Reagan Nominates B of A Economist Heller for Fed Seat

H. Robert Heller, a Bank of America economist with no known inclination toward any particular brand of monetary policy, was nominated Monday by President Reagan for a seat on the Federal Reserve Board.

Heller’s speciality is international economics, an increasingly important policy area as the U.S. trade deficit is hitting annual records and the dollar is falling in comparison with other currencies.

Heller, if confirmed by the Senate, would fill the seat vacated in April when Federal Reserve Vice Chairman Preston Martin resigned. The term runs until 1996.

Manuel Johnson, currently a Fed board member, will be nominated to serve as vice chairman, the White House said.

Heller has been senior vice president and director of international economic research at B of A in San Francisco since 1978.

“He’s a mainstream, balanced practitioner of economic analysis, quite solid,” said C. Fred Bergsten, president of the Institute for International Economics, a Washington research firm.

“He will be quite a good member,” Bergsten said. “It’s an appointment to be applauded.” Henry Wallich, the Federal Reserve member specializing in international issues, has been in poor health, and Bergsten said that Heller’s appointment will “beef up that side of the (Fed) operation.”

An official at the International Monetary Fund, where Heller was chief of financial studies from 1974 until 1978, said the nominee is “pragmatic, rather than having an ideological bent one way or another.”

Reagan has appointed four members of the seven-member Federal Reserve Board, which has a profound impact on the economy through its regulation of the growth of the nation’s money supply. The Fed is widely credited with wringing inflation out of the economy, at the cost of the 1981-82 recession, by tightening money growth and forcing up interest rates.

The four Reagan appointees, including Martin, organized a brief revolt against the tight-money policies of Chairman Paul A. Volcker earlier this year when they voted for a reduction in the discount rate, the interest charged to member banks for borrowing from the Fed.

The vote against Volcker, which would have caused considerable embarrassment for his leadership role, was made public only after the board delayed its effect to give Volcker time to coordinate a rate cut with Japan and West Germany. When the chairman succeeded, he joined his Federal Reserve colleagues in a unanimous vote to lower interest rates.

With the resignation of Martin, who had disagreed publicly with Volcker on several issues, analysts said that Volcker seems in firm control of policy and that it is unlikely there will be another revolt soon against his leadership.

Heller, 46, a native of Germany, was educated at now-defunct Parsons College in Iowa, the University of Minnesota and UC Berkeley. He was an assistant and associate professor of economics at UCLA from 1965 to 1971 and professor of economics at the University of Hawaii from 1971 until 1974.

He is married, has two children and lives in Mill Valley, Calif.