Another Reason Janet Yellen Should Run the Fed

Gender matters.

Economist Janet Yellen is a top contender to run the Federal Reserve, America's central bank.Dan Honda/Contra Costa Times/ZUMAPress

Let our journalists help you make sense of the noise: Subscribe to the Mother Jones Daily newsletter and get a recap of news that matters.


Update, January 6, 2014: On Monday, the Senate voted 56 to 26 to confirm Yellen as chair of the Federal Reserve.

Update, October 9, 2013: On Wednesday, Obama will nominate Janet Yellen as chair of the Federal Reserve. She is set to become “the most powerful woman in American history.”

If President Barack Obama nominates Janet Yellen, the second-ranking official at the Federal Reserve, to be the next chairman of the central bank, she would be the first woman to ever occupy the post. This fact—and reports that Obama is considering former Treasury Secretary Lawrence Summers for the same post—has prompted editorials worrying that Yellen wouldn’t be up to the job, as well as more subtle attacks on her lack of “gravitas.”

Although Obama has spoken of the importance of diversity in his administration, his inner economic team is a boys’ club, says Sheila Bair, a former head of the Federal Deposit Insurance Corporation who has pushed publicly for Obama to pick Yellen to run the Fed. The top administration jobs that most affect the financial industry, Bair explains, are the chair of the Fed, the secretary of the Treasury, the head of the New York Federal Reserve, and the comptroller of the currency. And although there have been a few women in other top economic policy positions in the Obama administration, none of these big four spots has ever been filled by a woman.

“This has been a historical trend which Obama has good opportunity to break,” Bair says. Bringing in a woman would be more than just symbolic. Yellen breaking the gender barrier in the administration’s top economic circles could have practical implications, too. Many women who have worked in or with the administration in senior economic policy positions—including Bair, Sen. Elizabeth Warren (D-Mass.), and Christina Romer—have said publicly they felt excluded and marginalized by men in the decision-making process. Having a lady heading the Fed could change that.

Yellen running the Fed could also be important to women in economics. Only about a third of the people entering Ph.D. programs in economics are women, and only about 10 percent of all full-time tenured economics professors in the country are female. “There’s a kind of culture within the world of economics and finance which is very testosterone-driven,” says Margaret Blair, an economist at Vanderbilt University School of Law. Lynn Stout, a professor of corporate and business law at Cornell University, agrees. “Economists are not among most friendly to women when comes to a culture,” she says.

Yellen could help shift the economics profession away from being an “old boys’ club,” Stout says. “It would be encouragement to other women who might be more willing to put up with the hazing they generally receive when they try to study economics at the Ph.D. level…I think the symbolism is huge.”

Yellen is immensely qualified to run the Fed. She’s worked there for nearly two decades, was chair of the Council of Economic Advisers under President Clinton, and previously had an academic career at the University of California-Berkeley. And she knows what she’s talking about. A recent study also found that Yellen was the Fed policymaker who was most often right between 2009 and 2012. The Wall Street Journal recently scored 14 Fed policymakers on 700 predictions they made on growth, jobs, and inflation during the recovery, and found that the “most accurate forecasts overall came from Ms. Yellen.”

Perhaps the best argument for appointing Yellen is the alternative. Summers—who is perhaps most famous for his comments at a 2005 economics conference implying that women may be “innate[ly]” less intelligent than men—is a lifelong deregulator who helped cause the financial collapse. Yellen was one of the only top Fed policymakers who predicted the housing crisis. In 2005, she warned that “house prices are abnormally high—that there is a ‘bubble’ element.” Summers at the time said the idea was based on a “Luddite premise.

Summers also has been accused of bullying those who don’t share his position. In 2008, he reportedly shot down Romer, who had just been appointed chief White House economist, when she proposed a larger stimulus than he thought was practical. In the 1990s, he reportedly yelled at Brooksley Born, the former head of the Commodity Futures Trading Commission, when she proposed regulating the complex financial products called derivatives that ended up contributing to the financial crisis.

Yellen’s reputation, on the other hand, “is one of collegiality,” says Sheila Bair. “I can only assume she would be much more inclusive [than Summers].”

IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. It's our first time asking for an outpouring of support since screams of FAKE NEWS and so much of what Trump stood for made everything we do so visceral. Like most newsrooms, we face incredibly hard budget realities, and it's unnerving needing to raise big money when traffic is down.

So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

payment methods

IT'S NOT THAT WE'RE SCREWED WITHOUT TRUMP:

"It's that we're screwed with or without him if we can't show the public that what we do matters for the long term," writes Mother Jones CEO Monika Bauerlein as she kicks off our drive to raise $350,000 in donations from readers by July 17.

This is a big one for us. So, as we ask you to consider supporting our team's journalism, we thought we'd slow down and check in about where Mother Jones is and where we're going after the chaotic last several years. This comparatively slow moment is also an urgent one for Mother Jones: You can read more in "Slow News Is Good News," and if you're able to, please support our team's hard-hitting journalism and help us reach our big $350,000 goal with a donation today.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate