Diane Swonk, Chief Economist
Mar. 12, 2010 – 7:00 a.m. CT
Yellen Goes Back to D.C. for Fed
San Francisco Fed President Janet Yellen will be tapped to fill Don Kohn's role as vice chair of the Federal Open Market Committee. Janet is truly one of the sharpest knives in the drawer. She was chair of the Council of Economic Advisors under President Bill Clinton; a former Fed governor and Fed president; and was one of the brightest stars in academia on trade. Not only is Janet qualified, but we are extremely lucky that she is willing to come back from her San Francisco job and take a pay cut to guide the Fed during these turbulent times.
I have known Janet for a long time, and I think the world of her. She is up there in quality with my old friend Ned Gramlich, who, along with former Fed Gov. Larry Meyer, warned of the subprime crisis and problems with inappropriate and unregulated financial innovation. (Ned died of cancer in 2007.)
The other two governors have also been picked, but not yet named – Yellen was the only name I could get when in Washington, D.C. this week. They will all be confirmed together prior to Vice Chair Kohn's retirement in June, to avoid leaving an even more glaring gap in governors.
The biggest confirmation hurdle will probably be Senator Richard Shelby of the Senate Banking Committee who, despite his talk of fiscal discipline, has held up 70 Obama nominations so far, to get more "pork" for his state of Alabama. Senator Jim Bunning of Kentucky may also be a pain, but has gotten so outrageous that his own party has turned on him and convinced him to retire this year. At Fed Chairman Ben Bernanke's confirmation, Bunning likened Bernanke to Hitler (I am sure his Jewish family loved that) and another all-time favorite – the Ayatollah Khomeini – who also appeared on the cover of Time Magazine.
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