Scott Milne | Cnbc
President-Elect Joe Biden has elected former Federal Reserve Chairman Janet Yellen as Treasury Secretary, a landmark decision that could make her the first woman to head the department, according to people familiar with the matter.
Yellen, 74, is seen as a politically “safe” pick for the role, likely to garner support from Senate Republicans because anyone is capable of a bipartisan compromise during an otherwise fragile time for the economy.
A graduate of Brown and Yale Universities, Yellen was also the first woman to serve as Fed president after Senate confirmation in 2014.
His four-year tenure as Fed may also increase his odds of confirmation due to the improvement in the jobs market and historically low interest rates.
Political strategists say a more progressive option is expected, such as Wall Street critic Sen. Elizabeth Warren, was left out because it became clear that Democrats would not seek a majority in the Senate.
Biden’s team was also eyeing the job of Fed Governor Lyle Brainard and former Fed Vice Chairman Roger Ferguson, according to people familiar with the transition team’s thinking.
Nevertheless, progressive democrats can welcome Yellen as a thank you to the Treasury of Billen for how economic policymakers can address climate change. It has voiced support for the carbon dioxide emission tax in recent years.
Yellen is currently an economist at the Brookings Institute. Before becoming Fed chair, Yellen was at the helm of the San Francisco Federal Reserve Bank and the 18th chair of the Economic Advisory Council under the Clinton administration.
If confirmed, Yellen would without doubt acquire one of the most sought-after positions in the incoming administration, facing many unique economic hurdles.
The Wall Street Journal first reported the election on Monday, citing people familiar with the case.
The Treasury Secretary is a leading sailor of the American economy, manages public debt and executes foreign penalties, oversees the collection of taxes, and serves as chief and minor between administration and financial markets and businesses.
But the current precarious state of the US economy, combined with presidential-election lofty taxation and equality goals, sheds more light on the Treasury Department and its leader.
The Trump administration is poised to leave behind a fragile US economy after coronovirus and efforts to slow its spread have led to a sharp, but brief and historic slowdown in earlier commercial activity in 2020.
Most economists, including current Fed Chair Jerome Powell, say that Congress’ initial support and the $ 2 trillion Carriage Act helped soften the spring recession and rule the economy throughout the summer.
US GDP fell 31.4% on an annual basis in the second quarter of 2020. The government reported that production increased 33.1% in the third quarter.
But with the daily Kovid transition returning to record in the US, more and more forecasts are warning that GDP growth may subside in the fourth quarter and even be negative in the first three months of 2021.
Steven Menucchin, President Donald Trump’s Treasury Secretary, has been struggling for months to broker another stimulus bill agreed to by House Democrats and Senate Republicans.
Biden has supported Democrats’ support for the bill, which has cost at least $ 2.2 trillion. The presidential election on Monday made Antony Blinken his secretary of state and Jake Sullivan a national security adviser.
Although Yellen will no longer play a role towards the nation’s monetary policy, his gaze at the time of the Fed may suggest a cautious treasury in its direction.
Leading the Fed, Yellen and other central bank officials raised the benchmark federal funds rate five-fold over four years. By the time of its exit, the Fed had begun shrinking its massive $ 4 trillion portfolio bought during the Great Recession only to stimulate the economy.
Policy controllers, including Yellen, were keen to avoid repeating the so-called taper tantrum, sparking market volatility in May 2013 by then Fed Chairman Ben Bernanke’s remarks that the Fed could block its asset purchases.
This unrest appeared to color Yellen’s time at the Fed and is likely attributed to the gradual increase in the rate of federal funds under his watch, which critics had wrongly argued would hamper the recovery.