Yellen Nomination On Hold?

Kentucky Republican Rand Paul is threatening to put a hold on the nomination of Janet Yellen to lead the Federal Reserve. Paul, a staunch advocate for greater transparency at the Fed, said he will stall the nomination unless the Senate puts a bill he is sponsoring to a vote.

“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,” Paul said after the reports were made public.

Can the junior senator from Kentucky actually block a Federal Reserve chair nomination single-handedly? Probably not, although a lot depends on the actions of his Republican colleagues. Paul would need the support of 40 other senators to formally block the nomination, but he could still hold up the process for a number of days or weeks with procedural tactics. 

Still, the report was enough to spook markets in late morning trading. Both the Dow and the S&P gave back their earlier gains once Paul’s intentions were disseminated in the press.

Much of the recent rally in stocks is credited to Yellen’s nomination. The San Francisco economist favors loose monetary policy and has a well-documented bias toward higher inflation. Yellen is also a vociferous supporter of Quantitative Easing, which, among other things, pushes down mortgage rates. Mortgage rates have fallen noticeably since her nomination was announced, which bodes well for housing.

Paul said he intends to formally place the hold next week, once the Senate is back in session. The bill he is promoting would require a full audit of the Federal Reserve by Congress, something Fed officials have long opposed.