WASHINGTON —On the day the U.S. economy's expansion most widely credited with making it possible—Alan Greenspan.
The committee, by unanimous voice vote, recommended a fourth term for the Federal Reserve chairman. The full Senate is expected to vote on the confirmation this week.
"I'd be surprised if there are two senators who would vote against that," Senate Majority Leader Trent Lott said.
Greenspan and his colleagues on the Fed's policy-making Open Market Committee meet today and tomorrow and are expected to raise the overnight bank lending rate by a quarter percentage point that day to 5.75 percent, the highest it's been since November 1995. The Fed has raised borrowing costs three times since June, citing concerns about too-fast growth that could lead to a resurgence of inflation.
The 73-year-old Fed chairman has guided the central bank "with a rare combination of technical expertise, sophisticated analysis and old-fashioned common sense," President Bill Clinton said in nominating Greenspan to another term. This is the second time Clinton, a Democrat, has nominated Greenspan, a Republican, to head the central bank.
Lott said the Senate could act later this week with a roll call vote, predicting approval by an overwhelming margin.
First appointed by President Ronald Reagan, Greenspan took office on Aug. 11, 1987, two months before the Dow Jones Industrial Average posted its largest percentage decline ever.
He steered the economy through that crisis and has presided over an unprecedented period of growth and low inflation. As of this month, the economy's current expansion is 107 months old, the longest in U.S. history. It beats the 1961-1969 expansion that coincided with the Vietnam War, according to the National Bureau of Economic Research Inc., a private, non-profit research group.
He kept markets calm and the economy rolling through the savings and loan debacle of the late-1980s and the Mexican peso collapse in 1994-95.
In his third term, however, Greenspan faced the greatest crisis of his tenure at the Fed, the global economic slowdown triggered by the 1997 Asian currency crisis. Rejecting forecasts of imminent recession for the U.S., the Greenspan Fed held interest rates steady as the economy instead picked up speed.
After Russia defaulted in August 1998, however, financial markets in the U.S., and around the world, all but froze as investors shunned risk. Greenspan and his colleagues moved quickly to cut interest rates three times. The overnight bank lending rate—the economy's benchmark rate—was reduced a total of 75 basis points, to 4.75 percent, including the first between-meeting change in interest rates in four years.
"It was a stellar performance. He seemed to understand very quickly the significance of the problems in the financial markets," said Steve Slifer, chief economist at Lehman Brothers in New York. "Their quick action averted what could have been a disaster."
Greenspan was born on March 6, 1926, in New York City. He graduated summa cum laude with a B.S. in economics from New York University in 1948, going to earn a masters in economics in 1950, and a Ph.D. in economics in 1977.
Before coming to the Fed, Greenspan was chairman and president of economic consulting firm Townsend-Greenspan & Co. Inc. He also served as chairman of President Ford's Council of Economic Advisers from 1974 to 1977, before chairing the National Commission on Social Security Reform from 1981 to 1983.
Prior to his government service Greenspan served as a corporate director for Aluminum Company of America (Alcoa); Automatic Data Processing, Inc.; Capital Cities/ABC, Inc.; General Foods, Inc.; J.P. Morgan & Co., Inc.; Morgan Guaranty Trust Company of New York; Mobil Corporation; and The Pittston Company.
Greenspan is a devoted tennis player and a fixture on Washington's social scene. He's a disciple of free-market novelist Ayn Rand, and for several years in his youth, a professional jazz musician. "I played tenor saxophone, clarinet and bass clarinet. If I were a lot better I would probably be still doing that at the moment," he told the House Banking Committee on Feb. 11, 1999.
Greenspan is married to NBC News correspondent Andrea Mitchell. --Michael McKee and John Rega in Washington (202) 624-1895, with reporting by Laura Litvan in Washington /cah -0- (BN ) Feb/01/2000 10:59