Greenspan Vows to Be Independent

By Hobart Rowan
Washington Post Staff Writer
Wednesday, July 22, 1987

Economist Alan Greenspan, President Reagan's nominee to be the new chairman of the Federal Reserve Board, assured the Senate Banking Committee yesterday that he would firmly reject any pressure from the chief executive or Congress intended to influence his monetary policy decisions.

When Greenspan was asked at his confirmation hearing by Sen. Donald Riegle (D-Mich.) if he could pursue a tight-money policy even though the Reagan administration might oppose it, Greenspan responded:

"Certainly! If the Senate confirms me {to succeed Paul Volcker}, I will take an oath of office. And I take that oath seriously. It's just not credible to me that I would be advocating actions other than those I thought relevant to the situation.

"It's conceivable that my advice may turn out to be wrong, my actions may turn out to be be wrong, but that certainly would not be on the basis of politics rather than economics."

The question of Greenspan's ability to resist political pressure from the White House had been raised by Senate Banking Committee Chairman William Proxmire (D-Wis.) and others because of his close ties to Republican administrations.

Yesterday, after 3 1/2 hours of testimony that probed Greenspan's views on fiscal, monetary, budget, tax and debt issues, he seemed to satisfy the committee with his assurances that he could -- as Proxmire put it -- say "nix" to both the president and Congress.

Greenspan, currently chairman of Townsend-Greenspan Co., added at another point that although he philosophically is opposed to the antitrust laws, he would have no problem in putting aside "personal preferences" and apply the law as necessary.

"It's more important that the laws be adhered to rather than my personal {belief} that a law may be right or wrong," Greenspan said.

Proxmire predicted at the end of the hearing that Greenspan would be "overwhelmingly" confirmed, although the senator said that he may decide to vote against him.

Moreover, Proxmire said, "you will be moving onto a board of clones," all seven members having been appointed by Reagan.

Greenspan said he viewed the Fed's primary role as "achieving steady, maximum economic growth ... {without} letting the inflation genie out of the bottle." He volunteered that Volcker's policies had been "essentially on target", and expressed a determination to "follow {in his} footsteps."

In an exchange with Riegle, Greenspan declared that the critical problem facing the administration and the Fed "is how to manage our way out of our dual deficits -- budget and trade."

CONTINUED     1        >

© 1987 The Washington Post Company