Federal Reserve nominee Janet Yellen will mount a vigorous defense of the bank’s controversial stimulus program during her confirmation hearing on Thursday.
In testimony prepared for delivery to the Senate Banking Committee, Yellen rejects GOP criticism of the Fed’s expansionary policies while adhering to her “dovish” view that economic growth should take precedence over limiting inflation.
Yellen will caution that the economy is performing “far short” of capacity and argue the Fed’s massive bond-buying program shouldn’t end until that is rectified.
Yellen, who is seeking to become the first female Fed chief in history, gives a nod to GOP concerns about the Fed’s transparency by touting her efforts to make the central bank’s goals clearer to the public.
“I have strongly supported this commitment to openness and transparency, and will continue to do so if I am confirmed and serve as Chair,” she says in the remarks.
Currently the vice chair of the Fed, Yellen will also note the bank’s expanding role as a financial regulator. She will vow to balance the need for financial stability with efforts to relieve regulatory burdens on smaller institutions.
Yellen’s testimony emerged on the eve of her appearance before the Senate Banking Committee, which is expected to yield some fireworks but few major obstacles to her confirmation.
Even Senate Republicans inclined to oppose Yellen said Wednesday they expect she would garner enough support to win the job, barring some unexpected gaffe at Thursday’s hearing.
“I’ve predicted from Day One that I think she will be [confirmed],” said Sen. Bob Corker (R-Tenn.), who sits on the Banking Committee. “I don’t know what I’m going to do, but I predict she will be confirmed.”
Democrats have been unanimous in their backing of Yellen since she was nominated in October, especially after many of them took the rare step of urging President Obama to pick her over his reported favorite, Lawrence Summers.
Even after a tenuous accord was struck this summer on stalled nominees, Republicans have not been shy about rejecting the president’s picks. Democrats are again threatening to pursue the so-called “nuclear option” to limit the GOP’s ability to filibuster nominees.
But on Yellen, there is little indication that Republicans are planning on mounting a major assault.
Sen. Susan Collins (R-Maine), whose support will be crucial in clearing any GOP obstacles, said Wednesday that Yellen is “clearly well-qualified,” and added that only a major error during her hearing could endanger Collins's support.
“I don’t anticipate that, but you never know,” she told The Hill.
And other Republicans are holding their fire, hoping to pin Yellen down on specific points before backing her.
Members say that if they are going to back Yellen, they need to hear from her exactly how the Fed will exit its unprecedented stimulus into the U.S. economy.
“What a lot of Republicans are going to be concerned about is whether she sees some end in sight,” said Sen. Rob Portman (R-Ohio). “I’m always inclined to support a presidential nomination … [but] it’s worth having the discussion with her to see where she is on these issues.”
But other Republicans are lining up specific areas of concern that Yellen would need to address if she hopes to win their support.
Sen. Jerry Moran (R-Kan.), another Banking Committee member, said he would press Yellen on how she would provide regulatory relief to small community banks as a top regulator. And Sen. Johnny Isakson (R-Ga.) identified Fed transparency as a primary concern.
One wrinkle that could slow Yellen’s bid is how hard conservative Republicans will fight for a vote on legislation fully auditing the Fed before allowing the pick to proceed.
Sen. Rand Paul (R-Ky.) has said he wants to see such legislation brought up before Yellen receives a vote, and Sen. Ted Cruz (R-Texas) backed that approach Wednesday.
“Before the Senate votes on whether to confirm Janet Yellen, we should at the very least allow a vote on the Audit the Fed bill,” Cruz said in a statement.
The current head of the Fed, Ben Bernanke, has vocally criticized such legislation, saying it would expose the independent central bank to undue political pressure when it comes time to set monetary policy.