Profile: Lawrence Lindsey
W A S H I N G T O N, Jan. 3 -- Larry Lindsey comes to the new Bushadministration straight from the old Bush administration, having fought battles with recession — andwith economists who took umbrage at his defense of RonaldReagan’s tax cuts.
Lindsey, appointed today as President-elect GeorgeW. Bush's top White House economic adviser, is a former FederalReserve governor who, somewhat out of character for a centralbanker, is outspoken about his views.
He gained much fame, though with his public fight against Toys R Us.
Really, his feud was with credit-rating practices. But Lindseymade the children’s goods retailing chain and the Bank of New Yorkthe faces of that fight in 1995 when the bank’s computers rejectedhis application for a Toys R Us credit card. He was a member of theFederal Reserve Board at the time.
The reason for the rejection: too many credit inquiries when herefinanced his mortgage, despite a $123,000 salary andsqueaky-clean bill-paying record.
Toy Chain Suffers Embarrassment
Lindsey declared the rejection funny. Less humorous, he said,was that computers, for all their objectivity, could turn down alow-income person with no credit history who might try to obtain abusiness loan.
Victory came in the form of a $15,000 credit line later offeredby the toy chain and the bank — Lindsey turned it down — and awidely accepted policy change that some in the credit-scoringbusiness call the “Larry Rule”: Computer results of creditscoring for prospective cardholders, particularly rejections, arenow widely reviewed by human beings before being verified.
Such populist policy-challenging has earned Lindsey, 46, kudosfrom consumer groups. But Bush’s new assistant foreconomic affairs has made a more controversial mark in politicaland academic circles.
He opposes cutting the capital gains tax rate, something of anoddity among conservatives.
In line with his Toys R Us credit-scoring battle, the son ofpublic school teachers in Peekskill, N.Y., was noted during hisfive-year stint on the Federal Reserve Board for lecturing banks onimproving lending practices to poor people.
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