A Broker for Treasury

Whose economic views are mostly unknown

The ad for the nation's largest brokerage house reads MERRILL LYNCH IS BULLISH ON AMERICA. In naming a Treasury Secretary, Ronald Reagan wanted to send a similar message of confidence to the nation, especially its business community. Who better to carry it than Merrill Lynch's own chairman, Donald Thomas Regan?

The choice came at the eleventh hour, after former Treasury Secretary William Simon and Citicorp Chairman Walter Wriston had been counted out. Some members of Reagan's transition team were surprised and soured by the decision. They felt that the post should have gone to former Treasury Undersecretary Charls Walker or Reagan Economic Adviser Alan Greenspan. The selection of Regan, 61, seems to have been the handiwork of Reagan's campaign chairman, CIA Director-designate William Casey, who got to know the Merrill Lynch chief when Casey was chairman of the Securities and Exchange Commission in the early 1970s.

An English major at Harvard ('40) and avid golfer (he shoots in the low 90s), Regan learned his hard-driving management style as a Marine lieutenant colonel during combat in the Pacific. Says Regan, whose Irish temper flares quickly at subordinates who do not meet his expectations: "I don't like laziness or sloppiness or slovenliness." After World War II, he joined Merrill Lynch, became its president in 1968 and chairman in 1971. Under his leadership, the firm, already biggest in the U.S. securities industry, became a financial supermarket with thriving new lines of business in insurance, real estate and consumer lending. Having accomplished what he set out to do, Regan had begun to think of stepping down. Two years ago he and his wife Ann, who have four grown children, bought a house in Mount Vernon, Va., for their retirement.

Businessmen regard Regan as sensitive to their need to raise new capital to spur investment, industrial growth and productivity--all the things that the "Reaganauts" claim must be done if inflation is to be stemmed and the economy steered along a path of robust recovery. There are, however, some reservations about Regan among career officials at Treasury. As Merrill Lynch's chairman, he rarely expressed thoughts about economic policies beyond stating their impact on the securities industry. For instance, in a speech last month to the senior staff of the New York Stock Exchange, he declared, "Most of us feel that we are moving into the most encouraging environment for a free-enterprise economy in a generation or more. It should spur investment and productivity and growth, all of which should be reflected in vigorous stock markets." Says a private economist in Washington: "None of us has any notion of what his economic philosophy is. He's a conservative Republican and believes in lower taxes, but what else?"

Regan's experience before congressional committees has been largely limited to discussing such Wall Street esoterica as negotiated commissions in the buying and selling of stock. He has publicly favored a proposal to lower capital gains taxes from 28% to 21%, which would chiefly benefit the nation's nearly 30 million shareholders. He also backs tax incentives, such as more rapid depreciation schedules for businessmen, broadening individual tax brackets to offset inflationary bracket creep and individual tax cuts, but only if a statutory limit is put on the growth of federal spending. However, friends are confident that at his confirmation hearing he will amply demonstrate that his views are broader than the special interests of Wall Street and the "thundering herd" of Merrill Lynch.

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