Bush wants Greenspan to serve 5th term

By William Neikirk
Chicago Tribune

WASHINGTON — Federal Reserve Chairman Alan Greenspan has become an institution like the one he heads.

GREENSPAN

Greenspan towered above all other potential candidates, and Bush would have encountered criticism if he had replaced him in an election year.

"What is hard to replace is his depth of knowledge about the markets and business cycles," said Salomon Smith Barney economist Robert diClemente.

There was no obvious alternative to Greenspan, who has engineered the lowest interest rates in 40 years and guided the U.S. economy through turbulent times, including two recessions and a boom that generated the 1990s' economic excesses.

But it's not clear how much longer the New York economist will be in the job. The nomination is for four years, but Greenspan's 14-year term as a board member expires Jan. 31, 2006. He cannot be named to a new 14-year term, and every chairman has to be a member of the board.

The next president, whether Bush or Democrat John Kerry, could ask Greenspan to remain as chairman until a replacement is found.

Carl Tannenbaum, chief economist at LaSalle Bank in Chicago, had doubts that the Fed chairman would want to stay for four years, chiefly because of his age.

In two more years, Greenspan would break the record of William McChesney Martin, who headed the central bank for more than 18 years in the 1950s and 1960s.

Ronald Reagan named Greenspan as Fed chairman in 1987, and he has served under two presidents named Bush, as well as Bill Clinton.

"Alan Greenspan has done a superb job as chairman of the Board of Governors of the Federal Reserve System, and I have great confidence in his economic stewardship," Bush said in a written statement.

Greenspan implicitly endorsed Bush's tax cuts in 2001, but he has since become a critic of the deficit. He called for cutting spending to offset Congress' tax cuts.