- The Washington Times - Sunday, July 20, 2003


Americans who have watched interest on savings shrink along with rock-bottom loan-interest rates are in good company: Federal Reserve Chairman Alan Greenspan has taken a hit, too.

Mr. Greenspan’s 2002 financial disclosure form showed that income from his no-frills investments — Treasury securities, money market accounts and savings and checking accounts — totaled between $55,000 and $139,000. That was down from the range of $106,000 to $309,000 Mr. Greenspan reported in investment income for 2001.

The disclosure reports list the value of holdings in broad ranges.

As Fed chairman, Mr. Greenspan has preferred to keep all of his holdings in money market accounts and Treasury securities, which are considered the world’s safest investment, to avoid any appearance of conflict that may be raised by holding stocks in individual companies.

Those safer investments typically pay smaller interest rates than riskier investments, as many of the nation’s senior citizens are finding.

At 77, Mr. Greenspan is himself a senior citizen, and his holdings haven’t been immune to the low financial earnings older Americans have suffered — though the Fed chairman remains a wealthy man.

The value of Mr. Greenspan’s investment holdings in 2002 totaled between $3 million and $6.3 million, nearly the same as in 2001.

Lower rates benefit borrowers but hurt savers, particularly senior citizens and others on fixed incomes.

Rep. Ron Paul, Texas Republican, at a hearing Tuesday asked Mr. Greenspan about the fairness of this.

Mr. Greenspan said the Fed’s rate reductions helped the economy recover from the 2001 recession and cushioned the blow of shocks to the economy, including the September 11 terror attacks.

“Now, we can’t have it both ways,” Mr. Greenspan told the House Financial Services Committee hearing. “In other words, we cannot both have high interest rates, which give significant incomes to those who hold interest instruments, and low interest rates, which will stabilize the economy and expand it.”

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