Treasury And The Fed Were Never This Close

A few years back, at a weekly lunch attended by officials from the Treasury Dept. and the Federal Reserve, the talk turned to flaws in measuring gross domestic product. Most participants tuned out. Not Fed Chairman Alan Greenspan and then-Treasury Under Secretary Lawrence H. Summers, though. "You can't believe how enthralled they were getting into all this minutiae on national income accounts," recalls economist Alicia H. Munnell, an Assistant Treasury Secretary at the time.

That happens a lot when the Fed Chief and Treasury Secretary-designate get together, associates say. Over the years, an intimate bond has been forged between the two: They admire each other's intellect and share a love of analyzing the most obscure economic data. Indeed, they may be closer than any previous duo running the Fed and Treasury, says Munnell. "They have a terrific relationship, personally and professionally," departing Secretary Robert E. Rubin told BUSINESS WEEK. "I have no doubt that will continue."