Risky Business

JANET YELLEN TAKES CHARGE OF THE FEDERAL RESERVE

JJanet L. Yellen took the reins as chair of the Federal Reserve Bank from outgoing chair Ben Bernanke in February, making her the first woman to hold the post in the Fed’s century-long history.

The job is arguably the most influential economic policymaking job on the planet. And although economics remains a male-dominated field, it is hard to imagine anyone having better credentials than Yellen for the post.

And while her job requires her to dwell in the esoteric and mysterious world of monetary policy, she said she never forgets the goal of her work is to improve the lives of everyday Americans. “The mandate of the Federal Reserve is to serve all

American people, and too many Americans still can’t find a job and worry how they will pay their bills and provide for their families,” she said at the White House after being nominated to be Fed chair. “The Federal Reserve can help if it does its job effectively.”

Yellen, 66, comes to her new job after a long career as an economist and more than a decade in top positions at the

Fed, including three years as vice chairman. In that time, she has earned a reputation for having sound judgment and a keen understanding of the Fed’s mandate, which is frequently in tension: to keep inflation under control while lowering unemployment and stoking economic growth. “Dr. Yellen’s experience is unmatched,” Sen. Tim Johnson, a South Dakota Democrat who chairs the Senate

Banking Committee, said before Yellen’s confirmation.

“She currently serves as a member and vice chair of the

Board of Governors; she previously served as a member of the Board of Governors in the 1990s; she was the chair of

President Clinton’s Council of Economic Advisors; and she served six years as president of the San Francisco Fed.”

Beyond that, Johnson noted, Yellen has an impressive academic record. She has been a professor at Berkeley’s Haas

School of Business. Previously, she was a professor at Harvard University, as well as a faculty member at the London

School of Economics. She is a summa cum laude graduate from Brown University, and she received her Ph.D. in economics from Yale University, where she was the only female candidate in her doctorate class of two dozen.

“Dr. Yellen has written numerous research papers on the labor market, unemployment, monetary policy, and the economy. Her expertise in these areas, including her understanding of the relationship between Fed policy and the labor market, would be valuable as we chart the course back to full employment,” Johnson added. President Obama called Yellen’s appointment “one of the most important economic decisions that I’ll make as president—[and] one of the most important appointments that any president can make—because the chair of the Fed is one of the most important policymakers in the world, and the next chair will help guide our economy after I’ve left office.” Yellen steps into this pivotal role running the nation’s central bank at a particularly risky moment. In the wake of the recession, the Fed has kept interest rates close to zero, which has put pressure on savers dependent on normal interest rates and even pension funds whose liabilities, under accounting rules, go up when rates are down. In addition, the Fed has pumped trillions of dollars into the economy to keep interest rates low in hopes of stimu-

Janet Yellen, chair, Federal Reserve Bank

lating growth. The bank now holds nearly $4 trillion in bonds and other securities, which it is going to slowly sell in the coming months and years.

But scaling back Fed support of the economy comes with its own set of potential pitfalls. Critics contend that the Fed’s bond buying program, while no doubt helping to revive the housing market and stoke consumer spending, has fueled an unsustainable run-up in stock prices, while depressing interest rates for savers. Now, they say, the problem is if the Fed retreats, stock prices could tumble, sending a shock through a still fragile, if recovering, economy.

“I have been a long-time critic of the Fed’s quantitative easing purchases,” said Sen. Mike Crapo, the top-ranking Republican on the Senate Banking Committee, before Yellen’s confirmation. “I am concerned that markets have become overly reliant on them. That is why it is essential to know how Dr. Yellen…would manage the process of normalizing monetary policy.”

Now that she is in charge at the Fed, the central bank’s handling of the bond-buying program remains her biggest test. In the weeks before Yellen took the helm of the Fed, the stock market had some tumultuous days after many months of record highs, underscoring the fact that managing the withdrawal puts her in delicate and uncharted territory.

Yellen has made clear that she has supported the bond buying program and would keep at least some of it in place until the economy is on sure footing. “A strong recovery will ultimately enable the Fed to reduce its monetary accommodation and reliance on unconventional policy tools such as asset purchases,” Yellen said at her confirmation hearing. “I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy.”

In the past, Yellen has proved to be an uncanny forecaster of where the economy was headed. She was president of the Federal Reserve Bank of San Francisco during the housing boom and was one of the first major economists to warn that problems in the subprime part of the housing market could hurt the broader economy.

During her years in Washington, Yellen joined departed chairman Ben S. Bernanke in pushing for more transparency at the Fed, an institution that has faced suspicion in the past because of its once-secretive processes. She led the bank’s efforts to establish an explicit target for inflation—which is 2 percent—and develop guidelines for when the Fed would consider raising interest rates.

