Wednesday, August 28, 2013

Fed's Janet Yellen: Debt Free Multi-Millionaire

Federal Reserve vice-chair, Janet Yellen, who is widely believed to be under consideration to be nominated by President Obama to succeed Ben Bernanke as Fed chair, is a debt free, multi-millionaire.

NYT reports:
Janet L. Yellen reported investments worth at least $4.8 million in 2012, making her one of the wealthiest members of the Federal Reserve’s board of governors, according to annual financial disclosures that the Fed released Tuesday.

All seven members of the board are millionaires, but the disclosures also show that the Fed’s chairman, Ben S. Bernanke, may well be the least affluent of the group.

Ms. Yellen, a candidate to succeed Mr. Bernanke, owned stock in a small number of companies including Conoco Phillips and Pfizer, but mostly invested in broad-based equity and bond funds. Much of the money is held in retirement accounts.

Her investments, mostly held in common with her husband, George Akerlof, also include a stamp collection worth at least $15,000. The couple’s investments were worth between $4.8 million and $13.2 million in 2012, according to the disclosure forms, which assign each asset to a range (such as $50,001 to $100,000) rather than providing a value.

The total does not include the pensions the couple earned at the University of California, Berkeley, where both worked as professors, nor Ms. Yellen’s pension from the Federal Reserve Bank of San Francisco, where she was president from 2004 to 2010, nor the home they own near campus.

Ms. Yellen earns a salary of $179,900 as a Fed governor. She does not earn anything extra for her position as vice chairwoman. On top of that, the couple reported income from investments of between $102,820 and $323,200. The disclosure forms do not include the salary earned by Mr. Akerlof as a senior resident scholar at the International Monetary Fund.

According to the disclosure document, Yellen also owned stock in E.I. Dupont, Office Max, Raytheon and Teradata.

At the time of the filing, she also held a position in Vanguard Fixed Income Security Fund High Yield Corporate Portfolio. If she continues to hold this position, she is surely suffering declines in value, as the bond market continues to collapse. This is her only long-term fixed income position.

An indication that she may be expecting interest rates to climb long-term is that her only investment in a bond index fund is in the Vanguard Short-Term Bond Index Fund, which only invests in bonds that have maturities between 1 and 5 years. Outside of the Vanguard High Yield Corporate Portfolio, she appears to have no exposure to long term debt securities.