Berkeley Economist Yellen Is Confirmed for Fed Seat

Janet Yellen, a UC Berkeley economist, won Senate confirmation Thursday for a seat on the Federal Reserve Board, becoming President Clinton’s second appointee to the powerful central bank policy panel.

The Senate cleared Yellen’s nomination on a 94-6 vote just in time for her to join the Fed’s Open Market Committee meeting Tuesday, where the central bank may raise interest rates to combat inflation. She will sit on both the Fed’s board and the policy-making Open Market Committee.

Earlier this year, Clinton named and the Senate confirmed Alan Blinder, a member of the President’s Council of Economic Advisers, to be the Fed’s vice chairman. Blinder succeeded Fed Vice Chairman David Mullins, who took a position in the securities industry.

In a hearing before the Senate Banking Committee on July 22, Yellen said she supports the Fed’s efforts this year to contain price increases by raising rates. The Fed has acted four times since February to push up the federal funds rate on overnight loans among banks, bringing it to 4.25% from 3%. It also raised rates for direct loans to banks to 3.5% from 3%.

Sen. Lauch Faircloth (R-N.C.) was the only dissenter in the banking committee’s 18-1 vote for Yellen. Faircloth was concerned that Yellen “was too soft on inflation, and she didn’t have any private-sector experience,” a Faircloth aide said.