Rohatyn Out of Running for Fed Job

New York investment banker Felix Rohatyn formally withdrew Tuesday from consideration for the No. 2 position at the Federal Reserve, leaving the White House 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 President Clinton may be unable to fill two vacancies on the Fed’s Board of Governors until after the November elections.

Fed 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 is 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.

The opposition to Rohatyn was led by conservative Sen. Connie Mack (R-Fla.), 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.