Lots of people walking around think they have game, but the actual odds that a high school basketball player will be drafted by the NBA are 1 in 3,333. Now, we don't know the odds of getting the nod for the Vice Chair position at the FOMC, but they are surely higher. The good news is that President Obama will reportedly nominate Dr. Janet Yellen, who currently serves as San Francisco Federal Reserve Bank President. She is eminently qualified and a supporter of community banking.
By way of background, she is an economist by trade (is coincidentally married to Nobel prize-winning economist) and was a voting member of the FOMC in 2009. She is considered to be an inflation dove, which is someone who promotes monetary policies that favor low interest rates (as a means of encouraging consumer activity to spur growth within the economy) and are less worried about the effects low interest rates may have on inflation. Doves generally worry about unemployment more than higher interest rates. While this is a simple way to try and box Dr. Yellen's thinking up into a sound byte you will undoubtedly see repeated in the press, it is much too simple an explanation for the way we believe she will act as Vice Chair of the FOMC.
She is also plenty smart, having graduated summa cum laude from Brown University with a degree in economics in 1967. She then went on to get her Ph.D. in economics from Yale in 1971.
She has already had a great career that includes teaching (Harvard University, London School of Economics and Haas Business School); research (Massachusetts Institute of Technology, National Bureau of Economic Research) and advisory (Chair of the President's Council of Economic Advisors 1997 to 1999, Brookings Panel on Economic Activity, Congressional Budget Office). She has served on the Federal Open Market Committee in 2009, as well as 1994 to 1997 and has been the President of the San Francisco Fed since 2004.
Dr. Yellen will be focused on fixing the unemployment issue, which is a good thing if you ask us, since few seem to be really doing much on that front. She is also realistic, recently indicating in a speech that the US could continue to see slow employment growth, with an economy that will not operate at full potential until probably 2013. Dr. Yellen also stated in the same speech that full economic recovery isn't just the Fed's job and more will be needed, saying, "monetary policy can't give the same kick to the economy that it delivered in past recoveries."
We have had the pleasure of talking to her directly at various banking functions and can tell you that she is extremely bright, understands many of the issues facing community bankers and is both open and willing to listen. That is a good person in our humble opinion to have on the decision-making board of the Fed, because she truly seems to understand that small business hiring will come from small business lending - ultimately sparked by community banks in local towns and cities all over the country.
We are happy to see Dr. Yellen get nominated to a four-year term as the Fed's 2nd most powerful member, behind Mr. Bernanke himself. We expect the Senate will move quickly to confirm her for the position and know she will do a great job for the economy, small businesses and community bankers across the country. Dr. Yellen certainly has game.