President-elect Joe Biden is expected to name former Federal Reserve Chair Janet Yellen, a well-known labour economist with a career spanning over three decades in policy-making, to serve as his Treasury Secretary, the Wall Street Journal reported.
If confirmed by the Senate, she will be the first woman in US history to head the Treasury Department and will, in turn, helm Biden’s economic response to the ongoing coronavirus pandemic, which has crippled the country’s economy, rendering the highest level of unemployment since the Great Depression.
Last week, Biden hinted at his pick for Treasury Secretary, saying, “You’ll find it is someone who I think will be accepted by all elements of the Democratic Party, progressives through the moderate coalition.”
Many observers immediately pointed to Yellen, who has previously attracted bipartisan support. During her confirmation as Fed chair in 2014, she received 11 Republican votes, including the backing of three sitting Republican senators.
If appointed, she will be the first person to have held three key economic positions in the US government — first as Fed chair, then as head of the White House Council of Economic Advisers, and now as Secretary of the Treasury.
So, who is Janet Yellen?
Born and raised in New York City, Yellen earned a degree in economics from Brown University before completing a PhD at Yale. The 74-year-old economist spent years teaching at Harvard University and the University of California at Berkeley before making her initial foray into Democratic Politics as head of former US President Bill Clinton’s Council of Economic Advisers in the late 1990s.
In the decades that followed she served as President of the Federal Reserve Bank of San Francisco, a Fed governor, and Fed Vice Chair, before ultimately becoming the first woman to chair the Federal Reserve.
She served as Chairwoman of the Federal Reserve under the Barack Obama administration from 2014 until 2018, when President Trump broke away from a decades-old Washington tradition of renominating the incumbent Fed Chair for a second term and instead nominated Jerome Powell to take up the top job.
Over the years, Yellen has earned a reputation as a feminist icon in the economics world for scaling new heights in a largely male-dominated field. While leaving the Federal Reserve in 2018, many of her female colleagues paid tribute to her by turning up the collars of their blazers — a fashion choice that Yellen popularised during her decades-long, illustrious career.
To honor Janet Yellen’s extraordinary tenure & accomplishments at the Federal Reserve, her distinction as the first woman Chair, & her inimitable style, we’re sharing photos of our colleagues “popping” their collars–just like she does. #PopYourCollar #WomenInSTEM pic.twitter.com/Ya0H3RwRnI
— New York Fed (@NewYorkFed) January 31, 2018
It was while working at the Fed in 1977 that she met her husband, economist and Nobel laureate George A. Akerlof. 📣 Express Explained is now on Telegram
What did she accomplish during her years as Fed chair?
During her tenure in the Federal Reserve, Yellen was credited with bringing the US economy back on track after the debilitating financial crisis of 2007 and the recession that closely followed. By the end of her term as Chairwoman, the unemployment rate fell to 4.2 per cent — the lowest level in more than 16 years, according to Bloomberg.
Her colleagues are known to describe her as being a lot like Mary Poppins — firm yet kind, smart and always prepared, a Washington Post report stated. She was famously one of the first policymakers to predict the 2008 financial crisis.
Under her leadership, the Federal Reserve also raised interest rates for the first time since 2008, which earned her widespread praise both from conservatives as well as from Wall Street.
But she has also been known to consistently stand up to Wall Street banks. Most notably, on Yellen’s final day in office, the central bank slapped some of its harshest sanctions on Wells Fargo bank to punish it for a scandal involving sham accounts.
In her resignation letter submitted to President Trump in 2017, Yellen wrote that she was “gratified that the financial system is much stronger than a decade ago”. She further pointed out that 17 million jobs had been added since the financial crisis and the Fed was inching closer to achieving its goals of “maximum employment and price stability”.
What are the challenges she will face as Treasury Secretary?
As head of the country’s Treasury Department, Yellen will be charged with the responsibility of tackling the staggering economic inequality that plagues the United States. But her immediate and most pressing concern will be combating the economic devastation caused by the ongoing Covid-19 pandemic.
In April, US unemployment levels hit a postwar record following the first wave of coronavirus infections, the Guardian reported. While the job situation has since improved, recovery has slowed down yet again after the second wave of infections struck the country in recent months. Economists at JPMorgan Chase & Co. foresee that the economy is likely to contract slightly in the first quarter of 2021 due to the rising number of infections, The Wall Street Journal reported.
With Democrats and Republicans deeply divided on how to facilitate a complete economic recovery, observers believe she is the best choice to bridge the gap and build consensus. Given her vast experience serving in the Federal Reserve, she is also likely to be able to work successfully alongside the Fed.
What has the reaction been to her possible nomination?
News of Yellen’s nomination has widely been welcomed by both Democrats and Republicans, who see her as capable of pursuing a bipartisan compromise to overcome the current economic crisis in the United States.
Senator Elizabeth Warren, who had earlier expressed interest in serving as Treasury Secretary under Biden, called Yellen an “outstanding choice”.
Janet Yellen would be an outstanding choice for Treasury Secretary. She is smart, tough, and principled. As one of the most successful Fed Chairs ever, she has stood up to Wall Street banks, including holding Wells Fargo accountable for cheating working families.
— Elizabeth Warren (@SenWarren) November 23, 2020
While many progressives were hoping Warren — a staunch critic of corporate America and Wall Street — would clinch the nomination herself, with Senate control still in limbo, observers believe Yellen is the safer choice.
Meanwhile, former Goldman Sachs executive and economic adviser to Donald Trump, Gary Cohn, too, said that Biden had made an “excellent choice”. “Having had the opportunity to work with then-Chair Yellen, I have no doubt she will be the steady hand we need to promote an economy that works for everyone, especially during these difficult times. Congratulations,” he tweeted.
Janet Yellen is an excellent choice for Treasury Secretary. Having had the opportunity to work with then-Chair Yellen, I have no doubt she will be the steady hand we need to promote an economy that works for everyone, especially during these difficult times. Congratulations.
— Gary Cohn (@Gary_D_Cohn) November 23, 2020
A formal announcement of her selection isn’t expected before the end of the month, as per reports. Earlier this week, a member of Biden’s transition team told the Wall Street Journal that the first few members of Biden’s economic team will be announced by next week.
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