Financial History Issue 119 (Fall 2016) | Page 35

By Gregory DL Morris Nancy Teeters, first female Fed governor, opposed high rates Bettmann As the politically agonizing year of 2016 winds down, the debate over whether the Federal Reserve should raise interest rates—and, if so, by how much—was largely overshadowed by the bitter presidential race. In dramatic contrast to the campaign for the White House, the long-running discussion about interest rates so far has been sharp but civil and substantive. It has shown how far the country’s economy and economic understanding have advanced. Most notably, the discussion is being led by the first woman to be chair of the Fed Board of Governors, Janet Yellen. The increase in question is a quarter point to a range of 0.5–0.75%; less than 40 years ago there was another initiative to increase rates by a quarter percent, but that was to 8%. It was opposed by the first woman to sit on the Fed’s board, Nancy H. Teeters, and her advocacy earned her the title of “Fed Dove.” Teeters joined the board of governors of the Federal Reserve System on September 18, 1978. She was appointed by President Jimmy Carter and served until June 27, 1984. According to her November 23, 2014 obituary in Bloomberg by Laurence Arnold, “Teeters was a lonely dissenting voice when, in her view, the war on inflation led by [Fed Chairman Paul] Volcker went too far.” She protested as large banks raised their prime rates to 21.5% in December 1980 and warned that high interest rates would cause the US economy to contract. “Because Fed dissents aren’t disclosed to the public until minutes are released, often weeks after a meeting, the impact of Teeters’ opposition was limited,” Arnold wrote. According to Secrets of the Temple: How the Federal Reserve Runs the Country, by William Greider (1989), Teeters’s opposition to large interest-rate hikes were “discounted during the long recession because she was regarded as a ‘knee-jerk liberal.’” She was “well known and respected as a Nance Teeters, the first female governor of the Federal Reserve Board, tells the House Banking Committee on March 26, 1980 that the Fed is considering allowing credit card lenders to charge consumers higher interest rates on old debts if they make new purchases.  |  Fall 2016  |  FINANCIAL HISTORY  33