President Bush yesterday nominated Federal Reserve Board Chairman Alan Greenspan to a fifth four-year term, praising the economist’s “superb” management of the economy since the waning days of the Reagan administration.
“Sound fiscal and monetary policies have helped unleash the potential of American workers and entrepreneurs, and America’s economy is now growing at the fastest rate in two decades,” Mr. Bush said. “Alan Greenspan has done a superb job as chairman of the Board of Governors of the Federal Reserve System, and I have great confidence in his economic stewardship.”
Mr. Greenspan, 78, dubbed “The Maestro” in one biography, is acknowledged throughout the world as one of the most powerful chairman in the history of the Fed.
“Greenspan has been such a successful Fed chairman,” said economist James Glassman of the American Enterprise Institute. “He has maintained an amazing stability in the American monetary system, amazing stability in inflation.
“The stability is so incredible, we’ve only had two recessions in his tenure and they were both extremely mild,” Mr. Glassman said.
Mr. Greenspan’s chief tool, the setting of interest rates, is watched closely by world markets and his every word in testimony to Congress can cause an immediate surge or dive on Wall Street.
Indeed, the Dow Jones Industrial Average rose 61.60 points yesterday on word that Mr. Bush has nominated him to lead the Fed again.
Mr. Greenspan’s current term as Fed chairman was set to expire June 20, but his separate term on the seven-member Federal Reserve Board expires in January 2006. It was not clear yesterday whether he would be forced to relinquish the chairmanship at that date.
Mr. Bush promised more than a year ago that he would nominate Mr. Greenspan again, and announced it formally yesterday to “get the process moving” on his confirmation hearings in the Senate.
Mr. Greenspan was first appointed Fed chairman by President Reagan in 1987, in the middle of an historic economic boom that has experienced just two mild recessions.
Mr. Greenspan was renominated by the first President Bush and twice by President Clinton during the technology boom of the 1990s.
His 17-year tenure is longer than any other Fed chairman except for the legendary William McChesney Martin, who was nominated by President Truman and served until the start of the Nixon administration.
Though Mr. Greenspan has Republicans to thank for his rise to prominence — he was chairman of the Council of Economic Advisers under President Ford from 1974 to 1977 — he has pleased and frustrated officials from both parties as Fed chairman.
Mr. Greenspan endorsed Mr. Bush’s tax cuts to the frustration of Democrats, but has also decried the long-term-deficit projections of the president’s budgets.
While his position is traditionally considered nonpartisan, Mr. Glassman sees the Fed chairman as among the shrewdest political players in Washington.