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Send resume to 1600 Pennsylvania Ave. if interested in Fed job

Monday, June 6, 2005

WASHINGTON -- Wanted: expert with a deep understanding of what makes the economy tick.

Must have credibility with Wall Street and the ability to deal deftly with financial turmoil, anytime, anywhere. Politically adept. A consensus builder. Unflappable. Business experience welcome, but not required.

If interested, contact 1600 Pennsylvania Ave., Washington, D.C. Attn: President Bush.

Picking Alan Greenspan's successor as chairman of the Federal Reserve will be one of Bush's most important tasks. Greenspan, 79, has led the Fed since 1987. He is expected to step down on Jan. 31.

The next chairman will play a crucial role in steering the world's largest economy so that it grows solidly and produces jobs without fanning inflation.

Fed experts say it is critical for Greenspan's successor to maintain the central bank's independence from political influence.

"Politicians like low interest rates. That's a fact of life," said Susan Phillips, a former member of the Federal Reserve Board.

"The ability to be able to raise rates even though politically unpopular is very important to the long-run well-being of the economy," said Phillips, dean of the George Washington School of Business.

Three people so far are drawing frequent mentions as possible successors to Greenspan. Each is a respected economist with a firm sense of how Washington works.

* Martin Feldstein, 65. An economics professor at Harvard University and president of the National Bureau of Economic Research, he advised Bush when the Texas governor ran for president in 2000.

* R. Glenn Hubbard, 46. Dean of Columbia University's graduate school of business and an economics professor, he was Bush's chief economic adviser from 2001 to 2003.

* Ben Bernanke, 51. On the Fed board since August 2002, Bernanke was picked by Bush in April to become chairman of the Council of Economic Advisers. Bernanke is awaiting Senate confirmation.

As Fed chairman, Greenspan helped Bush by endorsing the president's tax cuts in 2001. More recently, the Fed chief came down on the side of Bush's proposal for personal accounts as part of a revamp of Social Security.

Backing Bush

Can Bush count on such support from the next Fed chairman?

"I'm sure Bush is not going to pick someone who he knows has been criticizing his economic policies. But that doesn't necessarily mean it has got to be somebody who think every single decision that he had made is right," says Anil Kashyap, an economics and finance professor at the University of Chicago Graduate School of Business who teaches a course on understanding central banks.

The White House says it will not speculate about personnel issues and says Bush is pleased with Greenspan's performance.

Among the other names bantered about for the job are:

--Donald Kohn, 62, a member of the Fed board.

--Roger Ferguson, 53, vice chairman of the Fed board.

--John Taylor, 58, an economics professor at Stanford University. He had been Treasury undersecretary for international affairs. He has written popular textbooks for economics and is author of the "Taylor rule," a formula designed to help central banks set interest rates.

Greenspan ran an economic consulting business before he was appointed to be Fed chief. Before that, Greenspan was President Ford's top economic adviser. Yet he was not a household name when he replaced Paul Volcker at the central bank.

Just months into the Fed job, Greenspan was tested by a 508-point plunge in the stock market on Oct. 19, 1987. He won high marks for acting swiftly to reassure financial markets.

Despite some missteps, Greenspan has assumed an almost cult-like status over the years.

Greenspan's replacement also will have a chance to make a mark.

"The chairman dominates the Fed board. The next chairman may have an opportunity to shake the institution more than Alan did," says Martin Mayer, an expert on the Fed and a guest scholar at the Brookings Institution.


On the Net:

Federal Reserve: http://www.federalreserve.gov/


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