October 25, 2013 6:15 pm

Paul seeks hold on Yellen’s nomination as Fed chair

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Sen. Rand Paul Delivers Immigration Address Hispanic Chamber Of Commerce Conference©Getty

Senator Rand Paul

Rand Paul, the senator from Kentucky, said on Friday that he intended to place a hold on the nomination of Janet Yellen, the White House pick to chair the Federal Reserve. The move was not expected to derail her nomination but could delay a vote.

The plan by the Tea Party-backed senator who, like his father, former congressman Ron Paul, is a staunch critic of the Fed, means that Ms Yellen would have to win the backing of at least 60 senators to break the hold on her nomination.

Democratic aides shrugged off the move, pointing out that Mr Paul frequently used the procedural manoeuvre against President Barack Obama’s other nominees, including for the CIA and the FBI. Both nominees – John Brennan and James Comey – were ultimately confirmed. Mr Paul was the only senator to vote against Mr Comey.

The move would only pose a threat if Mr Paul’s campaign won the backing of 41 other senators, which was seen as highly unlikely. However, Ms Yellen’s nomination is still expected to be contentious given intense criticism of the Fed’s policies, particularly among conservative Republicans such as Mr Paul, Mike Lee of Utah and Ted Cruz of Texas.

Ms Yellen is meeting with individual senators next week to make her case for the job. The Senate Banking Committee expects to hold a hearing on Ms Yellen’s nomination next month, according to a Democratic committee aide. The committee received some of Ms Yellen’s paperwork on Friday.

Mr Paul said in a statement: “As part of Senate consideration of the Janet Yellen nomination to be chair of the Federal Reserve, I will request a vote on my bipartisan Federal Reserve Transparency Act, S. 209. The American people deserve transparency from the federal reserve and the federal government as a whole.”

The senator is promoting a bill, known in Washington as the “audit the Fed” legislation, that his father Ron Paul pushed through the House of Representatives with bipartisan support in 2012.

It would allow the Government Accountability Office to audit the Fed’s monetary policy decisions and financial market operations as well as just its accounts. Under current law, this is banned.

Proponents of the law argue that it would make the Fed more accountable for its monetary policy. Mr Paul won 37 Senate co-sponsors for the measure during the last Congress.

But opponents say ordering a GAO investigation would allow Congress to put pressure on the Fed and reduces its independence to set monetary policy. Extensive economic research shows that independent central banks tend to produce more stable inflation over the long-run.

Any senator can place a hold on a president’s nomination. Although the move is often reserved for less high-profile positions, it is not unprecedented for a Fed nominee to be the subject of a hold.

In December, 2009, Bernie Sanders of Vermont, one of the most liberal members of the upper chamber, placed a hold on Ben Bernanke’s second term as chairman. In a statement he called Mr Bernanke “one of the key architects of the Bush economy”. Mr Bernanke was ultimately confirmed in a 70-30 vote, the weakest support a Fed chairman had received in the history of the institution.

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