Federal Reserve Chair and Treasury Secretary Nominee Janet Yellen
The First Woman to Hold Either Position
Janet Louise Yellen is President-elect Joe Biden's nominee for U.S. Treasury Secretary, making her the woman nominated for the position. From February 2014 to February 2018, Yellen was the Federal Reserve chair. She was the first woman to hold that position.
"We face great challenges as a country right now. To recover, we must restore the American dream—a society where each person can rise to their potential and dream even bigger for their children. As Treasury Secretary, I will work every day towards rebuilding that dream for all." - Janet Yellen; Dec. 1, 2020
Yellen's experience as a former Fed chair gives her a unique advantage as Treasury Secretary. She will coordinate U.S. fiscal policy with the monetary policy of the current Fed chair Jerome Powell, with whom she worked closely while both were on the Fed board. Powell followed in Yellen's footsteps by continuing to gradually raise interest rates.
What Does the Treasury Secretary Do?
As Treasury Secretary, Yellen will be the chief financial officer for the federal government. That means she will manage the public debt, even though the U.S. Congress controls spending and deficits. The Treasury collects taxes but doesn't set tax policy. The Treasury prints money and manufactures currency, but the Federal Reserve manages the money supply.
Yet Treasury secretaries throughout our nation's history have played crucial roles in the U.S. economy. They advise the president on financial programs and policies that can create economic growth and job opportunities. They also negotiate with Congress to put those programs into laws. They serve as foreign diplomats on matters important to the U.S. economy.
What Does the Federal Reserve Chair Do?
The chair leads the Federal Reserve Board of Governors and the Federal Open Market Committee (FOMC). The Board oversees monetary policy while the FOMC executes it by changing interest rates and using its other tools.
The Fed chair is the country's premier economic expert whose words sway the stock market, interest rates, and the value of the dollar. That makes the Chair the most powerful person in the United States and the global economy.
Why Yellen Made a Good Fed Chair
Yellen's track record as Federal Reserve Chair speaks for itself. During her term of office, the unemployment rate fell from 6.7% in February 2014 to 4.1% in January 2018.
The Dow Jones Industrial Average set more than 150 record highs during her tenure. Inflation remained modest, as the core inflation rate hovered near the Fed's 2% target.
Yellen oversaw monetary policy at a crucial time. The economy was still recovering from the 2008 financial crisis. Interest rates had been lowered to zero. At the same time, the rising national debt limited fiscal policy.
It's ironic that, while Yellen's personal focus was on lowering unemployment, which would normally mean lowering rates, the times required her to raise interest rates to a more sustainable level. She gradually raised the upper range of the fed funds rate from zero to 1.5%.
Yellen always kept in mind how the economy affected everyday working families.
"Questions of income inequality, of course, are not part of the Federal Reserve’s dual mandate from Congress, which is to foster price stability and to promote maximum sustainable employment. Nonetheless, this has been an interest of mine for a long time, and not only as an academic." - Janet Yellen; Nov. 6, 2006
Yellen has been a long-standing advocate of financial regulation; as vice-chair of the Federal Reserve Board of Governors from 2010 to 2014, she helped oversee the implementation of the Dodd-Frank Wall Street Reform Act.
Yellen's Early Career
Yellen's accomplishments make her well qualified to serve as both Fed chair and U.S. Treasury Secretary.
Dr. Yellen graduated summa cum laude from Brown University with a degree in economics in 1967. She received her Ph.D. in economics from Yale University in 1971. She received the Wilbur Cross Medal from Yale in 1997, an honorary doctor of laws degree from Brown in 1998, and an honorary doctor of humane letters from Bard College in 2000.
Dr. Yellen was an assistant professor at Harvard University from 1971 to 1976 and a staff economist for the Federal Reserve Board from 1977 to 1978. She was a faculty member at the London School of Economics and Political Science from 1978 to 1980.
Dr. Yellen is Professor Emerita at the University of California at Berkeley.
At Berkeley, she was the Eugene E. and Catherine M. Trefethen Professor of Business and Professor of Economics (1999-2006). She has been a faculty member since 1980.
She was a Fed Board member between 1994 and 1997. President Bill Clinton appointed her as the chair of the Council of Economic Advisers between 1997 and 1999. She was the chair of the Economic Policy Committee of the Organization for Economic Cooperation and Development at the same time.
Dr. Yellen was the president and chief executive officer of the Federal Reserve Bank of San Francisco between 2004 and 2010. She became vice-chair of the Fed Board of Governors between October 2010 and February 2014. This four-year term coincided with a 14-year term as a board member.
After leaving the Fed, Dr. Yellen became the Distinguished Fellow in Residence with the Economic Studies program at the Brookings Institution. She was affiliated with the Hutchins Center on Fiscal and Monetary Policy. She was also an adviser to the Magellan Group.
"I consider myself a pragmatic, mainstream economist with a strong policy orientation." - Janet Yellen; June 1, 1995
She has served in high positions at the Western Economic Association, American Economic Association, and Yale Corporation. She is a member of both the Council on Foreign Relations and the American Academy of Arts and Sciences.
Dr. Yellen has written on a wide variety of macroeconomic issues with a particular interest in unemployment and income inequality. In 2001, she co-authored a book with economist Alan Blinder, "The Fabulous Decade: Macroeconomic Lessons from the 1990s." They found that budget surpluses combined with low interest rates create optimal economic performance.