Janet Yellen faces a Senate confirmation hearing this week with few questions about her qualifications to be the new chair of the Federal Reserve but plenty of potential pitfalls on issues from Libya to inflation.
The vice chairman of the Federal Reserve since 2010, Yellen was nominated by President Barack Obama last month to succeed Chairman Ben Bernanke when he steps down at the end of January after two terms.
Viewed by many economists as the most qualified person for the job, she’s expected to win approval from the Senate Banking Committee, which will hold its confirmation hearing Thursday. But there are potential landmines that could delay or deny her a path to the world’s most powerful banking post.
Sens. Lindsey Graham, R-S.C., and John McCain, R-Ariz., have vowed to halt a vote on Yellen until the Obama administration makes available five State Department officials who were present during the 2012 attack on the U.S. consulate in Benghazi, Libya, which killed U.S. Ambassador Christopher Stevens and three others.
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“The State Department has thus far refused to allow anybody in Congress to talk to these five,” Graham said Sunday on CNN. “And we’re going to talk to them, because they possess the best information about what happened in Benghazi.”
Sen. Rand Paul, R-Ky., vows to block Yellen until Senate Majority Leader Harry Reid, D-Nev., allows a vote on the proposed Federal Reserve Transparency Act, legislation that would subject the Fed to greater auditing.
“As the Senate debates the nomination of the next head of the Federal Reserve, there is no more appropriate time to provide Congress with additional oversight and scrutiny of the actions and decisions of the central bank,” Paul wrote Reid in an Oct. 29 letter.
Similar legislation passed the Republican-controlled House of Representatives in July 2012, but Democrats enjoy a 55-45 majority in the Senate. It means that Obama will need just five Republicans to break any legislative logjam and move to a vote on Yellen.
Yellen met with members of the Banking Committee in recent days, and many Republicans voiced concern to her about the Fed’s attempt to stimulate the economy through bond purchases that have swelled its balance sheet to more than $3.8 trillion. They fear that these purchases, at $85 billion a month since last December, could spark inflation down the road.
“She didn’t back off of that at all, so we just disagree,” Sen. David Vitter, R-La., told Bloomberg Television last week, stopping short of saying he’d oppose her confirmation.
Because Yellen represents continuity with Bernanke’s policies, financial markets aren’t fretting about her nomination.
“This is a non-event for the markets,” said James Paulsen, the chief investment strategist for Wells Capital Management in Minneapolis. “I think it’s already baked in the goods. It would indeed be an event if she’s not confirmed.”