The Senate voted 56-26 on Monday to confirm Janet Yellen as the next chair of the Federal Reserve, elevating her to arguably the most powerful woman in Washington. It won’t be an easy job.
In addition to overseeing the unwinding of the central bank’s bond-buying program and likely its first interest-rate hike since December 2008, Yellen will inherit the Fed chairman’s twice-yearly grilling by members of Congress. The Fed chief is required by law to provide semiannual updates on monetary policy to the Senate Banking and House Financial Services committees.
It won’t always be pleasant, but Yellen’s job might be slightly easier than that of her predecessor, Ben Bernanke. Not only is the economy slowly improving but the Fed is also easing off a bond-buying program known as “quantitative easing” that has drawn criticism from a number of congressional Republicans, who say it could have unintended negative consequences for the economy.
“There’s always a tension between the Fed and the Congress, which is sort of a rightful tension, but I don’t think it’s going to be as intense,” said Stuart Hoffman, chief economist at the PNC Financial Services Group.
From Congress’s perspective, the Fed is trudging toward more normal policies, which should please the vocal critics on the right, even as it may draw fresh criticism from Democrats who think the central bank is backing off its support for the fledgling recovery too soon. From the Fed’s point of view, Congress just delivered more fiscal certainty — something Bernanke often urged it to do — with the passage of a modest two-year budget agreement last month.
But even though the Fed announced it would cut the total number of monthly asset purchases by $10 billion to $75 billion in December, the central bank will still be growing its balance sheet, which critics say could cause financial instability, through the bond-buying program in 2014. “I don’t think the pressure lessens up. I just think it changes a little bit the nature of the Republican criticism,” said Sarah Binder, a Congress expert at the Brookings Institution.
Some of the more politically contentious aspects of the Fed are, in addition to quantitative easing, its work as a financial regulator and its transparency. A bill that would open up the central bank’s monetary-policy decisions to congressional scrutiny has been the most prominent effort in recent years to change the Fed; it passed the House in 2012 but has so far failed to advance in the Senate.
“I would be very concerned about legislation that would subject the Federal Reserve to short-term political pressures that could interfere with [its] independence,” Yellen said at her confirmation hearing, echoing concerns that Bernanke raised during his tenure.
She may be forced, like Bernanke, to defend her position again.
The House Financial Services Committee announced last month that it would spend 2014 examining the Fed’s mission through a series of hearings and is prepared to mark up legislation to reform the Fed later next year. The first of 2014, scheduled for Thursday, will focus on the international impacts of the Fed’s bond-buying program.
- 1 Why Presidents Skip the White House Correspondents’ Dinner
- 2 Policy Fights, Senate Rules Could Thwart “Repeal-Plus” Strategy On Obamacare
- 3 Why Every Member of Congress Gets a Monthly Porn Delivery
- 4 Hostile Swing Voters Spell Trouble for House Republicans
- 5 Obamacare Website Has Cost $840 Million
What We're Following See More »
After spending a few minutes re-litigating the Democratic primary, Donald Trump turned his focus to Obamacare. “I inherited a mess, believe me. We also inherited a failed healthcare law that threatens our medical system with absolute and total catastrophe” he said. “I’ve been watching and nobody says it, but Obamacare doesn’t work.” He finished, "so we're going to repeal and replace Obamacare."
Donald Trump lobbed his first attack at the “dishonest media” about a minute into his speech, saying that the media would not appropriately cover the standing ovation that he received. “We are fighting the fake news,” he said, before doubling down on his previous claim that the press is “the enemy of the people." However, he made a distinction, saying that he doesn't think all media is the enemy, just the "fake news."
"The FBI rejected a recent White House request to publicly knock down media reports about communications between Donald Trump's associates and Russians known to US intelligence during the 2016 presidential campaign, multiple US officials briefed on the matter tell CNN. But a White House official said late Thursday that the request was only made after the FBI indicated to the White House it did not believe the reporting to be accurate."