WILL FOMC DIRTY WORK DELAY GREENSPAN?S ?INEVITABLE? CONFIRMATION?
?Stan Wilson
The juxtaposing of two dates may foreshadow
more trouble for the confirmation of Alan
Greenspan to another four years as Federal
Reserve chairman than many Fed watchers
are predicting. On Jan. 26 the Senate Banking
Committee will hold a hearing on his
confirmation (probably a ?love fest?, one
committee aide quipped). But only six days
later, the Federal Open Market Committee
meets to begin what financial markets are
widely assuming be the markedly less-festive
task of pricking the financial asset price
bubble with a new round of rate hikes. In an
election year, the resulting Wall Street jitters
could chill some of the enthusiasm of
politicians for four more Greenspan years.
That the Fed chairman should fail to be
confirmed is, by all accounts, unthinkable.
Last week a staffer for one senator who takes
a dim view of Greenspan?s tenure quoted his
boss as saying, ?we only got seven votes last
time. We will probably get 10 votes this time.?
But three-and-a-half years ago, during
Greenspan?s last Senate confirmation,
opponents were successful in delaying floor
action for three months. Along the way, his
term as chairman expired and Fed governors
had to meet and elect him chairman pro
tempore because it was unclear whether the
statute would let him continue to serve
otherwise.
With the notable exception of Sen. Tom
Harkin, reservations about Greenspan were
kept muffled when the White House
announced his nomination last week. Another
some-time critic, Sen. Harry Reid, D-Nev., was
out of the country. And queries on this subject
to the offices of Sens. Kent Conrad and Bryan
Dorgan, both North Dakota Democrats, went
unanswered
Harkin, however, said in a statement, ?frankly,
I believe the Fed is all-too-ready to increase
rates again in February with no sign of
accelerating inflation in sight. This would be an
unneeded tax on American consumers and
stifle economic growth.? And, in what might be
interpreted as a loaded statement by those
who remember Greenspan?s last confirmation,
Harkin added that he looks forward to ?another
good debate? on the Fed?s monetary policy.
Last time, it was Harkin?s insistence on a floor
debate about monetary policy that forced a
prolonged delay of the nomination and
ultimately led the Senate leadership to cave in
to the Iowa Democrat and allow three days of
debate on the subject.
JOINED AT THE HIP?
Fed watchers pointed to another potential
complication. The Clinton Administration may
reconcile itself to the likelihood that its Fed
nominee, Carol Parry, will not be confirmed by
a Republican Senate this presidential election
year. But last week Beltway insiders
speculated about whether it might want to see
confirmation of another Fed nominee, Roger
Ferguson, linked to that of Greenspan÷ thus
muddying prospects for the latter. Ferguson
already has been confirmed to a four-year term
as Fed vice-chairman, ending in 2003. But his
current 14-year term as a Board member
expires in 12 months. In their college days,
Treasury Secretary Lawrence Summers was a
roommate of Ferguson and the two remain
friends. Summers is said to be interested in
getting Senate action on Ferguson?s
nomination.
So far, Senate Banking Chairman Phil Gramm,
R-Texas, has not been willing to act to give
Ferguson another term. Asked about the
latter?s chances for confirmation this year, a
Gramm spokeswoman said the schedule had
not been decided yet. A Treasury spokesman
did not respond to requests for comment. |
