In the news:
Yellen, a consensus-building stamp collector, has many admirers
Nominated by President Obama to replace Ben Bernanke at the helm of the Federal Reserve, Janet Yellen is known as a meticulous perfectionist, an unusually accurate prognosticator and a firm believer in the use of Fed policy to reduce unemployment.
The Associated Press
WASHINGTON — In a history-making selection, President Obama nominated Janet Yellen to be chairwoman of the Federal Reserve, a critical post as the nation continues its fitful economic recovery. If confirmed, she would be the first woman to lead the powerful central bank.
Yellen, currently No. 2 at the Fed, would replace Ben Bernanke, whose eight-year tenure at the helm is scheduled to end Jan. 31. Here’s a look at the public and private Yellen:
In the nearly 12 years that Yellen has expressed her views in statements and policy meetings and provided economic forecasts, she’s built an enviable batting average.
One example: In December 2007, the Fed’s official forecast was for continued growth. Yellen was unconvinced. Fed transcripts show she pushed her colleagues to take unusually aggressive action against the threat of a downturn. She lost the argument. The Fed approved a small quarter-point cut in a key short-term interest rate rather than the bolder half-point cut Yellen favored.
“Any more bad news could put us over the edge, and the possibility of getting bad news — in particular, a significant credit crunch — seems far from remote,” Yellen argued.
December 2007, it turned out, was the month the Great Recession officially began. Less than a year later, the financial system was engulfed by its worst financial crisis in 70 years.
Public, private sides
Shy and quiet outside the classroom. Firm and direct when making a point in class.
That’s how former students and colleagues recall professor Janet Yellen, who spent more than 25 years teaching economics at the University of California, Berkeley.
When Victor d’Allant took Yellen’s introduction to macroeconomics in 1986, his first impression was of a “tiny” woman facing down a room of 125 opinionated students. Yet d’Allant recalls that Yellen would disarm her most forceful intellectual antagonists with confidence and the ability to reason.
“She was always very good about staying calm,” d’Allant said. “She said, ‘Let’s think about this carefully.’ That is an art that not so many professors have, not so many professionals have. To force this other person to go deeper into their thinking and understand the consequences of their thinking.”
Stocks and stamps
Yellen and her husband, Nobel Prize-winning economist George Akerlof, have held a mix of big-company stocks and investment funds in a trust. They share a fondness for stamps.
The two held between $4 million and $13 million in assets as of Yellen’s financial-disclosure report for 2012. Their stamp collection was valued at between $15,000 and $50,000
Their individual stock holdings included Conoco Phillips, DirecTV Group, E.I. du Pont, Pfizer, OfficeMax and Raytheon.
Through the University of California, they also hold retirement accounts in funds invested in bonds, stocks and insurance-company contracts.
In addition, Yellen and Akerlof receive payments from a University of California pension, or defined benefit plan. Yellen also owns retirement funds managed by TIAA-CREF dating to her days as an assistant professor at Harvard in the 1970s.
Last year, she earned $179,700 from the Fed. As chairwoman, she would be paid $199,700, the same as for a Cabinet secretary.
Yellen is familiar with success. Born in Brooklyn, N.Y., in 1946, her father, a family doctor, worked from the ground floor of their home. Her mother was an elementary-school teacher who quit work to take care of Janet and her older brother.
Yellen graduated as valedictorian from her public high school and summa cum laude from Brown University with an economics degree in 1967. Four years later, she earned a doctorate from Yale University.
At Yale, Yellen became a legend, or at least her class notes did. The Yellen Notes, as they became known, served as an unofficial textbook for generations of graduate students studying economics at Yale.
A mentor at Yale, the late Nobel laureate James Tobin, once said of Yellen: “She has a genius for expressing complicated arguments simply and clearly.”
Love in the cafeteria
Yellen not only found career satisfaction at the Fed. She also met her future husband in the cafeteria.
In 1977, she was a staff economist at the Fed in Washington and Akerlof was a visiting economist. After they married the following June, they began a long and highly successful partnership that produced numerous academic papers while both taught at Berkeley.
“We liked each other immediately and decided to get married,” Akerlof wrote in an essay published when he won the Nobel Prize in 2001. “Not only did our personalities mesh perfectly, but we have always been in all but perfect agreement about macroeconomics.”
Yellen revisited the Fed’s cafeteria when she returned to Washington as one of seven Fed board members in the 1990s. She took her lunches there as a way to subvert the hierarchical system that limited contact between top Fed officials and hundreds of staff economists.
“It was a real cultural shock,” remembers Kevin Hassett, a staff economist at the time. “There was a serious bureaucratic divide between the political appointees and the staff. She found a way around that.”
Associated Press reporters Jim Kuhnhenn, Marcy Gordon and Michael Sandler contributed to this article.