Janet Yellen made history on Monday when she was confirmed as the first woman to head up the U.S. Federal Reserve. The Senate voted 56-26 to confirm Yellen as Ben Bernanke’s successor. His term expires at the end of this month.
Among the 26 dissenters were both Alabama Senators, Richard Shelby and Jeff Sessions.
Shelby, a longtime member of the Senate Banking Committee, has been one of Yellen’s most outspoken critics in recent months.
“Since 2008, the Fed’s printing presses have generated a backdoor stimulus nearly four times greater than the $787 Obama stimulus,” Shelby said after voting against Yellen’s nomination in committee. “The Fed is the world’s largest holder of U.S. Treasury bonds and the biggest enabler of our exploding debt. These actions also present massive risks for sharp price increases on every single product that Americans buy. I voted against President Obama’s nominee because I have no confidence that she will change course.”
Yellen will take over on the heels of the unprecedented maneuvers the central bank has undertaken in recent years to prop up the economy.
Staffers who attended a private meeting between Yellen and Shelby last November told Yellowhammer that she did not have a definitive answer when asked how she would “unwind” the Fed’s balance sheet, which now tops $4 trillion.
“Her biggest potential challenge… (is) the eventual unwinding of the massive Fed asset positions and rolling back of the Mount Everest of reserves the Fed has created,” said Kevin Hassett, a senior fellow at the conservative American Enterprise Institute and a former economist at the Federal Reserve. “If the economy picks up a bit from here, that challenge will be a difficult one, as inflationary pressures will begin to ramp up.”
Other Republican Senators voiced their concerns on Monday as well.
Sen. Chuck Grassley said Wall St. has become addicted to the Fed’s “easy money” policy, while the benefit to Main St. has been “questionable at best.”
“Unemployment remains high. Bank lending remains tight. And savers are discouraged,” Grassley said on the Senate floor.
Other notable Republicans voting against Yellen were Sen. Ted Cruz of Texas and marco Rubio of Florida. All Democrats voted in favor of her confirmation.
House Financial Services Committee Chairman Jeb Henserling, R-TX, announced last month that his committee is launching “the most rigorous examination and oversight of the Federal Reserve in its history.”
“Congress is our boss,” Fed Chairman Ben Bernanke responded.
“The boss” just hired Yellen, but is indicating that she may be on a tighter leash than her predecessors.
We may have more on this soon. Hill sources say Sen. Shelby is considering delivering remarks on the Senate floor later today regarding Yellen’s confirmation.
Follow Cliff on Twitter @Cliff_Sims
