Questions arise over departure of first woman to lead Fed

Nearly four years into Janet Yellen's history-making turn as the first woman to lead the Federal Reserve, the economy is growing, the unemployment rate is low and the stock market is setting record highs.

President Donald Trump says Yellen is a "spectacular person" and doing a "terrific job." But he's not offering her a second term, making her the first Fed chair in nearly 40 years not to be asked back.

Some are questioning why the president is moving aside the glass-ceiling-shattering economist.

"You have to guess gender has something to do with this," said Heidi Hartmann, president of the Institute for Women's Policy Research. "I would hazard a guess that most Fed leaders who have done as well as Janet have not been replaced."

Hartmann, an economist who pushed for Yellen's appointment, added that former chair Alan Greenspan "managed to transcend parties. Why can't Janet?"

Trump announced Thursday that that he would replace Yellen at the end of her term in early February. He is nominating Republican board member Jerome "Jay" Powell to take over the powerful job, which steers interest-rate policy and plays an essential role in maintaining economic stability.

The past three chairs of the Fed have all served two or more terms, winning approval of presidents from both parties. Yellen was nominated in 2013 by President Barack Obama, after serving as vice chairwoman.

Trump, who attacked Yellen on the campaign trail, has been more positive of late.

As the president announced he was going elsewhere for a Fed chair, he said of Yellen: "For the past four years, she has served with dedication and devotion and we are grateful for her total commitment to public service."

But Yellen has not always been in line with Trump's interests, for example, taking a cautious approach to raising interest rates. She has been an outspoken advocate for the stricter financial regulations that took effect in 2010 to prevent another crisis.

Stephen Moore, an economist at the Heritage Foundation who was a senior economic adviser to Trump's campaign, said Trump wants someone who will support loosening regulations. He also said the president simply wanted his own person in place.

"The job of the Fed chair is not just to be the lead person on monetary policy. This is the chief economic voice of the nation," said Moore. "She's not with the program."

Ever a showman, Trump teased his plans for months. He publicly considered several alternatives to Yellen — all men — but also praised her during a recent interview with Fox Business.

"You like to make your own mark, which is maybe one of the things she's got a little bit against her, but I think she is terrific. We've had a great talk and we are obviously doing great together, you look at the markets," Trump said.

To Sen. Elizabeth Warren, D-Mass., Trump's decision shows "his focus is not on creating jobs or raising wages or stopping another financial crisis, but on reversing any decision President Obama made."

Diane Swonk, chief economist at DS Economics, praised Yellen's legacy saying that "she got to make the pivot from crisis-era policies to stamina. Under her we got our second wind."

Swonk said not giving Yellen another term was "highly unusual" given her qualifications. But she added that "every president does have the right to choose their own Fed chair."

Yellen, who headed the Federal Reserve Bank of San Francisco and has been an economics professor at the University of California at Berkeley, sought to pave the way for more diversity within her profession. In a speech at Brown in May, she noted that "even in my own field of economics, women constitute only about one-third of Ph.D. recipients, a number that has barely budged in two decades."

Dean Baker, co-founder of the Center for Economic and Policy Research think tank, said Yellen's focus on diversity has "really mattered." He also praised her leadership record, saying that by "any objective measure" there has been major progress with the economy.

Baker said passing over Yellen was notable. He added: "There has been a tradition of reappointing people unless they've been a disaster."

Yellen herself issued a statement congratulating Powell. She said she was "committed to working with him to ensure a smooth transition."

But she did not attend the Rose Garden announcement of her successor, as past Fed chairs have done.