Several Republicans on the Senate Banking Committee, which will consider Yellen’s nomination before a floor vote to confirm her is scheduled, said today that the Federal Reserve’s bond-buying program -- known as quantitative easing -- could prompt them to vote against confirming Yellen.
“I still have the same concerns,” said Idaho Senator Mike Crapo, the top Republican on the banking panel, who opposed Yellen’s nomination to the Federal Reserve Board in 2010. “We are now moving toward further Fed management of some sort with regard to whether it’s winding down the quantitative easing or not, but I’m going to let the process move forward and evaluate it carefully before I make a decision.”
President Barack Obama today nominated Yellen, the Fed’s current vice chairman, to lead the central bank, succeeding Ben S. Bernanke. Obama called her a proven leader who is committed to the Fed’s dual mandate of keeping inflation in check while promoting job growth.
She has “a keen understanding about how markets and the economy work, not just in theory, but also in the real world,” Obama said at the White House in formally announcing her nomination. “I urge the Senate to confirm Janet without delay.”
Even if they end up opposing her, Republicans on the panel couldn’t unilaterally block Yellen because Democrats have a two-seat edge on the committee. On the Senate floor, Democrats would need the support of six Republicans to advance Yellen’s nomination.
“Republicans may vote against Yellen but given that she is not a highly polarizing figure and is not seen as a partisan, not to mention the gender politics of her being the first woman nominated to lead the Fed, we doubt she will be blocked by Republicans,” Brian Gardner, senior vice president for Washington research at Keefe, Bruyette & Woods Inc., said in a note to clients.
Obama turned to Yellen, 67, after Lawrence Summers, a former Treasury secretary and one-time economic adviser to the president, withdrew from consideration amid complaints from Democrats on the banking panel. Democrats have hailed the selection of Yellen.
“She’s terrific, a brilliant economist, someone who’s great experience as a bank president of the Federal Reserve of San Francisco, as a member of the board of governors, someone who understands not only the theory but over the last several years the real nuts and bolts of trying to run the Federal Reserve,” Senator Jack Reed, a Rhode Island Democrat on the banking panel, said today in an interview at the Capitol.
Republicans express skepticism primarily because as a top deputy to Bernanke, Yellen supported the central bank’s unprecedented bond-buying programs and was behind a strategy adopted in 2012 to commit the central bank to goals on inflation and unemployment.
Senator Bob Corker, a Tennessee Republican, criticized Yellen’s “dovish” views on monetary policy.
“In this case, I think almost the 100 percent focus is going to be monetary policy, at least among those who are going to look at this objectively,” Corker, discussing the nomination, told reporters today. “There are people who are automatic yeses.”
U.S. central bankers in December increased their bond purchases to an $85 billion monthly pace while tying changes in the benchmark lending rate to thresholds for unemployment and inflation.
“My biggest question to Ms. Yellen will be will she actively push for higher capital requirements for mega-banks than regulators have announced,” said David Vitter, a Louisiana Republican and member of the banking panel, adding that he worried she would “continue the Fed’s excessive printing of money.”
Alabama Senator Richard Shelby, formerly the top Republican on the banking committee, “has real concerns” about Yellen’s “proclivity to print more money and her record as a bank regulator,” said Shelby spokesman Jonathan Graffeo.
“However, he believes that we should let the confirmation process play out, and looks forward to discussing her record at the upcoming hearing,” Graffeo said.
Before a hearing is scheduled on Yellen’s nomination, she will be vetted by Republican and Democratic committee staffers and will meet privately with most, if not all, senators on the banking panel. That process typically takes several weeks and could be longer in this case because of furloughs necessitated by the government shutdown that is now in its second week.
Crapo, Shelby, Corker, and Vitter opposed Yellen’s nomination to the Fed board and to be the central bank’s vice chairman in 2010. All except Corker were among the 30 senators - - 18 Republicans and 12 Democrats -- who opposed Bernanke’s nomination to a second term as Fed chairman in 2010.
Summers, 58, withdrew his name from consideration last month after reports that he was the front-runner for the post. Twenty Senate Democrats took the unusual step of signing a July 26 letter urging Obama to nominate Yellen.
Although the senators’ pro-Yellen letter didn’t mention Summers by name, several signers later said they would oppose his nomination. They cited his efforts to deregulate the financial industry while serving in President Bill Clinton’s administration, a move that some lawmakers said contributed to the 2008 financial crisis.
At least five Democrats on the Senate banking panel said they would oppose Summers in the days before he bowed out of consideration. That would have been enough to scuttle his nomination in the committee had he been chosen.
Senator Mike Johanns, a Nebraska Republican on the banking panel who backed Yellen for vice chairman three years ago, said he was eager to learn more about her, though he wasn’t aware of any reasons his support would change.
“That’s why I’m saying I’m open but I haven’t committed to being a yes vote yet,” Johanns said.
“I’m going to sit down and talk with her, visit with her,” Coburn said in an interview at the Capitol. “I’m glad the president nominated someone, and now we can get the process moving.”
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