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Clinton names candidate to fill Fed's No. 2 post

Although somewhat unknown, Roger W. Ferguson Jr., 47, is viewed as an expert in bank and financial operations.

President Clinton on Friday nominated Roger W. Ferguson Jr., a management and technology expert whose monetary views are not widely known in the investment community, to be vice chairman of the Federal Reserve.

Ferguson, who has served as a Fed governor for two years, was a banking-industry consultant and partner at McKinsey & Co. in New York before he joined the Fed. He is viewed as an expert in the operations of banks and financial institutions, an important specialty as 2000 nears. Only the third African-American appointed a Fed governor, he would be the first to serve as vice chairman.

While the appointment would raise Ferguson's profile considerably, the Fed's decision-making will still be dominated by its chairman, Alan Greenspan. The seven Fed governors form the core of the 12-member Federal Open Market Committee, which sets interest-rate policy.

If confirmed by the Senate, Ferguson, 47, would replace Alice Rivlin, who resigned last month to rejoin the Brookings Institution.

Ferguson, who was not widely known before his appointment two years ago, was brought to the attention of the Clinton administration by Treasury Secretary Lawrence Summers, a classmate of Ferguson at Harvard University. Before McKinsey, Ferguson was an attorney at Davis Polk & Wardwell, a New York law firm. He received degrees in economics and law, both with honors, from Harvard, where he later received a doctorate in economics.

The nomination follows Clinton's selection Thursday of Carol Parry, a former senior executive at Chase Manhattan Bank and an expert in community reinvestment laws, to replace Susan Phillips, a Fed governor who resigned last year. The Clinton administration is a strong proponent of community reinvestment laws, but Sen. Phil Gramm of Texas, chairman of the Banking Committee, has sought to restrict the laws.

A Gramm committee spokeswoman said Friday that both "nominations came in too late for Sen. Gramm to have a chance to look at the papers, so he won't have a comment until after" Congress resumes in September.

Asked about Ferguson by reporters, Clinton responded: "He is superbly qualified. He has served well. And I am very excited about the prospect of his service. I'm glad he's willing to do it."

Greenspan said in a statement that Ferguson is "a person highly respected by his colleagues" and "an outstanding public servant, with broad experience and sound judgment."

Lawrence Kudlow, chief economist at Schroder & Co. and a former Reagan administration budget official, said Ferguson's monetary policy views are little known in the investment community. "There may be a discovery process here," Kudlow said. "Up until now, he's compiled a voting record in accordance with Greenspan, and I think around the Fed he is viewed more as a management consultant and administrative guy." But Kudlow said the appointments of Ferguson and Parry "may create the potential for two inflation doves who might be at loggerheads with the chairman's view or certain hawkish views" among other board members.

At his confirmation hearing two years ago, Ferguson emphasized that he believed the Fed's most important mission was price stability. The Fed's legislative mandate calls for it to promote maximum employment, but under Greenspan it has stressed inflation control. Ferguson also said he was concerned with issues like income inequality and job creation.