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Will Lindsey Head the Fed?

By Rich Miller Is Lawrence Lindsey back in the running to take over as Federal Reserve Chairman if Alan Greenspan retires early next year? That's the chatter making the rounds in Washington as the Bush Administration steps up its search for Greenspan's replacement.

At first blush, it's hard to believe the buzz. After all, President Bush sacked the 51-year-old economist back in 2002 from his post as head of the National Economic Council in a purge that also cost Treasury Secretary Paul O'Neill his job. But many Administration insiders think Lindsey got a raw deal in taking the blame for a team that was marred by infighting yet still managed to push through a tax-cut program to help the economy through the 2001 recession.

Besides, Bush is said to still like Lindsey and to believe that he has a good grasp of what makes the economy tick. The former Harvard University professor was Bush's chief economic adviser during the 2000 campaign and was prescient in predicting the recession that started shortly after the President took office.

HARD RIGHT. Now an economic consultant, Lindsey is no stranger to the Fed, having served there from 1991 to 1997 as a central-bank governor. Greenspan has spoken warmly of Lindsey's contribution to the organization. But some Fed staffers aren't so enthusiastic, accusing the conservative Lindsey of being too ideologically motivated at the central bank.

That's the same knock many Democrats have against the economist, who also served as a White House adviser under Bush's father. In fact, Senate Democrats delayed Lindsey's confirmation to the Fed for months back in 1991 before finally giving him the go-ahead.

Of course, no one knows whether Lindsey has a lock on the Fed job or is even the leading candidate. In the online-trading exchange, where you can gamble on everything from political elections to baseball games, he still trails three other economists in speculation over who might get the post: White House Chief Economist Ben Bernanke, Harvard University professor Martin Feldstein, and Columbia University Business School Dean R. Glenn Hubbard (see BW Online's Slide Show, "The Fed's Recruiting Pool").

But according to Tradesports, the odds of Lindsey getting the job have gone up recently. And if you listen to the whispers in Washington, that's about right. Miller is a senior correspondent in BusinessWeek's Washington bureau

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