President- elect Joe Biden’s economic team will be led by his choice for Treasury secretary, former Federal Reserve Chair Janet Yellen.(AP/ File photo)
President- elect Joe Biden’s economic team will be led by his choice for Treasury secretary, former Federal Reserve Chair Janet Yellen.(AP/ File photo)

Janet Yellen to forge US economic comeback as Biden’s treasury pick

Yellen’s expected to champion what she’s called “extraordinary fiscal support” to support the pandemic-ridden economy -- deficit spending that she says is affordable given extraordinarily low interest rates.
By Bloomberg | Posted by Mallika Soni | Washington
PUBLISHED ON NOV 30, 2020 01:40 PM IST

President-elect Joe Biden will take a significant step this week toward addressing the damage to the US economy inflicted by the coronavirus pandemic, as he names an economic team led by his choice for Treasury secretary, former Federal Reserve Chair Janet Yellen.

In Yellen, Biden will have a battle-tested policy maker who can draw on her nearly two decades at the Fed to help rebuild an economy in dire need of government cash and confidence. Biden has called for trillions of dollars in new stimulus to aid the small and mid-size businesses that are the nation’s jobs engine.

Yellen’s expected to champion what she’s called “extraordinary fiscal support” to support the pandemic-ridden economy -- deficit spending that she says is affordable given extraordinarily low interest rates.

Others in Biden’s economic policy team are also expected to be unveiled this week. People familiar with the process said longtime Democratic policy staffer Neera Tanden had been picked to lead the Office of Management and Budget. Cecilia Rouse, formerly of the Obama administration and currently dean of Princeton University’s School of Public and International Affairs, would head the Council of Economic Advisers. Both roles require Senate confirmation.

At the top of their to-do list will be to break a deadlock in Congress over additional relief spending, an effort that would be far easier if Democrats win two Georgia Senate seats in runoff elections next month to wrest control of the chamber from Mitch McConnell’s Republicans.

Yellen is seen winning easy confirmation in the Senate. While she occasionally sparred with Republican lawmakers as Fed chair, she’s widely respected, and some GOP senators publicly complimented her selection, which Biden has yet to make official.

At 74, she will be the oldest Treasury secretary in recent memory, and the first woman to lead the agency.

She would be the second person in the modern era to serve as both Fed chair and Treasury chief, after Jimmy Carter appointee William Miller, and the only one to also have led the White House Council of Economic Advisers, which she did in the Clinton administration.

“Biden made a clever pick with Yellen,” said economist Marc Sumerlin of Evenflow Macro in Washington. “She’s non-partisan, has earned everybody’s respect, and can give intellectual heft to the stimulus argument more than anyone else could have.”

Here’s a look at her challenges ahead.

Stimulus

The US economy is showing signs of further erosion as coronavirus cases spiral and some states begin to shutter businesses again in a bid to slow the spread. The US outbreak threatens to be a drag on the nascent labor market recovery, with jobless claims ticking up and payroll gains forecast to slow further.

Nine months into the pandemic, more than six million people still claim extended unemployment assistance.

Key for the Biden administration is passing a fiscal stimulus package that bolsters consumer finances and supports additional spending. The Fed is set to maintain an accommodative monetary policy to help drive growth.

History suggests Yellen will be sworn in by early February. Among her first tasks will be to decide what to do about the Fed’s pandemic lending programs. Outgoing Treasury Secretary Steven Mnuchin has said some will sunset on Dec. 31. She may find a way to extend them, which is the Fed’s preference, or perhaps redesign them since many remained largely untapped.

Market Stability

Investors predict that with a less volatile boss than her predecessor, Yellen can be a stabilizing force on Wall Street.

President Donald Trump’s practice of policy making by tweet sowed unpredictability for businesses and investors. Yellen’s tenure at the Fed -- as chairman, vice-chairman, governor, and San Francisco Fed president -- means that she’s keenly aware of the market impact of her words, a stark contrast with senior Trump administration officials.

“The markets love this appointment because being the former Federal Reserve chair, there’s no surprises about her thinking,” said Peter Mallouk, chief executive officer of Creative Planning.

Yellen comes as something of a relief to Wall Street after talk of Biden choosing Senator Elizabeth Warren, a nemesis of big banks with a preference for stronger financial regulation, as his Treasury chief.

But it’s the influence of progressive Democrats like Warren that steered Biden away from current Fed Governor Lael Brainard. Before Election Day, Brainard was a favorite for Treasury secretary among Biden’s advisers. Biden’s allies have since asked that Brainard remain at the Fed, where she’s the lone Democrat on the board.

