Difference between revisions of "David Mullins"

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'''David Wiley Mullins Jr.''' was an American economist who was the 14th [[Vice Chair of the Federal Reserve|vice chairman of the Federal Reserve]] from 1991 to 1994. Prior to his term as vice chairman, Mullins was as a member of the [[Federal Reserve Board of Governors]], taking office in 1990. Before his appointment to the [[Federal Reserve]], he was [[Under Secretary of the Treasury for Domestic Finance|under secretary of the treasury for domestic finance]] under President [[George H. W. Bush]]. Mullins left the government jobs to join the [[hedge fund]] [[Long Term Capital Management]] and remained in private finance following its collapse in 1998.
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==Early life==
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David Mullins was born on April 28, 1946, to David Wiley Mullins and his wife Eula in Memphis, Tennessee.<ref name=
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"Bush nom">http://www.presidency.ucsb.edu/ws/index.php?pid=16743</ref>  His father worked for [[Auburn University]] until 1960, when he became the president of the [[University of Arkansas]].<ref>http://libinfo.uark.edu/specialcollections/findingaids/mullins/index.html#INFORMATION%20ABOUT%20DAVID%20W.</ref>  David Jr. was raised in [[Fayetteville, Arkansas]], along with his brother Gary and sister Carolyn.<ref>Blustein, Paul (November 30, 1989). "Bush Eyes Treasury Official for Fed Post". The Washington Post. pp. D1.</ref>  Mullins left Arkansas for Yale and went on to study finance at the [[MIT Sloan School of Management]].  In [[1974]] he received his Ph.D. from MIT and accepted a position in the faculty of [[Harvard Business School]] as an expert in [[Financial crisis|financial crises]].<ref>https://archive.org/details/inventingmoneyst00dunb/page/132</ref>
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==Career==
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Immediately after the market crash in 1987, President Reagan tapped [[Nicholas F. Brady]], a former United States senator and then chairman of [[Dillon, Read]], to chair the Presidential Task Force on Market Mechanisms, later known as the Brady Commission. Brady recruited Harvard Business School professor [[Robert R. Glauber]] as the commission's executive director, and Glauber in turn enlisted Mullins, a Harvard faculty colleague, as associate director. <ref>Report of the Presidential Task Force on Market Mechanisms, p. ii</ref> The commission was to be an inquiry into the stock market crash of October 19, 1987, known as [[Black Monday (1987)|Black Monday]].<ref>Dunbar, pp. 133–134</ref>  In two months, Mullins helped assemble nearly 50 people to produce the report, which provided the [[official narrative]] of what caused the crash and offered recommendations on how to fix the deficiencies in the market.<ref>https://www.nytimes.com/1988/02/14/business/a-task-force-plays-beat-the-clock.html</ref>  The Brady Report laid some of the blame on derivatives trading and [[portfolio insurance]] mechanisms, with much of that focus being generated by Mullins.<ref name=lowen>Lowenstein, Roger (2000). When Genius Failed: The Rise and Fall of Long-Term Capital Management. Random House. ISBN 0-375-50317-X., page 37</ref><ref name="BG">Gosselin, Peter G. (February 2, 1994). "Fed vice chairman Mullins quits". The Boston Globe. p. 39.</ref>
