Janet Yellen was sworn in as 1st female US Treasury secretary

In a first, the US Senate voted overwhelmingly to confirm economist Janet Yellen as the Treasury secretary on Monday (Jan 25). 

After years leading the Climate Leadership Coalition, Janet Yellen has the credibility to engineer progress and guide the US to growth, clean energy and adapting to climate risks.

Background and History

Janet Yellen was born into a middle-class Jewish family in Brooklyn, New York, on Aug. 13, 1946. Her mother was a teacher and her father was a doctor, and she eventually became editor of the Fort Hamilton High School newspaper, from which she graduated as valedictorian. She graduated summa cum laude with an economics degree from Brown University in 1967 and went on to receive her Ph.D. from Yale University in 1971.¹

She then worked as a professor at several prestigious universities, including Harvard, The London School of Economics, and the University of California at Berkeley. In 2004, she became president and chief executive officer (CEO) of the Federal Reserve Bank of San Francisco, where she was credited with foreseeing the subprime mortgage crisis more accurately than her peers.

Yellen was also a member of a number of economic committees and councils, including the Organisation for Economic Cooperation and Development (OECD), the U.S. Council of Economic Advisors, and the American Economic Association. She served as a governor for the Federal Reserve Board between 1994 and 1997 and was also an advisor for the U.S. Congressional Budget Office. She was a research associate for the National Institute of Economic Research and was on the board of directors for the Pacific Council on International Policy. She has also held fellowships for the National Association of Business Economics, MIT, and Guggenheim.

Before serving as chair, she was the Fed’s vice-chair. She was appointed to this role for a four-year term on Oct. 4, 2010, by former President Barak Obama. Yellen used her position to convince the Fed to use a 2% annual target for inflationary growth. The Democrats urged Obama to appoint Yellen as chair over former Secretary of the Treasury Larry Summers due to her “impeccable resume, focus on unemployment and solid record as a bank regulator.”

Janet Yellen: A Keynesian Economist

Being a Keynesian, Yellen believes that economic markets are fundamentally flawed and need governmental regulation to function correctly. She created economic models showing how firms seeking to maximize profits would pay higher than minimum wages.

She was the first Democrat to chair the Fed in nearly 30 years but stressed the importance of the Fed being independent of political processes and staying nonpartisan. She backed Bernanke’s bond-buyback program and continued his stimulus campaign. During her term, she also tightened financial and banking regulations to prevent the past from repeating itself.

Road ahead

Janet Yellen was sworn in as the 78th U.S. Treasury Secretary on Tuesday, after which she sent a note out to the department’s staff outlining her goals for guiding the U.S. economy out of the “wholesale devastation” wrought by the pandemic.

Yellen detailed near-term goals she intends to achieve at the agency, including helping to ensure Americans have roofs above their heads and food on their tables, in addition to getting them back to work safely.

Over the longer-term, she said the department will play a role in the other key items President Biden has identified as priorities – the climate crisis, a crisis of systemic racism and an economic crisis that has been in the works for 50 years.

“I cannot be sure about the future, but I expect that when economists look back at this period in American history, they’ll conclude that perspective helped us leave behind a stronger, more prosperous country,” Yellen wrote to her Treasury Department colleagues.

The Treasury secretary’s in tray is daunting in its complexity. There’s a lot riding on Janet Yellen’s shoulders, head and heart.

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