Greenspan Confirmed as Fed Chairman

WASHINGTON — The Senate Monday confirmed the nomination of conservative economist Alan Greenspan as chairman of the Federal Reserve Board, clearing the way for him to take the key monetary policy post from outgoing chairman Paul A. Volcker next week.

The vote was 91 to 2, with only Democratic Sens. Bill Bradley of New Jersey and Kent Conrad of North Dakota voting against Greenspan.

Senate Banking Committee Chairman William Proxmire (D-Wis.) complained that there is “nothing in Greenspan’s experience . . . that shows independence. And, if there is one quality the Federal Reserve should have, it is independence.”

But Proxmire voted to confirm Greenspan anyway, citing the nominee’s firm anti-inflation stance and arguing that Greenspan, 61, is a better choice than any of the other people President Reagan might have chosen to serve a four-year term as head of the nation’s central bank.

Volcker, whose term officially ends Thursday after an eight-year tenure as probably the toughest inflation fighter in U.S. history, will remain at the helm of the Fed until Greenspan takes over.

Greenspan, head of a New York-based economic consulting firm, has vowed to follow in Volcker’s footsteps in trying to keep inflation under control. And, like Volcker, Greenspan is expected to practice an eclectic brand of policy-making that conforms to no specific school of economic thought.

“He isn’t a Keynesian. He isn’t a monetarist. He isn’t a supply-sider,” one economist commented in early June when Reagan announced Greenspan’s nomination. “If he’s anything, he’s a pragmatist, and, as such, he is somewhat unpredictable.”

Greenspan differs from Volcker on one key question facing the Fed, which oversees the nation’s banking system and has strong influence on interest rates and the money supply.

Greenspan favors removing most of the barriers that have prevented commercial banks from entering new businesses, particularly underwriting securities and investing directly in other businesses, like investment banks. By contrast, Volcker fought to slow the pace of banking deregulation despite strong objections from the Reagan Administration.

Greenspan, an advocate of laissez-faire capitalism who nonetheless has sometimes tempered his strong free-market views to help forge a political consensus, has experience as a high-level economic adviser to Republican Presidents Richard M. Nixon and Gerald R. Ford.

He headed the 1983 commission on Social Security, which reached agreement on a bailout for the politically sensitive retirement system by compromising on such steps as higher payroll taxes, taxation of some benefits and a delay in a cost-of-living increase.

Greenspan, a bachelor, has so far not displayed any characteristic habit, such as the late Arthur F. Burns’ pipe or Volcker’s cigar, that the press is so fond of noting in Fed chairmen to help personalize the men holding the crucial but poorly understood job. He is known, however, as a clarinet player and once toured with a swing band before making his career in economics.