Oregon State Bar Bulletin — OCT0BER 2004

Profiles in the Law
Fed Up with the Fed
By Cliff Collins

For 17 years, Wall Street and the media have hung on his every utterance, receiving his prognostications as if from a mountaintop sage.

The deferential treatment accorded Federal Reserve Chairman Alan Greenspan often dwarfs that of presidents, and his sound bites such as "a soft landing" and "irrational exuberance" made him an oracle.

Have we been duped? William D. Rutherford is certain of it. A former treasurer of Oregon, lawyer and successful businessman, Rutherford felt strongly enough to get the word out that he went to the trouble and expense to self-publish a book on the subject. In it, Who Shot Goldilocks? How Alan Greenspan Did in Our Jobs, Savings, and Retirement Plans, the blame for the burst bubble that ended the longest economic expansion in American history lands squarely on the shoulders of the Fed chairman.

In his book, Rutherford is single-minded. To him, the reason unprecedented growth came to a halt overnight was a direct result of the actions of Greenspan and the Fed. "Rising GDP, rising employment, rising profits, and rising productivity — it was all just too much to resist. It had to be fixed," the author writes. The chairman saw inflation coming when it wasn’t, and has proved throughout his tenure to be a poor forecaster of the economy, Rutherford charges.

Conversely, Rutherford does not credit the Fed with the 1990s’ prosperity. Instead, Greenspan was "a beneficiary" of growth, he says, because the American economy is strong enough to be self-correcting. He further indicts Greenspan with being unaware and uncaring about how his and the Fed’s actions affect average Americans — 2 million of whom lost their jobs.

Rutherford says he is not the first to say the emperor has no clothes, but is the first to put a book out that is mostly critical rather than laudatory. "I felt somebody needed to tell the story, and it wasn’t positive," he explains. Referring to the 32-month market decline, Rutherford writes, "This was a Fed-caused downturn, and it was unnecessary."

Rutherford chose law with the intention of returning to help the family business. Born in Iowa, he began working at age 7 in his father’s variety store in McMinnville after the family came West. Customer contact from an early age instilled a sense of public service in him, he feels. After making his mark at the University of Oregon, Rutherford was accepted by Harvard Law School. He says the Boston and Cambridge area was economically depressed at that time, the early 1960s, and the weather was "horrible," but he considers the educational experience very valuable to his development and thinking.

Rutherford served two years as a first lieutenant in the U.S. Army, then came to Portland to practice at the firm Maguire, Kester & Cosgrave, where "my role was to develop business clients," he says. One of his clients asked him to become in-house counsel, then to become chief executive officer. It was the first of several such posts to follow, though between business stints he practiced law for about 17 years.

He returned to McMinnville to open his own law office. He served as president of the chamber of commerce and chairman of downtown redevelopment, and he won election four times as a state representative from that district. Then-Gov. Vic Atiyeh appointed him to state treasurer to fill out the term of departing Clay Myers. Rutherford then won the next election and remained treasurer from 1984-87. As chairman of the Oregon Investment Council, he was responsible for investing $14 billion.

He next moved to New York City to take a position heading an international investment company. "It was an easy transition for me to go from law to business," Rutherford says. The law gave him a good "platform" to advise and manage businesses, he says. During one of his executive positions, he temporarily also took over the position of general counsel.

"We were being sued and investigated because of the losses before I came in," he says. "It was unbelievable to see how they practiced law in New York." He would come into the office in the morning and find "400 to 500 pages of legal documents to read that they had done overnight — they were churned out at an astonishing rate and quality."

Rutherford returned to Oregon in 1993, and has run his own investment firm, Rutherford Investment Management. He has been a speaker at many investment conferences, and has been listed in Who’s Who in the World and Who’s Who in America.

He ends his book with recommendations about reform, including placing term and age limits on the Fed chairman. "The economy is not just statistics," Rutherford concludes. "It represents ... lives and fortunes of millions of individuals and families, (and all are subject to the) damage inept policies can cause."

"Who Shot Goldlilocks? How Alan Greenspan Did in Our Jobs, Savings, and Retirement Plans" (101 pages, $18.95 plus $4.95 shipping and handling) can be ordered from Crown Point Press USA, 10300 SW Greenburg Rd., Suite 115, Portland, OR 97223), by phone at (888)755-6546, or through bookstores.

Cliff Collins is a Portland freelance writer and frequent contributor to the Bulletin.

© 2004 Cliff Collins

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