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Greenspan nominated to fifth term

By Nell Henderson
The Washington Post

GERALD HERBERT / AP President Bush poses for photographs with Federal Reserve Chairman Alan Greenspan at the White House yesterday.

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Bush had said more than a year ago he intended to nominate Greenspan, 78, whose four-year term expires June 20, and Greenspan had indicated then he would happily accept. But the lack of movement since then had provoked some speculation that either of the two men might have had a change of heart.

The president put that to rest yesterday, issuing a statement announcing his intention to renominate the chairman and adding, "Alan Greenspan has done a superb job ... and I have great confidence in his economic stewardship."

White House press secretary Scott McClellan went further, saying, "The president wants (Greenspan) to continue to serve as long as possible."

In a statement, Greenspan, who met with Bush yesterday, said he was honored by the opportunity "to continue my service."

Financial markets had little reaction, a welcome respite from recent swoons that pushed some stock indexes Monday to five-month lows on concerns about record oil prices, rising interest rates and higher inflation.

"If it hadn't happened, there would have been great instability" in the markets, said Diane Swonk, chief economist for Bank One. The action provides "much needed certainty in what was becoming an uncertain world."

Senate confirmation should be swift. Sen. Richard Shelby, R-Ala., chairman of the Senate Banking Committee, "believes Chairman Greenspan has done an outstanding job and looks forward to supporting his nomination in the Senate," said Andrew Gray, communications director for the panel.

Greenspan was first appointed Fed chairman in 1987 by President Reagan to replace outgoing Chairman Paul Volcker, who has been credited with launching the central bank's long, painful and ultimately successful campaign to bring inflation down from the double-digit highs of the late 1970s.

Greenspan was reappointed as chairman once by President George H.W. Bush and twice by President Clinton.

If confirmed, his next four-year term as chairman would expire June 20, 2008. But it's not clear whether he will continue that long because his term as a Fed board member expires in less than two years.
 
The Fed chairman must be selected from the seven Fed board members. Although the chairman can be reappointed, a board member may not serve more than one full 14-year term.

Greenspan served out the last years of Volcker's board term and was reappointed to a board term that will expire Jan. 31, 2006.

Greenspan could choose to step down as chairman then, if he believed it inappropriate to continue in an expired board seat. But under the law, he could continue in the board seat until the Senate confirms a successor.

If the president did not nominate a successor, Greenspan could continue in the seat and as chairman for the next four years.

McClellan, responding to reporters' questions, declined to speculate about what will happen when Greenspan's board term expires.