White House aide to replace Fed chairman

WASHINGTON -- President Bush named top White House economic adviser Ben Bernanke as chairman of the Federal Reserve Board on Monday in place of near-legendary Alan Greenspanas the official in closest control of interest rates.\nBernanke instantly announced his first priority would be "to maintain continuity with the policy and policy strategies under the Greenspan era."\nBush said his choice as the nation's new central banker "commands deep respect in the financial community." And he lavished praise on Greenspan, 79, calling him a legend who "has shepherded our economy through its highs and its lows."\nThe appointment is subject to Senate confirmation, and the president called for swift action.\nSen. Richard Shelby, R-Ala., chairman of the Senate Banking Committee, issued a statement saying, "I am confident that this nominee will be thoroughly questioned but also well-received by all members of our committee."\nWhatever the Senate's ultimate reaction, Wall Street liked what it heard. Stocks rose as word of Bernanke's appointment circulated before the presidential announcement.\nIt was the third time in as many years Bush has turned to the 51-year-old Bernanke for a sensitive economic post. The president named him to the Fed board in 2002, then made him chairman of the president's Council of Economic Advisers earlier this year.\n"If I am confirmed by the Senate, I will do everything in my power, in collaboration with my Fed colleagues to help assure the continued prosperity and stability of the American economy," said Bernanke, who holds degrees from Harvard University and the Massachusetts Institute of Technology and was chairman of Princeton's Department of Economics.\nGreenspan, who became chairman in 1987, completes his current term Jan. 31. By naming a successor more than three months in advance, Bush appeared to be trying to clear the path for a smooth transition.\nGreenspan did not speak at the brief announcement ceremony, a sure sign that his power is ebbing. For two decades, it has been his voice that has mattered most in Washington and many capitals around the world when it comes to key economic matters. His pronouncements, famously opaque, are scrutinized carefully for signs of future policy direction.\nHe issued a statement after the announcement, praising Bush for a "distinguished appointment," adding he has no doubt that Bernanke will "be a credit to the nation as chairman of the Federal Reserve Board."\n"Over the course of a career marked by great accomplishment, Ben has done path-breaking work in the field of monetary policy, taught advanced economics at some of our top universities and served with distinction on the Fed's Board of Governors," Bush said.\nBernanke has "earned a reputation for intellectual rigor and integrity," Bush said. "He commands deep respect in the global financial community. And he will be an outstanding chairman of the Federal Reserve."\nBush praised Greenspan as well, calling him a legend. \n"Under his steady chairmanship, the United States economy has come through a stock market crash, financial crises from Mexico to Asia, two recessions, corporate scandals and shocks ranging from devastating natural disasters to a terrorist attack in the heart of America's financial center," he said.\nWhile Bernanke pledged continuity with his predecessor's policies, the two men differ on whether the Fed should set targets for inflation -- Bernanke thinks it should, Greenspan does not. Otherwise they share a similar philosophy, so much so that while the younger man was at the Fed, market observers often looked at his speeches for insight into Greenspan's thinking.\nA summa cum laude graduate of Harvard in 1975, he received his doctorate from the Massachusetts Institute of Technology in 1979. During his years in Boston, he focused on the economic underpinnings of the Great Depression and the losing track record of the city's beloved baseball team, the Red Sox.\n"Economics is a very difficult subject," Bernanke once said. "I've compared it to trying to learn how to repair a car when the engine is running."\nSenate Democratic Leader Harry Reid issued a statement signaling the type of questions Bernanke might expect at his confirmation hearings.\n"I look forward to the confirmation hearings to learn more about Mr. Bernanke's views on how the Federal Reserve should steer our economy free from political influence and interference," he said.\nReid, who has been sharply critical of Greenspan for supporting Bush's tax cuts, added, "It will be important that Mr. Bernanke demonstrate that he is committed to guiding the economy to produce results for all Americans rather than promoting partisan policies that benefit special interests and an elite few."\nGreenspan was 61 when President Ronald Reagan named him Fed chairman.