President-elect Joe Biden has chosen former Federal Reserve Chairman Janet Yellen as Treasury Secretary, a historic decision that could make her the first woman to lead the department, say people familiar with the matter.
Yellen, 74, is seen as a politically “safe” choice for the role, which is likely to have the support of Senate Republicans, as the economy is capable of bipartisan compromises at an otherwise critical time.
A graduate of Brown and Yale Universities, Yellen was also the first woman to serve as Fed chair since the Senate confirmation in 2014.
His four-year tenure at the helm of the Fed, marked by an improved employment market and historically low interest rates, could increase his odds for confirmation.
Political strategists say hope for a more progressive choice, such as the well-known Wall Street critic Sen. After Elizabeth Werner was ousted, it became clear that Democrats would not be able to secure a large majority in the Senate.
“Janet is a big name with a remarkable experience published by her time at The Fed,” wrote Ulysses McCarnie, managing director of UBS.
“I’m not surprised that markets are responding favorably as this choice is reassuring, especially the challenges that include avoiding a double-dip recession amid growing cases of the virus going forward and getting people back to work.”
In 2017, President Donald Trump chose Yellen to end his first term at the central bank, replacing current Fed Chairman Jerome Powell.
According to people familiar with the signal team’s thinking, Biden’s team also monitored Fed Gov. Lyle Bernard and former Fed Vice Chair O’Groats Ferguson for the job.
Nevertheless, progressive Democrats will also welcome Yellen as Biden’s treasury chooses thanks to economic policymakers as part of their commitment to how climate change can be addressed. He has advocated for carbon dioxide emissions taxes in recent years.
Yellen is currently an economist at the Brookings Institution. Prior to becoming the Fed chair, Yellen headed the San Francisco Federal Reserve Bank and was the 18th chairman of the Clinton-administered Council of Economic Advisers.
Neither a Brookings spokesman nor a Biden transition spokesman responded immediately to CNBC’s request for comment.
“I think Janet Yellen is a solid person who I don’t think has a tough partisan tone for her, which I think Biden is looking for,” said Tom Block, a strategist at FundStrate Global Advisors.
“I think Maluchin did a very good job in a very difficult situation by keeping his relationship with Pelosi open.” “I think Janet Yellen can do the same with Republicans in the Senate.”
If confirmed, Yellen will no doubt inherit a highly demanding position in the coming administration, facing numerous unique economic hurdles.
The Wall Street Journal first reported the selection Monday, citing people familiar with the matter.
The Treasury Secretary is a leading navigator of the U.S. economy, manages the execution of public debt and foreign penalties, oversees tax collection, and serves as the main liaison between administration and financial markets and businesses, large and small.
But the current precarious state of the U.S. economy, with the president-elected noble tax and equality goals, will shed more light on the Treasury Department and its leader.
After the coronavirus, the Trump administration The fragile economy looks set to be left behind and efforts to slow its spread led to a sharp but short but historic recession in business activity in early 2020.
Most economists, including current Fed chief Powell, say early support from Congress and the $ 2 trillion dollar care act will help soften the spring tuna recession and revive the economy throughout the summer.
In the second quarter of 2020, US gross domestic product fell 31.4% year-on-year. The government reported that output rose 33.1% in the third quarter.
“From a political and market perspective, it’s hard to come up with a better candidate,” wrote Ed Mills, Raymond James’s Washington policy strategist.
“The market realized that Senator Warren is unlikely, but it’s hard to fight for the progressive wing of the Democratic Party, he’s the one to choose.” “She should also expect to get easy confirmation in the Senate, as it would be impossible for a Republican to block anyone of her size.”
But daily covid infections in the U.S. Returning to the record in, more and more forecasters are warning that GDP growth could decline in the fourth quarter and even negative in the first three months of 2021.
Trump’s Treasury Secretary Steven Munuchi has been fighting for months to broker another stimulus bill that House Democrats and Senate Republicans agree on.
Biden has backed pressure from Democrats for a bill of at least 2. 2.2 trillion. The president-elect on Monday named Anthony Blinkon his secretary of state and Jack Sullivan his national security adviser.
Although Yellen will no longer participate in the direction of the country’s monetary policy, a look at his time at the Fed could suggest a cautious Treasury in his direction.
While leading the Fed, Yellen and other central bank officials raised federal funds only five times every four years in two years. By the time of its exit, the Fed had begun to shrink its huge, tr 4 trillion bonds it had bought during the Great Recession just to stimulate the economy.
Policymakers, including Yellen, were keen to avoid a repeat of the so-called taper system, with Fed Chairman Ben Bernanke’s remarks in May 2013 suggesting that market volatility could prevent the Fed from buying its assets.
That volatility appeared to color Yellen’s time in the Fed and was probably responsible for the gradual increase in the federal funds rate under her watch, which critics erroneously argued would prevent recovery.
– Pippa Stevens and Eun Lee of CNBC contributed to the report.
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