Clinton backs Greenspan and snubs Gonzalez.

Alan Greenspan, the chairman of the Federal Reserve Board, has demonstrated that he's as good in the political arena as he is on the tennis court.

Mr. Greenspan plays a tough game of serve-and-volley.

And last week, the star of monetary policy aced his agency's arch-enemy, Henry B. Gonzalez, D-Tex., with the equivalent of an overhand smash.

Here's what happened: On Sept. 20, 16 days before the populist congressman's House Banking Committee was to begin bashing the central bank and suggesting ways to change it, President Bill Clinton suddenly decided to answer a letter

he received from Rep. Gonzalez way back on July 22.

More than Coincidence

I'll crawl out on the precarious limb of punditry and presume Mr. Greenspan, who sat next to Hillary during the State of the Union address, had a role in the timing.

Like the film reviews that disclosed the plot of "The Crying Game," the President's letter had the effect of sweeping away all drama from the hearings before they even began. Mr. Clinton told Mr. Gonzalez that he doesn't want to muck around with the central bank, a position that wasn't so evident before the publication of the President's response.

Mr. Gonzalez, in his letter, had asked Mr. Clinton to consider changing the Federal Reserve Act so that the presidents of the Fed's 12 regional banks could be appointed by the White House and approved by the Senate, just like the Federal Reserve governors.

"In general, the Federal Reserve decision makers are bankers or friends of bankers," said Rep. Gonzalez, who considers himself the champion of the average guy.

The congressman man said that the bankers' old-boy network excludes a lot of qualified women and minorities from a seat on the powerful Federal Open Market Committee.

Rep. Gonzalez's commmunique was one of dozens of shots he was firing at the Fed in a nine-month buildup to his hearings. One week Rep. Gonzalez would call for videotaping Fed Open Market Committee hearings. Another week, he'd call for tighter controls on the expenses of their bank presidents or berate Mr. Greenspan for being so limid about reducing interest rates.

About the same time, unnamed denizens of the Whitei@'44- ! l' C) T(L' ,C',F, ',, I I i

lan Greenspan, the chairman

of the Federal Reserve

Board, has demonstrated

that he's as good in the political arena as he is on the tennis court.

Mr. Greenspan plays a tough game of serve-and-volley.

And last week, the star of monetary policy aced his agency's arch-enemy, Henry B. Gonzalez, D-tex., with the equivalent of an overhand smash.

Here's what happened: On Sept. 20, 16 days before the populist congressman's House Banking Committee was to begin bashing the central bank and suggesting ways to change it, President Bill Clinton suddenly decided to answer a letter he received from Rep. Gonzalez way back on July 22.

More than Coincidence

I'll crawl out on the precarious limb of punditry and presume Mr. Greenspan, who sat next to Hillar-y during the State of the Union address, had a role in the timing.

Like the film reviews that disclosed the plot of "The Crying Game," the President's letter had the effect of sweeping away all drama from the hearings before they even began. Mr. Clinton told Mr. Gonzalez that he doesn't want to muck around with the central bank, a position that wasn't so evident before the publication of the President's response.

Mr. Gonzalez, in his letter, had asked Mr. Clinton to consider changing the Federal Reserve Act so that the presidents of the Fed's 12 regional banks could be appointed by the White House and approved by the Senate, just like the Federal Reserve govemors.

"In general, the Federal Reserve decision makers are bankers or friends of bankers," said Rep. Gonzalez, who considers himself the champion of the average guy. @-T,he congmssman said that the bankers' old-boy network excludes a lot of qualified women and minorities from a seat on

the powerful Federal Open Market Committee.

Rep. Gonzalez's commmunique was one of dozens of shots he was firing at the Fed in a nine-month buildup to his hearings. One week Rep. Gonzalez would call for videotaping Fed Open Market Committee hearings. Another week, he'd call for tighter controls on the expenses of their bank presidents or berate Mr. Greenspan for being so limid about reducing interest rates.

About the same time, unnamed denizens of the White

House who were concemed that the Fed might actually raise interest rates, were making aggressive noises of their own.

Gnashing of Teeth

I recall Business Week quoting one unnamed source as threatening that a interest rate hike would cause the smashing of china in the White House dining room. (I predicted at the time that the President would use Rep. Gonzalez like a fire axe against the Fed in the event of a rate hike.) Mr. Clinton's delayed response let Rep. Gonzalez down as gently as possible. The President said that while the Texan's suggestion had merit, he was afraid a change in the way the bank presidents are picked might spook the markets. (In light of some of Mr. Clinton's political appointments, I strongly agree.) Mr. Greenspan and company aren't out of the woods yet. Rep. Gonzalez, one of the world's, most well-mannered gentlemen, can get downright dirty in political brawl.

Even if the hearings won't produce viable legislation, I'll give even odds that Rep. Gonzalez will bloody some noses, perhaps by embarrassing the Fed in the press with some sin his staff has dug up. But the President's announcement can't help but to relieve some pressure on Mr. Greenspan.

I would hope that it would even embolden him somewhat to speak out more forcibly, more frequently, and 100-times mff clearly against the policies that threaten the continued existence of the banking system.

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