Candidate For Fed Asks To Withdraw

New York investment banker Felix Rohatyn withdrew Tuesday from consideration for the No. 2 position at the Federal Reserve, leaving the Clinton administration scrambling for names of Democrats who could win confirmation in the Republican Senate.

Calling GOP opposition to Rohatyn “cheap politics,” White House officials conceded that Clinton may not be able to fill two vacancies on the Fed’s Board of Governors until after the November elections.

Federal Reserve Chairman Alan Greenspan will still be nominated for a third four-year term in spite of the controversy over Rohatyn, said administration officials who spoke on condition their names not be used.

Rohatyn, a managing director at Lazard Freres & Co. who gained fame in helping rescue New York City during its financial crisis of the 1970s, said he was withdrawing from consideration “with considerable regret” and added that he had been eager to serve on the Fed with Greenspan.

“It is obvious to me that my nomination would result in protracted and extraordinarily divisive hearings in which ideological issues will overwhelm any possibility of rational dialogue,” he said in a letter to Clinton released by his office.