JACKSON HOLE, Wyo. – Former U.S. Treasury Secretary Robert Rubin (search), lavish in his praise for Federal Reserve Chairman Alan Greenspan (search), said Friday his successor should be market savvy because large problems may lie ahead.
In a luncheon speech at the annual Rocky Mountain symposium hosted by the Kansas City Fed bank, Rubin recalled the close cooperation between himself, Greenspan and then-Deputy Treasury Secretary Lawrence Summers (search) during Rubin's Treasury tenure from 1995 to 1999.
The three were memorably described as "The Committee to Save the World" in a Time magazine cover in 1999 for their work in helping manage financial crises that affected Mexico, Asia, Brazil, Russia and elsewhere and for warding off any adverse impact on the United States.
Rubin, now chairman of the executive committee at Citigroup, is widely recognized as one of the most successful U.S. Treasury secretaries in modern history. Summers, who succeeded him in 1999, was in the Jackson Hole audience as he spoke.
With the 79-year-old Greenspan due to step down next January, Rubin underlined how he and Summers — both Democrats — worked smoothly with Greenspan, a Republican, during the Clinton administration.
"We all shared a belief in market-based economics — though we had somewhat different views as to the appropriate role of government in our society — and felt that what happened abroad could greatly affect our own economic well being," Rubin said.
Rubin said a hallmark of the Clinton administration years had been its success in ratcheting down budget deficits to the point of notching up a few years of surplus, and implied the current Bush administration had been lax in piling up record deficits that are a potential threat.
"Looking forward, our loss over recent years of the fragile political coalescence around fiscal discipline, our currently projected 10-year fiscal deficits...our extremely low personal savings rate and high levels of personal debt, all suggest that the next Fed Chairman could face — at some point in the future, there's no way of knowing whether it is years out or sooner — an even greater need for the understanding and experience to deal with serious market difficulties," he said.
Much of this year's Jackson Hole gathering has been to sing Greenspan's praises and a sub-theme has been speculation about who will replace him and about the qualities that person will need.
The Bush administration has given no guidance when it may pick a nominee, though the decision will be one of the most significant the White House makes and offers the potential at least for leaving an imprint on national economic affairs well beyond the Bush years.
Three names are regularly mentioned — Glenn Hubbard (search), a past adviser to President Bush; Harvard economist Martin Feldstein (search); and Fed Governor-turned-White House adviser Ben Bernanke (search), all of whom were at the Jackson Hole conference. But the the White House has indicated it also is looking elsewhere, possibly toward Wall Street.
Rubin described economic superman-like qualities for a successor, but said history offers reason for optimism.
"The chairman of the Federal Reserve should not only have great insight in reading economic data, strong macroeconomic understanding, and a deep commitment to sound macroeconomic policy, but also a keen understanding of the psychology of markets and of business and a feel for the politics of Washington and of the global economic community," he said.
"Putting all those together is a tall order, but Paul Volcker (search) and Alan Greenspan show it can be done," Rubin added. Volcker held the job for eight years before Greenspan, who now has completed 18 years as Fed chief.