When it comes to banking policy, Federal Reserve Board Governor Edward M. Gramlich is a clean slate, and he intends to stay that way.
Mr. Gramlich, one of President Clinton's two recent appointees to the Fed, said in an interview that his interests and energies go in directions other than regulation.
"I'm basically a macro-economic guy," Mr. Gramlich said. "This is where it is in macro-economics."
Buttressing his point, Mr. Gramlich pushed for and won the chairmanship of the Fed's economic policy committee, a post normally reserved for more senior governors.
He even joked, at a Dec. 18 public meeting on proposed changes to the margin rules in Regulations G, T, and U, about his disdain for banking policy. After Governor Susan M. Phillips said the Fed would have to address additional changes next year, Mr. Gramlich responded: "I agree with all that, but I'm not sure I look forward to it."
Despite his lack of enthusiasm, Mr. Gramlich acknowledged he must deal with some banking issues. Past governors have said they spent more than half their time on merger applications and regulatory policy revisions. Mr. Gramlich was also assigned to the Fed's consumer and community affairs panel. (The open seat on the Fed's bank supervision and regulation committee went to the board's other newcomer, Roger W. Ferguson Jr.)
"I expect to learn about antitrust and this financial modernization issue," Mr. Gramlich said.
For now he said he is content to defer to the Fed's previous statements on key banking matters. When asked his view on the convergence of the banking, insurance, and securities industries, Mr. Gramlich referred to several speeches Fed Chairman Alan Greenspan has given on the subject.
When pressed, Mr. Gramlich said he will bring an analytical approach to bank regulation.
"I'm an economist, and economists are aware of the virtues of the market and how the market is a good way to allocate capital," he said. "But I'm also aware that there can be problems with free enterprise, especially when it involves financial institutions. You have to weigh the benefits of restoring free enterprise but be mindful of the risks."
Industry officials said they expect Mr. Gramlich to warm up to banking issues eventually, much like other governors who came to the Fed with little policy experience but left as regulatory experts. For instance, former Fed Governor Lawrence Lindsey came in with little regulatory knowledge but left as an expert on community reinvestment issues.
"His attitude toward the regulatory role of the Fed will quickly change," one banking industry economist said. "Even if he wants to be just a macro guy, he will realize that regulation of banks has profound effects on the economy."
"He is bringing an academic arrogance to the Fed that is not going to last long," agreed Bert Ely, president of the industry consulting firm Ely & Co. "Someone will pull him aside and tell him to cool it and don't complain about it in public."
In the interview, Mr. Gramlich said he was itching to return to Washington-he worked in government earlier in his career-from the University of Michigan in Ann Arbor, where he was dean of the school of public policy. His son, daughter-in-law, and granddaughter, Rachel, live in a nearby Maryland suburb.
"I've explained to Rachel all the ins and outs of monetary policy," he said. "She's a very well-informed 2-year-old."
He is looking forward to confronting the posse of news wire reporters who will broadcast his every musing to thousands of traders around the world. "Significant amounts of money can be made on inflections in my voice," he said. "One has to be very careful how one says things."
Mr. Gramlich said he plans to devote most of his public speechmaking to long-term economic issues and Social Security reform, a topic he championed as chairman of a presidential commission that studied the retirement system.
Nearly a month into the job, his office was devoid of personal effects, although boxes were neatly stacked in the center of the room. Besides educating his granddaughter, he spends his spare time playing golf and tennis, although he has yet to challenge Mr. Greenspan in either sport. Mr. Gramlich played baseball in high school and even earned a spot on his college freshman basketball team.
"I could take my son one-on-one until he was 20," he said. "I faded rapidly after that."
Mr. Gramlich, 59, received his BA from Williams College in 1961 and his PhD in economics from Yale University in 1965. He worked as a researcher at the Fed for five years, leaving in 1970 for the Office of Economic Opportunity. He joined the University of Michigan in 1976 and has been there ever since.
He has stayed out of politics, never campaigning for a candidate of either party and not making a political donation in a decade. "I've been nonpartisan for a long time now," he said.
He is still amazed he got the Fed job. His only tie to President Clinton was Gene Sperling, the president's National Economic Adviser.
"He may modestly say that I just knew him because we were both Michigan football fans," Mr. Sperling said. "But the truth is that he is well known in Washington as a highly qualified academic who also has been able to deal effectively with key public policy and long-term budget issues."
Outside of economic policy, Mr. Gramlich's major pet project is Social Security reform. The commission he headed, which released its findings a year ago, was deeply split. Six members wanted to shift 40% of the Social Security fund into stocks to boost earnings, while five recommended allowing the public to invest nearly half their contributions as they see fit.
Mr. Gramlich tried to steer toward middle ground, proposing to supplement the current system with a new 1.6% payroll tax that workers would invest in stock index funds. His recommendation was widely criticized as either woefully inadequate or too radical, depending upon the commentator.
"I think my plan is still a good plan," Mr. Gramlich said. "It is the right thing to do, and I'm not giving up. Something has to happen, because it is a lot less wrenching if you do it now."