Washington, DC, May 19--President Bush, ending any lingering uncertainty, nominated Alan Greenspan for another term as chairman of the Federal Reserve, a post he has held since 1987.
The 78-year-old Fed chairman's term expires June 20, and Bush said last spring that he would reappoint him. But because the White House hadn't made a formal move, financial markets were beginning to speculate that Bush was using the matter to put pressure on Greenspan to avoid raising interest rates before the election.
The White House yesterday ended that speculation. White House Press Secretary Scott McClellan read a statement from the president saying that Greenspan's policies have "helped unleash the potential of American workers and entrepreneurs" and expressing "great continuing confidence in his stewardship." The president and Greenspan met shortly afterward at the White House.
Greenspan probably won't serve the full four-year term as Fed chairman because his 14-year term as a member of the Federal Reserve Board expires on Feb. 1, 2006. By law, he can't be renominated to the board. He can, however, continue as chairman until his successor is named and confirmed by the Senate. Greenspan's first years at the Fed were to fill a previous governor's unexpired term.
The Fed--which has been holding its key interest rate at 1% since June to reduce the risk of deflation and stimulate a lackluster U.S. economy--is widely expected to raise rates when policymakers meet at the end of June.
Greenspan was named initially by President Reagan to succeed Paul Volcker two months before the 1987 stock-market crash. Although the first President Bush reappointed him, Greenspan clashed with the elder Bush's economic advisers, who complained that he was too miserly with interest-rate cuts in the early 1990s. The Clinton administration embraced him, and, though a Republican, Greenspan embraced it back, forging a particularly close relationship with Treasury secretaries Robert Rubin and Lawrence Summers.
President Clinton reappointed Greenspan twice.
Relations with the current Bush administration have been generally cordial, and Greenspan has been close to several of its officials, including Vice President Dick Cheney, with whom he served in the Ford administration during the 1970s.
The Senate is expected to approve Greenspan's renomination without controversy, and he can continue in the post even if a vote occurs after June 20. In a statement, Greenspan said he was "honored" and would "continue my service" if the Senate confirms him.
As Greenspan ages, financial markets, economists and Washington politicians frequently speculate on who might succeed him in the powerful post.