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Brady went on to become Secretary of the Treasury. As the [[savings and loan crisis]] deepened, he turned to Mullins, now an assistant Secretary of the Treasury, to develop a plan to resolve the crisis. The plan was enacted by Congress on August 8, 1989, as FIRREA (The Financial Institutions Reform Recovery and Enforcement Act of 1989) which created the RTC to dispose of failed thrift assets. The RTC ultimately sold $394 billion in assets of 747 failed thrifts. This approach became a model for banking resolution plans in [[Sweden]], [[Thailand]] and elsewhere.  Mullins remained popular with Congress and the President.<ref>Robinson, John (February 26, 1989). "A taste of the 'Harvard boutique'". The Boston Globe. pp. A1.</ref>  In 1989, Mullins was appointed by President Bush as assistant Secretary of the Treasury for domestic finance.<ref name="Bush nom"/><ref>https://www.nytimes.com/1989/02/02/business/big-slices-of-authority-for-2-brady-assistants.html</ref>  While at the Treasury, Mullins co-wrote a paper on [[high-yield debt]] [[Default (finance)|defaults]].<ref>https://web.archive.org/web/20090529084848/http://www.afajof.org/journal/prizeabs.asp#19891</ref><ref>https://doi.org/10.2307%2F2328617</ref>
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On May 21, 1990, Bush nominated Mullins to a 14-year term on the Federal Reserve Board of Governors to fill a vacancy left by the resignation of [[H. Robert Heller]].<ref>"People behind the policy at the Federal Reserve". USA Today. April 9, 1991. pp. 2B.</ref><ref>https://www.nytimes.com/1989/11/30/business/treasury-official-seen-as-choice-for-fed-seat.html</ref>  Mullins was seen as the Fed's "resident intellectual" due to his background as a professor in finance and economics.<ref name="NYT New Intellectuals">https://www.nytimes.com/1991/06/09/business/the-new-intellectuals-at-the-fed.html</ref>  In 1994, Mullins resigned to join [[John Meriwether]]'s new hedge fund, [[Long Term Capital Management]] (LTCM).  Although his term was to come to a close, the resignation was viewed as unexpected.<ref>Dunbar, Nicholas (2000). ''Inventing Money: The story of Long-Term Capital Management and the legends behind it.'' New York: Wiley. ISBN 0-471-89999-2, page 142</ref><ref>Berry, John M. (February 2, 1994). "Vice Chairman Of Fed Resigns Unexpectedly". The Washington Post. pp. F1.</ref>
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At LTCM, Mullins joined what ''[[Business Week]]'' termed a "dream team" of financial experts and academics, including Nobel laureates [[Myron Scholes]] and [[Robert C. Merton]].<ref>Nathans Spiro, Leah (August 29, 1994). "Dream Team". Business Week. p. 50.</ref> [[Roger Lowenstein]], author of ''[[When Genius Failed: The Rise and Fall of Long-Term Capital Management]]'', argued that some prospective investors in LTCM were swayed by the presence of Mullins.<ref name=lowen/> Just as the celebrity of Scholes and Merton caused investors and trading partners to exercise less diligence, Mullins' addition as a "marquee" name added gravitas to the firm.<ref>O'Brian, Timothy L.; Holson, Laura M. (October 23, 1998). "BLIND TRUST: A special report.; A Hedge Fund's Stars Didn't Tell, And Savvy Financiers Didn't Ask". The New York Times. pp. A1.</ref> Following that fund's collapse in 1998 and dissolution in 2000, Mullins left LTCM and worked for financial services companies.<ref>Henriques, Dana B. (June 19, 1999). "Hedge Fund To Cash Out Original Stakes". The New York Times. pp. C1.</ref><ref>Lowenstein, pp. 227</ref>  Mullins' career in government was effectively ended by the collapse.<ref>Lowenstein p. 176–177</ref>  In 2008 he was chief economist of the hedge fund Vega Asset Management.<ref>Remember These Guys?". Business Week. June 12, 2006. p. 57.</ref>
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David Wiley Mullins, Jr. died unexpectedly during an emergency heart surgery in [[Naples, Florida]], on February 26, 2018.<ref>http://www.encyclopediaofarkansas.net/encyclopedia/entry-detail.aspx?entryID=9557</ref><ref>https://www.wsj.com/articles/david-mullins-rose-to-fed-vice-chairman-then-joined-doomed-hedge-fund-firm-1519992000</ref>
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Latest revision as of 05:45, 29 December 2023

