The Washington PostDemocracy Dies in Darkness

The Finance 202: Yellen will face host of political problems as Biden's treasury secretary

with Brent D. Griffiths

Joe Biden’s treasury secretary may have short honeymoon with the nation’s economy in deep trouble.

Biden will take office this January almost certainly facing a series of concurrent economic disasters, from deep scarring in the restaurant and hotel sectors to an alarming increase in permanent unemployment.

In picking Janet L. Yellen as his treasury secretary, Biden has given his administration a seasoned Washington hand with as much credibility on macroeconomic policy as anyone else in the nation’s capital to fight those crises.

Yellen’s resume — economist at the Federal Reserve Bank of San Francisco, respected researcher, chairwoman of the Federal Reserve, economist at the Brookings Institution — lends her selection a degree of expertise that could at least temporarily help shield her from political attacks. Wall Street also took notice; shares reached session highs after the news broke.

But whatever political cover Yellen may have because of her work at the central bank could prove short-lived. 

The chair of the Federal Reserve has broad authority to control interest rates and other key instruments of monetary policy. The treasury secretary, by contrast, is typically immediately thrown into intense political battles consumed by difficult policy trade-offs and backroom jockeying, tasked with striking agreements with recalcitrant lawmakers who have their own parochial and political incentives.

“When you’re head of the Fed, you’re in charge of monetary policy. At Treasury, you have to work with Congress — they control both the spending and the taxes,” said Jeffrey Bergstrand, a former economist at the Federal Reserve now at the University of Notre Dame. “It’s a much more political role.”

Nonetheless, Yellen — who would be the first woman to head treasury — appears to have gotten a stamp of approval from both progressives who were pushing for one of their own, and members of the Trump administration.

Here's Gary Cohn, the former head of Trump's National Economic Council:

From a would-be contender for the job:

Former Clinton labor secretary:

The view from the bleachers:

On Capitol Hill, Treasury Secretary Steven Mnuchin emerged over time as the Trump administration’s lead negotiator with Congress. 

Mnuchin became President Trump’s go-to emissary to the Hill on taxes, infrastructure, stimulus legislation, trade and other divisive matters. He was routinely enmeshed in high-profile political controversies, defending the president’s decision not to release his tax returns and rejecting subpoenas from House Democrats demanding their release under the law.

It is unclear whether Yellen will play a similar role in Biden’s first term. The president-elect’s team has not yet filled out its economic policy roster — with the White House directors for the National Economic Council and Council of Economic Advisers both unnamed, for instance — but will face enormous economic decisions as soon as the transition occurs on Jan. 20. Yellen probably will be asked to weigh in on not just on the details of stimulus negotiations with Congress, but highly controversial actions the Biden team will be pressed to enact unilaterally, on matters ranging from eviction moratoriums to forgiving student debt.

Biden nodded last week toward the political considerations animating his selection for treasury secretary, telling reporters: “It’s someone who will be accepted by all elements of the Democratic Party, from the progressive to the moderate coalitions.”

Indeed, allies of Sens. Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) communicated to the Biden team that they found Yellen an acceptable choice. Having been tapped by both Bill Clinton and Barack Obama, Yellen also has long-standing ties to the party’s more centrist wing.

Maintaining her standing with both camps will be much harder once she and Biden take office. The Democratic Party faces fractious disagreements over a raft of economic policy matters, and Yellen will face a tall task in trying to bridge them while also spearheading agreements with congressional Republicans to stabilize a troubled economy.

“This is a highly political position. If you thought the Federal Reserve was in the hot seat when it comes to Congress, get ready,” said Chris Rupkey, chief economist at MUFG bank. “It’s a corner office seat — and the heat there can be very intense.” 

PROGRAMMING NOTE: Tory Newmyer is on vacation during this short holiday week. I'm filling in today and we have some great guest authors slated to follow. Thanks for spending part of your morning with us.

Market movers

Dow closes higher as coronavirus cases continue to rise.

Yellen wasn't the only reason for a market bump: “Stocks rose on Monday after AstraZeneca and the University of Oxford said their coronavirus vaccine was up to 90 percent effective, becoming the third inoculation this month that was revealed to be effective in trial data,” CNBC's Fred Imbert and Pippa Stevens report.

