Senate banking panel approves Yellen for Federal Reserve chairmanship

November 21, 2013

The Senate banking committee approved Janet Yellen’s nomination to lead the Federal Reserve on Thursday as three Republicans broke party ranks to support her confirmation.

GOP Sens. Bob Corker of Tennessee, Tom Coburn of Oklahoma and Mark Kirk of Illinois voted in favor of her appointment. In a surprise twist, one Democrat, Joe Manchin of West Virginia, opposed it. The committee approved Yellen’s nomination 14-8, and it will now head to the full Senate for consideration.

“As we still recover from the worst recession since the Great Depression, Dr. Yellen has the experience and intellect that is necessary to lead our central bank,” said Sen. Heidi Heitkamp, a Democrat and member of the committee.

Democrats hold a majority in the Senate but do not have enough votes to break a Republican filibuster, making bipartisan support essential to Yellen’s confirmation. In addition to the Republicans on the banking committee who supported her Thursday, Sens. Susan Collins (R-Maine) and Orrin G. Hatch (R-Utah) said this week that they have yet to make a final decision, leaving the door open for a favorable vote.

Though she is expected to be confirmed, several prominent Republicans have come out against her appointment. Sen. Marco Rubio (R-Fla.) said Thursday that he planned to vote against Yellen because she has been among the chief proponents of the Fed’s easy-money policies.

“Altogether, she has championed policies that have diminished people’s purchasing power by weakening the dollar, made long-term savings less attractive by diminishing returns on this important behavior, and put the U.S. economy at increased risk of higher inflation and another future boom-bust,” he said.

The confirmation comes at a delicate time for the central bank. The Fed is debating when to begin scaling back its effort to goose the economy through tens of billions of dollars in bond purchases a month. Wall Street has been on edge over the timing, and the Fed has struggled to communicate its intentions clearly amid muddy economic data and dissension within its top ranks.

On Wednesday, the Fed released documents from an October meeting of senior officials that showed they believed the job market was healing and they could start reducing the stimulus program “in coming months.” But it also revealed that the Fed’s top brass still don’t agree on the best way to prepare investors and the public for the program’s inevitable wind down. “The conversation did not lead to any clear conclusions as to how to strengthen forward guidance in order to offset any signal the market might take from tapering,” said Michael Feroli, chief U.S. economist at JPMorgan Chase.

Current Fed Chairman Ben S. Bernanke attempted to clear the air this week during a speech in Washington that highlighted the central bank’s commitment to keeping the benchmark short-term rate low even after its bond purchases end. But the yeoman’s work of shifting the Fed out of crisis mode will fall to Yellen, if she is confirmed.

Republicans focused on how she would approach that challenge during her hearing before the banking committee last week. On Wednesday, Corker said her response influenced his decision to support her nomination, even though he voted against her confirmation as vice chairman three years ago.

“During our discussions, she made a commitment to moderate purchases as soon as she believes the data supports that action and shows that the current status cannot continue,” he said.

Staff writer Ed O’Keefe contributed to this report.

Ylan Q. Mui is a financial reporter at The Washington Post covering the Federal Reserve and the economy.
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