Yellen In Heated Exchange Over Federal Reserve’s Shady Ties To Hillary Campaign: “Fed’s Independence A Myth”
Janet Yellen was forced to fend off new questions about the Federal Reserve’s political independence on Tuesday as a Republican lawmaker asked her if one of the central bank’s governors was too close to Hillary Clinton’s campaign.
The Fed chair was challenged by Scott Garrett, a Republican from New Jersey, over donations that Fed governor Lael Brainard has made to the Clinton campaign and over unconfirmed media reports that Ms Brainard is a contender for a senior job in a potential Clinton administration.
The exchanges came only two days after Donald Trump, the Republican presidential candidate, claimed in his debate with Mrs Clinton that the Fed has been keeping short-term interest rates low to help the Obama administration and was sustaining a “big, fat, ugly bubble” in the stock market.
Mrs Yellen has categorically denied the Fed is doing anything to suit the White House’s political objectives, saying earlier this month that “partisan politics play no role in our decisions.” Some analysts argue the Fed is vulnerable at a time of intense pressure from both sides of the partisan divide, however, with some lawmakers seeking to impose tighter legislative constraints on its policy freedoms.
Mrs Yellen was testifying on regulatory matters to the House Committee on Financial Services. Mr Garrett asked: “A Fed governor can be in direct negotiations with a political campaign looking for a future job and that is not a conflict as far as you’re concerned?”
His words referred to Ms Brainard, a former Treasury official who is often listed in media reports as a potential candidate to be Treasury secretary in a Clinton administration.
After a false start and cross talk between lawmakers seeking to end Mr Garrett’s questioning, the Fed chair said: “I would have to consult my counsel. I’m not aware that that’s a conflict, but I would …” Then she was herself cut off by the committee chair.
Shortly beforehand Ms Yellen said she had “absolutely no awareness” of Ms Brainard being in touch with the Clinton camp about a job.
Pressed on $2,700 in donations that Ms Brainard has made to Mrs Clinton’s campaign, the maximum permitted for individual contributions in a primary election cycle, Ms Yellen noted that the Hatch Act does not prohibit political contributions by Fed governors.
Ms Yellen has been asked about those donations in the past and has said that legal political campaign donations by central bank employees do not undermine its standing as a non-partisan agency.
Mr Garrett told the Fed chair: “As the saying goes, perception is reality. Whether you like it or not, the public increasingly believes that Fed independence is nothing more than a myth. The Fed has an unacceptable cosy relationship with the Obama administration and with higher ups in the Democratic party.”
Asked if she had ever asked Ms Brainard to recuse herself from monetary policymaking due to her “close involvement” with the campaign, Ms Yellen said: “She’s acting in a way that is permitted by the rules we are subject to. Each one of us has to decide for ourselves.”