When he signed on as Ronald Reagan's Treasury secretary last September, Nicholas F. Brady could not know whether he would have the job for very long. And he was not so sure he would want to keep it even if his longtime friend, George Bush, were elected President.
The past seven months seem to have erased any doubt. "He's warming to the job," marveled a Brady confidant.
That may seem difficult to believe. During the past few months, Brady has been pilloried both in Washington and on Wall Street. His first public comments on the dollar sent the U.S. currency plunging. His initial handling of the savings and loan rescue plan sparked a firestorm over whether Bush was planning a backdoor tax hike.
And his affable but seemingly aimless appearances before Congress left the widespread impression that Brady, who once headed an old-line New York investment firm, was the latest in a long list of Wall Street lightweights who never quite fathom the ways of Washington.
But now, things seem to be looking up for Bush's reluctant Treasury secretary.
Barely four weeks after Brady presented it, the Administration's S&L; bailout plan is progressing through Congress. His proposal for reducing Third World debt has won broad international endorsement. And budget talks with Congress--in which Brady has participated along with budget chief Richard G. Darman--have just produced their first solid results on Friday with a bipartisan agreement aimed at keeping the deficit under $100 billion.
Indeed, the three issues that Brady has helped shepherd are "the only big hits so far in the new Administration," a senior Treasury official asserted with only a little exaggeration. "Why is it that the image is so different from reality?"
Even Secretary of State James A. Baker III, whose Contra aid deal with Democratic lawmakers constitutes the Administration's only other significant accomplishment, seems to be off to a slower start.
"I'd say we are on schedule," Brady said matter-of-factly of his track record so far. "What the President wanted us to do is face up to the major problems. You can't get to the kinder, gentler things until the sequoias are cleared out."
Fighting Brush Fires
What is more, Brady is quietly compiling a broad, if not very flashy, agenda that includes increasing the nation's low saving rate, staving off further erosion in U.S. living standards and improving competitiveness in corporations, banks and financial markets--part of what he calls "the systemic problems" facing America.
Eventually, aides say, he may even seek to limit the current double taxation of corporate payouts.
Still, Brady has not yet moved to exert his influence in a number of other key areas, such as trade policy and U.S.-Soviet relations, in which Treasury traditionally has a hand. "He doesn't always focus on what he doesn't think is immediately important," an Administration official said.
Alan Reynolds, a supply-side economist at Polyconomics Inc., a Morristown, N.J., research firm, is not particularly worried. "They are still figuring out what they want to do after they deal with the immediate brush fires," Reynolds said, "but even when they've produced an incomplete plan, it's turned out to be the best game in town."
Like Bush, Brady seems to operate better in Washington's back rooms than in the public spotlight. Ted Van Dyk, a Democratic policy analyst, said the best way to understand Brady may be to imagine the President in his place.
"Nick Brady is a carbon copy of George Bush," Van Dyk said. "Good breeding, good intentions and good credentials, but curiously laid back."
As a result, Van Dyk predicts, the Treasury Department under Brady will take "no big risks," enjoy "no big triumphs" and make "no big mistakes." Instead, it will plod on, dealing with problems "on a case-by-case basis and making generally constructive proposals where the inertia needs to be broken."
His early exploits in office--both his gaffes and his subsequent achievements--reflect the best and the worst of Brady. He is strong on requiring long, painstaking analysis of a problem but inexperienced and sometimes naive about the political ramifications of proposed solutions.
Not All Critics Disarmed
His S&L; plan, for example, nearly came unglued over the hint that one option might entail a tax increase. But once the Treasury Department made public its final plan, which also bears the strong stamp of White House policy aide Richard C. Breeden, its officials have been generally successful, despite some modest setbacks in one House subcommittee, in out-maneuvering entrenched special interest groups and overcoming objections from balky members of Congress.
Not that Brady has disarmed all the critics. Some still complain that the package is too small to ensure that the crisis does not reemerge in future years and that it postpones key questions on reshaping the nation's financial system.
"They may be laying the foundation for a Chinese water torture," said Jerry Jordan, a former Reagan Administration economist now at First Interstate Bank in Los Angeles. "There's a real danger the plan could unravel."
