Alan Greenspan, Fed Chair through prosperity and crisis, dies at 100

Alan Greenspan, who in nearly two decades as chair of the Federal Reserve nurtured a long run of prosperity, navigated crises and was a powerful and polarizing force in shaping market-friendly policies, died Monday at his home in Washington. He was 100.

The cause was complications of Parkinson's disease, his wife, Andrea Mitchell, the chief Washington correspondent and chief foreign affairs correspondent for NBC News, said in a statement.

The preeminent economic policymaker of his time and arguably the most recognizable economist of any era, Greenspan led the central bank under four presidents of both parties from 1987 to 2006.

Much of his tenure coincided with a streak of affluence in which he stood as the embodiment of a triumphant, post-Cold War strain of American capitalism: optimistic, faithful in the power of markets to improve living standards, captivated by the power of technology and averse to regulation.

But the ideological stamp he put on policymaking came to be associated as well with the destructive consequences of forces that emerged on his watch, including deregulation of banking and Wall Street, the loss of American jobs to free trade and persistent concerns about bubbles in stock and housing prices.

Even as Greenspan skillfully managed interest rates in a way that kept the economy humming along, he remained leery of confronting a danger he well recognized: that the low-inflation, easy-money environment he had helped create was putting the United States at risk by fueling unsustainable investment booms. And he remained reluctant to act as banks and investment firms adopted complex new trading techniques that would come to wreak great damage.

At the Fed, he was successful at what he considered the central banker's primary task of holding down inflation. He also helped the United States deal with periodic shocks, including a stock market crash just weeks after he took office, the near-meltdown of Asian financial markets a decade later and the aftereffects of the Sept. 11, 2001, terrorist attacks.

Only after he stepped down in early 2006 - and especially following the crisis on Wall Street in 2008, the near-collapse of the mortgage market and the ensuing deep recession - were his legacy and philosophy challenged in a concerted way.

By that point, one group of critics blamed him for not heading off a housing bubble by pushing interest rates higher. Another accused him of promoting a corrosive free-market fundamentalism that left the financial system to operate unchecked as it adopted increasingly risky practices.

His record - and the degree to which he deserves either the praise or the blame heaped on him - remains a subject of intense debate. There is no doubt that he was a pivotal figure during a period of immense ferment in the economy and deep ideological divides over how to manage it.

At the peak of his fame, as the economy boomed in the late 1990s, his merest phrase could send the markets sharply up or down, and his face, behind thick glasses, was as familiar as any movie star's.

In public, he often spoke in an elliptical jargon that even his fellow economists had trouble deciphering.

Behind the scenes in Washington, Greenspan was a master of the political power game. Schooled by his experiences as a policy adviser to Richard Nixon's 1968 presidential campaign and his role as President Gerald Ford's chief economist, he developed into a wily operator who skillfully protected the Fed's independence while shaping the agendas of successive presidents and steering legislation on Capitol Hill.

His predecessor, Paul A. Volcker, had established that the central bank could hold off political pressure for lower interest rates with a tight-money strategy in the late 1970s and early 1980s. In the process, Volcker gave the Fed tremendous credibility in the financial markets and bequeathed to Greenspan plenty of room to shape policy in Washington.

Greenspan used his influence shrewdly on issues that, strictly speaking, went beyond his mandate at the Fed, weighing in regularly to shape policy on taxes, the budget deficit and trade. A Republican with strong libertarian leanings - in his younger days he was an acolyte of Ayn Rand, and he was appointed to the Fed by President Ronald Reagan - he nonetheless managed to infuriate Republicans as well as Democrats even as he won reappointment from presidents of both parties.

Alan Greenspan worked all the angles, cultivating allies across the aisle and at both ends of Pennsylvania Avenue.

He dated Barbara Walters of ABC News in the late 1970s. In 1997, he married Mitchell, who by his account never entirely forgave him for discussing antitrust policy on their first date many years earlier; their wedding was presided over by Justice Ruth Bader Ginsburg. Mitchell is Greenspan's only immediate survivor.

He was an avid tennis player, picking the game up in earnest on the White House court while serving in the Ford administration and pursuing it in spirited competition well into his 80s against a succession of Treasury secretaries and senior officials from both parties.

He eschewed formulas and rules other central bankers often relied upon in favor of a more intuitive approach based on deep analysis of data about decisions being made by businesses, consumers and investors.

Alan Greenspan was born on March 6, 1926, in New York City. He was the only child of Herbert and Rose (Goldsmith) Greenspan. His parents divorced when he was 5, and he was raised by his mother in the Washington Heights section of Manhattan.

With the enthusiastic encouragement of his mother, he became an accomplished musician in his teenage years. After graduating from George Washington High School, he went on to the Juilliard School and spent several years playing saxophone in a swing band.

During the band's gigs, Greenspan would spend breaks reading books he had borrowed from the library. "And one day I got a book out on business, finance or something on the stock market," he said in a 1989 interview with The New York Times Magazine, "and I found it really fascinating."

Recognizing that economics might prove a more fruitful field for him than music, Greenspan left Juilliard and entered New York University, where he earned a bachelor's degree in 1948 and a master's in 1950, both in economics. He started work on his doctorate at Columbia University, where he studied under Arthur Burns, who would later become Fed chair. Greenspan eventually received a doctorate from NYU in 1977.

Greenspan was married in 1952 to Joan Mitchell (later Joan Mitchell Blumenthal), a painter and writer; the marriage ended after a year.

His specialty was forecasting, built around intense study of arcane statistics rather than grand theories. As he was building a professional reputation during the 1950s, Greenspan was also developing an intense free-market philosophy, one that was heavily influenced by Ayn Rand, whose novels espoused laissez-faire capitalism built around a "rational selfishness," or the idea that society functions best when individuals pursue their self-interest.

Through his first wife, Greenspan met Rand in 1952 and soon became part of her inner circle, spending hours debating the relationships among individuals, governments and markets.

Greenspan first got involved in politics in 1967, when he signed on as an adviser to Nixon's presidential campaign, an experience that exposed him to the trade-offs between ideological principle and winning campaigns. In 1974, shortly before Nixon resigned in the Watergate scandal, Greenspan was named chair of the White House Council of Economic Advisers, a post he took up just after Ford took office, a period when the nation was enduring not just the political shock of Watergate but also the economic shock of soaring oil prices and roaring inflation.

After Ford's loss to Jimmy Carter in 1976, Greenspan remained active in Republican politics.

After Reagan's election as president, Greenspan was handed the sensitive job of heading a commission to keep the Social Security system from running out of money. In 1983, the commission recommended a mix of benefit cuts and tax increases. Given the real danger that Social Security would soon be unable to meet its obligations, most of the recommendations were adopted by Congress, and Greenspan's stock in Washington went up.

As early as 1986, there was speculation in Washington and on Wall Street that Greenspan would succeed Volcker as Federal Reserve chair should Volcker not be nominated for a third four-year term in 1987. When Volcker decided to step down, the Reagan administration viewed Greenspan as the obvious choice.

On Aug. 3, 1987, Greenspan's nomination was approved by the Senate on a 91-2 vote, and eight days later he was sworn in as the Federal Reserve's 13th chair.

On Jan. 31, 2006, at 79, Greenspan engineered a small rise in interest rates at a Fed policy-setting session, his last act in office. A few hours later, the Senate confirmed his successor, Ben Bernanke. Greenspan departed with a souvenir - his chair from the central bank's vast boardroom - and what seemed at the time to be the likelihood of a secure legacy.

This article originally appeared in The New York Times.