WASHINGTON -- When George W. Bush was asked during a campaign debate last October how he would handle a stock market crash or other major financial crisis, his answer was straightforward: first call Alan Greenspan.
The Fed chairman still has legions of admirers who cite a steady hand under four presidents at the helm of the nation's central bank. He has been hailed as the maestro of one of the nation's longest economic expansions and often characterized as the second-most powerful leader in the United States -- even the world.
But now, more than any time before in his 14 years at the Fed, Greenspan has been coming under criticism. His detractors in the financial community and on Capitol Hill suggest he was late in recognizing the storm clouds gathering over the economy -- and then acted too slowly.
Investors hoping he would play the role of stock market savior were generally disappointed on Tuesday when the Fed lowered key short-term rates half a percentage point, not the three-quarters they desired to help prop up a faltering market. Both the Dow and NASDAQ fell sharply after the announcement.
''If this economy tanks, he's going to get a lot of the blame for it. And he should,'' said economist Lawrence Chimerine, president of Radnor Consulting of Philadelphia. ''I've known Alan a long time. But, let's face it, he's made many mistakes. His forecasting record leaves a lot to be desired.''
While the Fed's mission is not to bail out financial markets, roughly half of all American families own stock, much of it in 401(k)-style retirement plans. When they feel financial pain, there's an impact.
''If ever anyone was a day late and a dollar short, it was Alan Greenspan today,'' said Sen. Byron Dorgan, D-N.D., an early Greenspan critic.
A bit more gentle, former Fed Governor Lyle Gramley said, ''There really isn't anything standing in the way of continued aggressive moves by the Fed.''
The main case against Greenspan is this: Critics say he raised interest rates last year when he should have been lowering them, continuing the tight-money stance through November.
By the time he started slashing rates in January, the economy was already tottering on the brink of a recession and the tech-stock bubble had burst. Now, U.S. policy-makers face an ugly combination of a depressed stock market and an economy on the edge of a recession.
Greenspan, 75, served as President Ford's top economic adviser in the 1970s and was first appointed as Fed chairman by President Reagan in 1987. A Republican, he was reappointed by both Bush's father and Bill Clinton.
During the first debate with Vice President Al Gore in Boston on Oct. 3, the younger Bush was asked how he would handle ''a stock market tumble'' or ''a failure of a major financial institution.''
''What I would do, first and foremost, is I would get in touch with the Federal Reserve chairman, Alan Greenspan, to find out all the facts and the circumstances,'' Bush responded.
Since taking office, Bush has wooed Greenspan -- and the Fed chairman, always politically savvy, has returned the overtures, including signaling support for Bush's centerpiece $1.6 trillion tax cut.
Bush named a longtime Greenspan friend, Paul O'Neill, as treasury secretary and bowed to Greenspan's wishes and renominated ally Roger W. Ferguson Jr. for a full 14-year Fed term, helping to assure Greenspan's continued domination of the board.
Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, joined a chorus of lawmakers expressing disappointment with the size of the Fed move on Tuesday. He said the state of the economy and lack of inflation would have permitted ''a lowering of interest rates to a greater extent.''
But others indicated they still had faith in Greenspan's touch. ''If it needs to be lowered again, I feel comfortable that he will,'' said Sen. Kay Bailey Hutchison, R-Texas.
Tom Raum has covered national and economic affairs for The Associated Press since 1973.
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