Key Vote: “NO” on the Nomination of Janet Yellen for Federal Reserve
Next month, the Senate is expected to vote on the nomination of Janet Yellen to serve as chair of the Federal Reserve.
Previewing Yellen’s nomination as Vice-Chairman of the Federal Reserve Board In 2010, the Heritage Foundation’s J.D. Foster wrote:
“Perhaps least surprising and most disconcerting, the three appointments together [of which Yellen was one] suggest a new bloc of votes on the policy setting Federal Open Market Committee for dovish monetary policies, i.e. those less concerned with containing inflation than reducing unemployment. As discussed elsewhere, though Chairman Bernanke has expressed a very credible intent to resist a return to higher inflation, his own remarks and those of other Fed officials already provide grounds for worry that they may, once again, be late in heading off trouble. With a new flock of doves winging their way to the Fed, inflation worries have only gotten worse.”
Additionally, there is growing concern that the Federal Reserve’s expanded role in the aftermath of the financial crisis and enactment of Dodd-Frank are causing it to become more political. According to Heritage, “a more politicized Fed threatens to destroy what is left of that image and place partisan concerns above sound monetary policy.” During her confirmation hearing, Yellen promised to use the Fed’s expanded powers to “level the playing field” between large banks and small and to “make it tougher for them to compete.” Heritage has warned against a process that “gives nearly unconstrained discretion to regulators” and instead suggested “a modified version of existing bankruptcy law, with the legal protections and independent judges it provides.”
It is ironic that the Federal Reserve “has emerged from the financial crisis as more powerful than ever despite having supplied much of the capital that fed the housing bubble.” In fact, the Bank appears to be doubling down on that behavior “by purchasing more than $1.7 trillion worth of mortgage-backed securities.” Although Yellen acknowledged the current size of the portfolio is “unprecedented” she did not present a plan to roll back the Federal Reserve’s engagement in such activities.
Heritage Action opposes the nomination of Janet Yellen and will include it as a key vote on our legislative scorecard.