Ending the longest non-cabinet, non-Supreme Court appointment saga I can recall, it’s being reported the president has decided to appoint Federal Reserve Board vice-chairman Janet Yellen to chair the Fed. The exceptionally well-qualified Yellen, who will become the first woman to head a major central bank, emerged as the obvious choice once former Treasury Secretary Larry Summers, reportedly the president’s first choice, withdrew from consideration after a torrent of criticism, most notably from Democratic senators who would have caused major trouble in confirmation hearings. So far, there are no signs Yellen herself will struggle to be confirmed, but given the current atmosphere in Washington, Senate Republicans may use the hearings to go after Obama’s economic policies and/or argue for a much more passive and inflation-focused Fed (as many GOP presidential candidates did during the 2012 cycle).
In any event Yellen, a past and present advocate of an aggressive monetary policy that takes the Fed’s “dual mandate” of promoting full employment while holding down inflation quite seriously, is very likely to continue the Fed’s current modest stimulative policies, perhaps even longer than the man she will succeed, Ben Bernanke. It’s a shame she can’t be in place quickly, since there is every indication the U.S. and global financial system is about to undergo another big test. Thanks, congressional Republicans.