October 19, 2017 / 5:08 PM / a year ago

Conservative Republican tries to derail reappointment of Fed's Yellen

WASHINGTON, Oct 19 (Reuters) - A member of the U.S. House of Representatives’ Freedom Caucus is mounting a campaign to kill any chance of a second term for Federal Reserve Chair Janet Yellen, the latest sign conservative Republicans want a fresh face at the helm of the central bank.

Republican President Donald Trump is expected to announce within a few weeks whether to reappoint Yellen to another four-year term. Other contenders for the job are top Trump economic adviser Gary Cohn, Fed Board Governor Jerome Powell, former Fed governor Kevin Warsh and Stanford University economics professor John Taylor.

Representative Warren Davidson, a Republican on the House Financial Services Committee’s monetary policy panel, is among those who want a change. He is circulating a letter opposing Yellen’s reappointment, the Ohio congressman’s spokesman said.

“Davidson is very passionate about this process,” the spokesman said, adding that the lawmaker is particularly concerned about the impact Fed policy has had on the ability of small firms to raise operating funds.

The text of the letter being circulated among lawmakers is not being released at this time, the spokesman said.

Members of the Freedom Caucus, the most conservative Republican grouping in Congress, have been critical of Yellen in the past, with some accusing her of keeping monetary policy too loose.

Key members of the House Financial Services Committee also have backed ideas proposed by contenders to replace Yellen. Taylor’s research, for example, figured prominently in a House-passed bill requiring the Fed to explain its actions through a strict set of rules.

The House, however, has no direct control over the appointment of a Fed chief. The Senate decides whether to confirm the president’s nominee.

Trump has criticized Yellen in the past and vowed to “drain the swamp” in Washington by naming new people to top jobs and embracing different ideas. But his economic agenda could benefit from the steady economic conditions fostered by Yellen’s Fed.

Yellen is scheduled to meet with Trump on Thursday for what may be the last of the interviews the president is conducting.

She was appointed in 2014 to her first term as Fed chief by former President Barack Obama and won confirmation by a 56-26 vote, with 11 Republicans supporting her.

Although Yellen’s appearances before the House panel have sometimes been marked by testy exchanges with Republicans, she received credit in her last testimony in July for steps the Fed was taking to reduce its massive balance sheet.

Conservative lawmakers have been pressuring the central bank to start reducing the Treasury bonds and mortgage-backed securities it accumulated in its response to the 2007-2009 financial crisis. (Reporting by Howard Schneider; Editing by Paul Simao)

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