Carter Appointee to Leave Fed Post

October 03, 1986|From a Times Staff Writer

WASHINGTON — Emmett J. Rice, a member of the Federal Reserve Board named during the Carter Administration, announced Thursday that he will resign by the end of the year, ensuring that five of the board's seven members will be appointed by President Reagan.

Until early this year, Chairman Paul A. Volcker, backed by other holdover members, had dominated the powerful Board of Governors, which sets monetary policy, regulates the money supply and has increasingly influenced interest rates.

However, with four Reagan appointees already on the board and with Volcker himself evidently more willing to respond to Administration fears of an economic slowdown, the Fed in recent months has eased the discount rate four times to 5.5%--the lowest level of this decade.

Rice was named by Carter to the board in June, 1979, and his term was to expire in January, 1990. In a letter Thursday to Reagan, Rice, 66, a former World Bank official said to be close to Volcker in policy orientation, explained that his decision to resign "is entirely personal."

Volcker, in a written statement accepting the resignation, said he had "known for a long time of Governor Rice's increasing desire to return to private life."

Besides Volcker, who also was named by Carter but was reappointed as chairman by Reagan in 1983, Henry C. Wallich, a long-time board member, will be the only remaining governor not named by Reagan.

The board's current vice chairman, Manuel Johnson, and Martha Seger, Wayne D. Angell and Robert Heller, since early this year have formed a four-vote majority capable of outvoting Volcker.

But, after a widely reported uprising in February, when Volcker was outvoted in a decision to lower the discount rate, Volcker himself has thrown his weight behind a strategy of pushing interest rates lower to stimulate the economy--with or without the cooperation of Japan and West Germany, whose currencies have appreciated sharply against the dollar.

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