“In this and many other ways, the Federal Reserve has become a more open and transparent institution,” Yellen said during her confirmation hearing. “I have strongly supported this commitment to openness and transparency, and will continue to do so.”

Yellen spent much of her academic career at the University of California at Berkeley, where her research focused on the roots of unemployment. Yellen also has a long history at the central bank. She worked there as an international economist in the 1970s and met her husband, Nobel Prize laureate economist George Akerlof, in the Fed’s cafeteria.

She returned to the Fed in the 1990s to serve on the Fed’s Board of Governors before joining the Clinton administration as head of the Council of Economic Advisers. Now she is on to the biggest economic policy job of all.

“With the bipartisan confirmation of Janet Yellen as the next chair of the Federal Reserve, the American people will have a fierce champion who understands that the ultimate goal of economic and financial policymaking is to improve the lives, jobs and standard of living of American workers and their families,” Obama said after Yellen’s confirmation. “She understands that fostering a stable financial system will help the overall economy and protect consumers. I am confident that Janet will stand up for American workers, protect consumers, foster the stability of our financial system, and help keep our economy growing for years to come.

“The mandate of the Federal Reserve is to serve, and too many Americans still can’t find a job and worry how they will pay their bills and provide for their families. The Federal Reserve can help if it does its job effectively.” — Janet Yellen

Marillyn A. Hewson

Chairman, President and Chief Executive Officer Lockheed Martin Corporation

Mary T. Barra

Chief Executive Officer General Motors Company

Phebe N. Novakovic

Chairman and Chief Executive Officer General Dynamics

A STEM

COMMITMENT

Mary Teresa Barra—first female chief executive officer of General Motors— joined GM in 1980 as an 18-year-old co-op student at the General Motors Institute (Kettering University). Mixing school and work in rotation at the Pontiac Motor Division, Barra studied electrical engineering at General Motors Institute, obtaining a Bachelor of Science. Clearly on the fast track, she was promoted quickly through engineering and staff positions. By 1988, she earned even further professional development recognition through a GM fellowship for an M.B.A. at the Stanford Graduate School of Business. With 33 years of experience at GM, Barra has risen through a series of manufacturing, engineering, and senior staff positions.

At the end of 2013, GM announced that Barra would succeed Daniel Akerson, the former chairman and CEO of General Motors who served from 2010 to 2014. As CEO, Barra leads company efforts to strengthen GM in automotive design and technology, product quality, customer care and business results for 56 GM plants, annual production of more than three million vehicles and powertrains, and 74,000 workers. workforce at a recent Career Communications Group (CCG) event. “Diversity is about talent and finding the best people for the job. If you get this equation right, underrepresented people will naturally rise to leadership positions,” he said.

To help that rise, the 106-year-old automobile manufacturer continues to shape the next generation of leaders and innovators for the auto industry and develop diverse talent for its future needs.

“STEM-based careers provide some of the most dynamic and innovative jobs in America today,” Barra said. “We need to do a better job of introducing young people to STEM from an early age, and of demonstrating just how fulfilling a technology-based career can be for them and their families. One of the best opportunities we have is with women and Hispanics and African-Americans. These students make up a significant portion of our future workforce, yet they are the most underrepresented groups in many STEM fields today.”

Over the last decade, the GM Foundation has helped prepare students to graduate with STEM, design and manufacturing degrees through the University-Organization Partner Program, with donations totaling $31.3 million. Since its start in 2011, the Buick Achievers Scholarship Program has awarded $16.5 million to students across the U.S. This year, the program will award 100 scholarships of up to $25,000 per year, renewable for up to four years, or up to five years for qualified engineering programs. In August 2013, GM donated $900,000 to Project Lead the Way, which brings together the application of math and science principles in a real-world context, helping students develop problem-solving skills that will prepare them for college and careers.

This February, Project Lead the Way (PLTW) also announced a $6 million national partnership with Lockheed Martin to expand PLTW’s science, technology, engineering, and math programs in urban school districts.

According to Lockheed Martin’s STEM education webpage, the corporation also provides support to 4-H Robotics: Curriculum and Clubs, Great Minds in STEM, and Girls, Inc., the company’s pilot program which connects Lockheed Martin volunteers with girls ages 9-11 to strengthen interest and confidence in pursuing STEM education and careers.

“To be successful, we must find a way to motivate young people to pursue careers in STEM,” Marillyn Hewson said at the CCG event. “We need to do everything we can to develop a strong pipeline of diverse talent and create opportunities for students to pursue their dreams. No one should ever feel like a career in technology is out of reach.”

