NATION Greenspan: Fed prepares for possible terrorist strike

Greenspan says the Fed learned a lot from the Sept. 11, 2001, attacks.
WASHINGTON (AP) -- Federal Reserve Chairman Alan Greenspan said Tuesday the central bank is standing ready to deal with potential threats to the economy including the "fortunately low but still deeply disturbing possibility" of a new terrorist attack.
The comments, which came at Greenspan's confirmation hearing for a fifth term as Fed chairman, followed a recent warning by Attorney General John Ashcroft that the terrorist network Al-Qaida was "90 percent" ready to attack the United States.
After the attacks
Greenspan told the Senate Banking Committee that the U.S. economy was able to able to emerge relatively unscathed from the Sept. 11, 2001, attacks, which forced Wall Street to close temporarily and led the central bank to flood the banking system with massive amounts of money to make sure that all U.S. financial institutions had the resources to meet withdrawal demands.
"We at the Federal Reserve learned a good deal from that tragic episode," Greenspan said.
He said that the Fed was continuing its efforts to bolster its operational capabilities and the banking system's payments systems to withstand another attack.
Greenspan told the committee he did not want to enumerate other potential threats that might keep him awake at night.
Private economists widely think Fed officials will begin raising interest rates at their next meeting June 29-30, pushing the federal funds rate from a 46-year low of 1 percent up by the first of what are expected to be a series of quarter-point increases.
Official's future
Despite the impending rate increases, something that politicians often rail against, members of the Banking Committee widely predicted a quick confirmation for Greenspan, who was first nominated as Fed chairman in 1987 by President Ronald Reagan and has gone on to serve under four presidents.
While the nomination for a fifth term as Fed chairman would cover four years until 2008, Greenspan's 14-year term as a Fed board member will end Jan. 31, 2006, and friends of Greenspan, 78, say he has told them he does not plan to serve beyond that date.
The 2006 retirement date was acknowledged during Greenspan's confirmation hearing by Sen. Paul Sarbanes, D-Md., who said that would allow whoever is elected president next November the chance to name a new Fed chairman early in his term.