The president has reportedly selected his nominee to replace outgoing Federal Reserve Chairman Ben Bernanke, and his official pick is Janet Yellen, according to members of the Senate Banking Committee.
Yellen, already vice chair of the Federal Reserve Board of Governors, took over as the official 'Fed Chair nominee' Tuesday night, creating some certainty for a stock market that has been on shaky ground since the start of the government shutdown.
Tim Johnson, chairman of the Senate Banking Committee, released a statement applauding the president’s plan to nominate Yellen.
"I commend President Obama on his selection of Dr. Yellen to be the first woman to serve as Federal Reserve Chairman. She has a depth of experience that is second to none, and I have no doubt she will be an excellent Federal Reserve Chairman," said Sen. Johnson (D-SD).
"In addition to having more than a decade’s worth of experience working on monetary policy at the Federal Reserve, Dr. Yellen has also worked at the White House as Chairman of the Council of Economic Advisors and taught at some of world’s most prestigious universities," he added.
Yellen has long been the favored pick on Wall Street since she brings the promise of a more dovish slide from quantitative easing and the likely continuation of the Bernanke-era in which the Fed played an active role in addressing high unemployment and economic malaise using quantitative easing.
With the Fed still purchasing billions of dollars in mortgage-backed securities and Treasurys each month, a Yellen pick is considered a softer transition to some analysts due to her current position on the board and the assumption she will be more Bernanke-like as Fed leader; therefore, more likely to slowly transfer away from QE.
Reactions to Yellen's expected nomination came quick. The National Association of Federal Credit Unions published a statement saying, "NAFCU congratulates Gov. Yellen on her nomination. We appreciate Gov. Yellen's readiness to hear credit unions concerns affecting their members and communities," said NAFCU president and CEO Dan Berger.
Goldman Sachs analysts predicted a few weeks ago that Yellen would be the president's pick, although a few market observers suggested Obama could go in an entirely different direction.
But the big takeaway is this: the Bernanke-way of leading the Fed is now far more likely to persist with Yellen at the helm than if the president had reached outside the current Fed camp for a nominee.
