WASHINGTON -- Alan S. Blinder, the president's choice to be view chairman of the Federal Reserve Board, sailed through Senate confirmation hearings Friday, pledging to promote a balanced monetary policy and a more open central bank.
And while he apologized to the Senate Banking Committee for his inexperience on regulatory matters, he pledged to take the lead on a wide variety of key issues facing the central bank.
Specifically, he vowed to lead the Fed in comprising with the administration over regulatory consolidation, beefing up oversight of derivatives, more aggressively enforcing fair-lending and community reinvestment rules, and demystifying the central bank's activities.
"I think an independent central bank is best for the long-run economic welfare of the country," he said. "But independence need not and should not mean arrogance, insensitivity, or lack of accountability," he said.
"Indeed, I think the Fed can do a better job than it has to date of explaining its goals and policies to the American people," he added.
In discussing monetary policy. the primary focus of the two-hour hearing, Mr. Blinder rebuffed criticims that he would he "soft on inflation." He compared his views to those of Fed Chairman Alan Greenspan, an inflation hawk.
"Chairman Greenspan has said that his working definition of stable prices in when inflationary expectations do not play a role in household and business decisions," he said. "I have often used a similar definition: when people stop talking about inflation."
'Close to' Price Stability
"By either of these definitions, the United States now looks to be close to, but not quite at stable prices," he added.
All four committee members at the hearing, as well as the senators from his home state, New Jersey, praised Mr. Blinder.
Sen. Bill Bradley, D-N.J., called him "one of our nation's most distinguished and highly regarded macro-economists."
And Sen. Paul Sarbanes, D-Md., praised his "real-view pragmatism" and avoidance of "rigid thinking."
Sen. Alfonse D'Amato of New York, the committee's ranking Republican, said Mr. Blinder has the "intellectual capacity, experience, and integrity to do the job." And committee Chairman Donald Riegle, D-Mich., called his background "superb."
Slaps at Fed Governors
The Fed's current board, however, did not fare so well in committee commentary. Mr. Greenspan and his four colleagues came under repeated attack for their recent decisions to push interest rates higher, at the risk of "bringing growth to a halt" or even of starting a new recession, as Sen. Riegle said.
The current Fed governors were also roundly criticized for blocking efforts to consolidate the banking agencies into a single regulator and for their unwillingness to compromise.
"This has gone on now for a few weeks, and I'm getting tired of it," said Sen. Christopher Dodd, D-Conn. "Delaying this process and playing chicken is not serving the interest of the consumers and the public."
Mr. Blinder told the lawmaker that, if a compromise is not reached before he is confirmed -- which he said might occur -- he would get that done.
The Fed also came under fire for what Sen. Riegle called its too lax oversight of banks' derivatives activity. "I think we have to get on toip of this derivatives issue," he said, "and I think there's been too much complacency frankly."