Person.png David Mullins   C-SPANRdf-entity.pngRdf-icon.png
(economist)
David Mullins.jpg
BornDavid Wiley Mullins Jr.
April 28, 1946
Memphis, Tennessee
DiedFebruary 26, 2018 (Age 71)
NationalityAmerican
Alma materYale University, MIT
Federal Reserve economist who moved on to the speculator hedge fund Long Term Capital Management until its spectacular collapse.

Employment.png Vice Chairman of the Federal Reserve

In office
July 24, 1991 - February 14, 1994
Preceded byManuel H. Johnson
Succeeded byAlan Blinder

Employment.png Board of Governors of the Federal Reserve System

In office
May 21, 1990 - February 14, 1994

David Wiley Mullins Jr. was an American economist who was the 14th vice chairman of the Federal Reserve from 1991 to 1994. Prior to his term as vice chairman, Mullins was as a member of the Federal Reserve Board of Governors, taking office in 1990. Before his appointment to the Federal Reserve, he was under secretary of the treasury for domestic finance under President George H. W. Bush. Mullins left the government jobs to join the hedge fund Long Term Capital Management and remained in private finance following its collapse in 1998.

Early life

David Mullins was born on April 28, 1946, to David Wiley Mullins and his wife Eula in Memphis, Tennessee.[1] His father worked for Auburn University until 1960, when he became the president of the University of Arkansas.[2] David Jr. was raised in Fayetteville, Arkansas, along with his brother Gary and sister Carolyn.[3] Mullins left Arkansas for Yale and went on to study finance at the MIT Sloan School of Management. In 1974 he received his Ph.D. from MIT and accepted a position in the faculty of Harvard Business School as an expert in financial crises.[4]

Career

Immediately after the market crash in 1987, President Reagan tapped Nicholas F. Brady, a former United States senator and then chairman of Dillon, Read, to chair the Presidential Task Force on Market Mechanisms, later known as the Brady Commission. Brady recruited Harvard Business School professor Robert R. Glauber as the commission's executive director, and Glauber in turn enlisted Mullins, a Harvard faculty colleague, as associate director. [5] The commission was to be an inquiry into the stock market crash of October 19, 1987, known as Black Monday.[6] In two months, Mullins helped assemble nearly 50 people to produce the report, which provided the official narrative of what caused the crash and offered recommendations on how to fix the deficiencies in the market.[7] The Brady Report laid some of the blame on derivatives trading and portfolio insurance mechanisms, with much of that focus being generated by Mullins.[8][9]

Brady went on to become Secretary of the Treasury. As the savings and loan crisis deepened, he turned to Mullins, now an assistant Secretary of the Treasury, to develop a plan to resolve the crisis. The plan was enacted by Congress on August 8, 1989, as FIRREA (The Financial Institutions Reform Recovery and Enforcement Act of 1989) which created the RTC to dispose of failed thrift assets. The RTC ultimately sold $394 billion in assets of 747 failed thrifts. This approach became a model for banking resolution plans in Sweden, Thailand and elsewhere. Mullins remained popular with Congress and the President.[10] In 1989, Mullins was appointed by President Bush as assistant Secretary of the Treasury for domestic finance.[1][11] While at the Treasury, Mullins co-wrote a paper on high-yield debt defaults.[12][13]

On May 21, 1990, Bush nominated Mullins to a 14-year term on the Federal Reserve Board of Governors to fill a vacancy left by the resignation of H. Robert Heller.[14][15] Mullins was seen as the Fed's "resident intellectual" due to his background as a professor in finance and economics.[16] In 1994, Mullins resigned to join John Meriwether's new hedge fund, Long Term Capital Management (LTCM). Although his term was to come to a close, the resignation was viewed as unexpected.[17][18]

