Obama to nominate Yellen as Bernanke replacement

U.S. Federal Reserve Vice Chair Janet Yellen speaks at an international monetary conference in Shanghai June 3, 2013.

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WASHINGTON President Barack Obama will nominate Federal Reserve vice chair Janet Yellen to succeed Ben Bernanke as chairman of the nation's central bank, the White House said Tuesday.

If confirmed by the Senate, the 67-year-old Yellen would be the first woman to lead the Fed. She also would be the first woman ever to head a major central bank anywhere in the world.

She would take over at a pivotal time but would likely continue steering Fed policy in the same direction as Bernanke, who was expected to appear with her and Obama at the White House on Wednesday for a formal announcement.

Bernanke's term ends in January, completing an extraordinary eight-year tenure in which he helped pull the U.S. economy out of the worst financial crisis and recession since the 1930s.

Under Bernanke's leadership, the Fed created extraordinary programs after the financial crisis erupted in 2008. It lent money to banks after credit markets froze, cut its key short-term interest rate to near zero and bought trillions in bonds to lower long-term borrowing rates.

Yellen, a close ally of Bernanke, has been an aggressive proponent of extending the extraordinary support the Fed has used since the 2008 financial crisis to help nurse the U.S. economy back to health. With economic growth and job-creation still weak, many investors appear to think Yellen is less committed to scaling back the Fed's $85-billion-a-year program to buy Treasury and mortgage bonds. The Fed implemented that policy, known as quantitative easing, in 2008 to prop up the economy, and it has helped propel stocks to record highs.

Yellen emerged as the leading candidate after Lawrence Summers, a former Treasury secretary whom Obama was thought to favor, withdrew from consideration last month in the face of rising opposition.

"She's an excellent choice and I believe she'll be confirmed by a wide margin," said Sen. Chuck Schumer, D-N.Y., a member of the Senate Banking, Housing and Urban Affairs Committee.

Born in the New York City borough of Brooklyn, Yellen graduated from Brown University in 1967 with highest honors in economics. She received her doctorate in economics in 1971 from Yale, where she studied under the Nobel Prize-winning economist James Tobin.

She was an assistant professor at Harvard University from 1971 to 1976 and then worked as an economist at the Federal Reserve in Washington from 1977 to 1978. She met her husband, George Akerlof, in a Fed cafeteria. The two worked together for many years on the Berkeley faculty. Akerlof shared a Nobel in economics in 2001 with Joseph E. Stiglitz and A. Michael Spence.