Dow Jones Capital Markets Report Fed McTeer named A&M University Chancellor
By Michael S. Derby
Dow Jones Newswires
November 4, 2004
New York (Dow Jones)—Federal Reserve Bank of Dallas President Robert McTeer has been named chancellor of the Texas A&M University System, bringing to a close a long and high profile career at the central bank, the school said Thursday.
McTeer had been the sole candidate for the job, and his appointment wasn’t unexpected. The Dallas Fed president said in a statement “I look forward to serving the people of Texas in this new role… I accept this position with gratitude and enthusiasm.”
McTeer began his career at the Richmond Fed in 1968, and became head of the Dallas Fed in 1991. He was perhaps the most plain spoken of central bank officials, often delivering his economic views in speeches punctuated by self-penned poems and allusions to country music musicians.
His main mark as a policy maker came in his endorsement of the changing role of technology and productivity in the U.S. economy. He joined with Fed Chairman Alan Greenspan in the then controversial view that productivity rates had shifted higher, allowing the economy to grow at a more robust rate without creating unwanted inflation pressures.
The “new economy” model is now widely accepted by economists, and in the view of many, vindicated the course of monetary policy followed by the Fed during the closing years of 1990s.
In a “Goodbye and Howdy” essay posted on the Dallas Fed web site Thursday, McTeer expressed his sadness at leaving a job he had held for so long. He said of his arguments on productivity, “The Dallas Fed caught the wave and had a good ride, not because I was a better economist than others, but possibly because I wasn’t. Not being good at econometric models, I kept my eyes open to the real world.”
He noted that a good metaphor helped sell his view. “My new-paradigm frog story – to boil a frog you put him in cool water and gradually raise the heat. He doesn’t jump because he doesn’t realize his paradigm is shifting – was helpful in explaining the economy’s paradigm shift and analysts’ slow reaction to it,” McTeer wrote.
“My Washington colleagues sometimes looked askance, but the press was tolerant and my Texas friends hung in there,” McTeer said.
Leave Dallas Fed Immediately
McTeer’s resignation from the Dallas Fed was effective as of Thursday. The bank said Helen Holcomb, the bank’s first vice president and chief operating office, will serve as acting president. She will participate in Federal Open Market Committee meeting, although the Dallas Fed leader isn’t a voting member this year.
McTeer’s replacement will be selected by the bank’s board of directors, subject to approval from the Federal Reserve Board. The Dallas Fed’s board has come under criticism in the past for the heavily Republican political donations done by its chair, lead by Ray L. Hunt, of Hunt Consolidated, Inc. A frequent critic of Fed practices, the Financial Markets Center, has noted that Hunt’s political giving is far above that of other Fed bank board of director members, who are drawn from the private sector.
The replacement of McTeer, who was also widely know as the “lonesome dove,” is anyone’s guess at this point. His departure comes amid a fairly significant changing of the guard at the Fed’s 12 regional banks. Banks in Cleveland, New York, Richmond and San Francisco all have relatively new leaders.
Tom Schlesinger, who leads the Financial Markets Center, a Virginia-based organization that’s often critical of central bank practices, said, “it will be very interesting” to see who takes over at the Dallas Fed.
“Dallas, unlike some of the other banks, has carved out a doctrinal identity” of a staunch advocacy of free markets that came to be largely under McTeer’s leadership, he said.
Reprinted with permission of The Battalion