Public Papers - 1991 - July
Remarks Announcing the Nomination of Alan Greenspan To Be a Member and Chairman of the Board of Governors of the Federal Reserve System and a News Conference
The President. Just to top the day with a very important announcement, I want to say that it is my intention to send, as soon as possible, to the Senate my intention to reappoint Chairman Greenspan as Chairman of the Federal Reserve, and also nominating him to another term as a Governor of the Federal Reserve.
I, of course, would encourage the Senate to move as quickly as possible on this important nomination. The respect that Alan Greenspan has around the world and in this country, particularly in the financial marketplaces, is unparalleled. And it gives me great pleasure to move forward at this time, quite a bit in advance of the expiration of the term, but nevertheless, I think, most appropriately, to ask him to serve.
And you know, it's not a one-way street. This is a very complicated job. It is a time-consuming job. It's a job of great pressure. And I'm extraordinarily grateful to Chairman Greenspan for being willing to undertake another term as Chairman of the Fed. He has done an outstanding job. Every place I go abroad, I get the same reports and the same vote of confidence that I get here; from the central bankers abroad, from the finance ministers abroad, as well as from the heads of state and government.
So, this country is very fortunate to have the important affairs of the Federal Reserve Bank in Alan Greenspan's hands, and I am very grateful that he is willing to continue in this most important job.
And so, Alan, my thanks to you, sir, for your service to your country, and the mike is all yours.
The Chairman. I thank you very much, Mr. President. It's certainly been an honor to serve as Chairman of the Federal Reserve under your Presidency. And hopefully, if the Senate sees fit to find my credentials appropriate, I look forward to another 4 years of what is really, for an economist, the most interesting job that there is in government.
Needless to say, the last 4 years have been rather extraordinary, and I suspect that the next 4 years will have as many surprises as the last 4.
Again, let me thank you very much, Mr. President. It has certainly been an honor to work with you.
Q. What does this portend for the economy? Do you think we're really coming out of the recession now?
The Chairman. Helen [Helen Thomas, United Press International], I think the evidence is increasing week by week that the bottom is passed and the economy is beginning to move up. We still do not yet know how rapid the recovery is, or the underlying strength of it, but I think it's a pretty safe bet at this stage to conclude that the decline is behind us and the outlook is continuing to improve.
Q. Mr. President, what kind of signal do you hope that this reappointment sends to the financial markets, which have been a little apprehensive about this and waiting for decision for some time?
The President. Well, I don't think they've been apprehensive in any way other than hoping that this would take place. So, I think it will -- to the degree markets have been gittery in anticipation, which I don't think has been the case, this certainly should be a reassuring signal to not only domestic but to world markets because of the respect level that I alluded to before.
Q. Mr. President, did Chairman Greenspan, in effect, save his job with these interest cuts early this year?
The President. No, his job wasn't in jeopardy. The Fed is an independent -- sometimes very independent organization over there, and he's got to lead that important enterprise the way he sees fit. I think we both understand that the growing economy is a good thing. And certainly, our administration is committed to that. But I see nothing in anything that the Chairman has done that would indicate that he doesn't agree with that. He's been a fierce fighter against inflation, but I think he also is as strongly committed to growth, not just for what that means to jobs and everything in America but what it means internationally. We cannot have a global economy that is stagnant.
Q. -- -- a factor in your decision, sir?
The President. No, just overall excellence was the factor in this decision.
Q. A question for Chairman Greenspan. With unemployment hovering around 7 percent, do you think there's room to ease interest rates a little bit to spur the economy?
The Chairman. I think you know me well enough, Mik, [Jim Miklaszewski, NBC News] that that is not a question that I'm about to answer. I think that what we committed to do, and I've said this innumerable times before the Congress in the various sessions that we've been at, is to try to maintain the maximum long-term sustainable economic growth that is possible. And that we hope that the basic policies which we engage in will implement that. And as I've said innumerable times before the Congress, that trying to keep the inflation under control is a necessary condition to maximizing economic growth and employment, and keeping the unemployment rate as low a feasible level as one can conceive.
