Kroszner on point as Fed tries to end financial abuses

Kroszner, who earned a bachelor's degree in applied mathematics-economics at Brown and a doctorate at Harvard, says he's doing what he always has: analyzing facts to make the best decision.

"Being a very much empirically oriented economist, … I'm really trying to get into the data and see what the data say. That's how I come to my approach and how I've always come to my conclusions," Kroszner says.

A member of President Bush's Council of Economic Advisers from 2001 to 2003, Kroszner is an expert on finance and banking. His past research has challenged economic assumptions underpinning Depression-era laws that limited the ability of banks to range into other financial areas. He has examined whether private-market forces provide sufficient incentives for self-regulation, looking at such things as credit ratings and structural innovations in futures markets. Kroszner is also co-author of a 1994 book examining a possible world with completely deregulated money and banking.

"I would have expected him to be helping to repeal some of the regulations that were passed in a hurry during the New Deal. … I guess that hasn't happened," says Lawrence White, professor of economic history at the University of Missouri-St. Louis, who has analyzed some of Kroszner's research.

An aficionado of modern architecture, Kroszner titled a 1998 paper on international finance with the phrase "Less is More," borrowed from architect Ludwig Mies van der Rohe. Lately, he's been spending time looking over some less visionary building: visiting areas of Cincinnati, Las Vegas, Boston, Miami and Minneapolis hard hit by the housing downturn. Kroszner says the mix of data, on-the-ground visits and outreach inform his decisions.

"The Federal Reserve has taken immense strides … in understanding the abusive practices in the marketplace hurt not only consumers but the market overall," says Plunkett, saying he was surprised to get a call from Kroszner "out of the blue" following up on proposed credit card rules.

Recent Fed efforts have brought flak from Kroszner's former colleagues on the Shadow Regulatory Financial Committee. In a recent statement, the committee said aggressive Fed initiatives were inviting political pressure that could "poison" broader policy goals. It said the Fed, "at a minimum" should be relieved of consumer-protection duties.

"There aren't very many libertarians in financial-crisis foxholes," says Tom Schlesinger, executive director of the non-profit Financial Markets Center, who said when Kroszner was first named that his academic work evinced contempt for the public sphere. He says the Fed evolution and Kroszner's "are two separate issues. … To some degree I'm still a little skeptical."

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