- Fed watchers were surprised to see Page One of the Wall
Street Journal on Aug. 2.
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- The Journal headlined "What Happens When King Alan
Goes?
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- The lead article, which read more like an editorial than
a news report, observed that although Greenspan is in good health at 75
years of age, "He won't lead the federal reserve forever; he'll probably
step down in less than four years.
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- The paper took Greenspan to task for "doing little
for prepare for the transition to a new chairman.
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- Does the Journal know something we don't?
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- Perhaps.
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- Yesterday, NewsMax reported that Greenspan has already
indicated to the Bush administration that he wants to resign and that
it should begin looking for a replacement.
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- Greenspan's expected resignation, which could come by
the end of the year if the administration can find a suitable replacement,
comes on the heels of the recent announced resignation of board member
Edward W. Kelley.
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- The new openings on the seven-member Federal Reserve
will give President Bush a golden opportunity to reshape the Federal Reserve
Board in a major way.
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- Greenspan s departure would mean that more than half
of the seats would be open. Two seats are already vacant as a result of
the resignations of Susan Phillips in 1998 and Alice Rivlin in 1999. Next
January, the term of Board Governor Laurence Meyer expires. That means
Bush could fill five of the seven board seats in the next year.
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- Laurence Lindsey, the president s chief economic adviser,
had said "a number of bankers are under consideration for the slots
already available before NewsMax.com learned of Greenspan s expected retirement.
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- Lindsey himself is the subject of much speculation on
Wall Street and in Washington. He was a Fed governor from 1991 to 1997.
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- Before that he had served as special policy development
assistant to the first President Bush. Earlier the Harvard economist had
served with President Reagan s Council of Economic Advisers. Sources tell
NewsMax he remains the front-runner for Greenspan s job, but that the
new administration will cast a wide net.
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- Lindsey is said to be favorite of the president, but
also some administraion officials believe he doesn t cut a strong enough
appearance. Greenspan made such a forceful impression on the markets,
administration officials believe they may need to fill his shoes with
another strong personality that continues to imbue confidence to the financial
markets.
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- Among the candidates being considered for Fed vacancies,
according to the Dow Jones Newswires, are Terry Jorde, president of Country
Bank USA in North Dakota; Diane Swonk, chief economist of Bank One Corp.,
in Chicago; and Gay Wisbey, a securities regulator in the United Kingdom,
who is eligible by virtue of her American citizenship.
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- Greenspan has been lobbying against Jorde to fill any
vacancies on the board, according to the June 20 Evans-Novak Political
Report. The newsletter says Greenspan did not get along with Jorde when
she was on the Fed s Consumer Advisory Council from 1994 to 1997.
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- Jorde is also reported to be a close associate of Lindsey.
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- Recently, Bush moved to fill the vacancies on the board.
He nominated Susan Schmidt Bies, executive vice president of First Tennessee
National Corp.; and Mark Olson, a former president of Security State Bank
of Fergus Falls, Minn.
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- Some economists who are critical of what they view as
an excess of caution on Greenspan s part like Robert D. McTeer Jr., president
of the Federal Reserve Bank of Dallas. He is viewed as a good balance
between "pro-growth and "anti-inflationary approaches, both
of which are required in the right amounts.
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