Janet L. Yellen, President Barack Obama’s nominee to lead the Federal Reserve for the next four years, sailed through a Senate confirmation hearing Thursday as Republicans and Democrats mostly used the opportunity to raise broader concerns about income inequality and the regulation of large banks.
Members of both parties appeared to treat Yellen’s confirmation as a foregone conclusion. There were hardly any questions about Yellen’s qualifications, and relatively few about her views on the Fed’s efforts to stimulate the economy.
But Yellen was subjected to a bipartisan barrage of criticism from senators concerned that the Fed is worsening income inequality through policies that mostly benefit the wealthy, and that it is doing little to help everyone else.
“It’s not clear to me and it’s not clear to many Americans that have not seen a raise in many years that this policy raises incomes and wages on Main Street,” said Sen. Sherrod Brown, D-Ohio. “What will you do to help?”
Yellen, the Fed’s vice chairwoman since 2010, fielded questions in a calm and careful manner. She said that the Fed was trying to help everyone, and that its efforts to hold down interest rates had provided clear benefits to car and home buyers.
“The ripple effects go through the economy and bring benefits to, I would say, all Americans,” Yellen said. She continued, “If we can generate more robust recovery in the context of price stability, then more Americans will see meaningful increases in their well-being.”
Yellen said, however, that the divergence between rich and poor was a long-term trend mostly driven by factors well beyond the Fed’s control.
Much of the hearing was devoted to regulation of big banks, a subject elevated to central importance by the financial crisis.
Some of the strongest questions came from Sen. Elizabeth Warren, D-Mass., who criticized the Fed for regulatory failings before the crisis and expressed concern that it still was not trying hard enough.
“The truth is, if the regulators had done their jobs and reined in the banks, we wouldn’t need to be talking about” stimulus, Warren said.
Yellen held her ground, avoiding even a clear statement that the Fed’s failures had played a role in the crisis – something she has conceded in other contexts.
“I absolutely believe that our supervisory responsibilities are critical and they are just as important as monetary policy and we need to take them just as seriously,” she said.