You are here
Fiery Yellen fights back as Republican lawmakers lambaste Fed
[WASHINGTON] Federal Reserve Chair Janet Yellen on Wednesday fended off a stream of aggressive questions from Republican lawmakers who accused the central bank of making Democratic political causes a higher priority than its stewardship of the US economy.
Speaking in front of the House of Representatives Financial Services Committee, the normally reserved Ms Yellen was the most animated she's been in a public hearing since taking on the Fed's top role last February, in a sign of rising friction between the Fed and conservative lawmakers in Congress.
During the hearing, part of the Fed's semi-annual economic and monetary policy report to Congress, Ms Yellen fought back against accusations that the Fed holds a liberal bias and talked over politicians trying to interrupt her.
Ms Yellen's separate appearances in the House and Senate this week came amid growing threats to the Fed's independence.
Republicans, now in control of both legislative branches, have been leading efforts to rein in the central bank. Top lawmakers have said the Fed has too much regulatory authority and not enough accountability in its handling of US monetary policy.
The House has passed a series of bills aimed at the Fed, but none gained traction in the Senate while under Democratic control.
That political pressure is expected to increase, with congressional efforts to fully audit the Fed coinciding with the central bank's complicated task of raising interest rates and selling down its US$4.5 trillion balance sheet.
Ms Yellen's demeanor on Wednesday contrasted with that of her predecessor, Ben Bernanke. While both are reserved academics, Ms Yellen showed more tenacity when facing lawmakers' pointed questions than Bernanke in his early years as Fed chief.
Yellen did not hide her annoyance at committee members who questioned the central bank's intentions.
The most heated exchange took place when Representative Mick Mulvaney, a South Carolina Republican, told Ms Yellen the Fed was "sticking its nose" where it didn't belong by trying to address issues such as long-term unemployment and income inequality. "I've also talked about long-run deficit problems and budget problems in this country, and they're your responsibility, not mine," Ms Yellen replied.
Several Republicans on the committee pressed Ms Yellen on her meetings with the White House and Treasury Secretary Jack Lew and tried to corner the Fed chief into admitting an allegiance to Democratic Party principles. Ms Yellen was an economic adviser to President Bill Clinton and was appointed by President Barack Obama, both Democrats.
House Representative Scott Garrett of New Jersey pointed out that Ms Yellen had met with liberal-leaning groups, and that her schedule showed she had met with more Democrats than Republicans. "We meet with a wide range of groups," Ms Yellen fired back. "I think it is a complete mischaracterisation of our meeting schedules." Ms Yellen had a far less tense exchange with lawmakers when she testified on Tuesday before the Senate Banking Committee.
Several House lawmakers referred to a speech on income inequality that she gave in Boston last year, saying it was a sign of her support of Democratic and Obama administration agendas ahead of the presidential election last November. "I believe that it (income inequality) is a problem that everyone in this room should be concerned about," Ms Yellen replied. "I am not making political statements. I am discussing a significant problem that faces America ... I didn't offer any policy recommendations whatsoever in that speech." Some lawmakers took issue with the number of meetings Ms Yellen has had with Mr Lew, and asked that she make the transcripts of those conversations public. Yellen said she would not do so, just as she would not do so if she met with a lawmaker. "The Federal Reserve is independent. I do not discuss monetary policy or actions that we are going to take with the (treasury) secretary or with the executive branch. We confer about the economy and the financial system on a regular basis," Ms Yellen said.