WASHINGTON, Oct. 22 (UPI) -- The financial market's love for Federal Reserve Chairman Alan Greenspan may have fizzled since the stock market's plunge over the past year, but there's still a die-hard group of core supporters who have blind faith in his leadership.
There may, however, be a resurfacing of rumors that the 75-year-old chairman himself is feeling somewhat long in the tooth, if his latest public performance provides any insight.
"I was halfway across the Atlantic at the time of the attacks," Greenspan told members of the National Italian American Foundation last Friday, given that he was on his way back to the United States from an international banking conference in Switzerland when terrorists struck New York and Washington. He told 100 U.S. businessmen of Italian descent that he was unable to communicate with Washington from the plane nor did he need to.
"Roger Ferguson, who as you know is the vice chairman (of the Fed), took over and ran the ship. So I was able to fly back to Zurich without any concern," Greenspan said. "The Federal Reserve works as a team, and is fortunate that we, especially at a time of crisis, have so many exceptionally talented people committed to public service."
Greenspan is in his 13th year at the helm of arguably the most important financial institution in the world, and there have been fears that the chairman could not be able to complete his fourth, four-year term, which expires in June 2004. Given that many economists and politicians had attributed the nation's astounding expansion in the late 1990s in part to Greenspan's leadership in steering monetary policy, concern about who could replace him in case of sudden illness or death had been of concern to a large number of both institutional and individual investors.
Then Republican presidential candidate Sen. John McCain, R-Ariz., opined the popular voice of the nation on the campaign trail last year, as he promised that if elected, he would certainly reappoint Greenspan for the next term and beyond.
"If he were to happen to die, God forbid, I would do like the did in the movie 'Weekend at Bernie's'. I would prop him up and put a pair of dark glasses on him," McCain said, emphasizing that the mere presence of Greenspan boosts investor confidence and spurs economic growth.
Perhaps Greenspan in his luncheon speech was trying to soothe away such concerns, to reassure investors that both the central bank and financial markets could and have functioned without him. Or maybe he was actually trying to go further, and plan a slow exit strategy before completing his fourth term in office, which would see him at 78 years of age.
For the chairman does not need the money. He is already fairly well off financially having owned his own financial advisory company until assuming his role at the helm of the Fed. Moreover, the relatively paltry paycheck of Fed chairman would be nothing compared to the advisory roles he could assume in the private sector for far less responsibility and stress. In fact, Greenspan mentioned twice in his 20-minute speech that he would like to join the senior tennis circuit.
So is he planning an exit strategy? Perhaps. It will, however, by no means be the first time a major financial figure tries to ease his way out of office, without causing havoc in the financial markets.
Former Treasury Secretary Robert Rubin was regarded as the pillar of not only the United States, but the global financial system during the financial crisis of the late 1990s. When rumors of Rubin's retirement from the Clinton administration first circulated in early 1998, financial markets sagged as investors panicked that the treasury secretary was irreplaceable. But with a number of calculated false leaks of his exit orchestrated by the administration, Rubin vacated his seat to his deputy, Lawrence Summers with only a small ripple in May 1999.
Greenspan too may be trying to emulate Rubin's seamless exodus strategy, trying to get the financial community to adjust in advance to his impending move.
However, recent questions about the soundness of the late 90s boom have impacted Greenspan's reputation and may have reduced his importance. Moreover, the Fed has apparently been helpless in trying to spur economic growth through lower interest rates. Thus financial markets may actually be relatively indifferent to the end of his tenure, even if it comes before his term is finished.
