[Congressional Record Volume 142, Number 22 (Friday, February 23, 1996)]
[Senate]
[Pages S1298-S1299]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          FELIX ROHATYN'S WITHDRAWAL IS A LOSS FOR THE NATION

 Mr. DODD. Mr. President, I would like to share with my 
colleagues my deep sense of regret over the decision by Felix Rohatyn 
to withdraw his name from consideration as a nominee to the position of 
Vice Chairman of the Federal Reserve's Board of Governors.
  My disappointment is based upon two factors: The first is that the 
Nation has lost an opportunity to benefit from the services of someone 
who not only has deep insights into the how the American economy 
functions, but someone who also has decades of practical economic 
experience both in the public and private sector.
  Mr. Rohatyn is justifiably celebrated for his successful efforts that 
brought New York City from the edge of bankruptcy onto sound financial 
ground. He did so through a combination of public and private action 
that resulted in downsizing the Nation's fourth largest 

[[Page S1299]]
government, thus creating the foundation that has allowed New York City 
to achieve a balanced budget for every year for most of the past two 
decades.
  Felix Rohatyn has also achieved great success in the private sector 
as the managing partner of the investment banking firm of Lazard 
Freres. Few people in the Nation can claim to have a better 
understanding of our capital markets and be able to back up those 
claims with the cold, hard proof of continued profitable returns for 
the company that he runs.
  But it is the manner in which, and the basis upon which, Mr. Rohatyn 
was prompted to withdraw his candidacy for this important position that 
prompts me to take the floor today.
  I fully respect--indeed, I encourage--the right of my colleagues to 
form and express their personal opinions about Presidential nominees. 
But that respect is diminished when that opposition takes a form that 
precludes a nominee from even getting a fair and open hearing before 
the Senate. That respect is diminished when instead of confronting a 
nominee during the hearing process and allowing that nominee to respond 
directly to his or her critics, leaked staff reports and innuendo are 
used to derail a nominee's chances.
  But we must go beyond the manner in which these objections were 
raised to examine the objections themselves, for they portend a slavish 
devotion to an economic orthodoxy that is out of place in our system of 
Government.
  I could understand active opposition to a nominee if he or she had 
been an advocate of Marxist economic thought or believed that 
isolationism was a cure for America's economic ills or was an advocate 
for some other discredited economic theory.
  But it appears that Mr. Rohatyn simply failed to meet some arbitrary 
litmus test as to who is or isn't a strong advocate for ending ``the 
era of big Government.''
  Mr. Rohatyn's sin? He proposed that the U.S. Government make 
investments in the infrastructure of the Nation. That radical thought 
places Mr. Rohatyn squarely in the camp of such noted American rebels 
as Daniel Webster, Henry Clay, Theodore Roosevelt, and most notorious 
of all, Dwight Eisenhower.
  Mr. Rohatyn also has the heretical notion that it is possible for the 
American economy to grow, without risking inflation, at a faster rate 
than the puny 2.5 percent per year that some--I repeat, some--
economists believe is the maximum safe rate of growth.
  It is amazing to me that some of my colleagues can become so wedded 
to specific static numbers in the field of economics, as if the numbers 
themselves were some sort of Rosetta Stone that could unlock the secret 
of economic prosperity. Some people must believe that understanding the 
economy is as easy as calibrating the atomic clock or measuring the 
snowfall at National Airport. In fact it is the philosophy and 
methodology that underlies these otherwise meaningless statistics that 
is of critical importance. On that score, Felix Rohatyn is extremely 
well qualified to serve on the Federal Reserve Board.
  The Federal Reserve is supposed to be an arena in which varying 
economic ideas can be debated, free from the constraints and pressures 
of the political arena. In that sense, it mirrors our greatest 
democratic institutions; if a diversity of opinion wasn't desired, 
there would be no need to have a Vice Chairman, or a Board of 
Governors. If monolithic thought were the intent, we would simply a 
single Director at the Federal Reserve, whose edicts would be carved 
onto marble tablets and then disseminated throughout the land.
  Mr. President, Mr. Rohatyn's credentials are virtually unquestioned.
  The chairman of the Senate Banking Committee recently stated that he 
thought the Mr. Rohatyn did ``an excellent job in New York,'' referring 
to his rescue of that city from bankruptcy.
  Mr. Rohatyn's colleagues on Wall Street said: ``Most people on Wall 
Street have great respect for Rohatyn and his financial skills. He is a 
guy who is not at all soft on inflation, so [we] don't know where those 
rumors to the contrary came from.''
  The Financial Times said ``there are not many U.S. bankers worth 
listening to. Rohatyn is the exception.''
  The Washington Post stated, in an editorial entitled, Playing Games 
with the Fed, that ``* * * the elected branches in recent years have 
pretty well given up on the broad management of the economy. They 
mainly add to the problem, which is then left to the Fed to resolve. 
They ought not compound the burden they create by spreading to the Fed 
their own doctrinal quarrel.''
  Some may view the withdrawal of Mr. Rohatyn from consideration as a 
victory of sorts. But by depriving the Nation of the benefits of Felix 
Rohatyn's talents and by imposing an ideological straightjacket on 
Federal Reserve Board nominees, those who are rejoicing today may find 
that theirs is a Pyhrric victory indeed.

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