WASHINGTON -- Federal Reserve Board Chairman Alan Greenspan occasionally tips off the White House on changes in interest rates and is likely to continue doing so, according to -Alan Blinder, a member of President Clinton's Council of Economic Advisers.

Blinder, whose has been nominated by Clinton to serve as vice chairman of the Fed, made the revelation in written comments responding to questions from members of the Senate Banking Committee. The committee is scheduled to vote Tuesday on Blinder's nomination.

"My understanding is that, from time to time, the chairman of the Federal Reserve does give the White House a 'heads up' on imminent changes in monetary policy," Blinder said. "I would expect this practice to continue," he said.

Clinton and Greenspan meet occasionally at the White House and have maintained a close relationship free of public bickering despite the Fed's four increases in short-term interest rates this year. Greenspan also has breakfast each week with Treasury Secretary Lloyd Bentsen, and the two are often weekend tennis partners.

Clinton seemed to be expecting the Fed's move on Tuesday to raise short-term rates when he told reporters that there was "clearly some room" for rates to go up. He made the comment as the meeting of the Federal Open Market Committee got under way.

Clinton's senior economic advisers have said they expect some credit tightening by the Fed, and they have voiced support for the central bank's goal of preventing the economy from overheating. That in turn, they hope, will keep down inflation and longterm rates and prolong the expansion during Clinton's term in office.

However, when the Fed raised rates this week, the president's economic advisers issued a statement saying they neither endorsed nor opposed the move.

Blinder told the committee that he believes the unemployment rate, now 6.4%, can drop to "close to 6%" before labor markets would start heating up and generating price pressures. "If 6% is right, there is still some room for above-trend economic growth before we enter the inflationary zone," he said.

In other comments, Blinder said that the complexity of derivatives presents federal regulators with "significant challenges" and that "more disclosures may also be in order."

Asked about financial derivatives, Blinder said they can play a useful role by allowing investors to manage risk. "That is a valuable function which should not be regulated out of existence." But he said bank regulators have a "special responsibility" to make sure that federal insurance insurance money is not put at risk.

Blinder recommended strengthening oversight of cross-border transactions involving derivatives -- in line with one of the recommendations made by House Banking Committee Chairman Henry Gonzalez, D-Tex., in his derivatives bill.

Bank regulators and the Financial Accounting Standards Board also need to strengthen accounting and financial disclosure standards for derivatives, Blinder said.

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