11/29/2004

The Fed's Ex

Earlier this year, Federal Reserve Chairman Alan Greenspan announced that he does not intend to serve past the end of his current term and separate 14-year term on the Fed board, which expires on January 31, 2006. Speculation has begun on who will succeed the legendary Greenspan.

It might seem daunting to follow a legend like Greenspan, now in his 18th year in the job. Yet there seem to be plenty of people who would like to do it.

The list of candidates being talked about in Washington and on Wall Street is half what it was before the Nov. 2 election, when prominent Democrats such as former Treasury Secretary Robert Rubin were considered hot prospects had Massachusetts Sen. John Kerry won the White House.

With Bush's re-election, the focus is on Republicans. Candidates include Harvard economics professor Martin Feldstein, chairman of the Council of Economic Advisers during the Reagan administration; Columbia University professor Glenn Hubbard, who was Bush's first CEA chairman; Treasury Undersecretary John Taylor; and Federal Reserve board member Ben Bernanke.
If I were more of an economics wonk, I would almost certainly know who some of these candidates are and might even be able to form an informed opinion about who would be a good successor and who would not.

There is a question in my mind as to whether it really matters who's in charge of the Fed so as (s)he is a reasonable person capable of dressing him- or herself in the morning. Reading The Creature from Jekyll Island didn't make me a big fan of the Fed and it's shady economics, and I'm unconvinced that the Chairman of the Fed does a whole lot more than attempt to look macho while trying to stay on the bull for eight seconds.

Regardless of my perceptions of the Fed, this appointment is sure to receive a lot of scrutiny due to the perception (dare I say irrational exuberance?) that Greenspan was personally responsible for the incredible economic booms that took place during his tenure. Depending on how right or wrong I am about the Fed, I think it's either the most or least important of Bush's pending nominations.