Already-strong case for Yellen strengthens further, and a word about the inanity of “market” preferences by Cardiff Garcia

Alan Blinder:

Fast forward to her days leading the San Francisco Fed, where she warned, as early as 2005, that the titanic real-estate market was heading for an iceberg. Ms. Yellen was frustrated that the Fed’s Board of Governors would not even issue regulatory guidance to curb disgraceful lending practices like piggyback loans that exceeded 100% of the house’s value, or loans with little or no documentation. When the board finally did so, she was dismayed at how weak the guidance was. She later told the Financial Crisis Inquiry Committee: “You could take it out and rip it up and throw it in the garbage can.” The guidance, she added, “wasn’t of any use” to the San Francisco Fed.

Feisty, but true. Had Washington listened to her, it would have cracked down on bad lending practices sooner, and the crisis would have been less devastating. After a thorough recent review of her record as a bank regulator, the Center for Public Integrity entitled their report “Yellen as Fed chair would be tougher on banks”—which tells you why some of the big banks are not thrilled at the prospect.

So much for the lack of toughness. See also Carola Binder.