A Woman to Step In as Vice Chairman at Fed?
Yellen's current stance on monetary policy and her impeccable credentials would likely mean she'd be approved by the Senate. Before the Fed, Yellen chaired the Council of Economic Advisers from 1997 to 1999. As The Wall Street Journal points out, "94 Senators voted to approve her during her first stint at the Fed." But the paper also says she may be questioned about the large number of bank failures in her region.
In addition to Yellen, President Obama will also have the opportunity to fill two other seats on the Fed board. Many observers believe that he'll favor people who agree with Bernanke's philosophy that rates should be low to help the economic recovery and job creation. But it's possible that Obama and Bernanke could be wrong. Fed Governor Kevin M. Warsh Fed and Thomas M. Hoenig, president of the Fed in the region based in Kansas City, have both been strong proponents of the central bank raising rates to head off the inflation that "easy money" due to low rates could cause.
Obama and Bernanke should be careful what they wish for. Yellen and the two other nominees may agree with the president and Fed chief on interest rates, which is perfect -- unless they're all wrong.