So since Monday, it has been official. Janet Yellen, the former chair of the U.S. Federal Reserve, has been appointed Treasury Secretary by Joe Biden. She will take over from Steven Mnuchin when the new White House administration assumes office on January 20.
The 74-year-old economist who graduated from the universities of Brown and Yale was the first woman to head the Fed, which she chaired from February 2014 to February 2018, and became the first female Secretary of the Treasury.
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The Senate, which is likely to remain under Republican influence, will be asked to vote on her nomination by the Democrats. This should not be an issue as Ms. Yellen enjoys a healthy amount of professional respect in both political parties. Markets assume that in the face of the Covid-19 crisis, she is in a position to find a bipartisan consensus on the required budgetary support.
Jaret Seinerg, an analyst with Cowen Washington Research Group, said about Ms Yellen, “We expect her to easily get her Senate confirmation. For us, Yellen is likely to support the resumption Fed’s lending programs for SMEs and local authorities (Main Street Lending Porgram and Municipal Liquidity Facility),” which Steven Mnuchin recently decided not to extend beyond 31 December, the analyst said. “It could also support housing aid. Her economic background should give her more credibility to negotiate a new plan to support the economy.”
In the United States, the transition between the two administrations will begin and the composition of the future firm has greatly reassured the markets by its professionalism, in particular the appointment of Janet Yellen. Beyond the personality of Janet Yellen, financial markets are pleased that Joe Biden has opted to hand over key positions in his cabinet to a team of centrist Democrats, mostly former leaders under Barack Obama, rather than to the party’s left wing, who would have preferred projects considered hostile by the markets.
Joe Biden also named Wally Adeyemo as Assistant Treasury Secretary at the Treasury. Wally Adeyemo is a Nigerian-born economist and former advisor to Barack Obama on foreign trade, who also chairs a non-profit group, the Obama Foundation.
Janet Yellen, a Keynesian-inspired economist, considered a “dove” in monetary policy, succeeded in leading the very gradual increase in key Fed interest rates in 2015, after years of near-zero rates following the financial crisis of 2009. She came under fire from Republican nominee Donald Trump in 2016, who accused her of keeping rates too low from a partisan angle to support Democrat Hillary Clinton’s candidacy.
Trump declined to extend Ms. Yellen’s tenure when he became president, nominating Jerome Powell, who was also swift to endure the wrath of the president. This time, Donald Trump blamed the Fed boss for not lowering the Fed’s main rates fast enough to help the U.S. economy.