President Obama on Wednesday nominated Janet L. Yellen to lead the Federal Reserve.
WASHINGTON — President Obama on Wednesday announced one of his most important economic decisions, nominating Janet L. Yellen to lead the Federal Reserve system and be his independent co-steward of the American economy. He called her “one of the nation’s foremost economists and policy makers.”
Ms. Yellen, 67, who would be elevated from her current position as the Fed’s vice chairwoman if the Senate confirms her nomination for a four-year term, would be the first woman to lead the Fed. She joined Mr. Obama before the cameras in the State Dining Room of the White House for the formal announcement. With them was the retiring chairman, Ben S. Bernanke, whom the president hailed for helping to guide the economy through the worst recession and financial crisis since the Depression.
“I could not be more grateful for his extraordinary service,” Mr. Obama said.
As for the woman he has chosen to replace Mr. Bernanke, the president said that Ms. Yellen was “renowned for her good judgment,” and that she sounded early alarms about the financial and housing bubbles that caused the economy’s near-collapse in 2008.
“Given the urgent economic challenges facing our nation, I urge the Senate to confirm Janet without delay,” Mr. Obama said. “I’m absolutely confident that she will be an exceptional chair of the Federal Reserve.”
Ms. Yellen, in a brief response, said, “While I think we all agree, Mr. President, that more needs to be done to strengthen the recovery, particularly for those hardest hit by the Great Recession, we have made progress. The economy is stronger and the financial system sounder.”
Ms. Yellen’s nomination comes amid one of the most rancorous and fraught battles in years between the political parties over the course of the economy. The federal government is already in partial shutdown because of an impasse over funding in the fiscal year that began Oct. 1, and the Treasury Department is approaching the debt limit next week, jeopardizing its authority to borrow to pay the nation’s bills and forcing emergency actions that could be financially destabilizing at best and provoke a global crisis at worst.
The nomination adds a wild card to the mix, and the need for Senate hearings, debate and votes adds to Congress’s already complicated mix of year-end business. A few Senate Republicans, like Senator Bob Corker of Tennessee, have spoken out against her as too dovish on monetary policy, but Ms. Yellen is widely expected to be confirmed.
Administration officials say the timing of her pick is mostly a coincidence, but it could serve Mr. Obama’s interests in the current budget fight.
Ms. Yellen has nearly unanimous support in the Democratic majority in the Senate, which must confirm her for the job. By contrast, had Mr. Obama nominated Lawrence H. Summers, who was thought to be Mr. Obama’s first choice but was a divisive figure among Democrats, that would have injected a wedge at a time the president needs a united party at his back. Perhaps worse, it would have ensured a Senate confirmation fight when Mr. Obama least needs it and when markets crave greater certainty in the direction of both monetary and fiscal policy.
Financial markets and businesses have been anxious to know who would take over from Mr. Bernanke when his term ends Jan. 31, and who would wind down the expansionary monetary policy that he engineered to help the recovering economy – particularly given the three-year-old stalemate between the Democratic White House and the Republican-controlled House of Representatives over the more stimulative fiscal policies that Mr. Obama favors. Generally markets see Ms. Yellen as representing welcome continuity after Mr. Bernanke, having been his ally on the major issues.
With Congressional Democrats eager for the first Fed chief with a Democratic pedigree, for the first time in a quarter-century – both President Clinton and Mr. Obama previously named Republican appointees Alan Greenspan and Mr. Bernanke, respectively, to second four-year terms – progressive senators and outside groups pressed for Ms. Yellen over Mr. Summers, viewing her fairly or not as more open to regulating big banks and more likely to stress the job-creation aspect of the Fed’s dual mandate to fight unemployment and inflation.
Among Republicans, Senator Michael D. Crapo of Idaho, the senior Republican on the Senate Banking Committee, was noncommittal in a statement on his Web site.
“The next Fed Chair faces a unique set of challenges, including winding down unconventional monetary policy, implementing a long list of unfinished rules under Dodd-Frank without over-regulating the community banking sector, and effectively communicating future policies to the markets and the public,” he said. “I continue to strongly disagree with the Fed’s use of quantitative easing, and am eager to learn Ms. Yellen’s vision for the direction of the Federal Reserve as we go through the nomination process.”
