Biden expected to pick former Fed chair Janet Yellen as Treasury secretary

Washington, DC

US PRESIDENT-ELECT Joe Biden is expected to nominate Janet Yellen, the first woman to lead the Federal Reserve, to be the next Treasury secretary, according to people familiar with the decision.

If confirmed, Dr Yellen would be the first woman to lead the Treasury in its 231-year history. She would also be at the forefront of navigating an economic crisis - while growth is recovering from pandemic-related lockdowns earlier in the year, coronavirus infections are climbing and local governments are restricting activity again, likely slowing that rebound.

Dr Yellen, 74, is likely to bring a long-held preference for government help for households that are struggling economically and for slightly tighter financial regulation with her to the Treasury.

But unlike the independent Fed, Dr Yellen would find herself in a much more political role - one that will likely require negotiating with a Republican-controlled Senate.

With Mr Biden expected to push for additional economic aid, Dr Yellen will be thrust into trying to broker a stimulus deal in a politically divided Congress that has so far failed to agree on another round of economic aid. She may be well placed to do so, as one of the most recognisable figures in Washington's economic spheres.

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Dr Yellen is well known on Capitol Hill and well connected globally after leading the Fed from 2014 to 2018. Her long career as an economic policymaker has also given her insight into Wall Street and its major investors. Dr Yellen declined to comment.

Her expected nomination was first reported by The Wall Street Journal. She is a renowned labour economist who taught at the University of California, Berkeley, among other academic posts. She was also chairwoman of the White House Council of Economic Advisers during the Clinton administration, president of the Federal Reserve Bank of San Francisco, a Fed governor, Fed vice-chair and finally the central bank's first female chair.

Dr Yellen wanted to be reappointed when her term at the head of the central bank ended in 2018, but President Donald Trump, eager to install his own pick, decided against renominating her. Instead, he chose Jerome Powell, the Fed's current chair, whom Dr Yellen has consistently praised since leaving the central bank.

In replacing Dr Yellen, Mr Trump broke with precedent. The previous three Fed chairs had been reappointed by presidents of the opposite political party. But it may have paved the way for Dr Yellen - who became an economist at a time when few women entered or rose in the male-dominated field - to break yet another public policy glass ceiling.

Dr Yellen has been called many things over the years, including "a feminist hero", a "small lady with a large IQ", and "Fed chair," which she preferred over the gendered "chairwoman". If confirmed, she will add "Madam Secretary" to the list. That will be a first at the Treasury, which has been led by a white man throughout its 231-year history.

Born in Brooklyn, New York, in 1946, Dr Yellen was raised in Bay Ridge, a middle-class neighborhood across the waterfront from Staten Island. Her mother was a teacher who stayed home to raise Dr Yellen and her brother. Her father was a family doctor.

She was both valedictorian and newspaper editor at her high school. She attended Brown University and went on to get a doctorate from Yale.

She met her husband, George A. Akerlof, now a Nobel laureate, while working in a research position at the Fed in 1977. The economic powerhouse pair have completed influential research on labour market dynamics together.

Dr Yellen has for decades been an influential player in Washington's policy sphere. Her time at the Fed saw the central bank undertake the most patient rate hiking cycle in its history - one that drew criticism at the time but laid the groundwork for a strong labour market that drove unemployment to its lowest rate in 50 years before the pandemic.

She has spent her post-Fed years at the Brookings Institution, occupying an office close to Ben Bernanke, who preceded her as Fed chair, and other former Fed officials. They call their corridor the "FOMC, Former Open Market Committee", a play on the name of the central bank's rate-setting Federal Open Market Committee.

She has been a clear champion of continued government support for workers and businesses as the pandemic saps the economy.

"While the pandemic is still seriously affecting the economy, we need to continue extraordinary fiscal support," Dr Yellen said in a Bloomberg Television interview in October. She has also been a major influence on leading officials at the Fed.

John C Williams, who worked for her in San Francisco, now leads the Federal Reserve Bank of New York. Mary C Daly, who now leads the San Francisco Fed, cites Dr Yellen as a key mentor. That, along with her experience working with Mr Powell, could help facilitate the kind of close relationship needed between the Fed and Treasury, which are collaborating on a variety of crisis response programmes.

While running the Fed, Dr Yellen at times had a testy relationship with congressional Republicans, including Mick Mulvaney, who said Dr Yellen was overstepping her boundaries by talking about inequality.

"You're sticking your nose in places that you have no business to be," Mr Mulvaney said at a hearing in 2015.

But in many ways, those conflicts underline how much Washington has changed over the past five years. Fed officials now regularly talk about inequality, entirely unchallenged.

The central bank has formalised something much like Dr Yellen's patient approach to interest rate setting as its official policy, which it explicitly hopes will foster more inclusive growth.

"It seems like a pretty subtle shift to most normal human beings," Dr Yellen said of that move. But "most of the Fed's history has revolved around keeping inflation under control. This really does reflect a decisive recognition that we're in a very different environment". NYTIMES