McTeer

McTeer

Updated

McTeer banks on experience

By BRETT NAUMAN

Eagle Staff Writer

Special to The Eagle

Robert McTeer Jr. says he didn’t expect to spend most of his career working with the Federal Reserve. Now he’s poised to leave the Fed to become chancellor of the Texas A&M System.

Robert McTeer Jr.’s strong business and financial background is tempered by a softer and less serious side that comes across in his writings and speeches.

A section of the Dallas Fed’s Web site is dedicated to McTeer’s writings. The following is a poem titled “Bad Timing” from the Web site category “Rhymes With No Reason”:

There once was an economy on the ropes

That kept dashing our recovery hopes.

When we made the concession

To call it a recession,

It turned up, and we felt like dopes.

Other McTeer writings, including poems and literary works about his childhood and economic issues, can be found at www.dallasfed.org/mcteer/index.html.

Eagle Staff Report

Robert McTeer Jr. vowed to return to higher education when he left a University of Georgia faculty position in 1968 to research economic issues for the Federal Reserve.

After 36 years and several promotions, the 62-year-old president and CEO of the Federal Reserve Bank of Dallas said he got somewhat sidetracked.

“I didn’t go to the Fed with the intention of making it my career. I always thought I would teach,” McTeer said from his Dallas office Friday. “When I got to the Fed, I liked it and never did leave.”

He is poised to finally make his return to academia after the Texas A&M University System Board of Regents last week named him the sole finalist to become the system’s next chancellor.

McTeer, who has led the Dallas-based Federal Reserve District 11 since 1991, is one of the nation’s most respected and, at times, outspoken economists, according to several financial experts.

After spending most of his professional career at the Fed, taking on the leadership of the A&M system is a homecoming of sorts for a public servant whose roots were connected to education as a young man.

Upbringing, education

McTeer was born and raised in rural Georgia. His father, Doyal McTeer, owned a truck stop off U.S. 411 near the small town of Ranger, where the younger McTeer worked pumping gas, changing tires and mopping floors during his teenage years.

“I usually tell people I grew up on the side of the road,” he said, referring to his home 150 yards off the highway connecting Atlanta and Knoxville, Tenn.

In the summer, Doyal McTeer worked at the truck stop from 7 a.m. to 7 p.m., and his son manned the 7 p.m. to 7 a.m. shift — except on Saturdays, when he wouldn’t have to work until midnight if he had a date.

The business was successful for a number of years but ultimately closed after an interstate highway was built nearby. Part of its failure, McTeer said, was linked to his father’s eighth-grade education and the fact his father could barely write.

“Because of that, he kept emphasizing to me the importance of education,” McTeer said. “He said I should go to college so I wouldn’t have to work all the hours he did.”

After graduating from a high school of 33 students, McTeer set out for the University of Georgia. While there, he took a money and banking course and began studying economics.

A professor in one course noticed McTeer had a knack for explaining complex financial issues and began using him to tutor other students, including members of the Bulldogs’ football team.

McTeer finished his degree in three years and stayed to work toward his doctorate. The university gave him one of three National Defense Education Fellowships as he continued his economic research.

The same scholarship was received the next year by McTeer’s close friend, Phil Gramm, who later left Georgia for a Texas A&M faculty position on his way to serving in the U.S. Senate.

Career success

While working on his doctorate, McTeer spent two years as an economics professor on Georgia’s faculty. In 1968, he took a position as research economist for the Federal Reserve Bank of Richmond.

The job was supposed to be temporary, McTeer said. The idea was to gain some practical experience studying economics and eventually move on to another faculty position.

Instead, it launched a storied career. While McTeer taught as an adjunct professor at the University of Richmond, Johns Hopkins University and Virginia Commonwealth University, he steadily ascended the Fed’s ranks.

In the early 1970s he was promoted into management, and by the 1980s his leadership had landed him a job running the Richmond Fed’s Baltimore branch.

Edward Kelly, a now-retired member of the Federal Reserve’s Board of Governors, worked with McTeer for years as he rose to prominence and in 1991 took over as president and CEO of the Dallas Fed.

“Mr. McTeer is a very intelligent, respected and articulate leader,” Kelly said last week. “He’s personal and upfront. He’s not shy and is not afraid to take a contrarian position on economic issues.”

As head of the Dallas Fed, McTeer supervises banking for all of Texas and parts of New Mexico and Louisiana. The district controls the flow of currency and clears checks for hundreds of banks.

McTeer also reports to the Board of Governors and sits on the Federal Open Market Committee — the Fed’s monetary policy arm, which influences the economy by regulating federal fund rates.

