New York Times

Is Greenspan's Salary A Bit Irrational?

"Irrational exuberance," of course, is the phrase once used by Alan Greenspan, the Federal Reserve chairman, to allude to the runaway bull market in stocks.

So how might a rational investor characterize the Federal Reserve salary structure, in which Mr. Greenspan, who sets the nation's main interest-rate benchmark almost single-handedly, earns a smaller paycheck than dozens of his underlings?

To be sure, some Wall Street traders and analysts make more money than their bosses because of outsized profits generated by their departments. But there is little doubt that Mr. Greenspan is the Fed's most valuable player and the only one of its officials most people could name.

Mr. Greenspan's salary this year is $161,239, according to the central bank. Although that is an increase from $141,300 in 2000 it is still less than a superstar baseball player makes in a weekend. And it is also less than the annual pay of each of the 12 presidents of the Fed's regional banks (not to mention less than what at least 11 staff members were making as long as six years ago, when the privacy conscious Fed was forced by a Freedom of Information Act request to disclose salaries, unconnected to names, of various officials).

The other governors of the Federal Reserve Board earn $145,115, while the salaries of the 12 regional presidents deemed to require pay closer to that of the private market than the people who labor in Washington - range from $205,000 to $303,000.

And who gets the top regional presidential pay? Not, as one might expect, William J. McDonough, president of the Federal Reserve Bank of New York, the permanent vice chairman of the Federal Open Market Committee and generally considered the system's No. 2 official. He makes $283,300, or $19,700 less than Robert Parry, president of the Federal Reserve Bank of San Francisco, who has more seniority.