Jacquelyn Martin/AP

Senate Confirms Fed Chair—Now the Hard Part Begins

Janet Yellen will oversee the unwinding of the central bank's bond-buying program and likely its first interest-rate hike since December 2008.

The Senate voted 56-26 on Monday to confirm Janet Yellen as the next chair of the Federal Reserve, elevating her to arguably the most powerful woman in Washington. It won't be an easy job.

In addition to overseeing the unwinding of the central bank's bond-buying program and likely its first interest-rate hike since December 2008, Yellen will inherit the Fed chairman's twice-yearly grilling by members of Congress. The Fed chief is required by law to provide semiannual updates on monetary policy to the Senate Banking and House Financial Services committees.

It won't always be pleasant, but Yellen's job might be slightly easier than that of her predecessor, Ben Bernanke. Not only is the economy slowly improving but the Fed is also easing off a bond-buying program known as "quantitative easing" that has drawn criticism from a number of congressional Republicans, who say it could have unintended negative consequences for the economy.

"There's always a tension between the Fed and the Congress, which is sort of a rightful tension, but I don't think it's going to be as intense," said Stuart Hoffman, chief economist at the PNC Financial Services Group.

From Congress's perspective, the Fed is trudging toward more normal policies, which should please the vocal critics on the right, even as it may draw fresh criticism from Democrats who think the central bank is backing off its support for the fledgling recovery too soon. From the Fed's point of view, Congress just delivered more fiscal certainty—something Bernanke often urged it to do—with the passage of a modest two-year budget agreement last month.

But even though the Fed announced it would cut the total number of monthly asset purchases by $10 billion to $75 billion in December, the central bank still will be growing its balance sheet, which critics say could cause financial instability, through the bond-buying program in 2014. "I don't think the pressure lessens up. I just think it changes a little bit the nature of the Republican criticism," said Sarah Binder, a Congress expert at the Brookings Institution.

Some of the more politically contentious aspects of the Fed are, in addition to quantitative easing, its work as a financial regulator and its transparency. A bill that would open up the central bank's monetary-policy decisions to congressional scrutiny has been the most prominent effort in recent years to change the Fed; it passed the House in 2012 but so far has failed to advance in the Senate.

"I would be very concerned about legislation that would subject the Federal Reserve to short-term political pressures that could interfere with [its] independence," Yellen said at her confirmation hearing, echoing concerns that Bernanke raised during his tenure.

She may be forced, like Bernanke, to defend her position again.

The House Financial Services Committee announced last month that it would spend 2014 examining the Fed's mission through a series of hearings and is prepared to mark up legislation to reform the Fed later next year. The first of 2014, scheduled for Thursday, will focus on the international impacts of the Fed's bond-buying program.

This article appears in the January 7, 2014 of NJ Daily.                          

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.