Janet Yellen, the new chair of the Federal Reserve.
As of Jan. 6, Janet Yellen is officially the chair of the Federal Reserve Board, after the Senate voted 56-26 for her confirmation.
But what does her confirmation mean for the United States?
Yellen has spent her life devoted to economics, working under two former Fed chairs, Ben Bernanke and Alan Greenspan, and serving as the president and CEO of the Federal Reserve Bank of San Francisco.
Despite her credentials, her nomination had languished in the Senate since October. Her nomination produced ire from conservative groups including the Club for Growth and Heritage Action for America.
On the other hand, other groups have celebrated her confirmation, not only for punching through the glass ceiling — she is the first woman chair of the Fed — but also for her economic views.
“Her more than a decade at the Federal Reserve has shown she is a steady-handed, consensus builder who recognizes that maximizing employment is good for American workers and our continued economic recovery,” Sen. Sherrod Brown, D-Ohio, said in a statement.
Yellen is seen as a continuity nomination by experts in economics, succeeding Bernanke, who oversaw the Fed during the worst finical crisis since the 1930s.
“She’s not an economist that advises standing on the sidelines and letting the chips fall where they are; she’s more likely to intervene and hasten the recovery,” said Jared Bernstein, senior fellow at the Center of Budget and Policy Priorities and former economic adviser to Vice President Joe Biden.
Yellen is expected to implement policy Bernanke and other Fed board members have developed. Meaning, a continued governmental hand in shaping the economic recovery.
“It’s a matter of degree than kind,” said Mark Calabria, director of financial regulation studies at the Cato Institute, when discussing her similarities to Bernanke. “There is a difference in timing, but it’s a difference of six months, not years,” he said, explaining Yellen will enact the same policies, but not at the exact times Bernanke would have.
Yellen has been a big advocate of reducing unemployment, another concern of Bernanke’s, especially for those who have been unemployed for long periods of time, according to Bernstein.
Additionally, some, including Bernstein, think Yellen may up the ante when it comes to governmental oversight of financial intuitions. Specifically, keeping an eye on bubbles caused by inflation or speculation.
However, Calabria worries Yellen’s past has not reflected concerns over financial bubbles.
“There is no big concentration in letting bubbles happen and the clean-up after,” Calabria said. “She was right in the middle of the San Francisco housing bubble and didn’t do anything.”
Even her communication style is up for debate. Before Greenspan, the Fed kept mostly mum on its decisions. It is yet to be seen if Yellen will be a regular on Sunday morning talk shows like her two predecessors, according to Calarbria.
For now, Yellen is a point of contention, but one that dissenters will have to live with for the next five years.
“She wouldn’t be my first choice,” Calabria said. “I’m skeptical of generating employment via inflation. We have a lot of questions and concerns.”
On the other hand, fans have time to bask in her victory. She’s expected to hold her first meetings in March.
“She’s an excellent choice,” Bernstein said.
However, there is one thing all sides can agree on. “She has the potential to surprise us,” Calabria said.
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