As Janet Yellen prepares to step down from her prestigious post, the Treasury Department is left to grapple with the aftermath of her controversial policies.

Yellen's imminent departure as Treasury secretary marks a tumultuous end to her tenure, as criticisms mount over her economic strategies, as the New York Post reports.

Appointed to the role by President Joe Biden, Yellen will leave her position as the U.S. Treasury secretary in January.

Her tenure has been marked by significant increases in both the federal budget deficit and national debt, sparking widespread criticism.

Yellen's Financial Strategy and Its Critiques

The deficit under Yellen's watch expanded to $1.8 trillion, while the national debt reached a staggering $36 trillion. Yellen's approach shifted the government's borrowing strategy significantly, increasing reliance on short-term debt.

This shift was seen by many as a politically motivated move to keep interest rates low during an election year.

Critics argue that this could lead to higher future risks associated with refinancing this debt at potentially higher interest rates.

Impact of Debt Strategy on Future Economics

The increase in short-term debt from 15% in 2023 to 30% has alarmed economists and policymakers alike.

This could lead to increased costs for consumers on mortgages and credit cards if interest rates rise. Moreover, a destabilized stock market could result if 10-year bond yields climb above 5%.

Robbert van Batenburg commented on the fiscal situation, saying, “The Treasury now faces a substantial volume of short-term debt maturing annually, which must be refinanced at significantly higher interest rates.

Current market rates for short-term debt, while slightly lower than recent peaks, remain elevated compared to historical levels.”

Government Interest Expenses and Economic Risks

Van Batenburg further notes, "This mismatch between low-cost historical debt and high-cost replacement debt is driving a substantial increase in the government’s interest expense." The government's financing strategy under Yellen has been flagged as unsustainable by many financial experts.

As Yellen prepares to leave office, the repercussions of her financial management practices continue to stir debates. The incoming Treasury secretary, hedge fund mogul Scott Bessent, is expected to face significant challenges from day one.

SEC's Leadership Changes and Future Direction

In related financial regulatory news, SEC Chairman Gary Gensler announced his early departure, planning to leave before his term ends in 2026. This has also stirred its share of controversy, particularly regarding his approach to climate activism and cryptocurrency regulations.

An SEC insider shared their concerns, stating, "Cleaning up after Gensler is like avoiding land mines left behind by the retreating Japanese soldiers." This highlights the perceived difficulties the next SEC chairman will face.

Potential Successor for Gensler at SEC

Paul Atkins is mentioned as a potential successor to Gensler. Critics of Gensler's tenure have accused him of focusing too much on climate issues at the expense of more traditional SEC roles, such as managing market stability and investor protection.

This transition period in major U.S. financial institutions signals a time of significant change and potential upheaval. Both the Treasury and SEC are at critical junctures, with their future directions and strategies hanging in the balance.

The impacts of these leadership changes on the U.S. economy will unfold in the coming years, as new policies and approaches begin to take shape under the guidance of their new leaders.