As a member of the committee, McTeer on three separate occasions in 1999 and 2002 broke from other board members and voted against raising federal fund rates.

The dissents put him in a contrary position with fellow economists, including Fed Chairman Alan Greenspan, and earned him nicknames such as “Lone Star Loner” and “Lonesome Dove” from the national media.

McTeer said he didn’t agree with the latter Larry McMurtry reference when it was first used by USA Today — and he still doesn’t, because it depicts him as being soft on inflation.

“A dove is someone for slightly easier policy, and a hawk is for tighter policy,” McTeer said. “I tell people in speeches I’m not a dove. I’m just a kinder and gentler hawk.”

Scott Hein, Briscoe Chair professor of bank management and finance in the Rawls College of Business at Texas Tech University, said economists across the nation listened when McTeer disagreed with his colleagues.

McTeer’s credibility as one of the nation’s leading economists already had been solidified based on his accomplishments in the 1990s running the Dallas Fed, Hein said.

Hein, who worked part time as a consultant for the Dallas Fed from 1988 to 1990 and under McTeer from 1993 to 1994, said McTeer has been credited with helping to make the district a national player in studying economic issues.

“In the 1980s the Federal Reserve Bank of Dallas did not have the reputation for research,” Hein said. “It was not respected at all in the Federal Reserve System. Their economic review is now highly read.”

Its researchers have produced numerous studies advocating free trade and free enterprise, said Scott McDonald, president and CEO of the Southwest Graduate School of Banking at Southern Methodist University. Economists under McTeer also have conducted studies that predicted the immense impact electronic checking has had on the banking industry, McDonald said.

“Bob McTeer has taken a Dallas Fed not all that well known in areas of creativeness and put it on the map,” he said. “A&M’s also trying to move forward. To me, he is exactly what you’re looking for in a chancellor.”

Future challenges

Although regents must wait nearly three more weeks to officially hire him, McTeer likely will replace the late Howard Graves as the A&M system’s next permanent chancellor.

Cancer led to Graves to retire in August 2003. Benton Cocanougher has taken on the chancellor’s duties on an interim basis in the nearly 14 months since then and was McTeer’s primary competition for a permanent appointment.

Regent Steve Stevens nominated Cocanougher for the post during a board meeting last week, but the measure fell one vote short of approval. The nine regents then unanimously selected McTeer as their finalist.

When the vote for Cocanougher failed, Stevens said, he felt obligated to support McTeer. Managing a complex organization such as the Dallas Fed makes him more than qualified to run the system, Stevens said.

Regents expect the same multifaceted success McTeer brought to the Dallas Fed for the A&M system under his leadership as chancellor, Stevens said.

McTeer’s duties will include overseeing the system’s nearly $2.5 billion annual budget, its $500 million endowment and its $1.1 billion investment portfolio, Stevens said.

“The A&M system is such an important part of higher education in Texas,” Stevens said. “With the pressures we have on funding in higher education, we need a strong presence in Austin and Washington to make sure we get our fair share.”

The prominence McTeer brings from years of experience at the Dallas Fed and as an accomplished public speaker, writer and even poet should give the system a higher profile, Regent Erle Nye said.

A major test for the new chancellor will come early in his tenure when the Texas Legislature begins meeting in January. One of the primary reasons for the session is for lawmakers to approve a state budget, which will determine the level of state funding the system will receive for the 2006 and 2007 fiscal years, said state Rep. Fred Brown, R-College Station.

“I just hope he’s a quick study, because so much of what the system relies on from the Legislature falls under his jurisdiction,” Brown said of McTeer. “Three months and he’ll be right in the middle of it all. It’ll be a crucial time.”

As for the upcoming legislative session, McTeer joked, “It would have been nice if the Legislature would have waited until [2006] to meet. I’m sure I’ll have good people to help me through that.”

He said there are many parallels between the Dallas Fed and the A&M system that will help him succeed as system chancellor.

Instead of a board of governors, he will report to a board of regents. Instead of Dallas, San Antonio, Houston and El Paso bank branches, he’ll supervise the nine universities, seven state agencies and a health science center. Instead of receiving information from numerous vice presidents and economists at the Fed, reports will come from university presidents and other system officials.

“I’m used to a complex organization with some ambiguity in reporting lines,” McTeer said. “They say the true test of a CEO is how they deal with ambiguity. I’ve been living with it for quite a while now.”

• Brett Nauman’s e-mail address is bnauman@theeagle.com.

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