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Yellen Sets Out to Build Treasury Team With Obama Alumni

Saleha Mohsin and Liz Capo McCormick
·4 min read
Yellen Sets Out to Build Treasury Team With Obama Alumni

(Bloomberg) -- Janet Yellen is focusing on several Obama-administration alumni for key posts in the U.S. Treasury, according to people familiar with the matter, as critical decisions loom on everything from debt funding to international economic ties.

Seth Carpenter and Michael Barr are being considered for undersecretary for domestic finance, the people said on condition of anonymity as the discussions are private. The job involves managing the funding of over $20 trillion in federal debt and overseeing financial institutions, tax and housing policy. Both Barr and Carpenter have previously worked at the Treasury.

Heidi Crebo-Rediker, who has served in foreign affairs posts, is being eyed as undersecretary to lead Treasury’s international affairs unit, the people said. Responsibilities include handling relations with finance ministries around the world, including through the Group of 20, and overseeing the Treasury’s currency-policy report, which has drawn global attention during Donald Trump’s presidency for labeling three trading partners as manipulators.

The undersecretary jobs are among the most important of dozens of political appointments at the Treasury that President-elect Joe Biden will need to make after taking office, and require Senate confirmation. Yellen, his pick for Treasury secretary, will also need Senate approval.

A Biden transition official, speaking on the condition of anonymity, said personnel decisions for the Treasury Department have not yet been made.

Brad Setser, who previously served at the Treasury, is under consideration to work under Crebo-Rediker overseeing currency policy as an assistant secretary, the people said. That would put him directly in charge of the semiannual foreign-exchange report.

Elizabeth Rosenberg and Peter Harrell, both currently at the Center for New American Security, and Columbia University’s Richard Nephew are all being considered for jobs involving oversight of sanctions on foreign countries -- either at the Treasury’s Terrorism and Financial Intelligence unit, or at the State Department, the people said.

Debt Management

Wall Street bond dealers are keen to see if the incoming debt-management team continues the preference of outgoing Treasury Secretary Steven Mnuchin’s group to bolster the issuance of longer-term securities -- locking in low yields.

After an alarming collapse in liquidity in the mammoth market for Treasuries earlier this year -- which required the Federal Reserve to come in as a backstop -- the role could also involve structural changes to the marketplace.

Carpenter is now the chief U.S. economist for UBS Securities. In 2013, he was tapped to be Treasury assistant secretary for financial markets, but was never confirmed and served in the role in an “acting” capacity. He also worked at the Fed for 15 years, during which he served as deputy director of monetary affairs.

Barr, a former top aide to ex-Treasury Secretary Timothy Geithner, was one of the main authors of the Dodd-Frank Act, which revamped financial regulation after the global financial crisis. He gained a reputation during the Obama administration as an unyielding negotiator who often dismissed Wall Street’s lobbying demands. The University of Michigan law professor is a member of the Biden transition group reviewing the Treasury Department.

Don Graves, a KeyBank NA executive, and Andy Green, of the Center for American Progress, are under consideration for jobs in the Treasury’s domestic finance office, according to people familiar with the matter. Both of them are on Biden’s Treasury transition landing team.

Carpenter and Green declined to comment. Other candidates mentioned in this story didn’t respond to requests for comment.

There’s not been a confirmed undersecretary of domestic finance -- a job that also coordinates ties with other regulators through the Financial Stability Oversight Council -- since Mary Miller stepped down in 2014. Since then, the job has been done by counselors who don’t require Senate confirmation.

Currency Policy

Crebo-Rediker is currently chief executive officer of International Capital Strategies LLC, and her career has spanned work on Capitol Hill and in investment banking as well as expertise in foreign relations. She has served on the Council on Foreign Relations, and was chief economist at the State Department under President Barack Obama, a new role that was designed to promote domestic job growth and advancing U.S. economic interests overseas.

Her husband, Doug Rediker, is also being considered for a position in the Biden administration, according to people familiar with the matter.

The incoming international affairs team will take office after Mnuchin made waves this week labelling Switzerland and Vietnam as currency manipulators -- his third such designation in two years. In August 2019, Mnuchin labeled China with the same charge, only to lift it in January.

Setser, who could take charge of that report’s compilation, is currently on the Council for Foreign Relations, and previously served as a Treasury deputy assistant secretary. He has a history of aggressive comments on some overseas central banks, criticizing some for foreign-exchange purchases he called intervention.

Still, Yellen’s own views may temper any influence that Setser might have. Yellen, a former Fed chair, has previously indicated a more understanding view of monetary policy decisions that have consequences for exchange rates.

(Updates with transition official comment in fifth paragraph.)

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