David W. Mullins Jr., a Treasury official with an academic leaning, will soon become President Bush’s first appointee to the Federal Reserve Board, according to Administration sources.
The 43-year-old Mullins has been close to Treasury Secretary Nicholas F. Brady in recent years. A former member of the Harvard Business School faculty who now is assistant secretary of the Treasury for domestic finance, Mullins was one of the main architects of the Treasury’s proposal for rescuing the savings and loan industry. He also served as a top adviser to the commission Brady headed that studied the October, 1987, stock market crash.
As a result, if confirmed by the Senate, Mullins would likely be viewed--for a while, at least--as Brady’s pipeline to the Fed. The Treasury chief has had some disagreements this year with Fed Chairman Alan Greenspan over whether the central bank has been keeping interest rates too high.
But some of Mullins’s colleagues were quick to point out that he is an academic with a strait-laced reputation--precisely the sort of Fed appointee that tends to shed political affiliations and become an institutional loyalist.
Appointments to the Fed are watched closely because the central bank exercises significant influence over interest rates, which it seeks to move up or down in an effort to keep inflation under control and sustain economic growth.
The seven-member board of governors determines the discount rate, a benchmark borrowing fee the Fed charges on loans to banks, and the governors all sit on the 12-member Federal Open Market Committee, which sets broad monetary policy. The board also plays a major role in regulating the banking system.
Mullins would replace H. Robert Heller, who resigned in June to become a top executive at Visa International, the credit card company.