Fed nominee Janet Yellen clears first Senate hurdle

Janet Yellen appeared before the Senate Banking Committee before they approved her nomination to be the next leader of the Federal Reserve.

Janet Yellen was approved to become the next chairman of the Federal Reserve by the Senate Banking CommitteeThursday morning, a key step in her expected confirmation to succeed Ben Bernanke at the head of the financial institution.

By a vote of 14 to 8, the committee voted to send Yellen’s nomination to the full Senate. Currently the number two at the Fed, Yellen would be the first woman to lead the institution in its 100-year existence if she is confirmed. Her policies would be largely in sync with those of Bernanke: extraordinary measures meant to bolster the economy, calming investors who might be worried about an abrupt shift.

During her confirmation hearing last week, Yellen warned against withdrawing Federal Reserve stimulus measures. "It's important not to remove support, especially when the recovery is fragile and the tools available to monetary policy should the economy falter are limited given that interest rates are at zero," she said

But several Republicans have said they will vote against her when the nomination comes before the Senate. One of those lawmakers, Sen. Marco Rubio, R-Fla., said in a statement Thursday morning that he believes Yellen “has championed policies that have diminished people’s purchasing power by weakening the dollar, made long-term savings less attractive by diminishing returns on this important behavior, and put the U.S. economy at increased risk of higher inflation and another future boom-bust."

Sen. Mike Crapo, the ranking Republican on the committee, voted against the nomination. He and other Republicans were joined by Sen. Joe Manchin, D-W.V.

But several Republicans voted to advance Yellen to the full Senate, including Sens. Bob Corker, R-Tenn., Tom Coburn, R-Okla., and Mark Kirk, R-Ill. A handful of other Republicans have announced their support, and their votes are necessary to pass the 60-vote threshold that will prevent a filibuster.

Two Republican lawmakers in particular have threatened to filibuster the Yellen nomination. Sen. Rand Paul, R-Ky., has said he will specifically block Yellen's nomination from going through unless Senate Majority Leader Harry Reid, D-Nev., agrees to allow a vote on his legislation to audit the Fed.

"The American people have a right to know what this institution is doing with the nation's money supply. The Federal Reserve does not need prolonged secrecy--it needs to be audited, and my bipartisan Federal Reserve Transparency Act will do just that," Paul said in a letter released last month.

Still, Paul conceded in an interview with Bloomberg TV last month that "in all likelihood" Reid would have the votes to ultimately secure Yellen's confirmation and any delaying tactics on his part would only be short-term.

Sen. Lindsey Graham, R-S.C., has also repeatedly said he will hold up all Obama administration nominees until the Congress is able to interview survivors of the Sept. 2012 attack on the U.S. consulate in Benghazi, Libya. 

When President Obama nominated her last month, Yellen said she would do her best to "promote maximum employment, stable prices, and a strong and stable financial system."

The past six years have been tumultuous for the economy and challenging for many Americans," she said. "While I think we all agree, Mr. President, that more needs to be done to strengthen the recovery -- particularly for those hardest hit by the great recession -- we have made progress. The economy is stronger, and the financial system sounder."

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    Rebecca Kaplan covers the 2012 presidential campaign for CBS News and National Journal.