Yellen to be nominated as 1st female Fed chairman

Cheyenne Hopkins and Joshua Zumbrun

Published: Wednesday, Oct. 9 2013 12:00 a.m. MDT

This photo combo shows Fed Vice Chair Janet Yellen, left, and former Treasury Secretary Lawrence Summers.

Associated Press

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WASHINGTON — President Obama will nominate Janet Yellen as chairman of the Federal Reserve, which would put the world's most powerful central bank in the hands of a key architect of its unprecedented stimulus program and the first female leader in its 100-year history.

Obama will announce the nomination at 3 p.m. here Wednesday, a White House official said in an emailed statement. Yellen, 67, would succeed Ben Bernanke, whose term expires on Jan. 31.

Obama turned to Yellen, vice chairman of the Fed since 2010, after the other leading candidate, former Treasury secretary and White House economic adviser Lawrence Summers, withdrew from consideration amid mounting opposition from Democrats on the Senate Banking Committee.

"She's an excellent choice, and I believe she'll be confirmed by a wide margin," Charles Schumer of New York, the Senate's No. 3 Democrat, said in a statement. Senate Banking Committee Chairman Tim Johnson, D-S.D., pledged to work "to move her nomination forward in a timely manner," saying her depth of experience is unmatched.

U.S. index futures climbed, signaling stocks may rebound from the biggest loss since August, and Treasuries rose after the announcement. Standard & Poor's 500 Index futures added 0.3 percent as of 11:03 a.m. in London, after the U.S. benchmark gauge lost more than 2 percent over the past two days. Five-year Treasury yields fell two basis points.

In Asia, Koichi Hamada, an adviser to Japanese Prime Minister Shinzo Abe, welcomed Yellen's nomination, predicted that she won't rush to exit easing, and expressed concern that prolonged U.S. stimulus could strengthen the yen and impede Japan's recovery. South Korea's finance ministry said Yellen will weigh the effects on other nations of tapering bond buying.

International Monetary Fund Managing Director Christine Lagarde looks forward to a female joining the ranks of central bank governors and will "no longer feel as lonely" at some male-dominated meetings, IMF spokesman Gerry Rice said.

The president's choice followed a polarizing and unprecedented public contest for a nomination that Obama described in August as one of the most important decisions of his presidency. Yellen was the favorite in surveys of economists and had the backing of 20 members of the Senate Democratic caucus who signed a July 26 letter to Obama.

As a top deputy to Bernanke, Yellen supported the central bank's unprecedented bond buying programs and was a driving force behind a new strategy adopted in 2012 to commit the central bank to goals on inflation and unemployment.

"It's hard to imagine a better choice by virtue of intelligence, temperament, demonstrated good judgment, understanding of the Fed, and extensive experience," said Alan Blinder, a Princeton University professor and former Fed vice chairman. "She should make a great Fed chair."

Summers also welcomed the decision, saying that "Janet Yellen is a terrific choice to lead the Federal Reserve. I have admired and learned from her ever since she taught my first macroeconomics graduate class in 1976," he said in an email.

As the Fed's No. 2 official, she has articulated the case for maintaining highly accommodative monetary policy. In a series of 2012 speeches, she outlined why interest rates could remain near zero into late 2015, and in a 2011 speech she justified the Fed's first two rounds of large-scale asset purchases with an estimate that the programs would create 3 million jobs.

"She's even more of a dove than Bernanke is, but there's nobody who can say she's not credentialed because of the range of experience she's got," said J. Alfred Broaddus, a former president of the Federal Reserve Bank of Richmond who debated Yellen over the Fed's mandates during the 1990s. "She has experience that almost nobody else can bring to the table at this point."

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