Hewson has been the CEO of Lockheed Martin Corporation since January 2013—the first female CEO at one of the world’s largest defense contractors. Like Barra, a 30-year veteran of her organization, she also joined Lockheed Martin in the 1980s. According to the Washington Post, Hewson started in 1983 as a senior industrial engineer working on military aircraft, a new program that provided opportunity for Hewson to advance. Over the course of Hewson’s 29-year career she has held 19 leadership positions that included running the company’s electronic systems business, the Post said.

In recent years, General Dynamics has bought companies with expertise in expected growth areas such as health technology and cybersecurity. To guarantee a future supply of highly skilled employees, GD partners with organizations such as Jobs for America’s Graduates and sponsors many scholarships at the community college and university level. GD also supports diverse communities where employees work and live through organizations that have an education focus, particularly STEM.

“Differences in race, ethnicity, gender and experience provide the environment in which diversity of thought can flourish, and it is that diversity of thought that ultimately makes us stronger and better, and, on a human level, richer,” said Phebe Novakovic, chairman and CEO of General Dynamics.

Novakovic joined GD in 2001 and became president and chief operation officer in 2012. She has served as the chairman of the board and CEO of General Dynamics since January 2013. She graduated from Smith College in Northampton, Mass., and received an M.B.A. from the Wharton School of the University of Pennsylvania in 1988. She worked for the Central Intelligence Agency. From 1997 to 2001, she worked for the United States Department of Defense.

At The Chicago Network’s Women in the Forefront Luncheon on April 19, 2013, keynote speaker and chairman, president and CEO of Ingredion Incorporated, Ilene Gordon, discussed the importance of a STEM education and shared how Ingredion is playing its part to promote women in STEM careers.

“An education in the STEM disciplines enhances analytical thinking, which is essential to make sound, fact-based business decisions that drive results. So without ‘shop class’ in elementary school, physics and calculus in high school, math and science classes in college, and an education at a business school that ranks among the best in the world, I would not have been prepared for the opportunities that I’ve had. It’s perhaps not a surprise that close to two-thirds of the women CEOs of the Fortune 500 have STEM degrees.

“While I was lucky to have support in these fields from an early age, not all girls do. Therefore Ingedrion is a strong supporter of Girls for Science, a nonprofit dedicated to exposing Chicago girls to science, technology, engineering and math at a young age. Such a program is a catalyst but without additional opportunities and higher education, the dream of budding STEM professionals could be thwarted so continued public and private support of STEM education for our young women in our nation’s schools and colleges must be a priority,” Gordon said.

“An education in the STEM disciplines enhances analytical thinking, which is essential to make sound, fact-based business decisions that drive results. ”

—Ilene Gordon, president and CEO, Ingredion Inc.

CELEBRATING WOMEN OF CHARACTER, COURAGE & COMMITMENT

WOMEN OF COLOR MAGAZINE’S OUTSTANDING 12

Eleanor K. Baum became the first female dean of an engineering school in the United States in 1984. In 1995, she was elected president of the American Society for Engineering Education, another first for a woman.

Ursula M. Burns serves as Chairman and CEO of Xerox. She is the first African-American woman CEO to head a Fortune 500 company.

Lina Echeverria was the first woman to seek admission to and graduate with a degree in engineering geology from the Universidad Nacional de Colombia at Medellin.

Dr. Aprille Ericsson is the first Black woman to receive a Ph.D. in Mechanical Engineering from Howard University, as well as a Ph.D. in Engineering at the National Aeronautics and Space Administration Goddard Space Flight Center.

Lillian Evelyn Moller Gilbreth (May 24, 1878 – January 2, 1972) was one of the first working female engineers holding a Ph.D.

Dr. Asha Goyal was vice president of quality for IBM Global Services. Her mobility issues as a result of polio at age 2 drove her passion for innovation. Vice Admiral Michelle Howard is the U.S. Navy’s first ever female four-star admiral. Howard is the first woman to be named Vice Chief of Naval Operations.

Duy-Loan T. Le is an engineer and the first woman and Asian to get elected to the rank of Texas Instruments Senior Fellow.

Ellen Ochoa became the first Hispanic woman in the world to go to space when she served on a nine-day mission aboard the shuttle Discovery in 1993.

Irene Hernandez Roberts is an IBM Master Inventor with over 50 IBM Patents.

Rear Admiral Eleanor V. Valentin is the first female flag officer to serve as director of the United States Navy Medical Service Corps.

Chien-Shiung Wu (May 31, 1912 – February 16, 1997) was a Chinese American physicist who worked on the Manhattan Project, helping to develop the process for separating uranium metal into the U-235 and U-238 isotopes by gaseous diffusion.