“The Dow Jones industrial average closed 327.79 points higher, or 1.1 percent, at 29.591.27. The S&P 500 gained 0.6 percent to end the day at 3,577.59, and the Nasdaq Composite advanced 0.2 percent to 11,880.63.”

  • The top leaders: “Shares of cruise lines and airlines led the gains on hope distributing these vaccines would reopen the economy and boost travel early next year. Shares of Carnival Corp. added 4.8 percent, while United Airlines rose 2.6 percent.”
  • And the losers: “Apple dropped nearly 3 percent, and Netflix slid 2.4 percent. Facebook, Amazon, Alphabet and Microsoft all posted slight losses.” (Amazon CEO Jeff Bezos owns The Washington Post.)

Fed's Charles Evans sees no rate hikes until late 2023 at the earliest: “Charles Evans said there is still ‘quite a long ways to go’ for the U.S. recovery from the coronavirus crisis, adding that he expects the Fed to keep interest rates at their current near-zero level until perhaps into 2024,” Reuters's Ann Saphir reports. “But that won’t mean the Fed will take its foot off the monetary gas pedal.”

BlackRock ups U.S. stocks to overweight: “The world’s largest asset manager has upgraded U.S. equities to ‘overweight,' turning bullish on quality large cap technology companies as well as small cap firms that tend to perform well during a cyclical upswing,” Reuters's Thyagaraju Adinarayan reports.

“The asset manager said it prefers the United States as it ‘boasts’ a higher share of “quality” companies with strong balance sheets and free cash flow generation in the highflying tech and health care sectors.” 

The transition

The General Services Administration on Nov. 23 cleared the way for President-elect Joe Biden to begin the transition process. (Video: The Washington Post)
The transition can finally begin.

A senior campaign adviser tells my colleagues this may be as close as President Trump gets to conceding: “Trump effectively surrendered his three-week protest of the election results by submitting to the government's official transition to the incoming Biden administration, bowing to a growing wave of public pressure yet still stopping short of conceding to Biden,” Josh Dawsey, Tom Hamburger,  Amy Gardner and Philip Rucker report.

“Trump authorized the federal government to initiate the Biden transition late Monday, setting in motion a peaceful transfer of power by paving the way for the president-elect and his administration-in-waiting to tap public funds, receive security briefings and gain access to federal agencies. Though procedural in nature, Trump's acceptance of the General Services Administration starting the transition amounted to a dramatic capitulation and capped an extraordinary 16-day standoff since Biden was declared the winner on Nov. 7.” 

GM hands Trump a loss as it reverses on California emissions rules.

The president previously injected himself into the issue: “CEO Mary Barra said in a letter to environmental groups it was ‘immediately withdrawing from the preemption litigation and inviting other automakers to join us,’ ” Reuters's David Shepardson reports.

“The about-face came as GM sought to work with Biden, who has made boosting electric vehicles (EVs) a top priority. The Detroit automaker has laid out an ambitious strategy to boost EV sales and last week said it will increase spending on EVs and autonomous vehicles by 35 percent from previously disclosed plans.”

  • More than 160 CEOs called for a transition of power before the ascertainment news: “The letter from the Partnership for New York City represents some of the biggest names in business and industry. Among the 164 signatories are Mastercard chief executive Ajay Banga, Goldman Sachs chairman and CEO David M. Solomon and Condé Nast CEO Roger Lynch,”  Hannah Denham and Juliet Eilperin report.

Tracking the picks, here's who else Biden announced would join his White House and administration:

  • Alejandro Mayorkas, homeland security secretary. “The son of Cuban Jews who fled Fidel Castro’s 1959 Revolution, Mayorkas would be the first immigrant and first Hispanic American to lead DHS if the GOP-controlled Senate confirms him,” Nick Miroff and Maria Sacchetti report.
  • Avril Haines, director of national intelligence. “She would be the first woman to hold the country’s top intelligence position and a stabilizing one …,” Shane Harris and Ellen Nakashima report.
  • John F. Kerry, climate envoy. The former secretary of state will report directly to the National Security Council, Brady Dennis, Steven Mufson and Juliet Eilperin report.

