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Biden to name Yellen to Treasury to lead U.S. from sharp economic downturn

Politics Nov 23, 2020 10:23PM ET
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2/2 © Reuters. FILE PHOTO: Yellen holds a news conference in Washington 2/2

By Trevor Hunnicutt and David Lawder

WILMINGTON, Del./WASHINGTON - (Reuters) - President-elect Joe Biden is expected to nominate former Federal Reserve Chair Janet Yellen as U.S. Treasury secretary, breaking a 231-year gender barrier and putting a seasoned economist and labor market expert in charge of leading the country out of the steepest downturn since the Great Depression.

The move, confirmed by Democratic allies to the Biden campaign, will shift Treasury's focus heavily toward progressive efforts to tackle growing economic inequality and fighting climate change and away from the Trump administration's pre-pandemic emphasis on cutting taxes and easing financial regulations.

Yellen, 74, brings Biden decades of economic policy experience and is respected by Congress, international finance officials, progressives and business interests alike. She has called for opening fiscal spending taps to revive an economy wracked by the coronavirus pandemic and would be the first person to head the Treasury, the Fed and the White House Council of Economic Advisers.

The post will present a host of new challenges for Yellen, whose policymaking experience in the past 20 years has largely centered on monetary - rather than fiscal - policy. For one, it means a far more political role than that she played in her long career at the Fed, an institution that goes to great lengths to distance itself from partisan politics.

A spokesman for Biden's transition team declined to comment. Yellen, reached by phone, also declined to comment.

Yellen made history in 2014 when she became the first woman to chair the Federal Reserve after serving for a decade as San Francisco Fed president and a Fed governor. Republican President Donald Trump declined to renew her term and replaced her with current Fed Chair Jerome Powell in 2018.

Born in Brooklyn, New York, to a family doctor and an elementary school teacher, Yellen earned a doctorate in economics from Yale in 1971 as the only woman in her class and taught at several major universities before serving as a top economic adviser to President Bill Clinton from 1997 to 1999.

She is married to Nobel Prize-winning economist George Akerlof, whom she met in 1977 at the Fed where both were working in research roles.

FISCAL POLICY LEVER

At Treasury, Yellen would have a major role in influencing U.S. fiscal and tax policy, tools she did not have at the Fed.

Yellen "will be a trusted, steady, and pragmatic hand on the helm as the U.S. navigates the economic recovery from the COVID-19 pandemic," said Tim Adams, a former Treasury official who is president of the Institute of International Finance, which represents more than 450 global banking firms.

With Democrats having only a slim possibility of winning a U.S. Senate majority in two Georgia runoffs in January, Yellen faces tough negotiations with Republicans to try to push Biden's agenda, includes raising taxes on the wealthy and investing trillions of dollars in infrastructure, education and fighting climate change.

Economists said Yellen would be effective in articulating the economic arguments for spending more in the near term to boost job growth and reduce the gap between rich and poor. Yellen's 2014 speech https://www.federalreserve.gov/newsevents/speech/yellen20141017a.htm highlighting the fast growth of U.S. inequality suggested it was a threat to "values rooted in our nation's history."

"She knows how to build consensus. She knows how to argue a point in her way. She’s no shrinking violet," said Julia Coronado, president of MacroPolicy Perspectives and a former Fed economist who worked with Yellen.

YELLEN BUMP FOR STOCKS

U.S. stocks picked up ground following the report.

Investors see Yellen as a force for more fiscal action to combat the economic crisis unleashed by the COVID-19 pandemic, and as someone in a strong position to ensure the Treasury will continue to work closely with the Fed.

"Yellen should be a very strong advocate for more aggressive fiscal policy, and given her gravitas around Washington, it may make her the single most effective fiscal expansion advocate Biden could have picked," said Tom Graff, head of fixed income at Brown Advisory in Baltimore.

The S&P 500 Index rose from roughly unchanged on the day at the time of the initial report to gain 0.57% by the closing bell. Prices of U.S. Treasury securities remained lower on the day. The dollar was little changed.

Yellen was chosen over other seasoned economic policymakers, including current Fed Board of Governors member Lael Brainard, 58, who served as the Treasury's undersecretary for international affairs early in the Obama administration.

Also under consideration was Roger Ferguson, 69, president of retirement asset manager TIAA and a former Fed vice chair, who would have been the first Black Treasury secretary.

