The Fed: Yellen’s departure gives Trump even more space to rebuild the Fed

Janet Yellen isn’t planning to stay at the Fed.

Federal Reserve Chairwoman Janet Yellen’s announcement that she will leave the central bank in February gives President Donald Trump even more room to change the way the Fed operates, possibly for decades.

Though Trump had already decided to nominate Jerome Powell to be chairman, rather than Yellen, the first woman to lead the central bank could have stayed on as a governor until 2024. Instead, her departure creates yet another vacancy for the president to fill.

Also read: Janet Yellen announces she’s leaving the Fed

Here’s a look at the turnover.

Position Obama era Trump era
Chair Janet Yellen Jerome Powell*
Vice Chair Stanley Fischer N/A
Vice Chair for Supervision Daniel Tarullo** Randal Quarles
Governor Lael Brainard Lael Brainard
Governor Jerome Powell N/A
Governor (community banker) N/A N/A
Governor Jeremy Stein (vacant since 2014) N/A
* – Nominated but not yet confirmed by Senate; ** – Tarullo didn’t formally hold vice chair title but held that role in practice

Obama had nominated Allan Landon to be a governor for a role specifically earmarked for a community banker, but Landon never was confirmed. Kathryn Dominguez was nominated by Obama to fill Jeremy Stein’s seat, but she too wasn’t confirmed.

Lael Brainard will be the one Obama-era voice to stay on, as her term doesn’t end until 2026.

The key post of New York Fed president also will see a new face, as William Dudley is retiring, but Dudley’s replacement will be made by the regional central bank rather than Trump. The New York Fed president gets to vote at every Federal Open Market Committee meeting.

Ahead of Yellen’s announcement, Oxford Economics analyst Terry Sheehan said the wave of departures gives the possibility of the central bank adopting more of a hawkish posture toward interest rates.

“The new governors could swing more hawkish in their views of monetary policy and favor a roll back of some of the post-financial crisis regulation. However, Trump’s nomination of Powell as chair suggests that a sharp swing to the hawkish side of the spectrum may not be in the cards,” Sheehan wrote.

In addition to the new faces, presidents from the regional banks of Cleveland, Richmond, Atlanta and San Francisco will rotate into being voting members in 2018, a more hawkish group that the regional presidents who vote this year.

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