The Senate confirmed Janet Yellen to head the Federal Reserve on Monday, making her the first woman to head the world’s most powerful central bank and arguably the most important female banker in history.
The Senate voted 56-26 to confirm Yellen, who’s been the vice chair of the Fed since 2010. Yellen, 67, will take the helm after Chairman Ben Bernanke’s second four-year term ends Jan. 31.
Though never in serious jeopardy, her nomination proved more controversial than anyone anticipated. Bernanke was confirmed on a voice vote in 2006, with just one senator, Kentucky Republican Jim Bunning, opposed. Bernanke was reconfirmed in 2010, but in a sign of how the Fed’s controversial stimulus efforts polarized the Congress, his second term was put to a formal vote, which he cleared by 70-30.
Yellen was a co-architect of the Fed’s controversial bond-buying program, designed to help boost investment and economic activity. It’s come at a cost of $85 billion a month since December 2012, and it will fall on her to unwind that effort at a pace that doesn’t disrupt the economy or spike inflation.
“No one can deny that the risks are real and the results could be devastating,” Sen. Charles Grassley, R-Iowa, said Monday.
It also will fall to Yellen to begin raising the cost of borrowing eventually, after record low costs for a record period of time. The Fed’s benchmark federal funds rate, which influences the cost of borrowing for consumers and businesses alike, has been near zero since December 2008.
“I think she is going to be forced to be the Fed chair that tightens policy,” said Dean Croushore, an economics professor at the University of Richmond in Virginia who’s the co-author of a textbook with Bernanke. “She’ll have no choice but to do that.”
Economists had long expected Yellen to take over from Bernanke, after they devised unconventional policies together to spark the economy. She’d long been viewed as one of the nation’s top economists, having run the Federal Reserve Bank of San Francisco, and she was a prominent academic at the University of California at Berkeley.
Over the summer, however, the Obama administration put out feelers to gauge the chances of confirmation for former Treasury Secretary Lawrence Summers. Summers enjoyed a close relationship with President Barack Obama, despite being chased out of the presidency of Harvard University in 2006 for suggesting there were innate reasons that few women pursued careers in math and science.
Women’s groups were outraged, viewing the weighing of Summers over Yellen as an insulting low point for the Obama administration. Months later, there was delight at Yellen’s confirmation.
“She deserves the job because she deserves the job,” Terry O’Neill, the president of the National Organization for Women, said in an interview Monday. “But she has broken through the glass ceiling in a very important way.”
What still bothers O’Neill is that Obama considered a friend over what so many considered the most qualified candidate.
“That’s exactly what the glass ceiling is. It’s the decision to put in place someone who is the friend, over the woman,” O’Neill said, adding that Yellen will become an important American role model. “The finance industry has a worse record in promoting qualified women than corporate America as a whole. More women will be encouraged to think they can . . . assert themselves and become leaders in the financial sector.”
In a study last March, a company called Preqin estimated that women accounted for 6.9 percent of the senior roles at buyout firms in 2012 and 9.7 percent of the senior roles at venture capital firms. Preqin provides data about the so-called alternative assets part of the finance sector, the funds open to the mega-wealthy.
Similarly, the New York research group Catalyst, which focuses on career advancement for women, published its 2013 census in December, finding that women held 14.6 percent of executive officer positions in corporate America, a figure unchanged from a year earlier. More than a quarter of corporations had no female executive officers.
Yellen addressed the issue of the glass ceiling during a question and answer session last April with the Society of American Business Editors and Writers.
“At the highest levels of central banking there are very few women, but I am pleased that the representation of women is increasing a lot at other levels, at lower levels of central banking and financial markets and institutions more broadly,” she said. “I really think this is something that is going to increase over time, and it’s time for that to happen.”
Yellen is married to a Nobel Prize-winning economist, George Akerlof, and their grown son is also a prominent economist. Obama noted that when quipping during her nomination about what passed as fun vacation reading for Yellen and her family.