Janet Yellen will testify in front of the Senate Banking Committee today (read her prepared remarks here), as the nominee to succeed Federal Reserve chairman Ben Bernanke. She’s expected to talk about stimulus policies — and Fed transparency, a cause she’s championed.
In a speech at the Haas School of Business at UC Berkeley last year, she touted good communication: “Indeed, I hope that one of the legacies of this difficult period is a permanent advance in Federal Reserve transparency.” But what, exactly, Yellen means by that word transparency is maybe not as clear to the public or to members of Congress.
“When Janet Yellen talks about transparency, she’s talking about the Fed being much more clear about how it will act in the future,” says Sarah Binder, a political science professor at George Washington University. “When members of Congress talk about transparency and the Fed, they mean something completely different.”
And what’s that? The inner workings of the Fed; the sausage factory tour. Something, Binder says, that Yellen, and Fed chairmen past, are far less interested in giving. Too much transparency can mean too little independence.
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