|FOR IMMEDIATE RELEASE:||CONTACT: CHRISTI HARLAN|
|Thursday, February 3, 2000||202-224-0894|
Following are excerpts from the floor statement of Sen. Phil Gramm, chairman of the Senate Committee on Banking, Housing and Urban Affairs, on the nomination of Alan Greenspan to a fourth term as chairman of the Federal Reserve:
"As I look down the list of Americans who have served as Chairmen of the Board of the Federal Reserve, it reads like a Who's Who in economics and banking: Paul Volcker, Arthur Burns, William McChesney Martin. These are Americans who have provided distinguished service to our country.
"But as I look at the record of Alan Greenspan, I can stand on the floor of the Senate and say, without any fear of contradiction, that Alan Greenspan's record is the finest record that has ever been established by a Chairman of the Board of Governors of the Federal Reserve since we created the Federal Reserve and it began operating in 1913.
"I believe a strong case can be made that Alan Greenspan is the greatest central banker in the history of the world.
"Why do I say these things? Let the record speak for itself in terms of what has happened under Alan Greenspan's leadership.
"First, how many people have been appointed to the highest appointed position in the land by Ronald Reagan, George Bush, and Bill Clinton? Is there any other person who has been appointed to a high position of public trust by those three men? The answer is no.
"And why have three successive Administrations appointed Alan Greenspan to be Chairman of the Board of Governors of the Federal Reserve? Because he is the best central banker we have ever had.
"As we all debate this issue and have our opportunity to second-guess Alan Greenspan, let me talk about the record. The day Alan Greenspan became Chairman of the Board of Governors of the Federal Reserve in 1987, long-term interest rates were 8.98 percent. Today they are 6.42 percent. As a result, millions of Americans who did not have the opportunity to build and buy their own homes the day Alan Greenspan became Chairman of the Federal Reserve Board, now have that opportunity, and they are seizing it in record numbers.
"The day Alan Greenspan became Chairman of the Board of Governors of the Federal Reserve, the Dow Jones Industrial Average stood at 1,938.83. Today the Dow stands at over 11,000.
"In other words, the equity value of the broad cross-section measure of the fundamental industry in America has risen during the period that Alan Greenspan has been Chairman of the Board of Governors of the Federal Reserve by nearly 500 percent.
"Today, schoolteachers, firemen, insurance salesmen and coaches find that the value of their 401(k)s and their IRAs have skyrocketed, and as a result, their financial security has grown. They approach retirement in a better position than anyone could have ever expected. And that wealth is widely distributed. More Americans own part of the equity value of America than ever before in history. Indeed, we have come the closest of any society in history of fulfilling the Marxist dream of workers owning the means of production -- only we have done it the real way, not with the government stealing it and claiming that workers own it; workers really do own it.
"The unemployment rate the day Alan Greenspan became Chairman of the Board of Governors of the Federal Reserve stood at 5.7 percent. Today, it is 4.1 percent -- the lowest level in 30 years.
"In fact, when you look at the array of social programs in the economy and their impact on the incentive of people to take jobs, when you look at the environment in which that 4.1 percent exists, I doubt if there has ever been a day in American history when the unemployment rate was effectively lower than it is today.
"What is wonderful about the golden economic age in which we are living is that employment among minorities is growing faster than employment in the economy as a whole. We have had an explosion in the number of women who have gone into business and succeeded, and the benefits of this economic growth are being more widely shared today than any economic growth that we have ever achieved.
"The rate of inflation on the day Alan Greenspan became Chairman of the Board of Governors of the Federal Reserve was 4.5 percent, and we were grateful. Today, the inflation rate is just 2.7 percent. As one of our colleagues already noted, if we could account for quality differences, if we could take into account the quality differences in a new Suburban versus a Suburban 10 years ago, or the quality difference in a Sony television as compared to 10 years ago, that inflation rate would be virtually zero.
"Just as Alan Greenspan was beginning his service as chairman of the Federal Reserve Board in 1987, we had a stock market drop of 500 points. That was a time when 500 points were real and represented a dramatic drop in equity values. Some argued that the government had to intervene; too many people are investing in the equity market; we have to have dramatic reforms.
"But under the stable leadership of Alan Greenspan, and several other members of the Working Group that was put together at that time, we basically set about to strengthen the system in terms of liquidity and transparency, and government kept its cold, dead hand off the equity market, and we have seen in the 1990s what the result has been.
"At the end of the 1980s, we experienced the S&L collapse, the greatest financial crisis during my period of service in Congress. It cost $100 billion to fix. It could have been avoided had we put up money earlier and acted earlier, as President Reagan urged. But under the leadership of Alan Greenspan, while nobody knew it at the time, we instituted a procedure of closing troubled thrifts and selling off assets, which the whole world looks at as the standard of how you deal with a financial crisis.
"Have we forgotten the Mexican peso crisis? Have we forgotten the Asian economic crisis? Can you remember when it was conventional wisdom that the collapse in Asia was going to mean an economic downturn in America? I missed that downturn, and so did America. Under Alan Greenspan's leadership, we have set a course that helped Asia regain its footing.
"In other words, Alan Greenspan's stewardship as chairman has not been uneventful. But the net result is that the American economy has stayed on track. It is easy for us to second-guess the policies of the Federal Reserve Board, but who but Alan Greenspan would raise interest rates on the very day that we are considering his confirmation? If that is not a statement of confidence in him, I don't know what is, and I don't see any reason to be second-guessing Alan Greenspan's record.
"Even with a record like this, you can't give Alan Greenspan all the credit. I think a lot of the credit goes back to Ronald Reagan and the reforms that we undertook then, and I am willing to give some credit to Bill Clinton and some to Congress. But if you were going to pick anybody who is currently holding a position of public trust and ask who has had more to do with the success we have had in this last decade -- the last 12 years, really -- of unparalleled economic achievement, I think you would have to give the prize to Alan Greenspan.
"As long as there are people like Alan Greenspan who are willing to serve, I think America is in good shape. I am eager to see him have the opportunity to serve for another four years. I hope he is blessed with health that will allow him to continue in this job for a very long period of time."