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Yellen’s first decision as Fed chair may be her most important

Janet Yellen

After a tumultuous six months of oftentimes ugly public debate, President Obama formally nominated Janet Yellen to replace Ben Bernanke as the next chairman of the Federal Reserve. If confirmed by the Senate, Yellen will become the first woman to hold the position.

Yellen’s path toward the most powerful seat at the Fed has been a winding road to say the least. She was the clear frontrunner to succeed Bernanke for months until word came from the White House that Obama was leaning toward his former adviser, Larry Summers. An argument can be made that Obama would have chosen Summers if Senate democrats, weary of his financial regulatory record and embarrassing exit as the president of Harvard University, hadn’t stood in the way.

Now, with the debate nearly behind us, everyone is wondering the same thing: how will things change under Yellen? It’s a difficult question to answer, but it’s likely Yellen won’t deviate too far from the strategy implemented by Bernanke and fostered in a large way by her own work as vice chairman.

What we know of Yellen is that she supports a policy that focuses deeply on job creation – good news for the unemployed. She also shows no fear in expanding the Fed’s balance sheet in an effort help nurse the economy back to health, a strategy that skeptics fear could eventually lead to an unhealthy level of inflation. It also creates what one stock picker called a “rigged” market.

For the short-term though, Yellen will have one main focus. How – and when – to wind down the $85 billion a month bond-buying program that continues to feed some market participants while starving others (FICC, M&A and of course bond funds like Pimco). We’ll have to wait and find out. The move will involve one part economic strategy and two parts politics.

30 Must-Follows on Twitter (eFinancialCareers)

There are probably more lists of the top finance people to follow on Twitter than there are people tweeting about finance on the micro-blogging site. Less clear, is who to follow on Twitter if you want a job in finance. Fret no more.

No More Free Passes (Bloomberg)

U.S. Securities and Exchange Commission Chairman Mary Jo White wants to design her enforcement program after former New York mayor Rudy Giuliani’s “Broken Window” strategy, feasting on smaller violations in an effort to avoid bigger ones. Watch out Wall Street.

Madoff Appeal (WSJ)

Irving Picard, the trustee representing victims of Bernie Madoff’s Ponzi scheme, has appealed to the U.S. Supreme Court in an effort to hold banks like J.P. Morgan and HSBC partially liable for the fraud. Picard contends that the banks looked the other way as they raked in millions of dollars of fees.

‘Watershed’ Moment for Online Learning (BBW)

Harvard Business School will become the latest Ivy League institution to offer courses through an online delivery model. New York University’s Stern School of Business made a similar announcement last month.

Squash Studs (Business Insider)

If you want to get ahead on Wall Street, playing squash isn’t a bad way to meet the right people. Here are the 21 best racket maestros on the Street.

Steer Clear of Quants (FIN Alternatives)

There have been much better years to be working at a quant hedge fund. The strategy is down 14.9% this year. Firms are closing left and right.

Who Needs New York? (WSJ)

Deutsche Bank has been actively moving traders and bankers to Jacksonville, Florida as it looks to cut costs. Surprisingly, those who are relocating aren’t missing city life like they thought they would.

Buzz Around the Office

Early Bloomer (NJ.com)

A 25-year-old New Jersey man was arrested after attempting to pass himself off as an incoming high school freshman. He may have had a better chance pulling it off if he wasn’t 6-foot-1 and 265-pounds.

List of the Day: Referring Friends

Recommending a friend who isn’t a great worker can harm your own reputation. When asked, take one of these routes.

  1. Refer them to another company other than your own.
  2. Explain how they wouldn’t like the company culture.
  3. Offer a lukewarm referral.

(Source: AOL Jobs)

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