Not Everyone Admires Fed's Top Lawyer, but Michael Bradfield's Power Is Certain; Critics Say the Post of General Counsel Has Become a 'One-Man Show.'

Article excerpt

WASHINGTON -- The office/conference room is very large, befitting its role as a war room for one of the capital's most powerful institutions. On the back wall, an out-of-date map depicts interstate banking in the United States circa 1982. Lawbooks sit on bookshelves like rows of ammunition. A mock "purple heart" is pasted to a lamp. "For injuries suffered in the Federal Reserve service," it reads.

Situated in the Marriner S. Eccles Building, known informally as the Old Fed Building, the office belongs to Michael Bradfield, The Federal Reserve Board's general counsel and a key officer in Fed Chairman Paul A. Volcker's army.

As general counsel, the 51-year-old Mr. Bradfield is the Federal Reserve Board's top attorney, overseeing a staff of about 30 lawyers. He is responsible for preparing all of the board's orders and for handling its litigation.

But in a period when banking law is under intense scrutiny, the Fed counsel has become a major policymaker. Mr. Bradfield, who was brought to the Fed by Mr. Volcker in June 1981, and who is described as one of the chairman's cosest advisers, was a force in several controversial decisions by the Fed in recent years, most notably the fight to kick securities, insurance, and other nonbanking companies out of the banking business.

He also helped shape the nation's current interstate banking environment, writing the Fed opinions that cleared regional interstate banking and interstate expansion via the nonbank-bank loophole in the Bank Holding Company Act.

In the area of new powers, Mr. Bradfield helped design the Fed's position that discount securities brokerage services are permissible activities for bank holding companies. 'In Search of Policy'

As architect of the Fed's legal strategy, he is a man with admirers and detractors. To several banking observers, the Fed and Mr. Bradfield often look like "policymakers in search of a policy." They say they can see no overall policy thrust at the Fed, in contrast to the Office of the Comptroller of the Currency or the Federal Deposit Insurance Corp.

The phrasing of affirmative decisions, such as those involving nonbank banks and regional interstate banking, is often lukewarm, thus encouraging legal challenge, they say. The Fed's positions on issues are so unpreditable, it is charged, that bank holding companies have no way of evaluating their chances of success in making an application.

Much of the criticism is heaped on Mr. Bradfield. Fed insiders and outsiders believe that the general counsel is too close to Mr. Volcker and the chairman's policy objectives at the expense of Fed precedent. This results in what they see as a weak litigation record.

In addition, Mr. Bradfield's supervision of the legal department is under firc from former members of his staff and current Fed insiders. They accuse Mr. Bradfield of demoralizing his staff and alienating other divisions of the agency. His administration, they say, was partly responsible for the departures of several key members of the legal division.

But even his harshest critics concede MR. Bradfield's strengths. He's an excellent lawyer, a tireless worker who typically puts in 12-hour days, an individual with tremendous access to Mr. Volcker, and a tough negotiator who helped to resolve some of banking's most serious crises: the international debt squeeze, the near collapse of the Continental Illinois Corp, and the 1982 failures of Penn Square Bank and Drysdale Government Securities Inc.

They also agree that as long as Mr. Volcker remains chairman, Mr. Bradfield will be one of Washington's most powerful operatives, affecting whether hundreds of applications by bank holding companies get approval from the agency.

An illustration of the power behind Mr. Bradfield's punch is the fact that few individuals interviewed for this article were willing to be quoted for attribution. …