Another First for Yellen

Ms. Yellen, who was the first woman to lead the Fed, would become the first person to have headed the Treasury, the central bank and the White House Council of Economic Advisers.

Separately, Mr. Biden’s transition team said he would nominate Alejandro Mayorkas to lead the Department of Homeland Security and Avril Haines as director of national intelligence. Former Secretary of State John Kerry will serve as special presidential envoy for climate change.

Ms. Yellen has said recently the recovery will be uneven and lackluster if Congress doesn’t spend more to fight unemployment and keep small businesses afloat. “There is a huge amount of suffering out there. The economy needs the spending,” Ms. Yellen said in a Sept. 28 interview.

One of Ms. Yellen’s first decisions could be to decide whether to reactivate and potentially revamp, with Mr. Powell’s approval, a series of lending backstops the Fed and Treasury launched when the coronavirus pandemic convulsed markets this spring.

The parameters of one of those programs—to buy loans extended to small- and midsize businesses—might be “insufficiently generous,” she said. The Main Street Lending Program has extended just $4 billion in credit to more than 400 companies in its first four months of operation.

Treasury Secretary Steven Mnuchin decided last week that the programs would cease the purchase of loans or assets at the end of the year, declining an extension that had been sought by the Fed. The Biden transition team criticized Mr. Mnuchin’s decision.

Mnuchin May Be Right

Powell agrees to return unused relief money to Treasury at year end following Mnuchin’s decision.

Please consider Carnival Borrowing Without Ships Suggests Mnuchin May Be Right


Hours after U.S. Treasury Secretary Steven Mnuchin called for emergency lending programs to be allowed to expire, corporate bond investors continued to flood Carnival Corp.’s bankers with more than $11 billion in orders for debt that comes with no collateral protection.

For some, it was a sign that credit markets aren’t so fragile after all. After roughly $2 trillion of borrowing helped U.S. companies bolster their balance sheets with cash to weather the pandemic, investors have grown increasingly confident -- perhaps even complacent -- that the widespread corporate failures predicted by many earlier this year have largely been avoided. Granted, the Fed helped fuel nearly all of that debt issuance, and the investor demand supporting it. 

And even if the immediate lifeline of $580 billion in backstop money is returned by the Federal Reserve to the Treasury, traders are betting that markets will fare just fine, anticipating that the government will step in again if new signs of stress emerge. 

Hasn't the Fed Made Enough Mistakes?

The Fed has blown four economic bubbles in succession keeping interest rates too low, too long.

Former Fed Chair Yellen pledges to continue this path, this time as Treasury Secretary supportive of the Fed.