Biden picks former Federal Reserve chair Yellen as Treasury secretary

Washington

PRESIDENT-ELECT Joe Biden took a significant step this week towards addressing the damage to the US economy inflicted by the coronavirus pandemic, naming an economic team led by his choice for Treasury secretary, former Federal Reserve chair Janet Yellen.

In Dr Yellen, Mr 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. Mr 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.

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

Mr Biden also announced other picks for his economic policy team early on Monday, including long-time Democratic policy staffer Neera Tanden 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, will head the Council of Economic Advisers. Both roles require Senate confirmation.

Adewale Adeyemo, a former senior adviser at BlackRock Inc who is president of President Barack Obama's foundation, will be nominated as the deputy Treasury secretary.

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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.

Dr 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 Mr 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.

Dr Yellen 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."

Dr 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 programmes. 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.

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

President Donald Trump's practice of policy making by tweet sowed unpredictability for businesses and investors. Dr 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. BLOOMBERG