Fed’s Yellen defends Brainard against congressman’s charges of political bias

US Republican congressman Scott Garrett attacked Federal Reserve president Janet Yellen over the Fed's political impartiality and particularly that of board member Lael Brainard, during a hearing today (September 28).

The comments follow recent accusations by Republican presidential nominee Donald Trump that the Federal Reserve was biased in favour of Democratic nominee Hillary Clinton.

The questions came during Yellen's semi-annual appearance before the financial committee of the US House of Representatives, the lower house of the American legislature. Congressman Garrett of New Jersey said Brainard had declared a monetary donation to Clinton's election campaign.

He then cited unspecified press reports that Brainard was in contact with the Clinton campaign to ask for a "top economic job" if the Democratic nominee won. Yellen replied that she was not aware of any contact between Brainard and the Clinton campaign.

Yellen added, in response to another question, that Brainard had never asked to be recused from a meeting of the Federal Open Market Committee (FOMC).

Garrett then asked if contact between Brainard and the Clinton campaign would count as a "conflict of interest" for an FOMC member. Yellen said she would need to consult legal counsel before replying to the question. Brainard is seen as one of the FOMC's leading "doves", in favour of continued monetary easing.

Yellen said she had never seen an FOMC member behaving in a way that showed signs of political bias. She also noted that all members of the Fed were subject to the Hatch Act, which prohibits US government employees from engaging in certain types of political activity.

Garrett also cited a number of press reports that he said indicated that members of the public believed that recent FOMC decisions had postponed hard choices until after the presidential election. "As the saying goes, perception is reality," he said, quoting a headline that read: "Yellen helps Clinton dodge a bullet." Yellen repeated her statement that Fed members were not influenced by political motives.