02.24.2014 0

From Bernanke to Yellen: 6 distinct differences in the two Federal Reserve Chairs

Bernanke-YellenBy Dixie Somers                                      

Most of the media accounts regarding the confirmation of Janet Yellen to replace Ben Bernanke as Chair of the U.S. Federal Reserve, stressed the similarities between the two. In fact, Bernanke and Yellen are far more similar in their views of monetary policy than different. Yet, they are not identical in every detail, so here are six distinct differences between the two Fed heads worth mentioning:

1. Their Differing Styles

Bernanke sometimes appeared hesitant to push forward with policies when receiving strong opposition from others on the board. Janet Yellen is considered less of a consensus builder and may be more firm in imposing her own views.

2. Greater Transparency

Because of Yellen’s tendency to be more forthright in her views, many hope that the Fed under her chairmanship will be less secretive and more forthright. To his credit, Bernanke to a certain extent attempted to open the Fed to greater public scrutiny, but some predict Yellen will go further. Which, with no annual audit of the central bank, can only be a good thing.

3. Liberal or More Liberal?

Both Bernanke and Yellen are Keynesian economists who believe in an active role for government in the economy. However, Yellen appears even more passionate in her views than Bernanke, which is why her nomination to her current position drew criticism from some conservatives who were not as critical of Bernanke.

4. Quantitative Easing

Like many of her colleagues, Yellen is a supporter of the Fed’s $65 billion a month debt buying program to keep interest rates down, but it isn’t certain yet that she will follow up in Bernanke’s recent tapering off of the program. Whether or not she will, shall be among her most closely watched first moves.

5. Experience Isn’t Everything, Is It?

Yellen actually comes to the chairmanship with more experience with the Fed and other federal agencies than Bernanke had when he was confirmed. But will that extra experience translate into a better performance? That remains to be seen.

6. Stating the Obvious

The fact that Bernanke is a man and Yellen is a woman may seem like a painfully obvious difference to point out in the two, but only in a subtle way does it matter. Not only it is an historical milestone for Yellen to be the first woman to hold the position, as the Chairperson of the Federal Reserve, she is also the first Democrat to run the Fed since Paul Volcker 35 years ago, first during Jimmy Carter’s Presidency.

Despite these differences, most Fed observers expect there will be no dramatic change between the policies of Yellen and Bernanke. Then again, it is not unheard of for people formerly in subservient roles to show a whole different style once they’re in charge. Therefore, Yellen may yet have a few surprises in store, but only time will tell.

Dixie Somers is a freelance writer from Arizona.  

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