The Senate confirmed Janet Yellen to be the next chairman of the Federal Reserve Monday evening, giving the U.S. central bank its first female leader and ending a nomination process that at times felt more like a high-profile political campaign.
The upper chamber voted 56-26 to confirm Yellen, with 17 senators unable to return from the winter break in time to vote. That is the lowest vote total for a Fed chairman, with only 11 Republicans crossing the aisle to support her candidacy.
Yellen will replace Ben Bernanke, the eight-year veteran who helmed the Fed throughout the financial crisis.
The 67-year old Yellen is slated to take over as chairwoman of the Board of Governors of the Federal Reserve System when Bernanke’s term expires on Jan. 31. Her first meeting of the Federal Open Market Committee, the panel that sets monetary policy, is scheduled for March 13.
The vice chairwoman of the Fed since 2010, and the president of the San Francisco regional Fed before that, Yellen has been a close ally of Bernanke and has played a leading role in shaping the Fed’s stimulus policies in the wake of the recession.
As Fed chairman, Yellen's course is not likely to depart markedly from the one Bernanke charted in tying the Fed's bond-buying and zero-rate policies to specific labor market goals.
Bernanke set the plans for withdrawing monetary stimulus in motion in December, announcing that the central bank would taper its monthly bond purchases from $85 to $75 billion. At a press conference following the move, Bernanke said he has always “consulted closely with Janet, even well before she was named by the president, and I consulted closely with her on these decisions as well. And she fully supports what we did today.”
The Senate approved moving to a final vote on Yellen’s candidacy before leaving for break in December, in a 59-34 vote that included "yeas" from five Republicans.
That total would not have been enough to advance Yellen prior to Senate Majority Leader Harry Reid's November decision to change the Senate rules pertaining the filibuster for executive appointments. By invoking the so-called "nuclear option" and altering the rules, Reid ensured that more politically polarizing candidates for the judiciary and administrative branch would gain appointments.
Yellen’s nomination also has fallen prey to the politicization that the Fed has traditionally avoided. Bernanke was initially approved by voice vote in 2006, and won confirmation for a second term in 2010 with 70 votes, which at that point was the fewest for any nominee in the Fed’s history.
In falling well short of that level of support, Yellen’s candidacy shows the extent to which the Fed’s unprecedented efforts to boost the economy by promising near-zero rates into the future and buying Treasury bonds en masse has elevated criticism of its leadership.
Many Republicans opposed Yellen on the basis that she has indicated she will support those policies, which they say may destabilize the economy.
"The experience of the late 1970s and early 1980s made it clear that once you let the inflation genie out of the bottle it is very difficult to stamp it out," Sen. Chuck Grassley of Ohio warned of the Fed's attempts to ease monetary conditions.
Unrest over the Fed's recent policies also reflects general satisfaction over the state of the economy, which has yet to fully heal from the financial crisis that came on Bernanke’s watch.
The process of finding Bernanke's replacement became a front-and-center topic in Washington after rumors surfaced over the summer that Obama's top choice for the job was not Yellen, but instead his former top economic adviser Larry Summers, the controversial Harvard professor who also was a top economic official in the Clinton administration.
Summers bowed out after liberals mounted a concerted effort to oppose him for his perceived ties to Wall Street and his background promoting deregulation of the financial sector. But Summers left a mark on the nomination process, giving it the feel of a high-visibility political campaign.
Not all believe that this turn of events has been a benefit to the central bank. Richard Fisher, president of the Dallas Fed, said in September that the president’s selection of a Fed chairman "should not be a public debate.” Introducing court intrigue into an environment in which anti-Fed sentiment was already running high may have contributed to the overall politicization of the Fed.
Bernanke defended the Fed’s separation from congressional influence in his December press conference, saying that it’s “important that we maintain our policy independence in order to be able to make decisions without short-term political interference.”
The Fed's non-stop printing press crashed the economy and buried it under the rubble of endless bailouts and a devalued currency.— Senator Rand Paul (@SenRandPaul) January 6, 2014
Bernanke has cautioned that a measure championed by Sen. Rand Paul, R-Ky., that would subject the Fed's monetary policy meetings to an audit would compromise the Fed's independence and harm policy. Paul, a Tea Party favorite, took to social media as well as the Senate floor Monday to criticize the Fed ahead of the vote to confirm Yellen.