The Federal Reserve “released transcripts of 14 scheduled and emergency policy meetings it held in 2008, providing the most complete view yet into developments inside the nation’s central bank as the financial crisis worsened and threatened to plunge the U.S. into another Great Depression,” the Wall Street Journal reports.

“Two days after U.S. officials decided to let Lehman Brothers collapse in September 2008, and just before the Federal Reserve was about to unleash a torrent of new support programs to bolster a crumbling financial system, central-bank officials were still struggling to grasp the magnitude of the calamity that had hit the U.S. economy.

Wonk Wire: Who will benefit from the Fannie/Freddie windfall?

“When Janet Yellen takes over the reins of the Federal Reserve on Monday, she will become one of the most powerful women in the world — a historic achievement that she has yet to fully embrace,” the Washington Post reports.

“Her status has been trumpeted by others — she is featured in a Microsoft commercial “celebrating the heroic women of 2013” and heralded by glossy magazine Marie Claire as having ‘triumphed over the haters’ — but Yellen has been reticent about the role that her sex has played in her four-decade career. She has even instructed staff members that her new title be simply ‘chair,’ rather than ‘chairwoman.'”

Deal Book: “Sheila C. Bair, a former head of the Federal Deposit Insurance Corporation who once argued that former regulators should be barred from joining the banks they oversaw, is joining the board of Banco Santander, the Spanish bank said on Monday.”

From her 2012 book, Bull by the Horns: “There should be a lifetime ban on regulators working for financial institutions they have regulated.”

The Senate confirmed Janet Yellen to head the Federal Reserve, “setting her up to take office Feb. 1 as one of the most powerful economic policy makers in the world,” the Wall Street Journal reports.

“Ms. Yellen, who will be the central bank’s first female chief in its 100-year history, was easily confirmed by the Democratic-controlled Senate. She is expected to be sworn into office Feb. 1 and lead the Fed’s policy meeting in March.”

Federal Reserve Chairman Ben Bernanke said “a willingness to resist political encroachment has been a key strength of the Fed during its first century as the U.S. central bank,” Bloomberg reports.

Said Bernanke: “One value that strikes me as having been at least as important as any other has been the Federal Reserve’s willingness, during its finest hours, to stand up to political pressure and make tough but necessary decisions.”

[Read more…]

“The Obama administration, currently stumbling through the health care overhaul, has reached a critical stage in its other signature effort: reining in Wall Street,” the New York Times reports.

“The push to reshape financial oversight hinges on negotiations in the coming weeks over the so-called Volcker Rule, a regulation that strikes at the heart of Wall Street risk-taking. The rule, which bans banks from trading for their own gain, has become synonymous with the Dodd-Frank overhaul law that Congress adopted after the financial crisis.”

Janet Yellen “breezed through questions about the financial crisis, the Fed’s stimulus efforts and banking regulation, as the Senate Banking Committee weighed her nomination to serve as future head of the Federal Reserve,” CNN Money reports.

Daily Beast: “The Senate remains a remarkably politicized place. Tea Party rogues like Ted Cruz of Texas and Mike Lee of Utah are gumming up the works. Republicans are filibustering Obama judicial nominees. And a grand bargain on taxes and spending remains elusive as ever. But at the Yellen hearing, the members of the Senate Banking Committee signaled that they essentially accept the status quo.”

Wonk Wire: The good news and bad news for Janet Yellen.

Sen. Rand Paul (R-KY) “is threatening to put a hold on the nomination of Janet Yellen to chair the Federal Reserve,” CNBC reports.

“Paul is insisting on a vote on his Fed transparency bill, and has informed Senate leadership of his intentions.”

First Read notes that Janet Yellen’s confirmation as Federal Reserve chair “won’t be easy; if you’ve been paying attention to politics over the last two or three years, there isn’t a lot of love of the Fed from the right. (Of course, that also shows you how conservatives and Wall Street couldn’t be more far apart right now.) But also don’t lose sight of the nomination’s historic nature, given that Yellen would be the first woman to chair the Fed. While Obama and his West Wing team have gotten the reputation (fair or not) of being a Boy’s Club, it’s worth noting that some of Obama’s most consequential appointments who will live well beyond his terms in office have been women — Sonia Sotomayor and Elena Kagan to the Supreme Court, and Janet Yellen to the Fed (even if Yellen wasn’t his first choice).”

