Brady pressed Greenspan on growth before Fed reappointment, officials say

September 24, 1992|By New York Times News Service

WASHINGTON -- Treasury Secretary Nicholas F. Brad pressured the Federal Reserve chairman, Alan Greenspan, to achieve a certain amount of economic growth shortly before Mr. Greenspan's renomination and thought he had received a commitment, administration officials said yesterday. But the officials denied that the Fed chairman had agreed to change monetary policy at Mr. Brady's behest.

Administration officials said yesterday that in meetings in July 1991, shortly before Mr. Greenspan was renominated, Mr. Brady told the Fed chairman that he hoped the Fed would help achieve 3 percent growth in 1992. The meetings came just before President Bush renominated Mr. Greenspan to a second four-year term as chairman.

Joseph R. Coyne, a Federal Reserve spokesman, said yesterday, "As far as extracting a commitment to achieve a certain level of economic growth, that's nonsense."

A Treasury official said, "It's not unusual for the Treasury secretary and the chairman to talk about the growth potential of the U.S. economy."

Economists said yesterday that it would be highly unusual and improper for a Treasury secretary to seek a commitment from a Federal Reserve chairman to achieve a certain level of economic growth as a quid pro quo for renomination.

The interaction between Mr. Brady and Mr. Greenspan was first reported in the Los Angeles Times yesterday.

One administration official said that Mr. Brady, in his talks with Mr. Greenspan, had evidently misconstrued something Mr. Greenspan said. This official said that Mr. Brady had come away thinking that Mr. Greenspan had committed himself to changing Fed policies to reach a certain rate of growth.

Fed officials and economists said it would be absurd for a Fed chairman -- just one of seven members of the Federal Reserve Board -- to agree to a level of growth because so many economic variables exist that this would be impossible.

"It's off the mark to say a commitment was asked and a commitment was given," said a Treasury official who was involved in monetary matters at the time. "What's not too off the mark was they met and talked about Fed policy."

This official added that it was clear that Mr. Brady thought Mr. Greenspan was moving too slowly to lower rates. The official noted that Mr. Brady and Mr. Greenspan have long met with each other.

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