Fed's No. 2 Resigns to Take Post at GMU; No Policy Change Seen Following Unexpected Departure of Johnson
Federal Reserve Vice Chairman Manuel H. Johnson, who has held posts at the Treasury or the central bank for nine and a half years, resigned yesterday to accept an endowed teaching position at George Mason University in Fairfax.</br></br>Johnson said that he did not want to commit himself to a second four-year term as Fed vice chairman after his term expires Aug. 3. He could have continued as a Fed governor, without being vice chairman, until the year 2000. "This was the appropriate time to return to private life," he said.</br></br>The resignation caught most officials at the Fed and the White House by surprise. There was no suggestion yesterday of who the Bush administration might name to succeed him at the Fed, the institution that more than any other in U.S. government has been directing the course of the nation's economy.</br></br>That choice will be closely watched, however, since the White House has complained publicly upon occasion that the Fed is keeping interest rates too high.</br></br>As vice chairman of the Fed, Johnson generally has been a conciliatory force helping to bring a sometimes sharply divided board into agreement, but that was not the case when he was first named to the board by President Reagan in late 1985. At one of his first board meetings, he joined in an unusual and successful challenge to Paul A. Volcker, chairman at the time, to force a cut in interest rates.