Financial Regulation

The party’s liberal wing appreciates Yellen for her support of tighter financial regulation, for which she’ll be the point person in the Biden administration. That will thrust her into anticipated policy battles between progressives and moderates over the policing of Wall Street.

The most liberal lawmakers want to restore and even toughen post-financial crisis rules weakened during the Trump administration. But centrists may push for a more cautious approach, arguing that it would be a mistake to clamp down on banks at a time when the economy is imperiled.

As Treasury chief, Yellen will lead the Financial Stability Oversight Council, the powerful group of regulators that tries to identify and rein in emerging threats posed by the industry. Since it was created through the Dodd-Frank Act, FSOC has become a forum for agencies like Treasury, the Fed and the US Securities and Exchange Commission to collaborate on oversight.

Yellen’s record indicates she may use the position to push for new rules on so-called shadow lenders, such as money-market mutual funds and investment banks that are outside the Fed’s reach.

In recent years she’s sounded alarms in particular about leveraged lending -- loans extended to businesses that are already highly indebted -- due to concerns that the economy could suffer significant job losses if the corporate borrowers start defaulting. Shadow banks are very active in leveraged lending.

Foreign Relations

What’s less clear about Yellen is whether she’ll embrace the Treasury secretary’s role as an occasional economic aggressor. While international economic diplomacy will be part of her purview, taking her to Group of 20 meetings that she participated in as Fed chair, she’ll now play a much larger role in US foreign policy.

Part of her new remit will be to work with the State Department and other national security agencies to manage the vast US sanctions portfolio. But as Biden indicated during his presidential campaign, his early agenda will include repairing ties with allies damaged by Trump’s “America First” position.

Mnuchin and predecessors including Hank Paulson played central roles in managing trade policy and relations with China. It remains to be seen if Biden will hand Yellen the same power.The new administration will also need to decide whether to scrap, keep, or escalate the billions of dollars in tariffs levied against Chinese imports, and whether to stick to the partial trade deal Trump signed with Beijing in January or seek to renegotiate it.

Yellen also will be involved in determining whether to continue sanctions imposed on Chinese officials for their crackdown on human rights, and she’ll inherit Trump administration restrictions aimed at cutting off Chinese technology companies’ access to American intellectual property.Yellen has spoken in favour of liberalizing trade and has publicly disagreed with Trump’s position that China’s management of its economy swelled the US trade deficit. She said in February that “we haven’t seen” any evidence that duties on Chinese goods made US manufacturers more competitive or more likely to hire.

At Treasury, Yellen would also decide whether to continue branding China as a currency manipulator in biannual reports. The US label has no practical effect, but adds to tensions between the world’s two largest economies.

While not singling out Beijing, Yellen said in 2019 that it was “really difficult and treacherous” to determine when a country is massaging its currency to gain a trade advantage. A weaker exchange rate, she said, may just be a byproduct of looser economic policy.

SHARE THIS ARTICLE ON
app
Close
Indian-American Neera Tanden, nominated by Biden as the Director of Office of Management and Budget at the White House, said she is honored to be part of the Biden-Harris administration.(AP)
Indian-American Neera Tanden, nominated by Biden as the Director of Office of Management and Budget at the White House, said she is honored to be part of the Biden-Harris administration.(AP)

Indian-American lawmakers say Biden, Harris will heal America

PTI, New York
PUBLISHED ON JAN 21, 2021 10:43 AM IST
Congressman Ro Khanna, who represents California’s 17th Congressional District, located in the heart of Silicon Valley, said he cannot stress “what an amazing moment this is for our community and for the multi-racial democracy in America.”
Close
President-elect Joe Biden’s pick for national intelligence director Avril Haines arrives for a confirmation hearing before the Senate intelligence committee.(AP)
President-elect Joe Biden’s pick for national intelligence director Avril Haines arrives for a confirmation hearing before the Senate intelligence committee.(AP)

Avril Haines is first official member of President Joe Biden's cabinet

ANI
PUBLISHED ON JAN 21, 2021 10:35 AM IST
The US Senate on Wednesday (local time) confirmed Haines for director of national intelligence.
Close
Joe Biden taking oath as US President during the 59th presidential inauguration in Washington, DC.(Bloomberg)
Joe Biden taking oath as US President during the 59th presidential inauguration in Washington, DC.(Bloomberg)

