Dear Crowne Gold Clients;

By Caren Bohan and Tim Ahmann
Reuters
Sunday, April 10, 2005

http://www.reuters.com/newsArticle.jhtml?
type=topNews&storyID=8135035

WASHINGTON -- Federal Reserve Governor Ben Bernanke has the edge in
the latest betting over who will succeed Alan Greenspan as Federal
Reserve chief, but sources close to the Bush administration say it
is still early in the decision process.

President Bush's decision earlier this month to nominate Bernanke to
head the White House Council of Economic Advisers prompted
speculation that the top White House economics job may be an
audition for Greenspan's post.

"Bernanke is a strong Washington player with good insights," said
William Beach, a scholar at the Heritage Foundation, a conservative
think tank in Washington. "He's a nose ahead on this."

Scott Reed, a Republican political consultant, called Bernanke "the
favorite of the month."

Many on Wall Street agree. A recent Lehman Brothers poll put him at
the front of the pack, even before he was named to the top job at
the Council of Economic Advisers.

Bernanke, along with Glenn Hubbard, a former CEA chairman, and
Harvard economist Martin Feldstein have long been seen as the front-
runners to replace the 79-year-old Greenspan, who must leave early
next year when his Fed board term expires.

Bernanke associates say the Princeton University economist's
interest in the council has more to do with wanting to try his hand
at broad policy-making than with jockeying for the top Fed post.

Some analysts said the tight timing might be tricky for Bernanke,
who still faces Senate confirmation for the CEA post and who will
have logged less than a year in that job when Greenspan's position
comes open.

Two sources with close administration ties played down the idea that
any one candidate led the field, noting that the decision-making
process appeared to be in the early stages.

Both said all three of the most cited candidates -- Bernanke,
Feldstein, and Hubbard -- have a good shot.

One, a former administration official who spoke on condition of
anonymity, said the White House could still turn to a prominent Wall
Street figure, though it was likely to pick someone already in the
mix.

"It's not like you're going to need to find some dark horse out of
left field," said the source, who added that the decision-making
will be a closely guarded process involving senior players like
White House chief of staff Andrew Card and Vice President Dick
Cheney.

Greenspan also is sure to wield influence.

Bush faces the more immediate task of replacing Bernanke at the Fed.
Several Republicans said Richard Clarida, a Columbia University
economist and former U.S. Treasury official, fit the profile the
administration is seeking and one source said he is indeed being
considered.

If Bernanke wins Senate approval for the White House Council of
Economic Advisers, he will join the other top contenders, along with
Greenspan, in having CEA experience.

Greenspan was CEA chairman under President Gerald Ford. Feldstein
led Ronald Reagan's CEA and Hubbard headed it for the first two
years of the Bush administration.

Bernanke, one of the country's leading monetary policy economists,
has become well-regarded on Wall Street since joining the Federal
Reserve Board in 2002.

He also has developed a rapport with Greenspan, despite his long-
standing advocacy for inflation targeting, a publicly stated
inflation goal by a central bank, at the Fed -- a move Greenspan has
opposed.

The Heritage Foundation's Beach said Bernanke possesses one
credential crucial for any Greenspan replacement: The ability to
translate econo-speak into plain language.

"Bush is going to want to appoint someone who can sit down with him
and speak in a language he understands," Beach said.

Of the three candidates most mentioned, Hubbard -- a public finance
expert at Columbia University -- has the closest White House ties
from his years in the administration and his stint advising Bush's
2000 presidential campaign.

Feldstein, who also was an adviser to the 2000 Bush campaign, is
said to visit Washington frequently.

"He's pretty well-connected," said the former U.S. official, who
pointed out that Feldstein would bring strong managerial experience
to the Fed from his long tenure as head of the National Bureau of
Economic Research.

One question mark, though, is Feldstein's role as a director of
American International Group Inc., an insurer whose accounting
practices are under investigation by the U.S. Securities and
Exchange Commission and New York Attorney General Eliot Spitzer.

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