Yellen’s path to Fed leadership strewn with hurdles

 

McClatchy Washington Bureau

Janet Yellen faces a Senate confirmation hearing this week with few questions about her qualifications to be the new chair of the Federal Reserve but plenty of potential pitfalls on issues from Libya to inflation.

The vice chairman of the Federal Reserve since 2010, Yellen was nominated by President Barack Obama last month to succeed Chairman Ben Bernanke when he steps down at the end of January after two terms.

Viewed by many economists as the most qualified person for the job, she’s expected to win approval from the Senate Banking Committee, which will hold its confirmation hearing Thursday. But there are potential landmines that could delay or deny her a path to the world’s most powerful banking post.

Sens. Lindsey Graham, R-S.C., and John McCain, R-Ariz., have vowed to halt a vote on Yellen until the Obama administration makes available five State Department officials who were present during the 2012 attack on the U.S. consulate in Benghazi, Libya, which killed U.S. Ambassador Christopher Stevens and three others.

“The State Department has thus far refused to allow anybody in Congress to talk to these five,” Graham said Sunday on CNN. “And we’re going to talk to them, because they possess the best information about what happened in Benghazi.”

Sen. Rand Paul, R-Ky., vows to block Yellen until Senate Majority Leader Harry Reid, D-Nev., allows a vote on the proposed Federal Reserve Transparency Act, legislation that would subject the Fed to greater auditing.

“As the Senate debates the nomination of the next head of the Federal Reserve, there is no more appropriate time to provide Congress with additional oversight and scrutiny of the actions and decisions of the central bank,” Paul wrote Reid in an Oct. 29 letter.

Similar legislation passed the Republican-controlled House of Representatives in July 2012, but Democrats enjoy a 55-45 majority in the Senate. It means that Obama will need just five Republicans to break any legislative logjam and move to a vote on Yellen.

Yellen met with members of the Banking Committee in recent days, and many Republicans voiced concern to her about the Fed’s attempt to stimulate the economy through bond purchases that have swelled its balance sheet to more than $3.8 trillion. They fear that these purchases, at $85 billion a month since last December, could spark inflation down the road.

“She didn’t back off of that at all, so we just disagree,” Sen. David Vitter, R-La., told Bloomberg Television last week, stopping short of saying he’d oppose her confirmation.

Because Yellen represents continuity with Bernanke’s policies, financial markets aren’t fretting about her nomination.

“This is a non-event for the markets,” said James Paulsen, the chief investment strategist for Wells Capital Management in Minneapolis. “I think it’s already baked in the goods. It would indeed be an event if she’s not confirmed.”

Email: khall@mcclatchydc.com; Twitter: @KevinGHall

Read more Politics Wires stories from the Miami Herald

  • Basketball diplomacy in Washington?

    Republican Curt Clawson, who won a GOP primary for a vacant Florida congressional seat Tuesday, immediately said he wants to duel with President Barack Obama on the basketball court.

  • Obama dines at famous Tokyo sushi joint

    By Lesley Clark McClatchy Washington Bureau

  •  
U.S. President Barack Obama is greeted by an unidentified official upon his arrival at Haneda International Airport in Tokyo, Wednesday, April 23, 2014. Obama is in Japan for a three-day state visit.

    Obama arrives in Japan to begin week-long Asia visit

    Obama, who is making the first state visit to Japan by a U.S. president since former president Bill Clinton, arrived at Haneda International Airport shortly before 7 p.m. local time and was to have a private dinner with Japanese Prime Minister Shinzo Abe.

Miami Herald

Join the
Discussion

The Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere on the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

The Miami Herald uses Facebook's commenting system. You need to log in with a Facebook account in order to comment. If you have questions about commenting with your Facebook account, click here.

Have a news tip? You can send it anonymously. Click here to send us your tip - or - consider joining the Public Insight Network and become a source for The Miami Herald and el Nuevo Herald.

Hide Comments

This affects comments on all stories.

Cancel OK

  • Marketplace

Today's Circulars

  • Quick Job Search

Enter Keyword(s) Enter City Select a State Select a Category