WASHINGTON — Janet Yellen, President Obama’s nominee to lead the Federal Reserve for the next four years, sailed through a Senate confirmation hearing Thursday as Republicans and Democrats mostly used the opportunity to raise broader concerns about income inequality and the regulation of large banks.
Members of both parties appeared to treat Yellen’s confirmation as a foregone conclusion. There were hardly any questions about Yellen’s qualifications, and relatively few about her views on the Fed’s efforts to stimulate the economy.
But Yellen was subjected to a bipartisan barrage of criticism from senators concerned that the Fed is worsening income inequality through policies that mostly benefit the wealthy, and that it is doing little to help everyone else.
“It’s not clear to me and it’s not clear to many Americans that have not seen a raise in many years that this policy raises incomes and wages on Main Street,” said Senator Sherrod Brown, Democrat of Ohio. “What will you do to help?”
Yellen, the Fed’s vice chairwoman since 2010, fielded questions in a calm and careful manner. She said that the Fed was trying to help everyone, and that its efforts to hold down interest rates had provided clear benefits to car and home buyers.
“The ripple effects go through the economy and bring benefits to, I would say, all Americans,” Yellen said. “If we can generate more robust recovery in the context of price stability, then more Americans will see meaningful increases in their well-being.”
Yellen said, however, that the divergence between rich and poor was a long-term trend mostly driven by factors well beyond the Fed’s control.
Much of the hearing was devoted to regulation of big banks, a subject elevated to central importance by the financial crisis. Senators pressed Yellen to explain why the Fed was taking so long to impose new restrictions on large banks, and whether she considered the restrictions authorized by current law sufficient.
Yellen demurred on the last point, saying that she would withhold judgment until the process was complete.
Some of the strongest questions came from Senator Elizabeth Warren, Democrat of Massachusetts, who criticized the Fed for regulatory failings before the crisis and expressed concern that it still was not trying hard enough.
“The truth is, if the regulators had done their jobs and reined in the banks, we wouldn’t need to be talking about” stimulus, Warren said.
Yellen held her ground, avoiding even a clear statement that the Fed’s failures had played a role in the crisis — something she has conceded in other contexts.
“I absolutely believe that our supervisory responsibilities are critical and they are just as important as monetary policy and we need to take them just as seriously,” she said.
Yellen offered little new information about the Fed’s short-term plans, although she made clear that she remained a staunch supporter of its stimulus campaign.
She said that the Fed’s continuing expansion of its holdings of Treasury securities and mortgage-backed securities, at a pace of $85 billion a month, had “made a meaningful contribution to economic growth.”
She also pushed back against concerns about the cost of those purchases.
“How long is too long?” asked Senator Mike Crapo, Republican of Idaho.
Yellen responded that “this program cannot continue forever” but said that she saw no evidence of the disruptions cited by opponents.
And she made clear that high unemployment remained her greatest concern. “I consider it imperative that we do what we can to promote a very strong recovery,” she said.