WASHINGTON - Janet Yellen, the Federal Reserve Board's newest governor, is supposed to come from a different tradition than her Republican- appointed colleagues.
Supporters have said she's one of President Bill Clinton's new Democrats - liberal on social issues and conservative on economic ones.
But, in her first five months at the Fed, Ms. Yellen has remained quiet and noncombative, declining to stake out controversial positions publicly.
In fact, she appears to have adopted many of the Fed's long-standing views on regulatory issues.
Unlike fellow Clinton appointee Alan Blinder, who caused a stir early last fall after discussing publicly the Fed's role in preventing unemployment, Ms. Yellen has not made headlines.
Even on an issue the President has singled out as a priority - community reinvestment reform - Ms. Yellen so far has not differed from her colleagues.
For example, the former University of California business professor voted in September to give Barnett Banks permission to buy a Florida thrift, despite a continuing Justice Department fair-lending probe.
"I'm somewhat disappointed that (Ms. Yellen and Mr. Blinder) have not sought out new ground from some of the holdovers on the board, especially given the public comments of some members of the board," said Allen Fishbein, general counsel to the Center for Community Change.
Several board members, including Lawrence B. Lindsey, have questioned the wisdom of parts of the Community Redevelopment Act reform package.
Ms. Yellen, in her first wide-ranging interview since taking office in August, said the public should not misinterpret her silence on CRA issues.
"I consider myself a liberal," she said. "I am concerned about the cities. I just think it is inappropriate to be staking out a position."
She said she will speak out once she's considered the comments filed on the most recent CRA revisions. Until then, she said she wants to keep an open mind.
She and the other governors, contrary to the belief of some CRA activists, do not take CRA complaints lightly, she added.
"The board always takes CRA protests seriously," she said. "They are not ignored."
Fed governors receive a confidential assessment of a bank's Home Mortgage Disclosure Act data and an analysis of its CRA performance before voting on an application, she said.
Community activists said it is too early to know where Ms. Yellen stands on CRA.
"The jury is still out," said John Taylor, president of the National Community Reinvestment Coalition.
He said Ms. Yellen has made several encouraging comments, telling community activists that she believes CRA is an important part of the regulatory system. Hopefully, those comments will turn into action, he said.
"The sense I got with her is that she clearly is trying to learn and do some on-the-job training," Mr. Fishbein said. "That may explain why she's been quiet."
But, he said he is surprised that Ms. Yellen has not defended CRA and fair-lending issues when they have come up at Fed meetings.
Ms. Yellen also has adopted the board's consensus view on a host of other issues, including regulatory consolidation, derivatives, Glass- Steagall Act reform, and mutual fund sales.
For example, while the Clinton administration wanted to strip the Fed of some of its bank regulatory powers, Ms. Yellen said these powers are vital to the central bank's monetary policy mission.
"It is surprising how much you learn from the regulatory environment that is helpful in monetary policy," she said.
For example, as the Fed has tightened the money supply, bankers have told her that they are easing credit terms, effectively mooting the central bank's interest rate hikes.
"Is that relevant to us on the monetary side?" she asked. "Absolutely."
On the derivatives front, Ms. Yellen echoed the view of several Fed governors who have said regulators have a hard time accounting for risk.
"Risk can only be evaluated in the context of a bank's complete holdings," she said. "The problem is, how do you judge the risk of a portfolio? This is not just a matter of sending in bean counters."
Regulators also must determine how to respond to institutions that calculate risk exposure differently, she said.
Ms. Yellen, agreeing with Fed Gov. Susan M. Phillips and others, said additional legislation on derivatives is not needed because there is no evidence yet that banks are abusing the complicated financial instruments.
Ms. Yellen also sticks to the Fed's consensus view on Glass-Steagall reform, saying separately capitalized holding companies should be freed from the 10% cap on their underwriting activities.
"I think I am reasonably comfortable with that," she said.
But, repeating Fed Chairman Alan Greenspan's view, a final resolution of whether the cap stays or goes must be left to Congress, she said.
"I would not be comfortable seeing regulators adopt rules that effectively repeal Glass-Steagall," she said.
Ms. Yellen adheres as well to the Fed's view on the sale of mutual funds and other investments, saying she supports letting banks expand into new businesses provided there are adequate safeguards.
Ms. Yellen stressed several times during the interview that she is just learning about many of these regulatory issues, noting that she didn't encounter these questions during her career as an economist.
That career began when the Yale University doctor of philosophy served as an assistant professor of economics at Harvard from 1971 to 1976, before joining the Fed as an international economist.
She left the central bank in 1978 to teach at the London School of Economics before joining the faculty at Berkeley.
She found out she was in the running for the Fed post while vacationing in Hawaii. She said it took Treasury Department officials a week to track her down.
"I was far from a phone and didn't tell anyone where I was going," she said with a smile.
Less than a month later, the President formally nominated her, she said.
That Ms. Yellen's first major interview comes five months into her 14- year term shouldn't surprise anyone, Emory University professor George J. Bentson said. Most new governors avoid the spotlight, added Mr. Bentson, a member of the Shadow Financial Regulatory Committee.
"That is pretty much the way they do it," he said.
