President-elect Joe Biden plans to nominate former Federal Reserve Chairwoman Janet Yellen to become the next Treasury secretary, according to sources familiar with the decision.
If confirmed by the Senate, Yellen, 74, would become the first woman to hold the position, The Wall Street Journal reported.
An Obama Democrat, Yellen was the first woman to lead the Fed. If she is confirmed for the new post, she will also become the first person to head the Treasury, the central bank, and the White House Council of Economic Advisers.
Yellen has been an economist at the forefront of policy-making for three decades and works as an economist at the Brookings Institution. She served as chairwoman of the Federal Reserve from 2014 to 2018, and as cice chairwoman from 2010 to 2014.
Yellen has said Trump had a “lack of understanding” of the Fed and economy.
While Yellen has accomplished many firsts, there may be a dark side to her Yellen holding the Treasury post. Here are five things Black America needs to know.
Black America is challenged by a growing wealth gap years in the making. Wealth inequality got worse in 2020, due in part to the policies of the Federal Reserve. Its policies have drastically increased inequality as interest-rate cuts and other stimulus boosted stock prices, benefiting the country’s wealthiest.
While Yellen left the Fed in 2018, some question if her decisions are still negatively affecting the Black community.
An analysis of data going back two decades, over the tenures of four Fed chairs — Alan Greenspan, Ben Bernanke, Yellen and Jerome Powell — found that the “central bank has engaged in several rounds of massive securities purchases…which clearly have helped wealth explode for the top 1 percent and even the top 10 percent of Americans while stagnating for half of the country,” MarketWatch reported.
Yellen, considered a renowned economist and now a possible Biden administration nominee, claimed the wealth gap is due to mainly two things — college costs and tougher lending to businesses. This may hold true for poor and middle-class whites versus rich whites, but not for the economic gap between Black people and their white peers.
Many economists have said that racial wealth inequality dates back to the end of slavery when freed Black people were promised 40 acres of land, a promise that was never fulfilled. Ever since, Black people have been trying to catch up while dealing with unequal pay, educational challenges, and banking and housing discrimination, among other injustices.
Yellen said in a speech while she was Fed chairwoman that she is “greatly concerned by the extent, and continuing increase, of wealth inequality in the United States.” She noted “significant income and wealth gains for those at the very top, and stagnant living standards for the majority.”
Other economists say Yellen is wrong, not just about the racial wealth gap but even when considering the general wealth gap.
“Economists and politicians blame the inequality on the inequity of the tax codes, the cost of healthcare, the welfare and benefit systems to care for the bottom 10 percent, rising costs of education versus the increased demand for more highly educated employees, the aging of the population, and so on,” FX Empire reported.
Critics say that Yellen, especially when she was Fed chair, failed to recognize how systemic racism plays a major part in the racial wealth gap. As the head of the Federal Reserve, she had the power to help close this growing gap.
The Federal Reserve, the central banking system of the U.S., has all the tools necessary to close the racial wealth gap and should finance reparations, according to Dr. William A. “Sandy” Darity Jr., a Duke University economist and reparations activist.
Those economic disparities are “a constant and Blacks are not perpetually in protest over those conditions. But violent anti-Black police action invariably leads to Black protest,” said Darity, one of the most prominent U.S. advocates for economic policies to close the wealth gap between whites and African Americans.
Black America needs a job guarantee, baby bonds and reparations for slavery, Darity said.
“Reparations designed to eliminate the racial wealth gap are unlikely to eliminate police malfeasance,” Darity told Business Insider. “White supremacists in the police force will not discriminate between Black folk on the basis of their wealth levels. While higher levels of wealth may facilitate negotiating the criminal justice system more effectively, higher levels of wealth among Blacks will not erase the high degree of racist bias in policing.”
When Yellen was chairwoman of the Federal Reserve, she testified before the House Financial Services Committee. In response to a question from Rep. Joyce Beatty (OH) about Black unemployment, Yellen indicated, as one analyst noted, that “the Fed’s concerns about inflation limit its ability to address high African-American unemployment.”
Yellen went on to say, “There really isn’t anything directly the Federal Reserve can do to affect the structure of unemployment across groups. And unfortunately, it’s long been the case that African-American unemployment rates tend to be higher than those on average in the nation as a whole.”
But, again, it seemed she was off the mark when it came to the economic state of Black America and how to fix it.
“The problem with her analysis is that it is wrong,” wrote William Michael Cunningham, founder of Creative Investment Research, on LinkedIn. “While it is true to say that the Fed has limited tools, that is not the same thing as having no tools.”
Cunningham pointed out that the Fed could radically change Black unemployment. The Fed “has tools to address this problem. The Fed simply has no desire to address the problem. This is the impact of having no African-American representation at the board level: there is no one in a position to counter, as a peer, biased analysis like that put forward by the Fed Chair,” he wrote.
Taking a look at Yellen’s past comments on her beliefs, some wonder if it will be more of the same when she takes over the Treasury.
Jamarlin Martin, founder of The Moguldom Nation, recently tweeted a chart showing the trajectory of income for the top 1 percent and bottom 50 percent of people in the U.S.
“Janet Yellen will say ‘Obama & I don’t have anything to do w/ this X chart, we were only Pres & Chairwoman of the FED,'” Martin tweeted. “Yellen’s easy and conventional answers to this chart: it’s education costs & business lending. This X was going to produce an ‘earthquake’ w/o MAGA.”
Former Fed Chairwoman Yellen has earned some mega-money on the speaking circuit. She launched her new career as an economic talking head in April 2018 with an appearance at a conference for financial services company the Jefferies Group. Most every time she speaks, she earns a fee, MarketWatch reported. It’s a route many D.C. insiders have taken.
Yellen was a featured speaker for the Washington Speakers Bureau.
“A steadfast policymaker, an advocate for jobs and an economics trailblazer, former Federal Reserve Chair Janet L. Yellen offers candid insights into global and domestic monetary policy and economic trends,” the bureau’s promotional material read.
Listen to GHOGH with Jamarlin Martin | Episode 73: Jamarlin Martin Jamarlin makes the case for why this is a multi-factor rebellion vs. just protests about George Floyd. He discusses the Democratic Party’s sneaky relationship with the police in cities and states under Dem control, and why Joe Biden is a cop and the Steve Jobs of mass incarceration.
While Sen. Elizabeth Warren has consistently made moves to put the spotlight on big banks and the need for banking reform, it is unlikely Yellen will do the same if she lands the Treasury post, CNBC reported.
Why? Wall Street is celebrating the news of the Yellen pick. Judging from her time as Fed chair, Wall Street would most likely feel protected under Yellen’s tenure at the Treasury. In fact, stocks rallied as news leaked out that Biden has selected Yellen as his Treasury secretary.
“The former Federal Reserve chair is a widely respected economist who is expected to be pragmatic, focused on fixing the economy and not pursuing a new regulatory regime for banks that some on Wall Street have feared,” CNBC reported.
