EPI, along with the Fed Up coalition, released a new report today reviewing Janet Yellen’s term as chair of the Federal Reserve. Entitled “Impressive, incomplete, and under threat,” the report argues that Yellen and the Fed have done more than any other policymaking institution to facilitate economic recovery over the past four years, and commends Yellen for enacting policies to reduce unemployment and strengthen financial stability. The report concludes with a call for Yellen to be re-appointed, and urges all members of the Board of Governors to continue serving in their positions.
“During Chair Yellen’s tenure, I have seen my personal livelihood and job prospects improve,” said Paola Angel Mendoza, an activist with Fed Up coalition member Make the Road New York, “I am grateful for her leadership pursuing full employment, and I don’t believe her work is finished.”
The report argues that the considerable progress made toward full employment would be undermined by new leadership, particularly if President Trump nominates Board of Governor candidates who do not respect the Fed as an institution, value the Fed’s full employment mandate, or seek to unwind the financial protections put in place since the Great Recession. Yellen’s term as chair expires in February 2018, and the Trump administration has begun filling three vacancies on the Fed’s Board of Governors, recently appointing Randal Quarles, a self-described “Wall Street lawyer,” as vice-chair of supervision. Quarles testified before the Senate last week. In a recent interview, Trump confirmed he is deciding whether to re-appoint Yellen or replace her with former Goldman Sachs president Gary Cohn.
“Since taking office, Trump has appointed people who seek to destroy the very agencies they’re tasked with leading,” said Fed Up campaign manager Jordan Haedtler. “Appointing Gary Cohn as Fed Chair would be like appointing Putin to be in charge of cyber-security. If Trump decides to fill the Fed with people like Cohn, it will just be more proof that his campaign promises to bring back jobs and drain the swamp were lies. The most responsible choice is to re-appoint Janet Yellen as Chair of the Federal Reserve.”
In the past, Fed Up, with leadership from EPI, has been critical of Yellen and the Fed. Both groups have highlighted the Fed’s lack of diversity, called for reform of the Fed’s governance structure, and warned against premature interest rate hikes. The report acknowledges that progress on diversity has been modest, and makes the case for holding off on further interest rate increases in the months ahead. However, in examining Yellen’s legacy as a whole, the report points out that Yellen faced a severe recession, fiscal austerity, and constant pressure to normalize interest rates, and still managed to bring the Fed closer to achieving its dual mandate than many of her predecessors.
“Yellen and the Board of Governors deserve credit for getting our economy closer to full employment,” said Economic Policy Institute Research Director Josh Bivens. “But their work is not yet complete. Given the threats our economy still faces, they should proceed with caution on future rate hikes, and continue to serve the remainder of their terms on the Board.”