WASHINGTON, D.C. (KPIX 5/CNN) — Federal Reserve Vice Chair Janet Yellen – a Bay Area local – is once again the odds-on favorite to become the next chair of the Federal Reserve, now that President Barack Obama’s preferred candidate, former adviser Larry Summers, has stepped out of the race.
Yellen has now officially became the front-runner for the U.S. central bank’s top job, sources familiar with the situation told the news service Reuters on Monday. People familiar with the situation said Obama had largely whittled down his decision to Summers and Yellen. With Summers out of the picture, Yellen moved to the top of the list.
“Clearly at this point, the front-runner now again is Janet Yellen,” James Wilcox of the University of California, Berkeley’s Haas School of Business told KPIX 5. “Of course she was a faculty member here at the Haas School of Business in Berkeley, the president and CEO of the Federal Reserve Bank of San Francisco – so she’s been around the Bay Area for many years.”
Summers served as one of the president’s top economic advisers during the Great Recession, but would have been a controversial pick based on his lack of monetary policy experience, his record as a deregulator during the Clinton administration and his controversial comments about women.
Summers pulled his name from consideration on Sunday, writing that he “reluctantly concluded” the confirmation process would be “acrimonious and not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation’s ongoing economic recovery.”
In contrast, Yellen already has the support of roughly a third of Senate Democrats and more than 450 economists, who in a letter to Obama, praised her “impeccable resume,” focus on unemployment and her “solid record as a bank regulator.”
If appointed, she would become the first woman to head the central bank in its 100-year history.
“I think a woman – as head of the federal reserve – a qualified woman – would be a very positive thing for this administration,” U.S. Sen. Dianne Feinstein (D – California) told KPIX 5.
Her ‘impeccable’ resume: Yellen has a Ph.D. in economics from Yale and more than a decade of experience in various Federal Reserve roles, including as president of the San Francisco Fed and Fed Chair Ben Bernanke’s number-two in command since 2010.
Earlier in her career, she served a two-year stint as the chairwoman of the Council of Economic Advisers and taught economics at UC Berkeley.
Fed transcripts from 2005 to 2007 also show that Yellen foresaw the housing crisis better than many of her colleagues.
On monetary policy, her views are closely aligned with Bernanke’s. Considered a “dove” on inflation, her chief focus lately has been on stimulating the economy to bring the unemployment rate down.
Economists expect she will continue the central bank’s efforts to stimulate the job market back to full employment, even if it means continuing the Fed’s controversial bond-buying program.
Bernanke’s term ends in January, and before a new appointment can be made official, the Senate must approve Obama’s nominee.
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