Wonk Wire: Yellen’s confirmation could take a while.

Bloomberg: “Anyone who remembers the collapse of Lehman Brothers Holdings Inc. little more than five years ago knows what a global financial disaster is. A U.S. government default, just weeks away if Congress fails to raise the debt ceiling as it now threatens to do, will be an economic calamity like none the world has ever seen.”

“Failure by the world’s largest borrower to pay its debt — unprecedented in modern history — will devastate stock markets from Brazil to Zurich, halt a $5 trillion lending mechanism for investors who rely on Treasuries, blow up borrowing costs for billions of people and companies, ravage the dollar and throw the U.S. and world economies into a recession that probably would become a depression. Among the dozens of money managers, economists, bankers, traders and former government officials interviewed for this story, few view a U.S. default as anything but a financial apocalypse.”

President Obama “will likely nominate Janet Yellen soon as the next chairman of the Federal Reserve. Yellen, the current vice chairman of the central bank, should enjoy uniform Democratic support and will almost certainly pick up enough Republican votes to win confirmation,” Politico reports.

“Then her real problems will begin.”

“Yellen, should she get the job, would take over at a uniquely difficult time for the nation’s central bank. Since the financial crisis, the Fed has been among the few constant sources of economic stewardship in Washington, pumping money into the struggling economy as Congress and the White House lurched from near-default to the first credit downgrade in the nation’s history to a series of high-stakes spending battles.”

The New York Times has a good piece on how liberal Democrats rose up to derail the possible nomination of Larry Summers to be chairman of the Federal Reserve Board.

“For the White House, that would have left two options, Senate aides said, both unpalatable. The first would have been to lean on the Democratic “no” votes, asking members to agree to pass Mr. Summers out of committee even if they intended to vote against him on the Senate floor. But the White House had not laid the groundwork for such a strategy. Some Democratic offices had not heard from White House representatives about the nomination at all.”

“The second option would have been to barter for Republican votes. Aides described that strategy as possible: many Republicans would have been willing to vote for Mr. Summers, they said, for a price. But handing the Republicans leverage in the midst of the debt ceiling and budget debates would have weakened the White House’s hand.”

Wonk Wire: Janet Yellen is now the front-runner for Fed chief.

Larry Summers’ withdrawal as a candidate for Federal Reserve chairman “came after an unprecedented campaign to stop a Fed nominee even before he was announced, spearheaded by Democratic senators who took on a president of their own party,” Bloomberg reports.

Peter Beinart: “Still not convinced that the Democratic Party’s becoming more anti-Wall Street?”

Former Treasury Secretary Lawrence Summers called President Obama to say he is pulling out of the contest to succeed Ben Bernanke as chairman of the Federal Reserve, the Wall Street Journal reports.

Said Summers: “I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation’s ongoing economic recovery.”

The Week: Will Janet Yellen be the next Fed chair?

Larry Summers’s prospects of becoming chairman of the Federal Reserve next year dimmed, “as an important Senate Democrat signaled that he would vote against the Harvard economist, should President Obama nominate him to lead the central bank,” the Wall Street Journal reports.

Sen. Jon Tester (D-MT), “considered a political centrist, joins at least three other Democrats on the Senate Banking Committee who are expected to vote against Mr. Summers if he is nominated.”

“The mounting opposition to Mr. Summers suggests his potential path to Senate confirmation is narrowing quickly. His nomination would need Republican support to advance from the banking committee to the Senate floor.”

President Obama is set to name former Treasury Secretary Lawrence Summers as the next chairman of the Federal Reserve Board, sources told The Nikkei.

Wonk Wire: Bank leverage?

Wonk Wire has the latest evidence that it will be Larry Summers.