US President George W. Bush formally nominated Alan Greenspan for a fifth four-year term as chairman of the Federal Reserve, fulfilling a pledge Bush made last year and reassuring investors about the most powerful economic post in the country.
Greenspan, 78, has already been Fed chairman for nearly 17 years and has navigated the economy through the boom of the 1990s as well as through two recessions, two stock market crashes, terrorist attacks and two separate wars in Iraq.
If the Senate confirms him to another term as chairman, which is all but certain, Greenspan would be allowed to serve until his separate 14-year term as a Fed governor expires in January 2006.
PHOTO: AP
Because Bush announced nearly a year ago that he wanted Greenspan to remain at the Fed for another term, the only question in recent weeks was why the White House had waited to nominate him until just one month before his current term expires.
Officials at both the White House and Fed said on Tuesday there had been no last-minute reluctance or, as some Wall Street mavens had speculated, any intention to pressure the central bank into keeping interest rates low.
"Alan Greenspan," Bush said in a written statement on Tuesday, "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."
Greenspan quickly accepted the invitation.
"I am honored to be nominated by President Bush and, if confirmed by the Senate, to continue my service as chairman," he said in a written statement.
Despite his age and his extraordinarily long tenure as Fed chairman, exceeded only by that of William McChesney Martin Jr from 1951 to 1970, Greenspan continues to wield unprecedented power over the economy and to display bold judgment on monetary policy.
To shore up the economy during a three-year plunge in employment that only now seems to be ending, Greenspan's Fed sharply cut interest rates, provoking a boom in housing, home-refinancing and consumer spending.
Greenspan, a Republican who served as chairman of president Gerald Ford's Council of Economic Advisers, has arguably been Bush's most powerful ally on economic issues.
Defying conventional wisdom, Greenspan's policies of rock-bottom interest rates greatly softened the economic downturn of 2001 and a succession of economic shocks since then.
Even though business executives drastically cut back on both corporate investment and hiring until late last year, the Fed's low interest rates pumped hundreds of billions of dollars into the economy as homeowners slashed their mortgage payments and pulled cash out of their houses through refinancing.
Only now, after employers have added more than 700,000 jobs in the first four months of the year, is the Fed expected to start raising rates -- almost certainly beginning at the end of next month.
Despite his Republican affiliation, Greenspan also enjoys widespread influence among Democrats. Senator John Kerry, the expected Democratic choice to run for president, quickly congratulated the Fed chairman on his re-nomination and alluded to Greenspan's collaborative relationship with the Clinton administration.
"Alan Greenspan's overall record as chairman of the Federal Reserve has been one of distinction," Kerry said. "During the 1990s, when Chairman Greenspan worked alongside a president committed to fiscal discipline, the American people saw the benefits of historic job growth, surpluses and the longest economic expansion in history."
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