Janet Yellen will be one step closer to becoming the next chair of the Federal Reserve after a vote is held later this week, Bloomberg reports. In a key step in the confirmation process, Yellen will face the Senate Banking Committee to try and obtain its members’ seal of approval. With Democrats holding a two-vote advantage in the 22-member committee, it seems unlikely that her candidacy will be halted by the vote.
A more significant challenge to Yellen’s path to the Federal Reserve may come on the Senate floor, where a vote will be scheduled by the year’s end. Though Democrats have an edge in the Senate as well, Yellen will require several Republican votes in order to achieve to 60-vote threshold needed to obtai approval. Yellen’s supporters hope that her confirmation will go through before Ben Bernanke, the current head of the Federal Reserve, begins to relinquish power in January .
The main debate over the actions of the Federal Reserve concerns its massive program of quantitative easing, by which the bank buys $85 billion worth of securities each month in order to introduce cash into the economy. Proponents of the policy, including Bernanke and Yellen, claim that it is vital to speeding the pace of recovery. When liquidity is increased, it is easier for businesses to gain access to capital, leading them to invest and expand.
However, opponents of quantitative easing claim that it has merely depressed interest rates and eroded confidence in the U.S. dollar. Many Republicans have placed themselves in that camp, saying that quantitative easing is creating unprecedented levels of debt and making it harder for a recovery to take place. They point to persistently high unemployment levels as evidence that the program is not working.
Several Republicans have stated that they will not vote for Yellen based on her support of continued quantitative easing. While few question Yellen’s qualifications and her general acumen, it is the divisive nature of economic policy in Washington that has created questions about her confirmation.
Though some expected the Federal Reserve to begin to taper quantitative easing in September, the move was delayed until unemployment levels fall to more reasonable values. When exactly this will be is uncertain, though, if Yellen does get the job, it would seem as if the end of quantitative easing will come later rather than sooner.