Federal Reserve Chief Re-Nominated

President Bush re-nominated Alan Greenspan as chairman of the Federal Reserve on Tuesday, praising his leadership and sending a strong signal of stability to financial markets.

The nomination was announced as Greenspan met at the White House with the president.

"Sound fiscal and monetary policies have helped unleash the potential of American workers and entrepreneurs, and America's economy is now growing at the fastest rate in two decades," Bush said in a statement.

"Alan Greenspan has done a superb job as chairman of the Board of Governors of the Federal Reserve System, and I have great continuing confidence in his economic stewardship," the president said.

Bush had announced in April, 2003, that he would keep Greenspan, 78, for a fifth term.

Greenspan's current term as chairman does not end until June 20, 2004, meaning that if Bush had waited to make his choice, the matter could have become embroiled in the presidential election campaign.

"The president thinks Alan Greenspan is doing a great job and that's why he believes he should be renominated," White House press secretary Scott McClellan said. "Obviously there are term limits on the position. But the president wants him to continue to serve as long as possible."

Greenspan was chairman of the Council of Economic Advisers under President Gerald Ford from 1974 to 1977 and was tapped to be Fed chairman by Ronald Reagan in 1987. He was re-nominated by Bush's father and twice by Bill Clinton.

Bush said he was re-nominating Greenspan as Fed chairman for a term not to exceed four years - which would expire in June 2008.

Greenspan would have to deal with a complicating factor were he to serve a full chairman's term - his current term as a member of the seven-member Fed board expires in January 2006.

CBS News Chief White House Correspondent John Roberts reports that by law, he cannot be appointed to another term.

However -- he can continue to serve as chairman past that date.

The President could ask Congress to amend the Federal Reserve Act to extend the term of board members -- which is not likely, says Roberts.

Conversely, all Bush has to do to keep him on is fail to nominate another chairman when the term expires. Greenspan then becomes "acting" chairman until the President appoints another.

Administration sources tell CBS News that in the event Greenspan still wants to serve as chairman of the Fed after his term expires, President Bush would likely let him stay on as acting chairman.

Greenspan took over as Fed chairman in August 1987, succeeding Paul Volcker.

He has been Fed chairman for 17 years, longer than any chairman at the central bank except for the legendary William McChesney Martin, who was first nominated for the Fed by Harry Truman and served into the start of the Nixon administration.