WASHINGTON (AP) - Putting a bigger stamp on the Federal Reserve,
President Barack Obama on Thursday chose Janet Yellen as vice
chairwoman of the central bank and filled two other vacancies on
the board, which has enormous power over Americans' pocketbooks.
The nominations are subject to Senate approval. If the Senate
confirms all three nominees, Obama will have appointed five of the
seven members of the Federal Reserve Board.
His moves come as the Fed, whose decisions influence economic
activity, employment and inflation, is facing political and
The Fed is steering the economy out of the worst recession since
the 1930s, and legislation to overhaul the financial system would
eliminate some of the Fed's authority while giving it new
responsibilities. Some lawmakers think the Fed overstepped its
authority by bailing out some big financial firms during the 2008
Fed interest rate decisions affect the rates consumers pay on
home mortgages and other consumer and business loans. On Wednesday,
the Fed ended a two-day meeting by sticking to its pledge to hold
rates at historic lows for an "extended period" to help energize
Yellen is president of the Federal Reserve Bank of San
Francisco. As vice chair, the second-highest ranking Fed official,
her duties would include helping build support for policy positions
staked out by Fed Chairman Ben Bernanke, who has begun a second
Obama also nominated Sarah Raskin and Peter Diamond to the Fed
board. Raskin is the Maryland commissioner of financial regulation.
Diamond is an economist at the Massachusetts Institute of
"The depth of experience these individuals bring in economic
and monetary policy, financial regulation, and consumer protection
will make them tremendous assets at the Fed," the president said
in a statement. "I am grateful they have chosen to dedicate their
talents to serving the American people."
Yellen was a top adviser to President Bill Clinton and is
considered a dove on monetary policy. That means she would be
expected to be more concerned about high unemployment, currently
holding at 9.7 percent nationally, than about rising inflation.
She would succeed Donald Kohn, who plans to depart at the end of
June. Kohn has been a member of the Fed board since 2002.
Yellen and Diamond, who is an authority on Social Security,
pensions and taxation, are Ph.D. economists. With Kohn's departure,
the Fed would have just one professional economist, Bernanke. Of
its other current members, Daniel Tarullo was a Georgetown
University law professor, Kevin Warsh brought Wall Street
experience and Elizabeth Duke was a banker. Warsh and Duke were
nominated by President George W. Bush.
Raskin, who served as counsel to the Senate Banking Committee,
would expand the Fed's expertise over financial regulation. That
would include consumer issues, which are important to Obama and
Congress as they seek to impose tighter oversight on the financial