Tag: Federal Reserve Bank

Yellen had a passion for psycology, not economy

Janet Yellen
Janet Yellen

She’s about to become one of the most influential financial leaders in the world, but a classmate who sat in front of Janet Yellen at Brooklyn’s Ft. Hamilton HS says he was “shocked” at her career path.

“I didn’t think she had a passion for economics,” recalled Ron Vincent, a former Wall Street guy who took the same economics class as the incoming Federal Reserve Bank chair and who now heads Hi Investors Capital.

“I was shocked. She was in the psychology club.” Now, he added in awe, “She’s going to be the world’s most powerful woman.”

Yellen’s yearbook entry shows she was editor of the school paper, The Pilot, as well as a member of the Arista honor society, the Boosters basketball program, the Minutemen history club and the psychology club.

As head of the Fed, Yellen will help guide US monetary policies, affecting the pocketbooks of Americans and consumers across the globe.

Yellen’s four-year term begins Feb. 1. President Obama nominated her to the post in October. She is currently the Fed’s vice chair. Source: NYP

Fed chairman to testify about bailout to foreign entities

Ben Bernanke
Ben Bernanke

A judge has ordered Ben Bernanke, the Federal Reserve chairman, to testify about the bailout of AIG in a case where the government is accused of illegally appropriating the insurer and using it “to covertly funnel billions of dollars to foreign entities”.

Government lawyers had argued Mr Bernanke was too senior and the facts had been raked over too often for his appearance to be necessary.

Judge Thomas Wheeler disagreed. Compelling Mr Bernanke to travel to a Washington law firm to answer questions about the government bailout, he wrote on Monday that the “court cannot fathom having to decide this multibillion-dollar claim without the testimony”.

The claim comes from Hank Greenberg, the former chief executive of AIG, who says he and other shareholders were unfairly diluted when the Federal Reserve Bank of New York took an 80 per cent equity stake in return for $182bn in emergency funding. He is suing the government for compensation.

Judge Wheeler said there were “extraordinary circumstances”, a test of whether senior officials had to give evidence in lawsuits.

In his decision, he wrote: “Mr Bernanke was a central figure in the government’s 2008 determination of how it should handle AIG’s fiscal difficulties. To rule otherwise would deprive the court of important relevant evidence in its fact-finding and resolution of this case.”

The insurer came close to collapse in September 2008 as Lehman Brothers filed for bankruptcy. AIG had written credit default swaps, an insurance against default by subprime mortgage-backed securities, which fell in value as the crisis deepened.

The US provided AIG with more than $182bn in taxpayer funds to stave off collapse in return for a majority stake. In its complaint, Starr International, Mr Greenberg’s vehicle, said the US did so against the wishes of AIG shareholders “without due process or just compensation”. – FT