Taiwan's 'de-facto' ambassador to US attends Joe Biden's inauguration

Reuters
PUBLISHED ON JAN 21, 2021 10:29 AM IST
Taiwan's foreign ministry said it was the first time an inauguration committee had formally invited the country's representative in Washington.
Close
Authorities are asking people to stay home during the Lunar New Year holidays in February as part of the efforts to prevent another debilitating outbreak.(REUTERS)
Authorities are asking people to stay home during the Lunar New Year holidays in February as part of the efforts to prevent another debilitating outbreak.(REUTERS)

China to impose virus testing on Lunar New Year travellers, cases rising

Reuters, Shanghai/beijing
PUBLISHED ON JAN 21, 2021 10:05 AM IST
Millions of residents in Hebei province surrounding Beijing, the northeastern Jilin province and Heilongjiang have been put into lockdown in recent weeks amid what is the worst wave of new infections since March 2020.
Close
U.S. President Joe Biden speaks during the 59th presidential inauguration in Washington, D.C., U.S., on Wednesday, Jan. 20, 2021. Biden will propose a broad immigration overhaul on his first day as president, including a shortened pathway to U.S. citizenship for undocumented migrants - a complete reversal from Donald Trump's immigration restrictions and crackdowns, but one that faces major roadblocks in Congress. Photographer: Patrick Semansky/AP Photo/Bloomberg(Bloomberg)
U.S. President Joe Biden speaks during the 59th presidential inauguration in Washington, D.C., U.S., on Wednesday, Jan. 20, 2021. Biden will propose a broad immigration overhaul on his first day as president, including a shortened pathway to U.S. citizenship for undocumented migrants - a complete reversal from Donald Trump's immigration restrictions and crackdowns, but one that faces major roadblocks in Congress. Photographer: Patrick Semansky/AP Photo/Bloomberg(Bloomberg)

Biden bets big on immigration changes in opening move

AP, San Diego
PUBLISHED ON JAN 21, 2021 10:03 AM IST
The new president dispelled any belief that his policies would resemble those of former President Barack Obama, who promised a sweeping bill his first year in office but waited five years while logging more than 2 million deportations.
Close
Pakistan Muslim League-Nawaz (PML-N) Maryam Nawaz termed the case as the 'biggest fraud in Pakistan's history'. (AFP)
Pakistan Muslim League-Nawaz (PML-N) Maryam Nawaz termed the case as the 'biggest fraud in Pakistan's history'. (AFP)

Pak election commission issues notices to 19 political parties

ANI, Islamabad
PUBLISHED ON JAN 21, 2021 09:33 AM IST
This comes after separate rallies led by different constituent members of the Pakistan Democratic Movement (PDM) held a protest outside the ECP against an 'unacceptable delay' in the PTI foreign funding case.
Close
U.S. President Joe Biden signs executive orders in the Oval Office of the White House in Washington, after his inauguration as the 46th President of the United States, U.S., January 20, 2021. REUTERS/Tom Brenner(REUTERS)
U.S. President Joe Biden signs executive orders in the Oval Office of the White House in Washington, after his inauguration as the 46th President of the United States, U.S., January 20, 2021. REUTERS/Tom Brenner(REUTERS)

US to re-enter Paris Agreement: All you need to know about climate accord

By hindustantimes.com | Edited by Karan Manral
PUBLISHED ON JAN 21, 2021 09:31 AM IST
President Joe Biden, on his first day in office, reversed his predecessor Donald Trump’s order to exit the treaty.
Close
Graciela Uraga, left, a cleaning lady, and Blanca Cedillos, a nanny, react as they watch Joe Biden's presidential inauguration from the Workers Justice Center, an immigrants rights center, Wednesday, Jan. 20, 2021, in the Sunset Park neighborhood of Brooklyn in New York. Cedillos admitted to being "nervous" when the speech started, but after the speech, said she was disappointed Biden didn't mention immigration reform. (AP Photo/Kathy Willens)(AP)
Graciela Uraga, left, a cleaning lady, and Blanca Cedillos, a nanny, react as they watch Joe Biden's presidential inauguration from the Workers Justice Center, an immigrants rights center, Wednesday, Jan. 20, 2021, in the Sunset Park neighborhood of Brooklyn in New York. Cedillos admitted to being "nervous" when the speech started, but after the speech, said she was disappointed Biden didn't mention immigration reform. (AP Photo/Kathy Willens)(AP)

