed by fellow Kentucky Senator Rand Paul that would establish audits of Fed monetary policy and deliberations. McConnell is running for re-election and faces a 2014 challenge from a Tea Party-backed candidate, as well as a Democratic opponent.
The Fed, under Chairman Ben Bernanke, has been buying $85 billion in bonds a month since September 2013 in a third round of so-called quantiative easing aimed at pushing down long-term borrowing rates and boosting investment and hiring.
Policymakers on Tuesday began a two-day meeting at which they will debate the future of that policy, although most economists expect them to stand pat until next year.
Critics of the bond-buying program worry the Fed's easy money policies can drive investment to countries with higher interest rates, weakening the dollar. Fed officials typically argue that the bond-buying program is aimed at boosting the U.S. economy, and Bernanke has said his policies are consistent with a strong dollar.
Yellen, who as Fed Vice Chair has been supportive of the policies, is slated to take the reins when Bernanke's term ends on January 31.
McConnell supported Obama's reappointment of Bernanke in 2010.
Obama's Democrats control 55 of the Senate's 100 seats. A recent Senate rule change means that the 67-year-old former economics professor needs to only win backing from a simple majority to be confirmed.
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US Senate to vote Monday on Yellen for Federal Reserve
The US Senate will vote Monday on the nomination of Janet Yellen to replace outgoing Ben Bernanke as chair of the Federal Reserve, Senate Democratic staff said Friday.
Yellen, currently the Fed vice-chair, easily passed a Senate Banking Committee vote in November, but the full Senate vote stalled amid other key business in the chamber and tangles between Democrats and Republicans over nomination procedures generally.
A vote endorsing her nomination would clear the way for Yellen to take the lead at the Fed on February 1, the first woman ever to lead the US central bank.
At 67, Yellen has built a strong reputation as an academic economist, teaching at the University of California at Berkeley, and as a veteran policymaker at the Fed.
She is not expected to embark on any major policy shifts: she has been a close ally of Bernanke's easy money policy focused on reducing unemployment in the wake of the 2008-2009 Great Recession.
She has also been an architect of the Fed's policy of increased transparency and more open communication of its likely policy direction.
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Senate poised to confirm Janet Yellen as Fed chair
The U.S. Senate, kicking off its 2014 session on Monday, intends to waste no time making history as it moves to approve Janet Yellen to be the first woman to head the Federal Reserve.
A Senate vote is set for 5:30 p.m. (2230 GMT) on Yellen, 67, who has been vice chair of the U.S. central bank since 2010.
If confirmed, Yellen would succeed Ben Bernanke, whose second four-year term ends on January 31.
In an early sign that Yellen commands enough support to win confirmation, the Democratic-controlled Senate voted 59-34 on December 20 to move forward with the nomination.
President Barack Obama's choice of Yellen put her in line to become the first female chief of the powerful U.S. central bank in its 100-year history and just one of a handful of women heading central banks globally.
Yellen has been an unwavering advocate of the Fed's aggressive steps to boost the U.S. economy as it struggled to emerge from a severe economic recession.
In late 2008, the Fed cut overnight interest rates to near zero and has since conducted a series of massive bond purchase programs intended to keep long-term borrowing costs low.
The result has been a falling U.S. jobless rate, which hit a five-year low in November of 7 percent as the pace of economic growth has also picked up.
Assuming the Senate approves her nomination, Yellen's main task will be to navigate the central bank's way out of its extraordinary stimulus, dialing down its current bond-buying program. The U.S. central bank trimmed that program to $75 billion per month, from $85 billion, at a much anticipated policy meeting last month.
During a mid-November Senate Banking Committee hearing on her nomination, Yellen defended the Fed's aggressive actions to foster economic growth and said, "I consider it imperative that we do what we can to promote a very strong recovery."
Some Republicans expressed concerns the Fed may have gone too far. "I think the economy has gotten used to the sugar you've put out there and I just worry that we're on a sugar high," Senator Mike Johanns of Nebraska said at the time.
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Yellen confirmation vote may be closest in Fed history
Janet Yellen will continue to make history as she prepares to take over the reins of the Federal Reserve.
Not only will Yellen be the first woman to lead the U.S. central bank, but her confirmation vote will likely be the closest ever, according to Chris Krueger, a senior policy analyst at Guggenheim Washington Research Group.
The Senate is expected to vote on Yellen’s nomination at 5:30 p.m. Eastern.
Most of the Senate’s 45 Republicans are expected to vote against Yellen’s confirmation, Krueger said in a research note.
Despite this opposition, Yellen is going to win confirmation easily, Krueger noted. Senate rules approved in November limit Republicans’ ability to block President Barack Obama’s nominees.
The current Fed vice-chairwoman already has a minimum of 55 senators supporting her, four more than she needs under the new rules, Krueger added.
The notoriety of the tightest Fed-chief confirmation vote has been held by Fed Chairman Ben Bernanke since 2010, when he was confirmed for a second four-year term by a vote of 70-30 in the Senate. Opposition to Bernanke had more of a bipartisan flavor, with 12 Democrats and 18 Republicans voting no.
In an interview, Krueger said not to read too much into united Republican opposition to Yellen. He said it was more of a vote against Obama’s economic policies than a vote of no-confidence against her.
In addition, many Republicans will oppose her because they remain enraged by the change in the Senate rules, he added.
The Senate unanimously confirmed Yellen as Fed vice-chairwoman in 2010.
And with Yellen only needing 51 votes for confirmation, Republicans can mollify their conservative base with a vote against her nomination, Krueger said. Tea-party Republicans, led by former Republican Congressman Ron Paul and now his son, Sen. Rand Paul of Kentucky, have strongly opposed Fed policy in recent years. They view the Fed’s bond-buying program as an example of big government run amok.
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