ALAN GREENSPAN will take over the chairmanship of the Federal Reserve Board at a time when the board itself is, by any historical standard, conspicuously weak. The chief defect is inexperience. While the chairman usually gets most of the public attention, there are in fact seven seats at the table, and all members' votes count equally in the decisions that set the country's monetary policy.
Central banking is an esoteric and specialized business. For that reason, members' terms are set by statute at 14 years with one term expiring every other year. But an unusual cycle of resignations has disrupted that orderly progression. Except for the outgoing chairman, Paul Volcker, there is no member of the present board with as much as three years' tenure; only one member has more than 18 months on the board, and one seat is vacant.
As recently as five years ago, the board was very much a mandarinate. All but one of the seven members were professional economists. Most had worked at the staff level within the Federal Reserve System before their appointments, and a couple had spent most of their careers there. As a group they represented a very high level of expertise and intellectual capacity; the board's great shortcoming in those years was a lack of representation of the world that the Federal Reserve regulates.
All that has now been reversed. The Reagan appointments have reflected the populism that is always a part of this administration's economics, as well as the White House's intention of building an opposition to Mr. Volcker and the consensus of experts over which he presided. Several of the present members have had experience in commercial banking, but the Federal Reserve's work takes it into areas that commercial bankers rarely visit.
The complexity of the board's work has increased sharply over the past 15 years. Rapid swings in interest rates have made the basic job of managing the money supply far more difficult. The Latin American debts have greatly expanded the Federal Reserve's role in a particularly fast-moving and demanding kind of diplomacy. Among its other responsibilities the Federal Reserve is also one of the regulators of the banking system, which draws it deeply into the fierce struggle over the banking legislation now before Congress.
Having created a Federal Reserve Board that is very new to most of these issues, the administration cannot do much about it but let time and education take their course. When the White House begins to think about filling that vacant seat it might want to consider, for the sake of balance, looking for a mandarin.