WASHINGTON - Just 24 hours after President Clinton signaled his intent to renominate Federal Reserve Board Chairman Alan Greenspan, another White House nomination to the Fed Board appeared to be dead.
Carol J. Parry, former executive vice president for community development at Chase Manhattan Corp., was nominated Aug. 5 to fill one of two long-standing vacancies on the seven-seat board. But industry and Capitol Hill sources said Ms. Parry has several strikes against her among Senate Republicans, the most critical strike being the upcoming presidential election. If a Republican were to win in November, he could choose his own nominees to fill the two empty Fed seats.
"I think she is going to wither on the vine," an industry source said, reflecting the pessimism of both allies and foes.
But Ms. Parry said she would not ask the White House to withdraw her nomination. She also said she would provide a much-needed voice for bankers on the Fed. "No one's giving up here," she said in an interview Wednesday. "I'm clearly qualified, and I have the support of both Republicans and Democrats in the Senate."
Senate Banking Committee Chairman Phil Gramm, an arch critic of the Community Reinvestment Act, is reportedly concerned about Ms. Parry's level of affection for the 30-year-old law, which encourages banks to lend to lower-income families. "She was very liberal on the CRA stuff," said a banking industry official who used to work with Ms. Parry. "I wouldn't be surprised" if Sen. Gramm was troubled.
Ms. Parry scoffed at the CRA issue and said she is still confident that lawmakers committed to an "apolitical" Fed will give her a fair hearing. "I obviously bring a special expertise in consumer issues to the board," she said. "But I don't bring a pure advocate's zeal. I'm a banker. I would bring a balanced view in terms of consumer regulations," she added, noting that only late in her career at Chase, Chemical Bank, and Manufacturers Hanover did she work on the CRA issue.
She also rejected concerns that she lacked a background in monetary policy. "We've got plenty of economists and experts on monetary policy on board," said Ms. Parry, who would be the only woman on the all-male board. "We've just passed financial modernization. It's critical that there be someone on the board who understands the business of banking and right now you don't have anyone."
Sen. Gramm is reportedly citing technical flaws in her nomination, sources say.
Ms. Parry is a resident of Brielle, N.J., but she has been nominated from the state of Illinois to represent the Federal Reserve district of Chicago. The reason is that the Fed cannot have two board members from the same Federal Reserve district, and Mr. Greenspan represents the New York district. Ms. Parry's argument is that she grew up in the Chicago area, but Senate Banking Republicans are expected to object, saying she should be considered a resident of the New York district.
"I was born and raised in the Chicago area," Ms. Parry said. "I lived there until I completed college, and I understand that fully qualifies me to represent the Chicago Fed seat."
Experts say many governors have used similar tactics, and that this rule is only a technicality and usually enforced only as a stalling tactic.
"This is not the first time it has come up," said veteran banking industry lobbyist Richard Hohlt. "Usually, it has been worked out in a creative way."
Some industry observers have raised concerns that the Fed is operating with just five members on its seven-seat board. The seat Ms. Parry was appointed to fill has been vacant 18 months, since board member Susan M. Phillips resigned. Sen. Gramm is not concerned, however. "He has said before that the Fed doesn't appear to have had any problem operating with five members," a Senate Banking spokeswoman said.
