Rebound doesn't pay off for Fed chief :: Namibia Internet Gateway cc ::

Articles: Rebound doesn't pay off for Fed chief

Posted by admin on Friday, July 02, 2004 - 12:09 AM

U.S. Federal Reserve Board chairman Alan Greenspan's personal finances didn't benefit much from the strong economic recovery he helped engineer in 2003, his financial disclosure statement shows.
The statement, released by the U.S. central bank yesterday, shows the value of Greenspan's investment portfolio was barely changed from 2002 despite the fastest economic growth in four years. His investment income, moreover, remained well below the levels he enjoyed before the Fed began cutting interest rates in 2001. Greenspan, whose Fed salary is $171,900 (U.S.) a year, reported an investment portfolio worth between $3 million and $6.4 million — about the same as in 2002, the statement shows. His investment income — mainly from money-market funds and Treasury bills — was estimated at $43,226 to $102,3000, down from a range of $55,000 to $139,000 in 2002. Greenspan is famously conservative in his investments, shunning stocks and corporate bonds because they can be affected by the interest-rate decisions he makes. His wealth is almost entirely in savings accounts, money-market funds and Treasury bills. But that conservatism has placed him in a similar predicament to that of elderly Americans living on fixed incomes. Over the past three years, the income of retirees and others who rely on interest payments dropped sharply as the Fed cut its key interest rate to a 46-year low of 1 per cent. The interest-rate cuts finally generated a strong recovery in 2003, when the U.S. gross domestic product grew 4.3 per cent. Since then, financial markets have stabilized, employers have resumed hiring, and wages have been growing. The Fed this week finally deemed the economy healthy enough to start reversing the interest-rate cuts of the last few years. It raised its key short-term interest rate a quarter percentage point to 1.25 per cent and indicated it intends to raise the rate again soon. Greenspan reported he accepted a free plane trip to New York on a private jet provided by World Bank president James Wolfensohn. Greenspan used the plane to attend the wedding of Wolfensohn's son, a Fed spokesperson said. Greenspan estimated the round-trip flight was worth about $800. Brighter economic conditions did bolster the personal finances of Greenspan's wife, Andrea Mitchell, the disclosure statement showed. Mitchell, an NBC News correspondent who invests mainly in stocks, reported an investment portfolio valued at $1.3 million to nearly $3 million in 2003 — up sharply from a range of $726,019 to $1.8 million in 2002.

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