The Third World debt plan faces similar challenges. While Treasury's new approach has been accepted in principle by finance ministers around the world, both U.S. allies and the independent Federal Reserve Board are unhappy with key elements. Moreover, the plan left so many details unresolved, perhaps because it was rushed out in response to riots in Venezuela, that even top officials cannot say how it will work in practice.
Barry P. Bosworth, a Brookings Institution economist, says the S&L; and debt plans have much in common: "They both ended up getting fairly good marks for general direction but are being criticized as incomplete. In both cases, the Treasury had the right basic elements, but the follow-through is lacking."
Senior Brady aides insist that they are learning quickly from their early stumbles. They believe Brady's image problem stems from his low-key, decidedly un-Washington manner. Imbued with an upper-class inner confidence, the usually unflappable Brady is casual and chatty with visitors, seemingly unmindful of the need to weigh his words carefully and almost devoid of ego.
"He doesn't have to go out and impress everybody how important he is," one Treasury official said. "And he's not a guy who took the job as a stepping stone to anything else."
Although Brady lieutenants are careful not to confirm it, acquaintances say he suffers from a mild form of dyslexia, a reading disorder, that forces him to rely on briefings rather than on reading and sometimes makes him seem disoriented. At this past month's meeting of the world's finance ministers, he launched part way into a speech before realizing he had the wrong text.
Brady is used to being more a private man than a public figure. At Dillon, Read & Co., the investment house he headed, his job more often found him taking clients to the golf course for quiet lobbying rather than turning himself into a highly visible figure on Wall Street.
Third World Plan Key
Yet Bush clearly values his judgment, even when it runs counter to the President's own. For instance, Brady was one of the first to warn Bush that former Sen. John Tower's flaws would prove fatal to his bid to become defense secretary. As a result, even though Treasury had its plate full during the transition from the Reagan Administration to the Bush Administration, Brady spent much of December huddled with Bush, counseling him on the Tower nomination.
For all Bush's trust in him, however, Brady's ultimate reputation will probably ride on how well he executes the Administration's hastily crafted Third World debt plan.
In brief, Brady's new approach calls for debtor countries to negotiate with commercial banks to persuade them to discount a portion of their Third World loans and exchange them for new government securities whose interest payments would be guaranteed with monies from the International Monetary Fund or World Bank.
The proposal was initially supposed to work without new lending from banks. But critics argued that debt reduction schemes alone would never provide enough relief. Now, after four or five quickly concocted mutations, Brady has had to reverse himself on the issue, and the Treasury is scrambling to come up with a "test case" country, such as Mexico.
What's worse, some officials have complained that Brady has been high-handed in dealing with the new government of Mexican President Carlos Salinas de Gortari. Earlier this year, top Treasury policy-makers effectively stalled a U.S.-promised bridge loan in a dispute about whether Mexico had met its economic targets. And two weeks ago, Brady abruptly rejected a recent Mexican debt-reduction plan out of hand.
Brady has also drawn criticism for a brief, ill-timed spat with the Federal Reserve Board earlier this year, when he openly criticized Fed Chairman Alan Greenspan for pushing interest rates up as an anti-inflation measure. That outburst led financial markets to think that the Treasury secretary was "soft" on inflation.
Nevertheless, the soft-spoken Wall Streeter quickly backed off when the inflation numbers took a sharp turn for the worse. Aides say Brady and Greenspan meet weekly over breakfast and now have a workable--if not entirely sympathetic--relationship. "There are no differences," Brady insisted.
Without doubt, the reluctant Treasury secretary is becoming visibly less so. Shedding his inhibitions late last month, Brady ventured to the hustings for a two-day trip to Dallas and Houston to promote his S&L; rescue plan--and appeared to enjoy the give-and-take with audiences.
But his new-found confidence will do him little good if he cannot deliver.
Said fellow Wall Streeter Alan Stoga, the top economic analyst at Kissinger Associates: "If in six months from now we have a debt strategy that is inadequate, if our trade policy is being driven by events rather than by a larger strategy, and if the Administration hasn't come to grips with the U.S.'s own debt problem, then I think we may have to start worrying."