Federal Reserve Board Vice Chairman Roger Ferguson likes to joke as he takes the podium and adjusts the microphone that although he's only 5 feet 7 inches tall, "I look 6-foot-2."
Fed watchers say there's more truth in that than many realize. Ferguson's modest stature belies his influence and import at the Fed, where he has become a close ally of Chairman Alan Greenspan. Only the third African-American to serve on the Board of Governors, Ferguson has made a name for himself by focusing on the internal workings of the bank.
He's worked on strengthening banking regulation, analyzing policy implications of the rapidly changing US financial system, and increasing Fed accountability. That's set him apart at times from other Fed governors who are better known for their monetary policy pronouncements.
"Roger realized early on that the right way to be an effective governor was from the inside rather than the outside," said Alan Blinder, a Princeton University economist who served as the Fed's vice chairman in the mid-1990s.
Ferguson joined the board in November 1997, filling the unexpired term of former Fed Governor Janet Yellen. His initial appointment expired January 31, 2000; since then he's served under a law that lets members stay until their successors are appointed.
Greenspan pushed President George W. Bush to nominate Ferguson to another term at the Fed, even though he was originally chosen to join the central bank by former President Bill Clinton.
He's expected to easily win the endorsement of the Senate Banking Committee at a confirmation hearing today, particularly since Democrats now control the Senate.
Like most Fed policy makers, Ferguson has a doctorate in economics. Unlike many of them, he isn't known for it. Ferguson made his mark in the private sector as a lawyer at New York-based Davis Polk & Wardwell, and a banking industry consultant for McKinsey & Co.
"He would be the first to admit that he's not the macroeconomist of the caliber of Alan Greenspan," said Carl Tannenbaum, chief US economist at ABN Amro North America Inc in Chicago.
In October 1999, Fortune magazine predicted Ferguson would soon be atop the list of candidates to succeed Greenspan, whose term as chairman ends in 2004. That's unlikely: a Fed vice chairman has never ascended to the chairman's office. And Ferguson isn't seen as dynamic enough to replace the larger-than-life Greenspan.
"The way to become the next Fed chairman is to develop a big public profile and endear yourself to the president of the United States," Blinder said. "I don't see Roger taking any steps in that direction."
Ferguson's views don't stand out in discussions about interest rate policy. He typically votes with Greenspan, and has never dissented. "I take him as a bit of a litmus tests in terms of where the solid, center core of the committee is," said Peter Hooper, chief US economist at Deutsche Banc Alex Brown.
Any unfriendly questions from senators today likely would focus on that. He's loyally defended the Greenspan Fed's decision to leave interest rates unchanged through the last half of 2000, even though the economy was cooling rapidly.
"The evidence in hand did not appear sufficient to justify a rate cut," Ferguson told the Bay Area Council in Oakland, California in January.
Observers do give Ferguson high marks for his efforts to better explain decisions by the Fed's rate-setting Open Market Committee. Chairing a working group on the issue, Ferguson helped convince the FOMC to issue a statement after every meeting rather than only when rates changed.
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