Three potential Fed slots.

Most Washington observers fixate on the Bush Administration's coming opportunity to influence the future makeup of the U.S. Supreme Court. Yet over the next eighteen months the Bush team will enjoy perhaps an even greater opportunity to shape the Board of Governors of the Federal Reserve. White House insiders note that to date no less than three Fed board slots are expected to become vacant. To begin, the seat held by Chairman Greenspan becomes available at the start of 2006 (assuming a replacement can be named and confirmed by that time). Newly appointed Chairman of the Council of Economic Advisors Ben Bernanke's seat is open. By the end of the year, the seat of Democratic appointee Ed Gramlich becomes available. Plus, White House officials say they are considering nominating one of these new appointees to the Vice Chairmanship which opens up in 2007.

Note that even at the highest levels, the Bush team admits privately that personnel is not their strong suit, with the name Paul O'Neill still tough to forget. Their intent with the Fed is to add three individuals with strong macroeconomic and/or financial market experience, recognizing that the exit of Alan Greenspan will create a large void in these areas.