Bush to fill spots on Fed board

Posted 9:13AM on Wednesday 8th May 2002 ( 23 years ago )

WASHINGTON - President Bush will nominate a Princeton economist and a top adviser to Alan Greenspan to vacant positions on the Federal Reserve Board, administration officials said Wednesday. The nominees to the seven-member board will be Ben Bernanke of Princeton and Donald Kohn, a longtime staffer with the Fed in Washington. A senior administration official, speaking on condition of anonymity, said the White House was announcing the picks later Wednesday. Bernanke and Kohn would fill vacancies created by the departures of Laurence H. Meyer, who left in January when his term expired, and Edward Kelley Jr., who retired in December after 14 1/2 years. With the two nominations, Bush will have picked five of the seven Fed board spots in his first 16 months in office. Last year, he nominated Federal Reserve Vice Chairman Roger Ferguson, first selected by former President Clinton, to a new term on the board and selected bankers Mark Olson and Susan Bies for two other vacancies. However, analysts said as long as Federal Reserve Chairman Alan Greenspan remains in the top spot, they expect little change in the Fed's handling of monetary policy. Greenspan, 76, has been chairman since August 1987. His current term runs until June 2004. Kohn, 59, has been Greenspan's closest adviser on interest rate policy, serving for 14 years as director of the Fed's division of monetary affairs, the group that prepares the briefing books for Fed policy-makers to review when they meet eight times a year to set interest rates. Kohn, who earned his doctorate in economics in 1971 from the University of Michigan, began working for the Federal Reserve system as an economist at the Kansas City regional Fed bank in 1970. He became a staffer to the Fed board in Washington in 1975. Bernanke, 48, holds a Ph.D. in economics from the Massachusetts Institute of Technology. In addition to his teaching duties at Princeton, he serves on the National Bureau of Economic Research's business cycle dating committee, the panel that determine the dates when recessions begin and end. Bernanke has focused much of his academic research on monetary policy and in one area has staked out a position in disagreement with Greenspan. He has argued for an approach known as inflation targeting in which the central bank would publicly announce a specific level of inflation that it intended to achieve with its policies controlling the nation's money supply and interest rates. Greenspan has argued against adopting either a specific inflation goal or a range for inflation, regarding this as too inflexible. Instead, Greenspan said the Fed's goal should always be achieving a rate of inflation low enough that it does not affect economic decisions being made by consumers and businesses.

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