Administration Considers Delaying Fed Chief's Exit
Wednesday, May 18, 2005
Federal Reserve Chairman Alan Greenspan frequently urges Americans to postpone retirement and stay on the job longer.
He may soon get the chance to do so himself.
Bush administration officials are mulling whether to encourage Greenspan, 79, to continue as Fed chairman for at least a few months beyond the Jan. 31 expiration of his term, according to sources told of the possibility.
That would give the White House more time to broaden the search for possible successors, looking beyond the academic and policy worlds to the corporate world, as they have been urged to do by some financial analysts.
Greenspan did not comment for this article but indicated in a commencement speech Sunday at the University of Pennsylvania's Wharton School that he still intends to leave the Fed early next year. "I have more in common with you graduates than people might think," he said. "After all, before long, after my term at the Federal Reserve comes to an end, I too will be looking for a job."
A short extension might be attractive to Greenspan because if he remains at the helm until May 11, he would become the longest-serving Fed chairman ever, exceeding the 18 years, nine months and 29 days served by William McChesney Martin Jr., from 1951 to 1970.
The law allows a Fed chairman to continue beyond the expiration of his term until a successor is confirmed by the Senate. Thus, if Bush wanted Greenspan to stick around a bit longer, he could just put off nominating a replacement.
Bush's deputy chief of staff, Karl Rove, told Bloomberg News last month that it would be "premature" to announce a nominee this year.
"President Bush believes Chairman Greenspan is doing an excellent job," said White House spokesman Trent Duffy. He declined to comment on whether Greenspan might be encouraged to stay on, saying, "We don't speculate on personnel decisions."
Greenspan is highly regarded in global financial markets and in Washington, but delaying the identification of a successor would carry risks, including prolonging the uncertainty, several Fed watchers said.
"Greenspan is doing such a terrific job, you can see how they would be tempted," said Kevin A. Hassett, director of economic policy studies at the American Enterprise Institute. But, he said, postponing a nomination would send "a negative signal to the markets. . . . It implies that Greenspan is irreplaceable. It implies if we don't have Greenspan, everything will fall apart."
Sen. Richard C. Shelby (R- Ala.), chairman of the Senate Banking, Housing and Urban Affairs Committee, said, "If we could keep Alan Greenspan on for 10 more years, I wouldn't have any qualms, based on his record which has been exemplary overall." But, he added, "an appointment would show decisiveness that [White House officials] are on top of the game, which I'm sure they are."