White House said to tap Bernanke

[notiCIas]

White House said to tap Bernanke

President's Bush nominee to succeed Greenspan will be his chief economic adviser, report says.

October 24, 2005: 11:42 AM EDT


NEW YORK (CNN/Money) - President Bush was expected to announce Monday that he has picked top economic adviser Ben Bernanke to succeed Federal Reserve Chairman Alan Greenspan, Reuters reported.

The news agency, quoting a knowledgeable source, said an announcement was to come at 1 p.m. EDT.

Bush told reporters there would be "an announcement soon" on his choice to replace Greenspan, whose 18-year tenure at the Fed runs out on Jan. 31, Reuters said.

Bernanke is chairman of Bush's Council of Economic Advisers. He served on the Fed's board of governors for nearly three years before moving to the White House in June.

His move to the White House was watched with interest on Wall Street because of the belief that he was on the fast track to replace Greenspan.

Bernanke is a former Fed governor who was considered one of the policy trend setters while at the central bank, espousing the virtues of an inflation target to guide monetary policy.

In addition to Bernanke, other candidates mentioned include Glenn Hubbard, a past adviser to Bush, Harvard economist Martin Feldstein and Fed governor Donald Kohn.

Before Bernanke moved to the White House job, many had thought Bush would nominate Martin Feldstein, a former CEA head under President Ronald Reagan and one of the nation's leading academic economists. But as Bernanke's odds increased, Feldstein's seemed to diminish.

Former Fed governor Larry Lindsey, the guy who estimated the Iraq war would cost billions more than the Bush team wanted to let on before it started -- does he have a chance? While he's often mentioned, I was told by one former Fed governor that Bush isn't keen on him.

Kohn is considered a great dark horse candidate by some on Wall Street and among former Fed folks.

He started out as a staff economist for the Fed's board of governors in 1975, advanced to the influential post of head staff economist, and then became a Fed governor three years ago. That's an unusual transition.

He has no obvious political connections but is considered super-qualified.

Hubbard, the president's first chief economic adviser, championed the dividend tax cut and was considered to be a front runner.

But he's now back at Columbia University and is said to be happy teaching economics and living in New York City -- and not as interested in the job as other candidates.

A couple more names to consider, even though they are given very slim odds.

Fed vice-chairman Roger Ferguson is considered a very close ally of Mr. G. himself, and a very bright guy. Plus, he happens to be African-American in case Mr. Bush wanted to play the "diversity" card.

Then there's one of my favorites, Bob McTeer, the former head of the Federal Reserve Bank of Dallas, now chancellor of the Texas A&M University system -- long considered a distant possibility.

He's got strong supply-side roots, that would please Bush, and he's from Texas by way of Georgia.

But he seems happy in his current job and Wall Street never seems to have gotten over the fact that he bucked the tide at the Fed in the mid-90's and dissented against rate hikes briefly when everyone else at the Fed thought that was the way to go.

The beginning of new era at the Fed is upon us. So let's sit back and wait.

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