Nov 21 2013

AL.com: Sen. Shelby votes against Janet Yellen for Fed chief: 'No confidence she will change course'

Sen. Richard Shelby votes against Janet Yellen for Fed chief: 'No confidence she will change course'

The nomination of Janet Yellen to be the next leader of the Federal Reserve cleared the Senate Banking Committee on Thursday without the support of Alabama Senator Richard Shelby.

Shelby, former chairman and current member of the Banking Committee, joined six fellow Republicans and one Democrat voting against Yellen. The committee approved the nomination 14-8. It now heads to the full Senate where the recent rules change would allow it to proceed with only a majority vote.

Shelby, who met with Yellen for almost an hour in late October, said his vote reflects a lack of confidence she will reverse the Obama administration's current fiscal policies.

"Since 2008, the Fed's printing presses have generated a backdoor stimulus nearly four times greater than the $787 Obama stimulus," Shelby said. "The Fed is the world's largest holder of U.S. Treasury bonds and the biggest enabler of our exploding debt. These actions also present massive risks for sharp price increases on every single product that Americans buy.

"I voted against President Obama's nominee because I have no confidence that she will change course."

In previous testimony, Yellen said she supported the administration's stimulus policy, despite criticism it artificially inflates stock prices. The Fed is now faced with tapering off the stimulus while trying to hold down long-term interest rates and keeping economic growth moving.

In a July 17 speech, Shelby said the stimulus process is being used to "prop up markets since the financial meltdown of 2008. The implied message is striking: The Fed is taking big risks through monetary policy because administration policy is not helping the economy."

Shelby said the Federal Reserve's balance sheet now stands at $3.5 trillion and continues to grow by $85 billion a month. Among those assets are $2 trillion in U.S. Treasury securities and $1.2 trillion in federal agency mortgage-backed securities.

"To put the acceleration of the Fed's balance sheet into perspective, it took 95 years from the Fed's creation in 1913 to reach $1 trillion," Shelby said. "The Fed then added the second trillion in just six weeks, followed by the third trillion this past January. Under the current quantitative easing program, the Fed's balance sheet will reach $4 trillion in less than six months.

"Where does it end? $5 trillion? $6 trillion? $10 trillion?"

Six Senate Republicans have said they support Yellen's nomination to succeed Ben Bernanke which would give the current Fed vice chair enough for confirmation. If approved, she will become the first women to lead the Federal Reserves.