Brady Named to Replace Baker in Treasury Post
President Reagan on Friday named Wall Street investment banker Nicholas F. Brady to replace Treasury Secretary James A. Baker III, who is resigning to assume the reins of Vice President George Bush’s presidential campaign.
“You’ve been a secret of our success,” the President told Baker, who has been with Reagan since the beginning of his Administration. Baker served first as White House chief of staff and then, after switching jobs with Donald T. Regan, as Treasury secretary for nearly all of Reagan’s second term.
“Now, Jim, go do it for George,” the President said.
Brady, 58, whose appointment as Treasury secretary is subject to Senate confirmation, is chairman of Dillon Read & Co. in New York. He briefly served as a Republican senator from New Jersey in 1982, when he was appointed to fill out the term of Democrat Harrison A. Williams Jr., who was convicted of bribery and corruption in the Abscam scandal.
“I am pleased to be able to . . . nominate such an able successor,” Reagan said in introducing Brady at the White House. “I cannot imagine anyone more qualified.”
But Brady, who also headed the recent presidential commission appointed to examine last October’s stock market crash, is not expected to make any significant economic policy changes in the few remaining months of the Administration.
“In terms of substantive policy, it doesn’t make any difference who is running Treasury over the next few months,” said David Hale, chief economist at Kemper Financial Services in Chicago. “The only thing Brady has to do is make sure he doesn’t say anything that might disturb the foreign exchange markets.”
Jerry Jordan, chief economist at First Interstate Bank in Los Angeles, agreed. “The markets don’t much care who is running Treasury right now,” he said. "(Federal Reserve Chairman) Alan Greenspan is the only policy-maker who matters. Until the second Tuesday in November, the only game in town is the Fed.”
Baker is leaving the helm of the Treasury Department at a time when there is almost no danger to the economy and little prospect of any surprises that would send financial markets into a tizzy.
Nonetheless, the announcement of his long-awaited departure to head the Bush campaign, a move that was carefully foreshadowed with well-orchestrated leaks, was delayed until after the stock market closed Friday to minimize any possible adverse effects.
‘Hard Act to Follow’
“There’s no doubt Baker is going to be a hard act to follow,” said William Cline, a senior fellow at the Institute for International Economics here. “Baker has been a very skilled Treasury secretary--one of the best.”
His resignation, which would be effective Aug. 17, the day Bush is scheduled to be nominated at the Republican convention in New Orleans, brings him full circle back to the man who gave him his first taste of campaigning.
A scion of a long-established Houston family, Baker became a close friend and tennis partner of Bush in the 1960s after Bush moved to Texas to make his fortune in oil. Baker was Bush’s campaign manager in his unsuccessful effort to win the 1980 GOP presidential nomination and played a key role in pulling him out of the race in time to avoid upsetting Reagan, who eventually picked his rival as his running mate.
Brady, who is expected to continue as Treasury secretary if Bush is elected President, shares the vice president’s New England blue-blood family background and Yale education. Although he was indirectly acquainted with the Bush family through his father’s business ties, Brady became friends with Bush in the early 1970s through the vice president’s brother, Jonathan Bush. Their friendship blossomed, and Brady even tried to recruit Bush in 1976 as a partner at Dillon Read.
Seen as Near Clones
“Brady and Bush are almost clones,” one close friend of both men told The Times earlier this year. “Bush is more outgoing and Brady is more intellectual, but they are very, very similar men.”
Over the years, the Reagan Administration has turned to Brady several times for help, asking him to serve on the Packard Commission that proposed defense reforms, the Scowcroft Commission that studied MX missile deployment and the Kissinger Commission that offered advice on U.S. policy in Central America.
But he is best known for his stewardship of the Brady Commission report on the stock market crash, which provided a widely praised, blow-by-blow account of the events and recommended that the Federal Reserve take over a new role of coordinating regulation of financial markets.
Efforts to reshape regulation of the markets have stalled this year, in part, because the Administration has been reluctant to endorse any changes, and Brady has not been particularly forceful in demanding significant reforms. But he has worked quietly behind the scenes in Congress and could play an important role on such issues next year if Bush is elected.
Critical of ‘Junk Bonds’
Brady, who heads one of Wall Street’s old-line investment houses, has been highly critical of the so-called “junk bonds,” pioneered by Drexel Burnham to finance corporate takeovers.
As a former senator, Brady should run into no difficulty in confirmation hearings, which the Senate Finance Committee would hold shortly after Congress returns from its summer recess Sept. 6. Because of his wealth, however, he will be required to put his assets in a blind trust when he assumes the Treasury post.
Brady and his wife, the former Katherine Douglas, have four children and live on a 4,000-acre estate in Far Hills, N.J. But Brady retains a bemused sense about his good fortune. His estate is marked by a sign that reads “Dogpatch.”