Friday, March 7, 2014
By Ylan Q. Mui And Zachary A. Goldfarb
The Washington Post
WASHINGTON — Janet Yellen’s official interview to become the nation’s economist in chief lasted less than an hour.
The silver-haired academic from Brooklyn had visited the White House only one other time in the three years since she was appointed vice chair at the Federal Reserve, according to visitor logs. She had not testified before Congress since her confirmation hearing. She felt her interview with President Obama early this summer was unexpectedly brief, according to two people familiar with the discussion. Both left the meeting without an expectation that she would get the job.
But on Wednesday, Yellen arrived at the White House again, this time as the president’s pick to lead the institution charged with setting the course for the nation’s economy. Her nomination is partly the result of a political miscalculation that turned Obama’s top choice into a flash point within his party.
Throughout the controversy, Yellen remained quiet rather than lobbying her case. Her supporters said she has studiously avoided politics and is adamant about the central bank’s independence. At times they were frustrated by her refusal to promote herself for the position, and she rejected offers from others to make her case before lawmakers and the administration – even as her future grew cloudy.
While friends say this trait is a testament to the quiet persistence that will define Yellen’s leadership style, others worry it will hamper her ability to navigate the central bank’s increasingly fractious relationship with Capitol Hill.
She will have to defend the Fed’s continued use of extraordinary measures to boost the economy to Republican lawmakers who have grown increasingly concerned about the central bank’s easy-money policies. The Fed has also come under fire for delays in implementing a financial regulatory overhaul passed by Congress three years ago. And she faces the complicated task of unwinding those stimulus programs while ensuring the recovery does not falter.
“Too many Americans still can’t find a job and worry how they’ll pay their bills and provide for their families,” Yellen said Wednesday in accepting the nomination. “The Federal Reserve can help if it does its job effectively.”
In the small world of Fed watchers, Yellen had long been considered the logical choice to run the central bank. She is a respected academic economist formerly based at the University of California at Berkeley who also served as head of President Bill Clinton’s Council of Economic Advisers. She did a stint with the Fed’s Board of Governors in Washington and led the Federal Reserve Bank of San Francisco. In 2010, Obama tapped her to become vice chair of the central bank, and she emerged as a key supporter of its controversial efforts to jump-start the recovery.
But Yellen remained largely unknown in political circles and among business leaders. Though Treasury Secretary Jack Lew and the current chair of the Council of Economic Advisers, Jason Furman, privately spoke highly of her, she was not an established member of Obama’s tightknit brain trust. Her chief rival was the president’s former economic adviser, Lawrence Summers, who came from that group.
“This was messy for a Fed chair nomination, and I hope it will never happen again,” said former Fed vice chairman Alan Blinder, a professor at Princeton University and a close friend of Yellen’s.
A Fed spokeswoman declined to comment for this story. A number of people familiar with the nomination process spoke on the condition of anonymity to discuss private conversations.
Summers was a highly visible member of the administration during Obama’s first term and the architect of his signature stimulus plan.
In contrast, Yellen’s lack of public standing was at times interpreted as a lack of ability. According to one supporter, several corporate executives unfamiliar with her work were questioning her experience as late as midsummer.
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