Tags: Yellen | Fed | Outreach | impoverished

Yellen Extends Fed's Main Street Outreach to Impoverished Byways

Thursday, 16 October 2014 07:33 PM

Janet Yellen is taking the Federal Reserve’s efforts to connect with Main Street America a step further, to its underprivileged byways.

Fed Chair Yellen spent more than an hour Thursday at a community development center in Chelsea, Massachusetts, a once-bankrupt and decaying city just north of Boston that is beginning to see better times.

Before delivering a speech Friday at a conference on economic inequality, she met with residents and non-profit leaders working to bring jobs, housing and education to Chelsea’s poor.

Chelsea City Manager Jay Ash told Yellen the surrounding neighborhood was once so rough his mother wouldn’t let him play there as a kid. She listened to the success stories of local residents who, with support from the center, found jobs and stabilized troubled lives. Yellen, who has often voiced concern about labor-market slack, asked whether local employers are hiring more.

“The Fed has always worked hard on building its legitimacy with the public,” said Vincent Reinhart, a former director of the Fed board’s Division of Monetary Affairs and now chief U.S. economist at Morgan Stanley. “Janet Yellen is making it a little more personal.”

Charm Offensive

As criticism of the Fed from elected officials in Washington has risen, Yellen is showing she is listening to the concerns of ordinary Americans.

“She has spent enough time at the Fed to know there are political pressures on elite institutions across the board,” said William Galston, a senior fellow at the Brookings Institute in Washington.

“The Fed cherishes its independence, but there are populist winds blowing in from both the left and right, and the Fed doesn’t get very high marks.”

Ben S. Bernanke, her predecessor, led the way in softening the image of the Fed chairman as a remote academic, concerned only about economic data.

He was interviewed by the CBS program “60 Minutes” on the main street in his home town of Dillon, South Carolina in March 2009. In July of that year, still under intense pressure to explain the Fed’s response to the 2008 financial crisis, he made a town-hall-style appearance that was taped for broadcast on PBS television, taking questions from the audience.

Drawing Fire

The Fed has drawn plenty of fire in Washington since 2008 for alternately failing to prevent the financial crisis and then bailing out some of the largest U.S. banks in an effort to contain it. More recently, Republicans in Congress have become increasingly critical of the Fed’s regulatory reach.

If Thursday’s event is part of a new public relations effort, Chelsea is a fitting stop for Yellen, who wrote extensively about labor markets when she was an academic, and has stressed the need to lower unemployment before raising interest rates.

Long one of Massachusetts’ poorest cities, Chelsea had an unemployment rate of 7.4 percent in August, compared with 6 percent across Massachusetts and 6.1 percent nationally.

Yellen met some of those statistics at Chelsea’s CONNECT, an umbrella site for six non-profits that share a loft-like space with blond hardwood floors and exposed rafters.

She visited a classroom where immigrants were learning English. After a brief tour with CONNECT Director Marissa Guananja, she asked about house prices and whether the area had a lot of subprime lending before the financial crisis. The answer was a firm “yes.” According to the program, 60 percent of its clients have no post-secondary school education, and 30 percent have no bank account.

Ash said he believed Yellen will take some useful information away from the visit.

“I think what she heard here today is consistent with her overall approach,” he said, “and that is, employment first.”

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Janet Yellen is taking the Federal Reserve's efforts to connect with Main Street America a step further, to its underprivileged byways.Fed Chair Yellen spent more than an hour Thursday at a community development center in Chelsea, Massachusetts, a once-bankrupt and decaying...
Yellen, Fed, Outreach, impoverished
Thursday, 16 October 2014 07:33 PM
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