President Barack Obama wants to nominate Janet Yellen, the president of the Federal Reserve Bank of San Francisco, to take over as vice chairman of the Federal Reserve, an administration official said Friday.
President Barack Obama wants to nominate Janet Yellen, the president of the Federal Reserve Bank of San Francisco, to take over as vice chairman of the Federal Reserve, an administration official said Friday.
Yellen, who was a top economic adviser to President Bill Clinton, is considered a dove on monetary policy, meaning she is more worried about high unemployment than rising inflation. She would become the second highest ranking Fed official.
Obama is also considering filling two other vacancies on the Federal Reserve board with Sarah Raskin, the Maryland Commissioner of Financial Regulation, and Massachusetts Institute of Technology economist Peter Diamond, the official said, speaking on condition of anonymity because the president had yet to make the announcement.
Fed Vice Chairman Donald Kohn's decision to step down at the end of June opened a third seat on the seven-member board, giving Obama a chance to put a bigger imprint on the central bank. His selections would have to be confirmed by the Senate.
The leaders of the Federal Reserve are especially important when the economy is rocky. The Fed can influence economic growth, employment and inflation through its power to set interest rates. It also is the country's lender of last resort when banks can't get their money elsewhere — a tool that the Fed exercised fully at the height of the financial crisis. It also supervises thousands of banks, ranging from large bank holding companies to small state-chartered institutions.
The Fed vacancies have stirred debate over the future direction of interest-rate policy. Given the fragile state of the economic recovery and the high jobless rate, Obama may come under pressure to choose people more inclined to keep interest rates low to spur growth and fight unemployment than to raise them to control inflation.
Yellen has a long history with the Federal Reserve system and has been president of the San Francisco Fed since 2004. Before that, she was a member of the Fed's Board of Governors from 1994 to 1997.
