U.S. Senator Joe Manchin (D-W.Va.) today issued the following statement on why he did not vote for Federal Reserve Chair nominee Janet Yellen in the Senate Banking Committee.
"After meeting with Federal Reserve Vice-Chair Janet Yellen to discuss her views on how to best grow our economy and balance our budget, hearing her testimony before the Senate Banking committee, and discussing monetary policy with experts, I cannot support her nomination to be Chairwoman of the Federal Reserve. I believe that Dr. Yellen is a very intelligent and capable nominee, but her views and beliefs to continue quantitative easing, despite a failure to see any real gains, greatly troubles me. A long time ago, I learned from my family in Farmington, West Virginia, "You can't spend your way to prosperity and borrow your way out of debt.'
Before this crisis, the Federal Reserve never held even $1 trillion dollars on its balance sheets. While the Fed had to take extraordinary action in the wake of the financial crisis, it's been five years since we started quantitative easing, and we continue this risky endeavor without seeing the gains we expected.
Since 2010, the Fed has pumped tens of billions of dollars into the economy every single month. We kept buying in 2011 and bought even more in 2012. Finally, almost one year ago, we increased our purchases to $85 billion a month. That's almost $1 trillion dumped into the economy in just one year. Today, the Federal Reserve has almost $4 trillion of government debt and mortgage-backed securities on its books.
What's been the result? Unemployment is still above 7.2%, our gross domestic product, the measure of our economy's performance, is still sluggish with 2.5% economic growth in 2010 and only 2.8% now. That's not the kind of improvement we expected from the Fed's program.
Unfortunately, during my conversation with Dr. Yellen and during her testimony before the Senate Banking Committee, Dr. Yellen never mentioned a limit nor a desire to back off these policies. While I support her desire to limit risk in the banking sector and help community banks, her views on the Federal Reserve's direction force me to oppose her nomination.
"I have said since the day that I arrived in the Senate, as well as my time as Governor of the great state of West Virginia, that if we don't balance our budget, we can't support our priorities. I believe that the current lending policy of the Fed will continue to allow Congress to run up record debts and deficits while our economy continues to lag behind."