Clinton Likely to Offer Greenspan New Fed Term

WASHINGTON —  President Clinton is strongly leaning toward nominating Alan Greenspan for a new term as chairman of the Federal Reserve Board but is likely to nominate an economist with more pro-growth views to fill one of the other two upcoming vacancies on the board, administration sources said Friday.

Despite comments that he made Thursday suggesting that he favors a higher growth rate than Greenspan has advocated, Clinton is close to settling on his nomination, sources said after a meeting late Friday with Laura D’Andrea Tyson, chief of the National Economic Council, and White House Chief of Staff Leon E. Panetta.

But Clinton also had decided that the board needs to engage in more vigorous debate over what growth rate is optimal for the economy, and so he will try to promote “a greater diversity of views.”

Greenspan’s reappointment, which is expected to meet little opposition, is in contrast to the administration’s recent bid to appoint New York investment banker Felix Rohatyn to the Fed. Rohatyn’s pro-growth agenda frightened conservatives, who feared he would not be sufficiently vigilant against the threat of inflation, and he formally withdrew his name from consideration on Feb 13.

While many believe that Clinton would prefer a chairman who would push harder for jobs growth--and worry less about inflation--Greenspan’s credibility in the financial world makes him highly valuable for the administration. He also has many fans among Republicans. As a result, his nomination is almost universally expected.

Administration officials view low interest rates as one of their economic accomplishments, and such rates partly reflect Wall Street confidence in Greenspan’s Fed.

“The Senate isn’t going to accept anyone they’re not comfortable with, and that covers a lot of territory,” said Robert G. Dederick, chief economist with the Northern Trust Co. in Chicago. “But they are comfortable with Alan Greenspan.

Greenspan’s current term ends March 2.