I would not vote to confirm Yellen. Here Cato’s Mark Calabria lays out Yellen’s sorry historical record.
Yellen has done little to make anyone believe she is ready to challenge that institution in any serious way. When asked about her time at the San Francisco Fed, a district which covers not just California but also Nevada and Arizona, she responded that regulatory oversight during the housing boom was “careful and appropriate.” Perhaps that explains why she missed the greatest housing boom in US history, despite sitting right on top of it.
The Beige book reports from Yellen during this time also repeatedly reflect a regulator who perceived mortgage credit quality as strong. If some of us could spot an overheated housing market from Washington, you really have to wonder how anyone could miss it sitting in San Francisco.
The answer is that she wasn’t even looking for it. Just as we now repeatedly hear concerns about a weak US labour market, which is true, we heard the same concerns after the Dot com bubble. But the Fed reaction was to keep the pedal-to-the-metal with loose monetary policy for far too long, and the result was a massive housing bubble. Since that bubble was creating jobs, it was largely viewed from the Fed as a good thing. All evidence suggests Yellen shared this benign perspective on the housing bubble, at times echoing Bernanke’s claim that everything was well contained.
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