Robert McTeer, president of the Federal Reserve Bank of Dallas, courts controversy.

He questions the value of the safety net, supports substantially broader powers for banks, and advocates lower trade barriers.

"It is frustrating to stick to just monetary theory and policy," Mr. McTeer said. "I have an itch to take a bigger-picture look and help people understand what is going on."

Bob McTeer, 54, is so unassuming and laid back that it is easy to forget he's president of the bank. Like every other employee, he wears his identification card - complete with picture and name in capital letters - on his jacket's lapel.

He reviews movies for the in-house newsletter and participates in the bank's fitness program, agreeing to battle head-on the employee who won a 2,500-meter stationary-rower race. (For the record, Mr. McTeer lost, but his time of 8:50 was third-best. "The winner and runner-up were half my age," he said with a smile.)

Mr. McTeer has even replaced the bank phone system's classical music with country-and-western tunes, except on Fridays - when Elvis takes over.

He speaks frequently in the region, hitting two Texas universities in one recent week. He often meets with the bank's directors, hopping Southwest Airlines for quick trips.

Though he grew up in Georgia and spent most of his professional career in Virginia and Maryland, Mr. McTeer has made the transformation to Texan since taking over the bank in 1991.

He's often pictured in a cowboy hat, and hanging on his office wall is a fluorescent painting of cowboy boots emblazoned with the Dallas Fed's emblem. He's even picked up the accent.

Like a cowboy riding alone on the range, Mr. McTeer is not afraid to go solo on policy issues.

He rejects the argument made by many of his Fed colleagues that banks, because they have access to the discount window and deposit insurance, should be barred from new businesses.

"The dangers of extending the safety net are real but somewhat overstated," he said. "There is room for deregulation and new powers without worrying about the taxpayers being at risk."

Congress insulated taxpayers when it passed the Federal Deposit Insurance Corp. Improvement Act, which requires regulators to shoot "sick and wounded" banks before they run out of capital and have to rely on the insurance fund to reimburse depositors, he said.

"The insurance fund is much more bulletproof than it used to be," he said. "The chance of problems getting all the way to taxpayers is overstated."

Others at the Fed consider the safety net subsidy far more significant. Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, has even proposed cutting out large banks with complex securities businesses from the safety net altogether because they pose too much risk to taxpayers.

Fear of extending the safety net also is an overriding reason Fed Chairman Alan Greenspan opposes letting banks directly enter new businesses through operating subsidiaries.

He hasn't made up his mind on operating subsidiaries, Mr. McTeer said. Having banks conduct new activities through holding companies is inherently safer, he said, but the risk an operating unit poses to the deposit insurance fund is so minor that he is unsure whether restrictions are worthwhile.

Mr. McTeer goes further than his colleagues when it comes to bank powers. He is not content just to let banks underwrite securities and life insurance. They also should be allowed to underwrite property and casualty insurance, he said.

Still, he's not ready to go as far as Senate Banking Committee Chairman Alfonse M. D'Amato, R-N.Y., who wants to drop the wall separating banking and commerce.

"Banking and commerce should be on the table," he said. "But I wouldn't start with that one. I'd open it up gradually."

He's been most vocal on the North American Free Trade Agreement, saying free trade is the only way to boost living standards on both sides of the U.S.-Mexican border. He toured Texas to build support for the treaty, which was ratified by Congress in 1993.

Mr. McTeer started his career at the Richmond Fed in 1968 as an international economist before becoming editor of its monthly economic review magazine. He quickly moved up to administrative officer of the research department, before becoming a special assistant to the president. After 12 years, he took over the Baltimore office.

"We used to sit in the board meetings in Baltimore during the Texas banking crisis and debate if it could happen here," he said. "The consensus was that it could not."

That, of course, turned out to be wrong. In March 1985 the private insurance fund for Ohio thrifts failed, setting off a run on banks. The crisis quickly spread to Maryland, whose thrifts also were insured by a private fund.

"The Maryland fund was very healthy and well-run," he said. "But once people started to mistrust it, we had a run."

By May, the crisis dominated local news coverage, and consumers were lined up at thrifts to withdraw their savings. Mr. McTeer transformed his operations center into a war room, complete with a bulletin board tracking the health of all 102 state-chartered thrifts.

More than 300 examiners streamed in from across the country. The late William Taylor, then the Fed's director of supervision, came up from Washington to oversee the operation. The crisis was finally defused when the Maryland governor said the state would guarantee all deposits.

While the effects of the Maryland crisis quickly dissipated, the impact of the Texas failures lingers. Mr. McTeer can see the entire Dallas cityscape from his office window; yet there is not one home-grown banking institution within sight. Instead, there are huge signs for out-of-state powerhouses NationsBank Corp. and Banc One Corp.

"The power of banking in Texas is now with the community banks," he said. "They have become more active."

That may explain why Texas is the only state to opt out of interstate branching, which takes effect in June. The decision appears to bother Mr. McTeer, who is an avid free-market advocate. But he's also a states'-rights supporter, making him reluctant to criticize the Texas Legislature.

Bankers in Texas said Mr. McTeer was a natural choice. "We picked him for his administrative ability and his ability to articulate positions to the public about the role the banking system plays in the economy," said Thomas Frost, chairman of Cullen-Frost Bankers Inc. in San Antonio and a member of the Dallas Fed's selection committee. "We had lost that with all the banks that had been acquired by entities outside Texas."

Mr. McTeer also is respected among Fed officials. "He is very smart, very well read, and very knowledgeable," Mr. Hoenig said. "He has an ability to bring a sense of humor to things without losing his point."

Bankers in the Fed's Dallas region have another decade to enjoy that sense of humor; Mr. McTeer plans to keep the job until he reaches the mandatory retirement age of 65.

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