Q. Are you satisfied with all the current conditions: inflation, unemployment, growth?
The Chairman. I'm never satisfied with the state of conditions. We always have something out of balance which requires redressing and hopefully we will work in that direction to do what is required.
Q. Mr. President, I wonder if you'd take that question. Do you feel, given the favorable economic data we've seen in recent weeks that there's room for further easing of the money supply?
The President. I don't get into that public -- I thought he gave a brilliant answer in saying he wouldn't answer it. [Laughter]
Q. Mr. President, some of your advisers have suggested that the Fed is not allowing the money supply to grow fast enough to assure the kind of growth that they would like to see. You majored in economics in college, do you agree with that? [Laughter]
The President. Having majored in economics at Yale, why, I'm probably the least-well qualified to comment on that of anybody. But, look, I can't say what level of where -- within these cones of targets that the Fed should operate; that's not my job. My job is to be concerned overall about the economy. I've expressed my interest in lower rates from time to time. I think the Chairman has expressed his interest in seeing a growing economy, so I'd have to leave it real general.
And I would not be standing here next to Chairman Greenspan, and for this assignment, if I didn't have full confidence. That isn't to say that you're never going to have differences between an administration and the Fed. But I think as you look back historically, you'll find that there has been far more compatibility and congeniality in terms of outlook between the Fed Chairman and our Secretary of the Treasury, our economic advisers here. And I can't say there have never been differences of how we look at a problem. My view is to keep the interest rates as low as possible without getting inflation out of control, and to see this country grow. And it is very important to our economic program and to the world, it seems to me, the opportunities for people around the world, to see a growing world economy. And I'm satisfied that in a broad sense Chairman Greenspan shares those goals.
Then I got two more, and then I'm leaving. Once, twice -- --
Q. Mr. President, when you announced your bank reform act to the holding companies, you have said that they had an obligation to the banks, that is, to make credit available when interest rates came down. And some of the manufacturers have said that that's just not happening. What are you going to do, and what is the Fed going to do to try to stimulate that?
The President. Well, I will say, again, good banks should make good loans. And there are some problems. There have been some problems in the banking system. I think there's some indication that the banks are doing better now. Certainly, if you take a look at the Stock Exchange, the way some of the bank stocks have reacted, I think you'll see reason for the public saying, hey, there's room for a little optimism here. But I still feel that good banks should be making more good loans. Some have taken the lower -- the differential on interest rates and used it to improve their balance sheets, and that's a highly technical point, but it's an important one.
And we can't dictate to the private sector what they ought to do. But if we do our fiscal job right here, if we keep the lid on that spending as best we can by fully seeing that Congress and ourselves stay with this budget agreement that was so controversial a year ago, then I think we are doing our part in providing a climate in which these banks can prosper and in which these banks can then start doing what I'd like to see them do as soon as feasible -- good loans made by sound banks.
And so, I'm a little more optimistic on this question of banks because it does look like people are -- the market is saying, wait a minute, they may have turned a corner here. Having said that, there may still be some problems out there. But it's predicated on a growing economy, the success -- the continuation of improvement, in my view.
Q. A followup on this, sir? Seeking the spread to the bottom line, though, doesn't achieve what you wanted. And I'm wondering if you will keep your implicit suggestion that your lobbying for the bank reform act or the Brady bank reform act, as you call it -- --
The President. Absolutely.
Q. -- -- is contingent upon the availability of credit.
The President. No, my lobbying for it is unconnected to the availability of credit. I think we need reform. And Nick Brady's done a great job bringing that to the attention of the Congress. We're getting bipartisan cooperation on many facets of that bill. So, I don't think the two should be linked. I mean, I really think that banking reform can stand on its own strong two feet. And it has some regulatory changes. It has some changes in what banks are permitted to do.
And so, I remain -- I'm glad you brought it up because we are firmly committed to the banking reform legislation. We've had the leaders of the Congress down to tell them that. And perhaps I haven't been quite as visible or as vocal on this as I feel I should be because of the press of other problems. But it's most appropriate it's raised at this meeting here, and we are committed.
