Originally created 03/15/04

Influential Fed president Broaddus to retire



RICHMOND, Va. -- After some of his remarks contributed to a blip in interest rates in the mid- to late 1990s, J. Alfred Broaddus Jr., president of the Federal Reserve Bank of Richmond, received an e-mail from an old college girlfriend.

The woman, who was nearing retirement, told him he should keep his opinions about the economy to himself. And the true and somewhat ego-deflating story, which Broaddus once told to a local audience, is still making the rounds in Richmond, his hometown.

Broaddus's self-effacing manner soon will be missed by colleagues and the business community. Broaddus, who turns 65 in July, plans to retire after more than a decade leading the Fed's 5th District, which includes Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.

When he leaves in August, the Federal Reserve will lose a firm supporter of Chairman Alan Greenspan and a consistent voice on monetary policy. Although Broaddus is little known to the general public, he is respected in economic circles for his quiet intelligence, understated strength and strong work ethic, colleagues and industry observers said.

"He sort of set the standard for how you would want a bank president measured," said David M. Jones, an economist who has written several books about the Fed. "I call him a solid central-bank soldier."

Jones ranks Broaddus as one of the more influential voices on the policy-making Federal Open Market Committee. The Fed president brought to the committee a keen insight of what was happening on Main Street due to his familiarity with business and consumer issues in his district, Jones said.

Broaddus's departure comes amid unusually high turnover at the Federal Reserve, according to the Financial Markets Center, a nonprofit group that provides research about the Fed. New presidents started last year at two of the 12 regional reserve banks, in Cleveland and New York. San Francisco and Richmond are currently searching for presidents.

Members of the Richmond bank's board of directors said internal and external candidates are being considered.

One advantage of hiring from within the Richmond Fed would be a candidate's familiarity with the bank's culture and less hierarchical leadership. For many years, the bank has had secure presidents who do not fear being overshadowed intellectually by other Fed managers, said Tom Schlesinger, executive director of the Financial Markets Center.

And Broaddus is certainly one of them, industry observers and employees said.

"Al's encouragement, openness to new ideas and consistent interest in improving monetary policy gave me and other economists the opportunity to make contributions beyond anything we might have dreamed of," said Marvin Goodfriend, senior vice president and policy adviser.

Where Broaddus has attracted both praise and criticism is for his views on inflation, one of his favorite subjects.

"In his long and accomplished career, Al Broaddus has amply demonstrated his unceasing dedication to the Federal Reserve and central banking," Greenspan said in a statement e-mailed to The Associated Press. "He has been a valued and steadfast advocate for price stability, whether that meant leaning against potentially destabilizing inflationary pressures or against the possibility of an unwelcome substantial fall in inflation."

But industry watcher Schlesinger said Broaddus was overly concerned about inflationary pressures in the mid-90s. "As it turned out, inflation didn't erupt on us," he said.

At the same time, Broaddus probably does not deserve to be labeled an inflation hawk, Schlesinger said. In recent years, the Fed president has adapted his views as the economy has evolved and inflation has fallen.

Broaddus's interest in economics began at Washington and Lee University in a class taught by John Gunn, a professor emeritus of economics who still keeps in touch with and gives advice to his pupil.

"His reaction was to explain patiently why it was not a suitable thing for the Federal Reserve to do," Gunn said of Broaddus' reaction to one suggestion.

After an Army stint from 1962 to 1964, Broaddus did economics research for the Defense Intelligence Agency. He joined the Fed in Richmond in 1970 as a research economist, rising through the ranks to become president in 1993.

In his early days as president, Broaddus recalls feeling the weight of sitting at the Open Market Committee table with Greenspan. "I wanted to make a contribution, but of course, I was a greenhorn," he said. "I remember feeling nervous."

Broaddus has been a firm backer of Greenspan, defending the chairman's recent comments on Social Security and Medicare benefits cuts for future retirees.

"He's making a great contribution with his statements," Broaddus said. "What he's trying to do is clarify the economics of these complex issues. ... He is nonpartisan. He tells is like it is."

Over time, Broaddus has become a popular speaker throughout his district. Jim Lowry, a director of the Richmond Reserve bank's Charlotte, N.C., office, said Broaddus has a knack for explaining complex economic issues to laymen.

"I'm impressed how he can work across all those lines," said Lowry, an automobile dealer in High Point, N.C.

Ironically, Broaddus has not planned his retirement with the same long-term view that he applies to the nation's economy. "Beats me," he said, when asked how he will spend the next several years.