Mr. DODD. Mr. President, I would like to share with my colleagues my deep sense of regret over the decision by Felix Rohatyn to withdraw his name from consideration as a nominee to the position of Vice Chairman of the Federal Reserve's Board of Governors.

My disappointment is based upon two factors: The first is that the Nation has lost an opportunity to benefit from the services of someone who not only has deep insights into the how the American economy functions, but someone who also has decades of practical economic experience both in the public and private sector.

Mr. Rohatyn is justifiably celebrated for his successful efforts that brought New York City from the edge of bankruptcy onto sound financial ground. He did so through a combination of public and private action that resulted in downsizing the Nation's fourth largest government, thus creating the foundation that has allowed New York City to achieve a balanced budget for every year for most of the past two decades.

Felix Rohatyn has also achieved great success in the private sector as the managing partner of the investment banking firm of Lazard Freres. Few people in the Nation can claim to have a better understanding of our capital markets and be able to back up those claims with the cold, hard proof of continued profitable returns for the company that he runs.

But it is the manner in which, and the basis upon which, Mr. Rohatyn was prompted to withdraw his candidacy for this important position that prompts me to take the floor today.

I fully respect--indeed, I encourage--the right of my colleagues to form and express their personal opinions about Presidential nominees. But that respect is diminished when that opposition takes a form that precludes a nominee from even getting a fair and open hearing before the Senate. That respect is diminished when instead of confronting a nominee during the hearing process and allowing that nominee to respond directly to his or her critics, leaked staff reports and innuendo are used to derail a nominee's chances.

But we must go beyond the manner in which these objections were raised to examine the objections themselves, for they portend a slavish devotion to an economic orthodoxy that is out of place in our system of Government.

I could understand active opposition to a nominee if he or she had been an advocate of Marxist economic thought or believed that isolationism was a cure for America's economic ills or was an advocate for some other discredited economic theory.

But it appears that Mr. Rohatyn simply failed to meet some arbitrary litmus test as to who is or isn't a strong advocate for ending `the era of big Government.'

Mr. Rohatyn's sin? He proposed that the U.S. Government make investments in the infrastructure of the Nation. That radical thought places Mr. Rohatyn squarely in the camp of such noted American rebels as Daniel Webster, Henry Clay, Theodore Roosevelt, and most notorious of all, Dwight Eisenhower.

Mr. Rohatyn also has the heretical notion that it is possible for the American economy to grow, without risking inflation, at a faster rate than the puny 2.5 percent per year that some--I repeat, some--economists believe is the maximum safe rate of growth.

It is amazing to me that some of my colleagues can become so wedded to specific static numbers in the field of economics, as if the numbers themselves were some sort of Rosetta Stone that could unlock the secret of economic prosperity. Some people must believe that understanding the economy is as easy as calibrating the atomic clock or measuring the snowfall at National Airport. In fact it is the philosophy and methodology that underlies these otherwise meaningless statistics that is of critical importance. On that score, Felix Rohatyn is extremely well qualified to serve on the Federal Reserve Board.

The Federal Reserve is supposed to be an arena in which varying economic ideas can be debated, free from the constraints and pressures of the political arena. In that sense, it mirrors our greatest democratic institutions; if a diversity of opinion wasn't desired, there would be no need to have a Vice Chairman, or a Board of Governors. If monolithic thought were the intent, we would simply a single Director at the Federal Reserve, whose edicts would be carved onto marble tablets and then disseminated throughout the land.

Mr. President, Mr. Rohatyn's credentials are virtually unquestioned.

The chairman of the Senate Banking Committee recently stated that he thought the Mr. Rohatyn did `an excellent job in New York,' referring to his rescue of that city from bankruptcy.

Mr. Rohatyn's colleagues on Wall Street said: `Most people on Wall Street have great respect for Rohatyn and his financial skills. He is a guy who is not at all soft on inflation, so [we] don't know where those rumors to the contrary came from.'

The Financial Times said `there are not many U.S. bankers worth listening to. Rohatyn is the exception.'

The Washington Post stated, in an editorial entitled, Playing Games with the Fed, that `* * * the elected branches in recent years have pretty well given up on the broad management of the economy. They mainly add to the problem, which is then left to the Fed to resolve. They ought not compound the burden they create by spreading to the Fed their own doctrinal quarrel.'

Some may view the withdrawal of Mr. Rohatyn from consideration as a victory of sorts. But by depriving the Nation of the benefits of Felix Rohatyn's talents and by imposing an ideological straightjacket on Federal Reserve Board nominees, those who are rejoicing today may find that theirs is a Pyhrric victory indeed.

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