At LTCM, Mullins joined what Business Week termed a "dream team" of financial experts and academics, including Nobel laureates Myron Scholes and Robert C. Merton.[19] Roger Lowenstein, author of When Genius Failed: The Rise and Fall of Long-Term Capital Management, argued that some prospective investors in LTCM were swayed by the presence of Mullins.[8] Just as the celebrity of Scholes and Merton caused investors and trading partners to exercise less diligence, Mullins' addition as a "marquee" name added gravitas to the firm.[20] Following that fund's collapse in 1998 and dissolution in 2000, Mullins left LTCM and worked for financial services companies.[21][22] Mullins' career in government was effectively ended by the collapse.[23] In 2008 he was chief economist of the hedge fund Vega Asset Management.[24]

David Wiley Mullins, Jr. died unexpectedly during an emergency heart surgery in Naples, Florida, on February 26, 2018.[25][26]


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References

  1. ↑ a b http://www.presidency.ucsb.edu/ws/index.php?pid=16743
  2. ↑ http://libinfo.uark.edu/specialcollections/findingaids/mullins/index.html#INFORMATION%20ABOUT%20DAVID%20W.
  3. ↑ Blustein, Paul (November 30, 1989). "Bush Eyes Treasury Official for Fed Post". The Washington Post. pp. D1.
  4. ↑ https://archive.org/details/inventingmoneyst00dunb/page/132
  5. ↑ Report of the Presidential Task Force on Market Mechanisms, p. ii
  6. ↑ Dunbar, pp. 133–134
  7. ↑ https://www.nytimes.com/1988/02/14/business/a-task-force-plays-beat-the-clock.html
  8. ↑ a b Lowenstein, Roger (2000). When Genius Failed: The Rise and Fall of Long-Term Capital Management. Random House. ISBN 0-375-50317-X., page 37
  9. ↑ Gosselin, Peter G. (February 2, 1994). "Fed vice chairman Mullins quits". The Boston Globe. p. 39.
  10. ↑ Robinson, John (February 26, 1989). "A taste of the 'Harvard boutique'". The Boston Globe. pp. A1.
  11. ↑ https://www.nytimes.com/1989/02/02/business/big-slices-of-authority-for-2-brady-assistants.html
  12. ↑ https://web.archive.org/web/20090529084848/http://www.afajof.org/journal/prizeabs.asp#19891
  13. ↑ https://doi.org/10.2307%2F2328617
  14. ↑ "People behind the policy at the Federal Reserve". USA Today. April 9, 1991. pp. 2B.
  15. ↑ https://www.nytimes.com/1989/11/30/business/treasury-official-seen-as-choice-for-fed-seat.html
  16. ↑ https://www.nytimes.com/1991/06/09/business/the-new-intellectuals-at-the-fed.html
  17. ↑ Dunbar, Nicholas (2000). Inventing Money: The story of Long-Term Capital Management and the legends behind it. New York: Wiley. ISBN 0-471-89999-2, page 142
  18. ↑ Berry, John M. (February 2, 1994). "Vice Chairman Of Fed Resigns Unexpectedly". The Washington Post. pp. F1.
  19. ↑ Nathans Spiro, Leah (August 29, 1994). "Dream Team". Business Week. p. 50.
  20. ↑ O'Brian, Timothy L.; Holson, Laura M. (October 23, 1998). "BLIND TRUST: A special report.; A Hedge Fund's Stars Didn't Tell, And Savvy Financiers Didn't Ask". The New York Times. pp. A1.
  21. ↑ Henriques, Dana B. (June 19, 1999). "Hedge Fund To Cash Out Original Stakes". The New York Times. pp. C1.
  22. ↑ Lowenstein, pp. 227
  23. ↑ Lowenstein p. 176–177
  24. ↑ Remember These Guys?". Business Week. June 12, 2006. p. 57.
  25. ↑ http://www.encyclopediaofarkansas.net/encyclopedia/entry-detail.aspx?entryID=9557
  26. ↑ https://www.wsj.com/articles/david-mullins-rose-to-fed-vice-chairman-then-joined-doomed-hedge-fund-firm-1519992000
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