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BUSH to nominate Tennessee banker to Fed

Updated:

WASHINGTON (AP) _ President Bush will nominate Susan Bies, a top official with a Tennessee bank, as a member of the Federal Reserve Board, the White House announced Friday.

If confirmed by the Senate, Bies, 54, would be the only woman on the seven-member board of governors and the only Fed member with direct experience in commercial banking.

Since 1980, Bies has worked for Memphis-headquartered First Tennessee National Corp., a large regional bank holding company with 200 branches in Tennessee, Mississippi and Arkansas. She currently serves the bank as executive vice president in charge of risk management.

Bies, who holds a doctorate in economics from Northwestern University, worked as bank economist at the Fed's St. Louis regional bank from 1970 to 1972. She also taught economics at Rhodes College in Memphis and Wayne State University in Detroit before joining First Tennessee.

Private economists viewed the choice of Bies as a mainstream selection that gave no hint that the Bush administration planned to push monetary policy in any particular direction.

While the normal term for a Fed board member is 14 years, Bush will have the chance to fill five of the seven positions in the first year of his presidency. Two of the positions have been vacant for two years.

However, economists said that as long as Fed Chairman Alan Greenspan remains in place, the Fed's interest rate policies will bear his strong imprint, given his 14 years as chairman and the success he has had guiding the economy during that time.

``It will remain the Greenspan Fed for as long as he is there,'' said David Wyss, chief economist at Standard & Poor's in New York. Greenspan's current term as chairman ends on June 20, 2004.

Among those who have been mentioned as possible candidates for the other spots on the Fed are Terry Jorde, head of CountryBank USA of Cando, N.D.; Alfonso Martinez-Fonts Jr., chief executive of J.P. Morgan Chase Bank of Texas; Mark Olson, a past president of the American Bankers Association and former president of Security State Bank of Fergus Falls, Minn.; and Gay Wisbey, an American serving as a senior regulator for Britain's Financial Services Authority in London.

In March, Bush announced that he would nominate Federal Reserve Vice Chairman Roger Ferguson for another term. Ferguson, the first black to serve in the central bank's No. 2 job, was originally appointed by President Clinton, who also renominated him to a full 14-year term last year.

However, Senate Banking Committee Chairman Phil Gramm, R-Texas, refused to act on the Ferguson nomination or another Clinton Fed nomination, former Chase Manhattan Bank official Carol Parry. Gramm argued that posts with lengthy terms should not be filled by a lame-duck administration.

On Monday, Fed Governor Edward W. Kelley Jr., the board's longest-serving member, announced his plans to step down when one of the two current vacancies is filled. Fed Governor Laurence Meyer, whose term expires in January of next year, has said he will not seek reappointment.

The Federal Open Market Committee, composed of the seven Fed board members and five of the Fed's 12 regional bank presidents, meets eight times a year to set interest rate policies.

The next FOMC meeting will be held June 26-27. Private economists are predicting the Fed will cut rates for a sixth time this year as the central bank continues trying to jump-start the sluggish economy.


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