As the financial crisis deepened in 2008, Janet Yellen argued at least twice for a more aggressive cut to interest rates than most of her colleagues at the Federal Reserve, internal documents unsealed on Friday showed.
For Yellen's critics, who worry the new Fed chair is a policy "dove" partial to overly easy monetary policy, that revelation will add grist to their mill.
But at the same time the transcripts of that year of fraught decision-making at the Fed will equally make the case for those who applaud Yellen for seeing the depth of the crisis before others and advocating an aggressive response, even more so than then-Fed Chairman Ben Bernanke.
At both a top-secret conference call in early January 2008 days after a dismal jobs report and another one in October just weeks after Lehman Brothers' market-shaking collapse, Yellen argued the need for a more muscular policy response.
"I support a 50-basis-point (half-percentage-point) reduction in the federal funds rate in the near future," she said on January 9, adding that she would prefer to cut rates by a quarter-point that very day, more than two weeks before the Fed's regularly scheduled meeting.
It was not to happen. Though Bernanke said he thought a rate cut would be needed soon, he had called the meeting not to take policy action but to gather his colleagues' thoughts ahead of a speech and congressional testimony. He wanted input on the signals he ought to convey to financial markets.
By the time the Fed did cut rates on January 21, it opted for a hefty three-quarter-point move.
Yellen, who at the time ran the San Francisco Fed, also called for stronger action during a conference call on October 7, about three weeks after Lehman Brothers failed and sent shock waves through financial markets.
Bernanke was using the call to gather support for a half-point cut.
"In my opinion, a larger action could easily be justified and is ultimately likely to prove necessary," Yellen said on the call. "We're witnessing a complete breakdown in the functioning of credit markets, and it is affecting every class of borrowers."
Despite her calls for more action, Yellen