Democrat Withdraws Bid for Fed Job

New York investment banker Felix Rohatyn withdrew Tuesday from consideration for the No. 2 position at the Federal Reserve, leaving the Clinton administration scrambling for names of Democrats who could win confirmation in the Republican Senate.

Calling GOP opposition to Rohatyn “cheap politics,” White House officials conceded that Clinton may be unable to fill two vacancies on the Fed’s Board of Governors until after the November elections.

Federal Reserve Chairman Alan Greenspan will still be nominated for a third four-year term despite the controversy over Rohatyn, said administration officials who spoke on condition of anonymity.

However, these officials conceded that the strategy of combining the conservative Greenspan, a Republican, with two liberal Democrats for the other vacancies was now in question.

Rohatyn, a managing director at Lazard Freres & Co. who gained fame in helping rescue New York City during its financial crisis of the 1970s, said he was withdrawing from consideration “with considerable regret” and added that he had been eager to serve on the Fed with Greenspan.

“It is obvious to me that my nomination would result in protracted and extraordinarily divisive hearings in which ideological issues will overwhelm any possibility of rational dialogue,” he said in a letter to Clinton released Tuesday by his office.

The opposition to Rohatyn was led by conservative Sen. Connie Mack, (R-Fla.) the chairman of the Joint Economic Committee, who characterized Rohatyn as a big-government liberal in favor of high taxes.

White House spokesman Mike McCurry said Clinton will meet with his economic advisors “in the coming days” to make decisions on the Fed vacancies.

Among those mentioned as possible candidates on the administration’s short list are Benjamin Freidman, a Harvard economist; Eugene Ludwig, comptroller of the currency and a longtime Clinton friend; and Peter Kenen, an economist at Princeton.

One other person mentioned, White House budget director Alice Rivlin, has said she would prefer to stay in her current post.