Janet Yellen confirmed as first female treasury secretary in U.S. history

Former Federal Reserve Chair Janet Yellen was confirmed as Secretary of the Treasury on Monday, with the Senate voting 84-15 to make her the first woman to helm the department.

Yellen steps into the role with some advantages: She is well known and well respected among lawmakers of both parties, and has firsthand experience with enormous economic challenges. Yellen had been expected to have an easy confirmation process, after her nomination passed the Senate Banking Committee on a unanimous 26-0 vote last Friday.

A New York native, Yellen received her Ph.D from Yale University and taught at Harvard University, the London School of Economics and the University of California, Berkeley, in addition to holding numerous positions at the Fed before becoming the first female head in the central bank’s history, in 2014.

“As Federal Reserve Chair, Yellen worked to build constructive relationships with members of the House and Senate,” said Mark Hamrick, senior economic analyst at Bankrate. “In that position, it was important to avoid overstepping certain political lines.”

As a member of President Joe Biden’s cabinet, Yellen’s role is inherently political — which means she will have to thread a needle as she engages with legislators.

“The less overtly political Yellen is, the more credibility she will have with the financial markets,” said Stephen Myrow, managing partner at policy research consulting firm Beacon Policy Advisors.

Yellen’s tenure is sure to be a marked change from that of her predecessor Steven Mnuchin, the investment banker who helmed the Treasury under former President Donald Trump.

A product of her middle-class upbringing in the New York borough of Brooklyn, Yellen has cited the critical — if often unseen — role that macroeconomic principles play in the day-to-day well-being of American families. At the Treasury, she is expected to target the roots of the nation’s growing inequality along with the factors that exacerbate it.

Yellen spoke about economic inequality and the “K-shaped” recovery in her hearing with the Senate Banking Committee, making the economic argument that facilitating broader access to financial stability doesn’t just benefit individual Americans, but strengthens the economy as a whole.

“It will be her job to help deliver the next round of economic stimulus, or relief, legislation with its steep price tag by lobbying members of the Senate,” Hamrick said.

“Secretary Yellen will be all about using muscular fiscal policy to support strong economic growth that will benefit even the hardest-pressed low-income and minority households,” said Mark Zandi, chief economist at Moody’s Analytics. “She has long been an advocate for addressing the income and wealth distribution, and now she will be able to act on it.”

She is also expected to be an advocate for Biden’s other long-range policy goals such as increasing green energy production. A member of the Climate Leadership Council, Yellen previously has expressed support for a carbon tax, along with providing Congressional testimony about an economic rationale for reducing greenhouse gas emissions.

Yellen will work closely with current Fed Chair Jerome Powell to help support the fragile recovery, which has begun to flash warning signs as the pandemic continues to surge out of control in many parts of the country.

Policy observers say her oversight of the Fed during a critical portion of the economy’s recovery from the Great Recession will serve her well as the coronavirus pandemic continues to weigh on the labor market and economic activity, as will support she has cultivated across the political spectrum — a rare commodity in a polarized Washington, D.C.

Since the early days of the pandemic, Powell’s Federal Reserve has leveraged its power to stabilize the financial system. Economists widely agree that those interventions saved markets from a potentially catastrophic meltdown in the spring — but there also are limits to what the Fed can achieve with monetary policy, a point Powell has made numerous times, coupled with increasingly dire warnings for lawmakers about the near- and long-term consequences of failing to act swiftly on fiscal stimulus legislation.

At the Treasury, Yellen will be positioned to put pressure on a sharply divided Congress more directly.

“The treasury secretary’s most powerful tool is the bully pulpit. For that to be effective though, the treasury secretary needs to have credibility,” Myrow said. “I think the strong bipartisan support her nomination has received, despite the hyper-partisan environment, is a testament to the reservoir of credibility she brings with her to the role.”