Tug Of War At The Fed: Greenspan Vs. The `Gang Of 12'

Twice in the past two months, the Federal Reserve has announced decisions to raise interest rates as soon as they were made. This break with tradition has been ascribed mainly to House Banking Committee Chairman Henry B. Gonzalez (D-Tex.), who has been urging the central bank to part its veil of secrecy. But the change also reflects the growing assertiveness of the Gang of 12--the presidents of the regional Federal Reserve banks. Dissension within the Fed could further rattle financial markets. And the regionals could use their strength to push for aggressive increases in interest rates. Chairman Alan Greenspan favors a more gradual approach.

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