Senators Looking for Leverage Find Yellen

Janet Yellen, Obama's choice for next leader of the Federal Reserve.
National Journal
Catherine Hollander
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Catherine Hollander
Oct. 31, 2013, 4:06 p.m.

Sen. Lind­sey Gra­ham said he would block Janet Yel­len’s nom­in­a­tion as Fed­er­al Re­serve chair­wo­man to get more in­form­a­tion re­leased on the Benghazi at­tack. Sen. Rand Paul said he would hold up the nom­in­a­tion for a vote on his bill.

In an en­vir­on­ment where pre­cious little le­gis­la­tion gets passed, law­makers look­ing for lever­age on is­sues have few places to turn. One of them is hold­ing up nom­in­a­tions — and Yel­len’s is a big one.

“It’s the only lever­age we have,” Gra­ham said.

And so, in a time-honored Cap­it­ol Hill tra­di­tion, Yel­len is be­ing made a pawn in oth­er fights.

For Gra­ham, R-S.C., that means gath­er­ing more in­form­a­tion about the at­tack on the U.S. con­su­late last year. “I’m go­ing to block fu­ture nom­in­a­tions com­ing from the ad­min­is­tra­tion, not be­cause I want to shut any­thing down — be­cause I want to open something up,” he said at a news con­fer­ence.

For Paul, R-Ky., that means a vote on his bill to broaden the abil­ity of the Gov­ern­ment Ac­count­ab­il­ity Of­fice to audit the Fed. Paul has been crit­ic­al of the Fed’s policies but sug­ges­ted he is open to con­sid­er­ing Yel­len’s nom­in­a­tion.

“I look for­ward to an in-depth dis­cus­sion in de­bat­ing her nom­in­a­tion, but my ul­ti­mate de­cision will rest on her po­ten­tial ef­fect­ive­ness in re­form­ing that his­tor­ic­ally ir­re­spons­ible in­sti­tu­tion,” he wrote in a Time ed­it­or­i­al after the White House an­nounced Yel­len’s nom­in­a­tion in Oc­to­ber.

In­deed, as the num­ber of laws passed by Con­gress in each ses­sion has de­clined over dec­ades, the use of holds has ris­en, says G. Calv­in Mack­en­zie, a pro­fess­or of gov­ern­ment at Colby Col­lege. It’s im­possible to know just how many are used today; they aren’t quan­ti­fied any­where. In 2011, the Sen­ate voted to end “secret holds,” which al­lowed law­makers to an­onym­ously block nom­in­ees.

But ac­cord­ing to Sarah Bind­er, a seni­or fel­low in gov­ernance stud­ies at the Brook­ings In­sti­tu­tion, com­pli­ance with the new rule is im­per­fect. “As the parties move farther and farther apart, it prob­ably in­creases the in­cent­ive to use more ob­struct­ive pro­ced­ures and ex­ploit them,” said Bind­er.

Nom­in­ees are blocked for all kinds of reas­ons. Some­times they over­come them, as Fed­er­al Re­serve Chair­man Ben Bernanke did in 2010 when Sens. Bernie Sanders, Jim De­Mint, Jim Bun­ning, and Dav­id Vit­ter vowed to block his nom­in­a­tion. Some­times they find a way around, as when Pres­id­ent Obama used a re­cess ap­point­ment to in­stall Richard Cordray as the first head of the Con­sumer Fin­an­cial Pro­tec­tion Bur­eau.

Some­times they don’t. In 2011, No­bel laur­eate Peter Dia­mond penned a scath­ing New York Times op-ed, “When a No­bel Prize Isn’t Enough,” to an­nounce his with­draw­al from con­sid­er­a­tion to serve on the Fed’s Board of Gov­ernors after his con­firm­a­tion was blocked three times.

Yel­len is less likely to be chal­lenged on the suit­ab­il­ity of qual­i­fic­a­tions for the job than Dia­mond, who, des­pite his No­bel Prize, had nev­er served at the cent­ral bank. Yel­len has been the Fed’s vice chair­wo­man since 2010 and pre­vi­ously headed one of its re­gion­al branches.

But the Fed’s ac­tions dur­ing and after the fin­an­cial crisis are sure to col­or her con­firm­a­tion hear­ings, and Paul is among the Re­pub­lic­ans who have raised ques­tions about the Fed’s stim­u­lus ac­tions.

The good news for Yel­len? As the Fed’s cur­rent vice chair­wo­man, she’ll be­come the act­ing chair­wo­man on Feb. 1 when Bernanke’s term ex­pires — even if she hasn’t been con­firmed by Con­gress.

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