Greenspan nominated for fifth term

WASHINGTON - Federal Reserve Chairman Alan Greenspan, who has helped steer the economy for 17 years under four presidents, was nominated Tuesday for a fifth term by President Bush, who said he had "great continuing confidence" in Greenspan, echoing the widely held view on Wall Street.

"Alan Greenspan has done a superb job as chairman," Bush said in a brief written statement issued shortly before a White House meeting with Greenspan.

Financial markets took the midday announcement in stride because it had been widely expected. Bush took the unusual step of announcing in April 2003, at a time when Greenspan was undergoing successful surgery to correct a noncancerous enlarged prostate, that he would nominate the Fed chairman for a fifth term in 2004.

That action and Tuesday's formal announcement were seen as efforts to reassure financial markets that the country's monetary policy will remain on a steady course during the presidential campaign season.

Greenspan has gained almost cult-like status on Wall Street for helping to guide the economy through two long economic expansions interrupted by two brief eight-month recessions, in 1990-91 and 2001.

Greenspan, in a statement released by the Fed, said: "I am honored to be nominated by President Bush and, if confirmed by the Senate, to continue my service as chairman of the board of governors of the Federal Reserve System."

First tapped for the Fed position in 1987 by Ronald Reagan, Greenspan succeeded another legendary Fed chairman, Paul Volcker. In the early 1980s, Volcker tamed a decade-long bout of inflation by driving interest rates to their highest levels since the Civil War.

Greenspan has not had to resort to such extraordinary measures during his nearly two decades at the Fed. However, he has proven to be very skillful in building consensus among a changing cast of Fed officials for an approach to monetary policy that has stressed small pre-emptive strikes to keep inflation in check.

Many economists believe another series of quarter-point increases in the Fed's key federal funds rate, the first rate hikes in four years, will begin at the central bank's next meeting on June 29-30.

Politicians usually are not happy when the central bank raises interest rates, but analysts said the impending rate increases likely will have little impact on what is expected to be an easy Senate confirmation for the Republican Greenspan. He is held in high regard by members of both parties in Congress.

"Democrats will take the opportunity to criticize the administration and say that the prospect of the Fed raising rates is just one more problem for the economy to endure," said economist David Jones, author of four books on the Greenspan Fed.