Washington (AFP) – The U.S. Senate confirmed Janet Yellen as the new leader of the Federal Reserve, marking the first time a woman has headed the world’s most powerful central bank.
President Barack Obama’s nominee earned bipartisan support in the bitterly divided chamber, but the 56-26 vote was still among the closest in the 100-year history of the institution.
Several senators who supported Yellen, currently Fed vice-chair, arrived too late for the vote.
Yellen, 67, will replace current Chairman Ben Bernanke, who steps down on January 31 after eight years in the job, during which the pair dealt with the country’s worst economic crisis since the Great Depression.
Bernanke’s successor’s main task will be ensuring the U.S. economy does not slip backwards at a time when other countries are beset by weakness.
Especially crucial will be further pushing down the American jobless rate, which fell to 7.0 percent in November, still significantly higher than Bernanke, Yellen and other Fed policymakers have deemed satisfactory.
Obama cheered the Senate approval, saying Yellen would serve the central bank and the country well.
“The American people will have a fierce champion who understands that the ultimate goal of economic and financial policymaking is to improve the lives, jobs and standard of living of American workers and their families,” he said in a statement. ”As one of our nation’s most respected economists and a leading voice at the Fed for more than a decade — and vice chair for the past three years — Janet helped pull our economy out of recession and put us on the path of steady growth.”
Yellen has built a strong reputation as an academic economist, and as a veteran policymaker at the Fed she is not expected to veer far from the policies set by Bernanke.
Married to economics Nobel Prize winner George Akerlof, she has a long-term interest in the impact of joblessness on the economy, and has helped keep Fed policy focused on bringing down unemployment.
She has also been closely identified with the Fed’s opening up of its once-mysterious policy thinking, with the central bank communicating what it sees in the economy and the expected direction of monetary policy far more openly than 10 years ago.
“Americans should feel reassured that we will have her at the helm of the Fed as our nation continues to recover from the Great Recession,” said Senate Banking Committee chairman Tim Johnson. ”Dr. Yellen’s leadership will also be critical as the Fed completes Wall Street reform rulemaking and continues to enhance the stability of our financial sector.”
The American Bankers Association, which has fought the Fed’s push for tough regulations in the wake of the 2008 crisis, cautiously welcomed Yellen’s approval.
“As the Federal Reserve heightens its focus on bank regulation, her experience supervising banks in the Federal Reserve system provides her with a valuable perspective. We look forward to working with the Federal Reserve under her leadership,” it stated.
Her nomination encountered resistance from several Republicans concerned with the Fed’s huge efforts to pump money into the economy over the past four years, including its $85 billion a month bond buying stimulus program of the past year, soon to be scaled back.
“The stock market has become addicted to the Fed’s easy money policies,” said veteran Senate Republican Chuck Grassley. ”It appears that Ms. Yellen will continue to pursue these misguided policies.”
However, with the economy now moving at a pace the Fed has tentatively ruled sustainable, the policy making Federal Open Market Committee, led by Bernanke and Yellen, decided at its December meeting to taper the program, starting with a $10 billion cutback this month.
The move came after months of delay and the step convinced Democratic Senator Joe Manchin, who had been concerned about the size of the stimulus, to back Yellen.
“I now feel comfortable supporting Vice-Chair Yellen’s nomination,” he said in a statement.
Copyright 2014 The National Memo