Fed nominee Yellen passes key Senate hurdle

AFP-JIJI

Janet Yellen passed a key hurdle Thursday on her way to take the helm of the U.S. Federal Reserve when she earned the endorsement of the Senate Banking Committee.

President Barack Obama’s pick to replace Fed Chairman Ben Bernanke now needs the approval of the Senate, which is a near-certainty after a deeply controversial change in the rules on vetting White House nominees by Democrats.

The rules change removes the opportunity for Republicans to block nominations if they cannot garner the support of at least 60 of the 100 senators. Now a simple majority will suffice, making it unnecessary for Yellen to get the backing of at least five Republicans.

Three Republicans joined 11 Democrats in the banking committee’s 14-8 vote for Yellen, who breezed through a confirmation hearing with the panel last week.

Democratic Senator Elizabeth Warren, a key financial institution watchdog in Congress, hailed Yellen as an “extraordinarily qualified woman” for the post and expressed surprise that eight on the committee had voted against her.

“Janet Yellen has impeccable credentials, and I’m very pleased she was voted out of committee with bipartisan backing,” said Warren.

“I hope the Senate will act swiftly to confirm her so she can get to work leading the Fed at this important time.”

If approved, Yellen, currently the Fed’s vice chair, would become the first woman to lead the world’s most powerful central bank.

At 67, she has built a strong reputation as an academic economist, teaching at the University of California at Berkeley, and as a veteran policymaker at the central bank.

Married to George Akerlof, winner of the Nobel Memorial Prize for economics in 2001, she has a long-term interest in the impact of joblessness on the economy, and has helped keep Fed policy focused on bringing down the unemployment rate.

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.

In that, she has been closely allied to Bernanke, who is stepping down after eight years as Fed chairman, during which he played a crucial role in rescuing the economy from the financial crisis of 2008.

In the confirmation hearing last week, she made clear she would not break from the stimulus policies put in place by Bernanke to get the U.S. economy into higher gear in the wake of the Great Recession.

But a number of Republican senators raised questions about the risks of the Fed’s ultra-low interest rate and the multi-trillion dollar pile of assets it has piled up as a result of its radical stimulus program, based on quantitative easing.

Michael Crapo, the committee’s top Republican, said he voted against Yellen because of her support for the ongoing stimulus, which has the central bank purchasing assets at a pace of $85 billion a month.

“The long-term costs of these policies are unclear and worrisome,” he said.

A full Senate vote on her nomination is expected to be scheduled for early December. With Democrats holding a majority in the body, approval appears certain.

However, it was not yet clear how furious Republicans would react to the change in rules decided Thursday after Yellen’s nomination clearly won over the banking committee.

Prior to the rules change, at least five Republicans had said they would vote for Yellen.