Ben Bernanke

President Bush selected top economic adviser Ben Bernanke to replace Alan Greenspan as chairman of the Federal Reserve.

Bernanke, who served on the Fed's Board of Governors for three years, is chairman of Bush's Council of Economic Advisers. He came to the White House in June.

Announcing the appointment at the White House, Bush said Bernanke "commands deep respect in the financial community" and has "earned a reputation for intellectual rigor and integrity."

"The decisions of the Fed affects the lives and livelihood of all Americans," the president said.

Greenspan, 79, will finish his 18-year tenure Jan. 31. The nomination of his successor is subject to Senate confirmation.

Hearings and a vote by the Senate Banking Committee are expected by the end of the year, according to Chairman Richard Shelby, R-Ala.

"This is one of the most important appointments that the president of the United States will make, probably, in this term,'' said Shelby.

Bernanke, 51, ranked No. 1 on the list of likely candidates in a survey of investors last month, according to Bloomberg News.

A graduate of Harvard University in 1975, Bernanke earned his Ph.D. at the Massachusetts Institute of Technology in 1979 then taught at Stanford University from 1979-1985. He moved to Princeton University where he became chairman of the Department of Economics in 1996, serving until 2002.

Bernanke, looking on with Greenspan at the White House today, said, "If I am confirmed by the Senate I will do everything in my power, in collaboration with by Fed colleagues to help assure the continued prosperity and stability of the American economy."

He added, his first priority "will be to maintain continuing with the policy and policy strategies under the Greenspan era."

Bush also praised Greenspan, who was appointed first by President Reagan in 1987.

"For nearly two decades, Chairman Greenspan has shepherded our economy through its highs and its lows. Under his steady chairmanship, the United States economy has come through a stock market crash, financial crises, from Mexico to Asia, two recessions, corporate scandals, and shocks ranging from devastating natural disasters to a terrorist attack in the heart of America's financial center," Bush said.

Ethan Harris, chief U.S. economist at Lehman Bros., said Bernanke has been "trained for the job," examining practical issues of monetary policy as a member of the Feds' Board of Governors.

"He has hung around the Fed for many years as an adviser," Harris said, according to MSNBC. "He certainly has the respect of many in the institution, so the handoff is pretty smooth."

As a member of the board, Bernanke was best known for raising concern about the U.S. suffering the kind of deflation experienced by Japan.

In a November 2002 speech to the National Economics Club in Washington, he suggested tools for "making sure 'it' doesn't happen here."

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