Q. I just want to see if we could get you to expand a little bit on your comments earlier today on being willing to consider a compromise on the abortion counseling regulation?
The President. No, you can't get me to expand on it.
Q. Just tell us whether you have been concerned by arguments that it could interfere with the doctor-patient relationship?
The President. No, I can't help you at all except to say that -- stories this morning -- if there is a chance to work out something, I'd be glad to do it. But I also pointed out I am not going to -- I ought not to be asked to violate my fundamental positions on this whole question of abortion and Federal funding and the exceptions and all of that. I am not going to change the position. But if there's some language as it relates to some regulation that can be resolved, why, so be it. So much the better.
We've got enough contentious items out there that divide this country, and I want to see the country come together. And in this whole question, somebody I -- I don't think I responded to it early on about the ``big tent'' theory that Atwater propounded -- of course, I feel that way. We've got people in our party that differ on this issue, and the Democrats have plenty of people in their party that differ on this issue.
So, if there's room for some compromise or some accommodation on a regulation, without asking me to fundamentally change my convictions on this question, so be it. And we ought to try to resolve that. But I don't know whether it's possible. I've had some interesting talks with Senator Chafee and others who are trying to get actually two vehicles, as I understand. One is an HHS appropriations -- --
The Chief of Staff. Labor-HHS appropriation.
The President. Labor-HHS. And the other is a free-standing legislation approach by Senator Chafee to try to work something out.
So of course, I'd like to see accommodation. But I am not going to change my fundamental position on this issue that for me is a very moral issue. And I understand when people -- Republicans differ with me. And I understand when Democrats that feel as I do agree with me. So, let's try to keep the tent broad. Let's try to reduce the numbers of contentious fights we have in this country and bring the country together. But I am not going to change my fundamental position.
Thank you all very, very much.
Q. In the debate you had said you had not sorted out the penalties -- --
Q. Mr. Greenspan?
Q. -- -- growing pressure for higher interest rates -- --
The President. Do you want any more or do you -- they'll keep you all day. This crowd is outrageous. They'll keep you all day long. Especially Helen Thomas, who knows that I cleared that question up years ago. But anyway -- --
Q. No, you didn't.
The President. What are your views on abortion?
The Chairman. I'll give them. I can talk about tennis all day.
Q. How about abortion?
Q. Chairman Greenspan, please.
The Chairman. I've got a couple of minutes. I've got to go.
Q. How do you view the growing pressure in Germany towards higher interest rates? And do you think we can combat -- if interest rates rise in Germany, can we combat that from coming into our system and causing our interest rates to climb at a time when we are trying to recover?
The Chairman. Well, remember that because exchange rates are free to move to the extent that there are pressures that would occur by changes in interest rates in any country, they need not impact on interest rates in the United States because whatever forces are moving are likely to be absorbed in a change in exchange rates rather than interest rates.
Q. So, you're not concerned about any -- --
The Chairman. Well, obviously, I am monitoring and am in continuous contact -- we're monitoring the International Monetary System, and I am in continuous contact with my colleagues abroad, especially the president of the Bundesbank. And we coordinate policies in the manner which, in our judgment, minimize the international repercussions that could occur from policies that either one of us tends to take.
Q. The differentials right now are okay?
The Chairman. I would just as soon not discuss that because that implies what policies might or might not be taken by the Federal Reserve or the Bundesbank, so I would like to back off.
Q. Chairman, do you see any signs of inflation reemerging from any sources as this recovery gets underway? Do you spot anything like that in the data?
The Chairman. Not yet. In other words, the one element in the outlook which I find encouraging is that we've come to a point where inflationary pressures are really very muted. That's not to say we should not be concerned about their being reignited at some point, but really examining the existing state of data gives one some confidence that inflation is well-contained at this stage.
I can do one more question, then I've got to run.
Thank you very much ladies and gentlemen.
Q. What are you going to do differently in your next term?
The Chairman. I haven't a clue. [Laughter]
Note: The President's 89th news conference began at 5:56 p.m. in the Briefing Room at the White House.