Yellen is Obama choice to succeed Bernanke at Fed

Posted on Oct 9 2013 - 6:20pm by admin

By JIM KUHNHENN and MARTIN CRUTSINGER, AP
October 9, 2013, 2:06 pm TWN

WASHINGTON — After a lengthy and politically charged search, President Barack Obama has decided to nominate Janet Yellen, the Federal Reserve’s vice chair, to be chairman of the powerful U.S. central bank, succeeding Ben Bernanke at a pivotal time for the economy and the Fed’s monetary policies.

If confirmed by the Senate, Yellen would be the first woman to head a major central bank anywhere in the world. She also would be the first Democrat chosen to lead the Fed since Paul Volcker was picked by President Jimmy Carter in 1979.

Obama was scheduled to make the announcement Wednesday with Yellen and Bernanke at his side in the White House’s ornate East Room.

Bernanke, 59, will serve until his term ends Jan. 31, completing a remarkable eight-year tenure in which he helped pull the U.S. economy out of the worst financial crisis and recession since the 1930s.

Under Bernanke’s leadership, the Fed created extraordinary programs after the financial crisis erupted in 2008 that are credited with helping save the U.S. banking system. The Fed lent money to banks after credit markets froze, cut its key short-term interest rate to near zero and bought trillions in bonds to lower long-term borrowing rates.

Yellen, 67, emerged as the top candidate after Lawrence Summers, a former Treasury secretary and White House favorite for the job, withdrew from consideration last month in the face of rising opposition.

A close ally of the chairman, Yellen has been a key architect of the Fed’s efforts under Bernanke to keep interest rates near record lows to support the economy, and she likely would continue steering Fed policy in the same direction as Bernanke.

Her nomination could face resistance from congressional critics who argue that the Fed’s low-rate policies have raised the risk of high inflation and might be breeding dangerous bubbles in assets like stocks or real estate.

Sen. Tim Johnson, who heads the Senate Banking Committee, which must approve Yellen’s nomination, said he would work with the panel’s members to advance her confirmation quickly.

“She has a depth of experience that is second to none, and I have no doubt she will be an excellent Federal Reserve chairman,” Johnson said in a statement.

The White House announcement comes in the midst of a confrontation between Obama and congressional Republicans, particularly those in the House of Representatives, over the partial government shutdown and the looming decision on increasing the nation’s $ 16.7 trillion borrowing limit. Obama has been harshly critical of Republicans for demanding either changes in health care or spending policies in exchange for paying for government operations and raising the debt ceiling.

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In this June 3 file photo, Janet Yellen, vice chair of the Board of Governors of the Federal Reserve System, answers a question from a participant at the International Monetary Conference in Shanghai, China. President Barack has decided to nominate Yellen to replace Federal Reserve Chairman Ben Bernanke.

(AP)

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