Yellen Reflects on Treasury Tenure, Talks with Successor Scott Bessent

Yellen Reflects on Treasury Tenure, Talks with Successor Scott Bessent

Outgoing US Treasury Secretary Janet Yellen recently shared insights into her tenure and her conversation with Scott Bessent, the hedge-fund veteran nominated by President-elect Donald Trump to succeed her. Speaking at a Wall Street Journal event, Yellen addressed a range of topics, including Federal Reserve independence and fiscal challenges facing the nation.

Transition to Scott Bessent

Yellen revealed that she spoke with Bessent after his nomination, providing him with insights about the Treasury Department. “I congratulated him on his nomination and told him I thought he would find this an extremely interesting and challenging job,” Yellen said. She emphasized the high standards and professionalism of Treasury staff, highlighting their importance to the financial markets and the economy.

“Civil servants at the Treasury are analytical, proficient, professional, operate with high integrity, and produce analysis that can be relied on. This is important to financial markets and to the economy,” she noted, particularly referencing the US Treasuries market.

Defending Federal Reserve Independence

Yellen reiterated her firm stance on maintaining the Federal Reserve’s independence, stressing that political interference can undermine economic stability. “What research has shown, and this is certainly what I see from my own experience, is that countries perform better — both in terms of inflation and job creation — when a central bank is left to use its best judgment without political influence,” she explained.

Responding to questions about the possibility of a president removing the Fed chair, Yellen clarified that her understanding is that the central bank’s head can only be removed by the Senate for cause.

Fiscal Regrets

Reflecting on her time as Treasury Secretary, Yellen expressed concerns about the nation’s fiscal sustainability. “I am concerned about fiscal sustainability, and I am sorry that we haven’t made more progress,” she said. She pointed out that the primary fiscal deficit—which excludes debt-servicing costs—is over 3% of GDP and needs to be reduced, particularly in an environment of higher interest rates.

Yellen’s remarks underscored the challenges of addressing fiscal imbalances amid rising debt and borrowing costs. “The deficit needs to be brought down, especially now,” she stressed, signaling her regret over missed opportunities to narrow the gap during her tenure.

Broader Implications

As Bessent prepares to take over, he inherits a Treasury grappling with complex issues ranging from fiscal policy to global economic uncertainty. Yellen’s emphasis on institutional integrity and data-driven analysis will likely remain cornerstones for navigating these challenges.