Oct. 26 (Bloomberg) -- U.S. President George W. Bush has reshaped the Federal Reserve Board -- soon all seven members will be his appointees -- and did it by emphasizing professionalism over political purity.

Democrats and Republicans alike praise the credentials and quality of his choices. Unlike his practice when filling vacancies on the federal courts and in many regulatory agencies, Bush has applied almost no ideological or partisan litmus tests when it comes to the Fed; experience and expertise appear to have been the main considerations.

``They've been excellent appointments,'' said Alice Rivlin, a Clinton administration appointee who served as Fed vice chairwoman from 1996 to 1999. ``These people are in the tradition of strong, well-qualified, non-ideological economists.''

With the selection two days ago of Princeton economist Ben Bernanke, 51, a Republican, to replace Fed Chairman Alan Greenspan, Bush has nominated five of the seven board members. He will fill the other two vacancies in coming weeks.

Economists and other analysts liken Bernanke's nomination to that of John G. Roberts Jr., who was sworn in last month as the U.S. Supreme Court's chief justice after a smooth Senate confirmation process. Bernanke's confirmation would provide a prominent victory for an administration beleaguered by an investigation of top aides and opposition from conservative groups to Bush's nomination of White House counsel Harriet Miers to the Supreme Court.

Earlier Choices

Bush's four previous picks for the Fed include the reappointment of a Democrat as vice chairman, as well as the appointments of a Republican banking expert, a woman whose expertise is in derivatives and whose political leanings are little known, and a political independent who rose through the Fed staff.

``The Fed has performed superbly through the Greenspan years, but before that it was in the hands of some people who didn't all know what they were doing and performed very poorly,'' said Stanford University economist Robert H. Hall. The current ``sense of overall stability'' is ``the result of completely professional policy-making.''

Bush's first Federal Reserve decision came less than two months after he took office in January 2001. He reappointed Democrat Roger Ferguson, 53, the Fed's vice chairman and the board's only African-American member, to a term that doesn't expire until 2014.

Later in 2001, Bush filled vacancies with Mark Olson and Susan Bies. Olson, 62, a Republican who learned banking at a community bank in Fergus Falls, Minnesota, had been the youngest- ever president of the American Bankers Association. Bies, 58, was director of risk management at Memphis-based First Tennessee National Corp., the state's second-biggest bank, and came to Washington with no stated political party affiliation.

`Leaving the Fed Alone'

``We needed some bankers,'' said Edward Gramlich, an economist at the University of Michigan in Ann Arbor and a Fed governor from 1997 to 2005. ``Presidents have realized that you're better off leaving the Fed alone, by getting good people over there and letting them manage the economy.''

Bush's next two nominees also came in a pair. In 2002, he named Bernanke to his first term as governor, which ended in June of this year, after which the president named him chairman of the White House Council of Economic Advisers. Bush also tapped Donald Kohn, 62, a political independent, to be governor after spending 15 years as one of Greenspan's top strategist on the Fed staff.

Political considerations or specific policy outcomes haven't always been put aside in selecting Fed members. ``Bush has been more open to having more of a bipartisan board than I've seen before,'' said Wayne Angell, who was appointed by a Fed governor in 1986 by then-President Ronald Reagan. Angell stepped down when his term expired during President Bill Clinton's administration in 1994. ``I didn't even give a moment's thought that Clinton would reappoint me.''

Countering Volcker

Reagan nominated candidates -- Angell and Manuel Johnson among them -- who were expected to counterbalance then-Fed Chairman Paul Volcker's tendency to keep interest rates higher than the White House wanted, in order to fight inflation.

Bush outlined his Fed criteria at an Oct. 4 news conference. ``It's this independence of the Fed that gives people, not only here in America but the world, confidence,'' he said.

In selecting a successor to Greenspan, Bush relied on a cadre of advisers. The search committee, which narrowed down an initial list of some 20 candidates for Fed chairman over the past six months, included Vice President Dick Cheney; White House Chief of Staff Andy Card; National Economic Adviser Al Hubbard; Liza Wright, an aide for presidential personnel; and I. Lewis Libby, Cheney's chief of staff.

Greenspan's Input

Bush also sought advice from Greenspan, who ``provided significant input on the nature of the job, and the qualifications needed for the position,'' White House spokesman Scott McClellan said.

``I suspect that on Fed decisions, the president has been very much influenced by Mr. Greenspan,'' said Allen Sinai, chief economist at Decision Economics in New York. ``Greenspan and Cheney go back.''

To balance out the board, Gramlich and other economists said the next two nominees should be trained economists. Bernanke, whose background is primarily academic, is likely to participate in the decision.

``Given the track record of the Bush administration, he's done all right by the Fed,'' said Nobel laureate Robert Solow, an economist at the Massachusetts Institute of Technology in Cambridge. ``But with these next two vacancies, I'd like to see him bring in some people with the capacity to think independently about economics.''

Bush's appointments will have lasting impact. One of the vacant terms expires in 2008 and the other in 2018. The soonest any of Bush's current Fed appointees will have to leave office would be January 2010, when Olson's term ends.

``It's a technical, fairly difficult job that has no particular political connotations, so I doubt there are any big campaign contributors dying to be on the Fed,'' Rivlin said. ``And remember, it doesn't pay very well, certainly by Republican standards.''

To contact the reporter on this story: Brendan Murray in Washington at brmurray@bloomberg.net

Last Updated: October 26, 2005 00:01 EDT