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Former Fed board member Gramlich dead at 86

Edward Gramlich, a former member of the Federal Reserve board who raised warnings about the housing boom, died Wednesday of leukemia. He was 68.
/ Source: The Associated Press

Edward Gramlich, a former member of the Federal Reserve board who raised warnings about the housing boom, died Wednesday of leukemia. He was 68.

A distinguished economics professor and the former dean of the School of Public Policy at the University of Michigan, Gramlich was appointed to the seven-member Fed board in 1997 by President Clinton. He served until August 2005 when he resigned to return to the University of Michigan, where he served as an acting provost in 2005 and 2006.

Even before he joined the central bank, Gramlich had for more than a decade been warning about the dangers that housing loan practices could pose for the economy.

As chairman of the Neighborhood Reinvestment Corp., Gramlich had urged lawmakers to better protect consumers against predatory lending practices and toughen regulation of mortgage lenders and banks. He continued the campaign as a Fed governor although his efforts met resistance at the Fed and on Capitol Hill from those opposed to greater regulation of business.

In June, Gramlich published "Subprime Mortgages: America's Latest Boom and Bust," a book that is likely to serve as a blueprint for Washington policymakers seeking to find ways to stem a rising tide of mortgage delinquencies and the steepest slump in housing in 16 years.

Gramlich had fallen ill during a trip to Africa in March. He was diagnosed with acute myeloid leukemia, an advanced cancer of the white blood cells. It was his second bout with cancer. While at the Fed in 2002, he was diagnosed with acute lymphocytic leukemia, a more treatable form of blood cancer.

An economist who specialized in cost-benefit analysis, Gramlich decided against pursing a highly experimental treatment of the disease.

At the time of his death, Gramlich was a senior fellow at the Urban Institute, a Washington think tank that published his last book.

Participating in a July panel on housing issues, Gramlich had repeated a familiar theme that more regulation was needed of lenders of subprime mortgages, loans offered to people with weak credit histories.

He said the central bank under Fed Chairman Ben Bernanke supported this view but "they seem to be alone."

In a statement, Bernanke praised Gramlich for his "leadership in consumer protection issues" and his work in helping to restructure the way the Fed's discount loan window operates. Bernanke, who had served on the Fed board with Gramlich, said, "Those who knew him will miss not only his penetrating insight and shining intelligence but also his great wit and warmth."

The seven members of the Fed's board in Washington participate along with the Fed's 12 regional bank presidents in setting monetary policy through their control of interest rates.

Robert Reischauer, the president of the Urban Institute, said that Gramlich's scholarship "set an incredibly high standard and served as a model of succinct, timely, relevant and readable" research.

In addition to his work in the area of housing, Gramlich was also an expert on Social Security and served as chairman from 1994 to 1996 of the Quadrennial Advisory Council on Social Security. He had also been deputy director and acting director of the Congressional Budget Office in 1986 and 1987.

Gramlich, who died at a hospice in Washington, is survived by his wife, Ruth, and two children, Sarah Howard and Robert. Other survivors include his parents, two brothers and one sister, and six grandchildren.