Immigrants feel positive about reforms to immigration rules under Biden

AP, Homestead, Florida, Us
PUBLISHED ON JAN 21, 2021 09:20 AM IST
  • Biden also issued executive orders reversing some of former President Donald Trump's immigration policies, such as halting work on a US-Mexico border wall and lifting a travel ban on people from several predominantly Muslim countries.
Close
Presidents and their families may accept gifts from US citizens as long as they don’t violate conflict-of-interest or bribery laws.(AFP)
Presidents and their families may accept gifts from US citizens as long as they don’t violate conflict-of-interest or bribery laws.(AFP)

Trump Discloses $40,000 in Gifts Received During Final Year

Bloomberg
PUBLISHED ON JAN 21, 2021 08:45 AM IST
Former US President Trump accepted more than $40,000 in gifts in his last year in office, including freebies from executives of the Boeing Co., Apple Inc. and Ford Motor Co.
Close
Biden on Wednesday signed 17 executive orders memorandums and proclamations including ending the Muslim travel ban.(AFP)
Biden on Wednesday signed 17 executive orders memorandums and proclamations including ending the Muslim travel ban.(AFP)

Biden signs order to end Trump's Muslim travel ban

ANI, New Delhi
PUBLISHED ON JAN 21, 2021 08:35 AM IST
Implemented in 2017 during Trump's first week in office, the Muslim Ban initially restricted travel from seven Muslim-majority nations: Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen.
Close
President Joe Biden speaks during the 59th Presidential Inauguration at the US Capitol in Washington.(AP)
President Joe Biden speaks during the 59th Presidential Inauguration at the US Capitol in Washington.(AP)

Biden's first foreign leader call will be to Canadian PM Trudeau: White House

ANI
PUBLISHED ON JAN 21, 2021 07:56 AM IST
The call will likely take place on Friday, informed White House Press Secretary Jen Psaki while holding the Biden administration's first press briefing.
Close
U.S. President Joe Biden speaks during the 59th presidential inauguration in Washington, D.C., U.S., on Wednesday, Jan. 20, 2021. Photographer: Patrick Semansky/AP Photo/Bloomberg(Bloomberg)
U.S. President Joe Biden speaks during the 59th presidential inauguration in Washington, D.C., U.S., on Wednesday, Jan. 20, 2021. Photographer: Patrick Semansky/AP Photo/Bloomberg(Bloomberg)

Where Biden stood, reminders of a failed insurrection

AP
PUBLISHED ON JAN 21, 2021 07:52 AM IST
Unlike Donald Trump's 2017 inauguration, which featured a speech that promised an end to decades of “American carnage," Joe Biden returned again and again to a theme of national unity.
Close
Vaccine is administered against the coronavirus (Covid-19) disease.(HT Photo)
Vaccine is administered against the coronavirus (Covid-19) disease.(HT Photo)

LIVE: Germany records 20,398 new Covid-19 cases as tally reaches 2.08 million

By hindustantimes.com
UPDATED ON JAN 21, 2021 10:16 AM IST
The global caseload of Covid-19 is closing in on the 97 million mark while death toll is at well over 2 million, according to Johns Hopkins University tracker.
China's State Councillor and Foreign Minister Wang Yi. The foreign ministry said that anti-China politicians in the US have "undermined China's interests, offended the Chinese people, and seriously disrupted China-US relations".(REUTERS)
China's State Councillor and Foreign Minister Wang Yi. The foreign ministry said that anti-China politicians in the US have "undermined China's interests, offended the Chinese people, and seriously disrupted China-US relations".(REUTERS)

China sanctions Pompeo, 28 other US lawmakers, for disrupting relations

ANI, Beijing
PUBLISHED ON JAN 21, 2021 07:01 AM IST
The Ministry said that anti-China politicians in the US have "planned, promoted and executed a series of crazy moves which have gravely interfered in China's internal affairs.
Close
China denies human rights violations and says its actions in Xinjiang are necessary to counter a separatist and terrorist threat.(AFP File Photo )
China denies human rights violations and says its actions in Xinjiang are necessary to counter a separatist and terrorist threat.(AFP File Photo )

Explainer: What's next after US accused China of genocide

AP, Beijing
PUBLISHED ON JAN 21, 2021 06:58 AM IST
China strongly defends its human rights record and policies in Xinjiang, saying its constitution and laws treat all citizens equally. It denies imposing coercive birth control measures or forced labor.
Close
SHARE
Story Saved
OPEN APP