Though progressives across the board celebrated when former Treasury Secretary Larry Summers "removed himself" from Obama's consideration to be the next Chair of the Federal Reserve, news that the official nominee and likely confirmed candidate to the post will be current Fed vice chairperson Janet Yellen is not likely to be seen as a victory for "progressive" economic policy.
As news reports indicated Monday night, Yellen is likely to be officially nominated by the president on Wednesday and face little opposition during the confirmation process that follows.
As the New York Times reports:
Ms. Yellen, 67, has been the Fed’s vice chairwoman since 2010, when Mr. Obama nominated her to the post and she was easily confirmed on a voice vote by the Senate. She would be the first woman to run the central bank.
She is also expected to win bipartisan support for her new role in the Democratic-controlled Senate, said Senator Charles E. Schumer of New York.
Across the corporate and mainstream media landscape, Yellen has repeatedly been called the "progressive" choice or the "left's" nominee, but that coverage often failed to recognize that it was the atrocious possibility of Summer's chairmanship at the Fed that made Yellen appear as a reasonable choice.
However, a recent portrait of Yellen by the Huffington Post's Zach Carter paints a picture of Yellen as right-of-center insider who agreed with Summers and other corporate-Democrats on key policy disasters, including cutting Social Security, supporting NAFTA, and calling for the repeal of Glass-Steagall Act which many economists see as the key decision that ultimately led to the housing crisis and financial disaster that took hold in 2008. According to Carter:
While supporting Yellen has become a cause célèbre for progressives opposed to Summers' regulatory hostilities, Yellen supported a host of economic policies during the Clinton era that have since become broadly unpopular. She backed the repeal of the landmark Glass-Steagall bank reform and she supported the 1993 North American Free Trade Agreement. She also pressured the government to develop a new statistical metric intended to lower payments to senior citizens on Social Security.
...in the 1990s, Yellen and Summers both served in the Clinton administration, and pursued many of the same policies. Yellen began serving as Chair of President Bill Clinton's Council of Economic Advisers in 1997, and publicly endorsed repealing Glass-Steagall's separation between traditional bank lending and riskier securities trading during her Senate confirmation hearing. Yellen referred to deregulating banking as a way to "modernize" the financial system, and indicated that breaking down Glass-Steagall could be the beginning of a process allowing banks to merge with other commercial and industrial firms.
"I do believe it's important to modernize the financial system at this time," Yellen said in response to a question from then-Sen. Lauch Faircloth (R-N.C.). "And on the issue of commerce and banking, I would begin by saying that I am not philosophically opposed to mixing banking and commerce. On the other hand, it seems to me that we have a lot more experience and knowledge about financial activities, and that most of the synergies are probably between banking and other lines of business that are financial in nature. I would think that that's an appropriate first step."
The Senate passed the repeal of Glass-Steagall in November 1999 by an overwhelming 90 - 8 margin. By allowing traditional banks to link up with securities firms and insurance companies, the legislation has been blamed for bringing on the too-big-to-fail era.