Lyle Gramley, the former chief economist of the Mortgage Bankers Association who prior to that was a Federal Reserve governor who helped battle a recession and inflation of more than 10% during Pres. Ronald Reagan's first term in the 1980s, has died. He was 88.
He died of natural causes on March 22 at his home in Potomac, Md., his son Alan Gramley said in a telephone interview.
Gramley served the Federal Reserve for a quarter-century as an economist, research director and governor. After joining the president's Council of Economic Advisers in 1977, Jimmy Carter nominated Gramley three years later to the Board of Governors. There, he became one of Chairman Paul Volcker's main allies in the Fed's fight to maintain independence under White House pressure to ease monetary policy during the 1981-1982 recession.
"Lyle was a brilliant and articulate economist, a consummate central banker," said Greg Valliere, chief political strategist at Washington-based Potomac Research Group, where Gramley was a senior economic adviser until retiring in 2011. "He was a man of remarkable integrity and kindness," Valliere said Monday in an e-mail.
Following the oil shocks of the 1970s, the U.S. Consumer Price Index rose as high as 14.8% in 1980, prompting Volcker's Fed to slow money-supply growth and raise the federal funds rate to almost 20 percent.
With the U.S. gripped by the worst economic decline since the Great Depression and a jobless rate that reached almost 11% in 1982, the Fed resisted repeated calls from Congress to cut borrowing costs, according to a history on the Fed's website.
"One of the first things I did when I came in as a board member was to argue: We've got to stop trying to pump more money into the system," Gramley said, according to "Secrets of the Temple: How the Federal Reserve Runs the Country," William Greider's 1987 book.
By the end of 1982, the Fed had won its battle, with the inflation rate dropping to 3.8%. The U.S. exited the recession in November 1982.
Gramley remained on the Fed board until September 1985 when he left to become the chief economist at the Mortgage Bankers Association in Washington. By that time, Reagan had appointed two of his own nominees -- Preston Martin and Martha Seger -- to the Fed board in a bid to ease the Fed's tight monetary policy, according to a 1985 article in the New York Times.
Lyle Elden Gramley was born on Jan. 14, 1927, in Aurora, Illinois. He was the son of Cook Gramley, an electrician, and the former Myrtle Pflugfelder, a homemaker, his son said.
Gramley earned a Bachelor of Arts degree from Beloit College in Wisconsin in 1951 before moving to Indiana University in Bloomington, where he received a master's in 1952 and a doctorate in economics in 1956, according to Carter's 1980 statement on Gramley's nomination.
After working as a financial economist at the Federal Reserve Bank of Kansas City from 1955 to 1962, Gramley became an associate professor of economics at the University of Maryland in College Park until 1964. He then joined the Federal Reserve System as a senior economist for the Board of Governors and spent 12 years with the research and statistics unit, first as an adviser and then as director.
In more recent years, Gramley was a regular contributor to the public debate about Fed stimulus and the U.S. economic recovery. Ever vigilant on consumer prices, he called for restraint as the Fed embarked on its second round of quantitative easing to help boost the economy.
"This is a year in which the Fed probably won't have to do a thing, just sit still, let the economy take care of itself," he said, according to a December 2010 Bloomberg News article. "We're looking at an economy that is improving, so the Fed isn't going to have to add more stimulus."
In addition to his son, his survivors include his third wife, the former Marlys Fee Jensen, and a daughter, Lynn Dawson. Both children are from his first marriage, to the former Evelyn Wachtel, who died in 1981, Alan Gramley said.