DuPont’s Up-and-Down History Shaped Biden’s Views on Business (WSJ)

Coronavirus fallout

From the U.S.:
  • More than 85,700 coronavirus patients hospitalized nationwide, shattering records: “In 23 states, the average number of hospitalizations has risen by 20 percent or more since one week ago. Twelve states — Maine, West Virginia, Oklahoma, Ohio, Pennsylvania, Indiana, Kentucky, Tennessee, Michigan, North Carolina, New Mexico, Arkansas — also set single-day records for hospitalized patients on Monday,” Antonia Farzan reports.
  • Statewide mask mandates are good for business, new study shows: “Reviewing data from all 3,142 counties nationwide, the researchers found that credit card spending increased more dramatically in counties where a mask mandate was introduced, compared to those where masks remained optional during the same time period,” Antonia Farzan reports.
  • Tough path ahead to get Americans vaccinated: “The vaccines need to be distributed across 50 states, plus U.S. territories, that have different demographics and shifting needs. The leading products must be stored at different temperatures and have different minimum orders, with each requiring two shots though the three vaccines don’t all share the same schedule,” Lena H. Sun and Frances Stead Sellers report.
Workers call on Walmart and Amazon to restore hazard pay.

Other retailers are also facing pressure before the holiday rush: “The United Food and Commercial Workers Union (UFCW), which represents 900,000 grocery employees at chains such as Kroger, Safeway and Giant, urged retailers to do more to protect workers from the virus that has sickened more than 12.3 million Americans,” Abha Bhattarai and Christopher Ingraham report.

“Separately, the workers rights group United for Respect called on such employers as Walmart, Amazon and Petco to pay an extra $5 an hour for the duration of the pandemic. Although many grocery and retail chains offered extra pay — typically an additional $2 an hour — early in the pandemic, most have since done away with the premium. At least 131 grocery workers have died of covid-19, according to the workers groups, though the actual death toll is probably much higher.” 

More from the corporate front:
  • Qantas CEO expects airlines to require immunization proof: “The Australian air carrier anticipates asking all international travelers to prove they’ve been immunized against the coronavirus once a vaccine is widely available — a requirement that is likely to be adopted throughout the industry, CEO Alan Joyce said,” Antonia Farzan reports.
  • Virtual stores try to recreate shopping experience: “Retailers such as Ralph Lauren Corp., Groupe Clarins SA and Gap Inc. are experimenting with virtual stores, letting web users navigate digital versions of their physical locations and try out features such as one-on-one consultations,” the WSJ's Ann-Marie Alcántara reports.
  • Warner Music leans on digital sales: “Revenue for the music label was roughly flat year over year in the July-through-September period, rising by 0.2 percent to $1.13 billion. Digital revenue made up a significantly larger share of that sum, growing 15 percent to $778 million, from $674 million in the year-ago quarter,” the WSJ's Matt Grossman reports.

Trump tracker

A major Trump donor's company received a government-backed loan.

The company sells title loans at a 350 percent annual rate: “A company owned by a major donor to Trump that operates auto-title loan stores with names such as LoanStar and Moneymax secured a $25 million low-interest loan from a government pandemic aid program, using what consumer advocates describe as a loophole to a rule designed to prevent most lenders from getting this federal help,” Todd C. Frankel reports.

“The cash infusion to Wellshire Financial Services — part of a multistate title loan empire run by Atlanta businessman Rod Aycox — came from the Federal Reserve’s $600 billion Main Street Lending program for small- and medium-size businesses. It’s the same program that is among the Federal Reserve’s emergency lending facilities that will be allowed to expire at year’s end after Treasury Secretary Steven Mnuchin announced last week the unspent funds will be redirected to more distressed parts of the U.S. economy.” 

Chart topper



  • Best Buy, Dollar Tree, Abercrombie & Fitch, Dick's Sporting Goods and Gap are among the notable companies reporting their earnings


  • The Fed's FOMC releases minutes of its November meeting
  • The Labor Department releases the latest weekly jobless claims
  • Deere & Co. is among the notable companies expected to report its earnings


  • The market is closed for the holiday. Happy Thanksgiving!

The funnies

Bull session