Janet Yellen has one more fight coming
FED CHAIR FENDS OFF POLITICIANS AFTER TURNING ECONOMY AROUND
Janet Yellen sparred with Republican lawmakers in the most heated exchange in her year-long tenure as Federal Reserve chair, highlighting the central bank’s exposure to growing demands for greater oversight from Congress.
Yellen forcefully rejected accusations from Republicans that she’s unaccountable to Capitol Hill and too closely aligned with the White House and Democrats. “The Fed already has been completely immersed and guided by partisan politics,” said Scott Garrett, a New Jersey Republican who has introduced one of the bills this year to give Congress more control over the Fed and curb its powers.
Yellen called that a “complete mis-characterisation”. Republicans want to rein in the Fed’s expanded oversight of the financial industry while limiting its aggressive monetary policy.
Confrontational hearing
Yellen’s challenge is to push back against proposals that include Senator Rand Paul’s “Audit the Fed” bill, while trying to avoid damaging political fights.
The confrontational hearing “is not business as usual,” said Allen Sinai, CEO of Decision Economics Inc in New York. Tension between the Fed and Congress is not new. Yellen’s predecessor, Ben S. Bernanke, a Republican appointed by President George W. Bush, endured bruising encounters with lawmakers during the financial crisis when the Fed became a lightning rod for public anger over Wall Street bailouts. Yet Wednesday’s hearing was particularly combative.
Investors would react badly if Congress succeeded in curtailing the Fed’s powers or politicise its workings, said Michael Materasso, who helps oversee $348 billion of bonds as co-chairman of the fixed-income policy committee at Franklin Templeton Investments in New York.