Senator Elizabeth Warren, a rival to Biden for the Democratic presidential nomination and a candidate for the Treasury post, tweeted that Yellen would be "an outstanding choice" and praised her for having "stood up to Wall Street banks" as Fed chair.

Earlier on Monday, Biden tapped veteran diplomat Antony Blinken as his new secretary of state and named other members of his national security team.

Trump continues to dispute without evidence Biden's victory in the Nov. 3 election, but the General Services Administration on Monday approved the start of a formal transition process.

Jen Psaki, an adviser to the Biden campaign tweeted that economic team members would be announced next week.

Biden to name Yellen to Treasury to lead U.S. from sharp economic downturn
 

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Comments (6)
Joseph Sherwood
Joseph Sherwood Nov 24, 2020 5:10AM ET
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This woman presided over the exact economic policy leading toward the crash in 2008. Failed socialist ideas and giving of loans to people who can't pay them. Welcome back to more of the same. Shorting the market becomes easier by the day. Buffett Indicator screaming Fed induced irrational exhuberance levels for markets.
Tre Hsi
Tre Hsi Nov 24, 2020 5:10AM ET
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"This woman presided over the exact economic policy leading toward the crash in 2008."  ----  you know anyone with access to Google can check to see Yellen was the Fed vice chairperson from 2010-14, chairperson from 2014-18?  that's all, now you can go back to your rant.....
Joseph Sherwood
Joseph Sherwood Nov 24, 2020 5:05AM ET
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Fake news as usual. Biden already said he'd remove the Trump tax cuts. This means tax increase for everyone who pays taxes.
Itachi Uchiha
Itachi Uchiha Nov 24, 2020 5:05AM ET
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it is not much difference as before but maybe more tax on 400,000 or higher
Options Trader
Options Trader Nov 23, 2020 11:27PM ET
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The federal reserve and the economy are not the same thing. Yawn, somehow dems always find a way to *******you.
Adrian White
Adrian White Nov 23, 2020 11:27PM ET
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Who said they were the same? But maybe you should have told Trump that a stock market on crack (free Fed money) is not a true measure of the economy.
Joseph Sherwood
Joseph Sherwood Nov 23, 2020 11:27PM ET
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Sure because the Fed is controlled by the president not members from mostly Democrat ran cities. I think you're on the wrong website of you're trying to correct people and don't even know that.
Tre Hsi
Tre Hsi Nov 23, 2020 11:27PM ET
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Joseph Sherwood  "Sure because the Fed is controlled by the president"  -- maybe that's what Trump thinks but you may want to do a bit research before ranting......here is a hint, google "US Fed independence" and read up a bit
Jozef Drozd
Jozef Drozd Nov 23, 2020 10:06PM ET
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https://www.collective-evolution.com/2020/11/01/update-nearly-45000-doctors-scientists-sign-declaration-opposing-covid-lockdowns/?fbclid=IwAR0YPXpc38Bew-h-ZdBDWbypmDGqvNrsyMAWB5GBfD1rQWzSj8EUgM4txok
Max Dividend
MaxDividend Nov 23, 2020 4:12PM ET
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"Yellen earned a doctorate in economics from Yale and has taught economics at the University of California, Berkeley, Harvard University and the London School of Economics (LSE)".....and still she knows nothing about economy
andy matalobos
andy matalobos Nov 23, 2020 4:12PM ET
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Definitely she is more educated than the less educated and experienced friends and political donors that Trumpsky appointed as "acting wannabes" cabinet members....adding more creatures to his House of Lies swamp.
Jesse Mulliniks
Jesse Mulliniks Nov 23, 2020 3:56PM ET
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Prepare for HYPER INFLATION folks buy calls and gold NOW
Max Dividend
MaxDividend Nov 23, 2020 3:56PM ET
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Gold actually should be up with news like this. Probably In January government will be talking in $3-4 Trillion in stimulus
Gamer Turtle
GamerTurtle Nov 23, 2020 3:56PM ET
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if true, it is an ongoing shakeout, so it has a long way down to go before a ride up.
Tyler Phillis
Tyler Phillis Nov 23, 2020 3:56PM ET
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Gamer Turtle  Shakedown...I think you meant shakedown. Make sure you turn your pockets out...
Edward Chong
Edward Chong Nov 23, 2020 3:56PM ET
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Max Dividend yeap but some invisible hands trying their best to suppress it.
 
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