Obama nominates Yellen as Fed chief, calls her a champion for workers

WASHINGTON -- President Obama on Wednesday announced the nomination of Janet L. Yellen to be the first woman head of the Federal Reserve, calling her “one of the nation’s foremost economists and policymakers” who would be a champion for American workers.

Flanked at a White House ceremony by the nominee and outgoing Fed Chairman Ben S. Bernanke, Obama said Yellen was committed to the central bank’s dual mandate of stable prices and maximum employment.

But Obama stressed Yellen’s concern for one part of that mandate -- reducing unemployment -- as he and she emphasized that the work of recovering from the Great Recession was not over.

Yellen, the current Fed vice chair, is widely seen as willing to tolerate somewhat higher levels of inflation in order to reduce unemployment. That view brings her strong Democrat support but is expected to produce Republican criticism, although the Senate is likely to confirm her.

“She’s committed to increasing employment and she understands the human costs when Americans can’t find a job,” Obama said.

“She said before, ‘These are not just statistics to me. The toll is simply terrible on the mental and physical health of workers, on their marriages, on their children,” he continued. “So Janet understands this and American workers and their families will have a champion in Janet Yellen.”

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Yellen, 67, said she was “honored and humbled” by the faith Obama showed in choosing her.

“The mandate of the Federal Reserve is to serve all the American people. And too many Americans still can’t find a job and worry how they’ll pay their bills and provide for their families,” she said.

“The Federal Reserve can help if it does its job effectively,” Yellen continued. “We can help ensure that everyone has the opportunity to work hard and build a better life. We can ensure that inflation remains in check and doesn’t undermine the benefits of a growing economy. We can and must safeguard the financial system.”
Obama and Yellen praised Bernanke, who is stepping down in January after eight years as Fed chairman.

Obama said Bernanke has been the “epitome of calm” while also displaying “tremendous courage and creativity” in helping respond to the financial crisis and the Great Recession.

“He took bold action that was needed to avert another depression, helping us stop the free fall, stabilize financial markets, shore up our banks, get credit flowing again,” Obama said. “And all this has made a profound difference in the lives of millions of Americans.”

Yellen, a former UC Berkeley economist, has been Fed vice chair since 2010. Before that, she was president of the Federal Reserve Bank of San Francisco from 2004-2010.

Her nomination was expected after the other leading contender, former Treasury Secretary Lawrence H. Summers, withdrew from consideration last month in the face of mounting political opposition. Strong pushback against Summers from some liberal Democrats, in addition to expected opposition from most Republicans, led to worries about his Senate confirmation.

Yellen is expected to get Senate approval.

But some Republicans already are raising concerns about Yellen, who has been a strong advocate of the Fed’s aggressive stimulus policies to reduce unemployment. Among those have been pumping hundreds of billions of dollars into the economy through large-scale bond buying known as quantitative easing that has dramatically expanded the Fed’s assets.

“I continue to strongly disagree with the Fed’s use of quantitative easing, and am eager to learn Ms. Yellen’s vision for the direction of the Federal Reserve as we go through the nomination process,” said Sen. Mike Crapo (R-Idaho), the top Republican on the Senate Banking Committee, which will consider her nomination.

Crapo was one of six Republicans on the committee in 2010 who voted against Yellen’s confirmation as Fed vice chair. The committee approved her nomination 17-6.

Yellen’s nomination was approved by unanimous consent by the full Senate, indicating there was not a lot of strong opposition. But the No. 1 position at the Fed is much more important, so this time she’s likely to face a tougher, roll-call vote.

Chris Krueger, a senior policy analyst at financial services firm Guggenheim Partners, predicted Yellen would be narrowly confirmed by the Senate.

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