Today is Fed day again, but it's an unusual one: The markets seem far less interested than usual in the pending pronouncements of Alan Greenspan and the Federal Open Market Committee. Apparently everyone woke up yesterday and decided it was time to get extremely worried about the potential for more Enron-like accounting blowups. And maybe people are just tired of paying attention to the Fed, or at least to the relationship between Greenspan's mutterings and the price of shares.
Nevertheless, Fed day means that it's time for another installment of this column's quixotic efforts to focus some sliver of attention on those FOMC members who are, for whatever reason, not Alan Greenspan. (Get the non-Greenspan and other FOMC basics here, and see below for more links to past columns.)
This afternoon the FOMC will make its usual statement, telling us whether there will be another trimming of the fed funds rate (which affects interest rates generally), and disclosing its "bias" regarding future actions. The current wisdom is that the market expects—indeed, hopes—that there will be no cut this time around and that the official statement will be less gloomy than it has been in the recent past. (Why? Because that would essentially be a signal from Lord Greenspan that he thinks we don't need it because the economy is stabilizing. Whether such a pronouncement would mean much in the face of Enron jitters is anyone's guess.) But we are not concerned in this particular column with what Greenspan thinks. Instead we use the occasion to introduce the two newest non-Greenspans.
You will recall that the FOMC is designed to have 12 members: Seven seats go to the Federal Reserve's Board of Governors (this includes Greenspan of course), an eighth seat is for the head of the New York branch of the Fed, and the other four are filled on a rotating basis by the heads of the other 11 Fed banks.
In June, Fed board member Edward Kelley announced his intention to retire, which created an unusual situation: It meant that President Bush would end up in a position to fill five seats on the board. Two spots were vacant when he came in. Laurence Meyer's term is scheduled to end Jan. 31 of this year, and Vice Chairman Roger Ferguson's had technically ended (although President Clinton had re-upped him, the relevant Senate committee never did hold hearings to confirm him).
As it happens, Bush backed Ferguson, too, so that's one. He has also made two new appointments: Susan Schmidt Bies and Mark W. Olson, each of whom joined up in December. More or less upon their arrival, Kelley departed, and the current FOMC meeting will be Meyer's last (so I guess today's announcement might be slightly delayed while everyone finishes their tea and Bundt cake, or their bottles of Rolling Rock, or whatever Fed types snarf down at such moments). So, there are still two slots for Bush to fill.
What can I tell you about Susan Schmidt Bies? For starters I can tell you her last name is pronounced "buys," so you don't make a fool of yourself by saying it wrong at your next Fed-centric cocktail party. She's presently the only woman on the Fed Board (or the FOMC). She has a Ph.D. in economics, and from 1979 until last year worked at the First Tennessee National Corp. in Memphis; at the end of her time there she was executive vice president in charge of risk management. (She has also worked as an economist at the St. Louis Fed and has taught economics.) She's been called a mainstream choice—not a stern inflation hawk who might have hit trouble from the Democrat-controlled Senate. Generally, the Fed Board has been made up mostly of economists of late, so it's worth underlining that Bies has a banking background. And that risk management bit is interesting: Bies has testified before Congress in the past on the once-again-hot subject of derivatives and will now be "the board's expert" on those financial instruments, in the judgment of the Washington Post's Fed-watcher John M. Berry.
Turns out the other new non-Greenspan also has a banking background: Mark W. Olson is a former president of the American Bankers Association (a lobbying group) and was staff director of the Senate's banking subcommittee on securities. He also worked for more than a dozen years at Ernst & Young, the accounting firm. (This résumé line is presumably of more interest now than it was last summer, when he was tapped by Bush.) His specialties: bank management and regulation. He is also the former president of Security State Bank of Minnesota. On the political front, he was associated with the election of Bill Frenzel, a Minnesota Republican, to a House seat that he held from 1971 to 1991 (Frenzel's now a Brookings Institution "guest scholar"); Olson did a stint on his congressional staff.
The banking and regulation backgrounds of the two new non-Greenspans is of potential interest because, although it gets less attention than the FOMC announcements, the Fed does have a regulatory function as the "umbrella supervisor" of the finance business generally. And in the post-Enron world, regulation is a word we're hearing a lot more often lately.
Meanwhile, there are also new faces in the four FOMC slots for non-New York regional bank chiefs, which rotate annually. Both of last year's dissenters (see below) are now gone for the time being. The new faces are Jerry L. Jordan (of the Cleveland Fed), Robert D. McTeer Jr., (Dallas), Anthony M. Santomero (Philadelphia), and Gary H. Stern (Minneapolis). I'd tell you more about each, but haven't you had enough excitement for one column?