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Janet Yellen to Lead the Fed

POLITICS

The Senate has confirmed Janet Yellen as the next chairperson of the Federal Reserve. Yellen, 67, the Fed’s vice-chair since 2010, will become the first woman to head the U.S. central bank when her four-year term begins February 1. (USA Today)

Use our resources to learn more about the Fed’s powerful Board of Governors.

Janet Yellen is well-prepared for her new job. Prior to her appointment as vice-chairperson of the Fed, she served as President and Chief Executive Officer of the Twelfth District Federal Reserve Bank, in San Francisco. She is a professor emeritus at the University of California at Berkeley, taught at Harvard University and the London School of Economics, and served as chairperson of the Council of Economic Advisers under President Bill Clinton. She graduated from Brown University and earned her PhD from Yale. Her husband won the Nobel Prize in economics. Ho-hum. Photograph courtesy the Board of Governors of the Federal Reserve System
Janet Yellen is well-prepared for her new job. Prior to her appointment as vice-chairperson of the Fed, she served as President and Chief Executive Officer of the Twelfth District Federal Reserve Bank, in San Francisco. She is a professor emeritus at the University of California at Berkeley, taught at Harvard University and the London School of Economics, and served as chairperson of the Council of Economic Advisers under President Bill Clinton. She graduated from Brown University and earned her PhD from Yale. Her husband won the Nobel Prize in economics. Ho-hum.
Photograph courtesy the Board of Governors of the Federal Reserve System

Discussion Ideas

  • Read our basic media spotlight on the Fed’s Board of Governors. Work through the questions in the Questions tab, which track the home districts of the Fed’s board members. Using the district map, find your own home district and those of the board. What distinguishes incoming Chairperson Janet Yellen’s district from her colleagues on the board?
    • Yellen is the only board member from the West Coast. In fact, she’s the only board member from the western United States—roughly defined as west of the Mississippi River. (As Ben Bernanke, a son of the South, leaves the board, its geographic representation will shrink even more.)
  • Is your money more widely traveled than you are? You can tell what District bank money came from by looking at the circular mark on the left side of a dollar bill’s face. The mark will have a letter, circled by the name of the bank. The letter E, for example, says the bill came from the Federal Reserve Bank of Richmond, Virginia. What bank distributed your bills—officially called Federal Reserve Notes?
    • What’s in my wallet? Notes from Atlanta, Philadelphia, and San Francisco.
  • What are the primary responsibilities of Yellen and her colleagues at the Federal Reserve? Read through our article on the Fed for some guidance. Better yet, let outgoing Chairperson Ben Bernanke tell you.
  • The Fed’s primary responsibility is to “promote a healthy U.S. economy,” defined as “maximum employment and stable prices,” according to Bernanke.
    • Controlling inflation by raising and lowering interest rates is one of the most important duties of the Fed. Inflation is the increase in prices of goods and services. Interest is the fee that banks charge to borrow money. Individual banks charge interest to people and businesses that borrow money from them. The Fed, the central bank of the U.S., charges interest to individual banks.
      • If the Fed believes the economy is slowing down, they will lower interest rates. This allows people and businesses to borrow money more easily because it is easier to pay back the bank.
      • If the economy is doing better, the Fed will likely raise interest rates. The Fed does not want the economy to grow too quickly. Inflation can occur if there is too much money in the banking system.
    • The Fed is also responsible for controlling the money supply in the U.S. It does this by buying and selling U.S. Treasury securities. Treasuries are loans people and businesses make to the United States. The government uses Treasuries to create programs such as disaster relief and the federal highway system. The government pays back Treasuries after a certain period of time. The Fed distributes money created by the U.S. Treasury to its member banks.
  • The USA Today article describes Yellen as “one of the more ‘dovish,’ or pro-growth, members of the Fed’s policymaking committee.” Do you think that means she supports raising or lowering interest rates? Why?
    • Yellen and the the rest of the Fed are still guarding the economy from the impact of the 2007 financial crisis by keeping interest rates very low. This allows the economy to grow more rapidly. People and businesses can borrow money more easily because it is easier to pay back the bank.

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