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. Last Updated: 07/27/2016

Iconic Greenspan Bids Farewell to Fed

WASHINGTON -- It was a farewell dinner at the White House that only Alan Greenspan could have engineered.

In the Blue Room last Monday night, with U.S. President George W. Bush as host, several dozen of Greenspan's closest friends gathered to toast him before he retires this week as chairman of the Federal Reserve.

But it was the list of guests, old friends whom Greenspan specifically asked the White House to invite, that highlighted his stature as both an icon and an iconoclast.

At one table was Vice President Dick Cheney, the hard-nosed combatant at the Bush White House, whose friendship with Greenspan began 30 years ago in the Ford White House.

But just a few tables away was Robert Rubin, a Treasury secretary under President Bill Clinton and a man so disliked in the Bush White House that many officials use his name as a sneering put-down -- "Rubinomics."

The guest list also included Vernon Jordan, the millionaire lawyer and ubiquitous adviser to Democratic leaders, and Peter Peterson, a Republican who has infuriated the White House by lambasting Bush's budget deficits.

The list underscores how Greenspan, despite being a lifelong Republican, had a knack for building friendships across the political spectrum and, almost unheard-of in today's bitterly divided capital, made few enemies in his 18-year tenure.

"He likes to be challenged by intelligent people," said Andrea Mitchell, Greenspan's wife and a correspondent for NBC television.

Now 79, Greenspan is scheduled to step down on Tuesday as the Fed's maestro and hand over the most powerful economic job in the world to Ben Bernanke, a former Fed governor and professor of economics at Princeton.

After serving a term longer than that of any other Fed chairman except William McChesney Martin, who held the job from 1951 until 1970, Greenspan's departure will be a historic transition. Bernanke, who is expected to be confirmed by the Senate on Tuesday, is likely to usher in a new era at the Fed -- one that is less personalized, less idiosyncratic and perhaps less mysterious.

Greenspan is almost an institution in Washington -- ubiquitous on the party circuit and a constant dispenser of economic advice to top lawmakers and presidents, regardless of which party is in power. In sharp contrast, Bernanke had almost no political ties until a few years ago. Many of his closest friends said they never realized he was a Republican.

Bernanke has told lawmakers that he will keep a lower political profile. Where Greenspan waded into explosive political debates over Social Security and tax cuts, Bernanke has vowed to stay silent on issues that are not directly tied to monetary policy.

Bernanke is a champion of greater openness and demystification at the Fed. He would like it to publicly peg its policies to an explicit target for inflation -- an idea that Greenspan opposes because it might restrict the Fed's maneuvering room.

But for all of Greenspan's flair, from his visibility at parties to his knack for catchy phrases like "irrational exuberance," many veterans of economic policy say it is a mistake to think no one can fill his shoes.

"Alan Greenspan played two roles -- one as chairman of the Federal Reserve, and the second as an economic sage," said Gene Sperling, a former top economic adviser to Clinton. "You need a lot of political savvy to rise to the level of economic sage, but I don't think you need so much simply to be a good Federal Reserve chairman."

Greenspan is not disappearing. He plans to write a book and start a consulting firm. And while he does plan to write and comment on the economy, he has vowed to avoid any comment about monetary policy. Mitchell, his wife, said he recently started figuring out how to do his own research on the Internet; he is still in the process of obtaining a personal e-mail address.

It remains to be seen whether Bernanke's background as an academic will lead to a different style of leadership at the Fed.

Greenspan's approach has been as much a matter of art as science, and his instincts and insights defied simple explanations. Though Greenspan loves nothing more than to crunch numbers, he was openly skeptical about economic models and preferred to look for "anomalies" that hint at new truths.

The most famous example was his recognition, long before the Fed's own staff, that productivity was climbing much faster than the government's official numbers showed.

Greenspan, who proved it by crunching his own numbers, once compared his effort to that of scientists who had originally inferred the existence of the planet Pluto without actually seeing it.