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Just off the bruising debates over the nation’s debt ceiling and the government shutdown, few crave a war that could put financial markets in turmoil, said Greg Valliere, chief political strategist with the political intelligence firm Potomac Research Group.
“So many people feel a bit chastened by putting the country through such a debacle with the shutdown and debt limit that I think this inclination to go for brinkmanship has diminished since October,” Valliere said.Averting Scorched Earth
Yellen, a Democrat who currently serves as the Fed’s vice chairwoman, has strong backing on Wall Street. The Fed’s monetary stimulus program intended to curb unemployment, which Yellen championed, has also helped fuel big gains in the financial sector.
Many of the Fed’s detractors say the quantitative easing, with its $85-billion-a-month buying spree in Treasury and mortgage-backed securities has helped Wall Street, but not Main Street.
“I understand that some of the tea party types have antipathy toward Wall Street. I get that,” Valliere said. “But at the same time, there’s an aversion to upsetting the markets. There’s an aversion to more scorched earth.”
Mark Calabria, director of financial regulation studies at the Cato Institute and a former GOP aide on the Senate Banking Committee, said the advocacy groups may have decided another battle wasn’t worth it, particularly without solid GOP unity.
“Republicans have basically pre-emptively caved,” Calabria said. “I think there is a sense that it’s a fight that’s already been lost.”
He noted Yellen would be the first woman to head the central bank, a historic occasion that could influence GOP votes.
“I’m not going to say the gender of Janet Yellen is going to determine how Sen. [Susan] Collins is going to vote, but I think it’s a factor,” Calabria said of the Maine Republican.
The decision of conservative groups not to key-vote Yellen’s nomination would avoid stirring up further internecine battles in a Republican party wrestling with its stances on major policy questions.
“They’re in a unique spot where they’re trying to repair relationships with the Republican caucus, and I actually believe that’s a factor here,” Calabria said.
With the biggest players in the conservative movement so far not engaged, that has left smaller organizations, such as American Principles in Action, to take the lead in mobilizing opposition to Yellen.
“It’s just a huge void within the conservative policy movement,” said Rich Danker, the APA’s economics project director. “If you’re an organization like Heritage for limited government, wouldn’t you want to weigh in on the fact that the Fed has been running a policy initiative to buy government debt? It boggles my mind.”
It’s also a sharp contrast to a recent fight over another financial regulatory nomination — that of Rep. Melvin Watt, D-N.C., to take the helm of the Federal Housing Finance Agency.
Republicans filibustered his nomination, with the help of the Club for Growth and Heritage Action, which included Watt’s cloture vote on their annual “key vote” score cards.
FreedomWorks, another conservative group, supports Paul’s legislation to “audit” the Fed’s monetary policy and wants to see a vote on that in concert with Yellen’s nomination.