When pressed on whether Fed Governor Lael Brainard’s support for Hillary Clinton is a conflict of interest, Yellen punted.
Federal Reserve Chair Janet Yellen was on Capitol Hill on Wednesday to testify on financial regulation.
At one point, she was caught in a heated exchange with Rep. Scott Garrett (R-NJ) over Fed Governor Lael Brainard’s donations to Hillary Clinton’s presidential campaign.
In March 2016, Bloomberg and others reported that Brainard had contributed $750 to Clinton. She was an “Obama administration appointment” at the Deptartment of Treasury before joining the Fed.
Yellen responded to Rep. Garrett’s questions about the donations by asserting that “the Hatch Act does not prohibit political contributions” from members of the Fed.
Then Rep. Garrett pressed on Brainard’s possible angling for a job in a future Clinton administration:
REP. GARRETT: “To your knowledge, has Governor Brainard been in contact with the Clinton administration – or, Clinton campaign regarding a potential job in a potential future administration? Are you aware of that at all?”
YELLEN: “I have absolutely no awareness of that.”
REP. GARRETT: “There have been published media reports talking about this. Are you not familiar with those media reports?”
YELLEN: “What’s important to me is whether or not in our decision-making, our collective decision-making, I see politics being brought to bear in reasoning about our decisions. And I have never seen that on the part of any of my colleagues.”
When Garrett asked Yellen if she would ask Brainard to recuse herself from Fed decision-making if Yellen learned “that [Brainard] has had communications with Clinton as far as trying to get a job,” Yellen said, after a pause, that “I’m not aware that that’s a conflict.”
Regardless of where one stands on Fed policy towards interest rates, the prospect of a Fed governor angling for her next job with a prospective president raises alarm bells.
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