Treasury Undersecretary's Dual Roles Raise Questions

Steel, a former vice chairman of the investment banking firm Goldman Sachs, does not foresee trouble. His spokeswoman, Jennifer Zuccarelli, said Steel's deal was blessed at Treasury and the Office of Government Ethics and was disclosed to the Senate, which confirmed him in October. Steel has agreed not to raise funds for Duke and is no longer directly involved in its endowment or investments. Any effort he puts into Duke, she said, comes out of his private time.

Duke's trustees were consulted about Steel's new job and decided to retain him as chairman. According to minutes of the board's executive committee meeting in August, Steel explained what his role in Washington would be and said he would have to step away from direct dealings with Duke's funding. After a discussion without Steel in the room, the executive committee "agreed that Mr. Steel's service in Washington would not have a negative impact on his service to Duke."

Still, the board requires plenty of his attention. It meets four times a year for two days each time, usually Friday and Saturday. In addition, the board's executive committee, which Steel also chairs, meets seven times a year between board meetings.

The board is responsible for the school's well-being, financial and otherwise. "In essence, the Board of Trustees owns Duke University," said John F. Burness, a Duke senior vice president. "The trustees have ultimate responsibility for the university in all of its aspects, including financial."

As undersecretary, Steel has one of the largest portfolios at Treasury. He supervises the assistant secretary for financial markets, the assistant secretary for financial institutions, the fiscal assistant secretary, the deputy assistant secretary for community development policy and the director of the Community Development Financial Institutions Fund. He also oversees the Bureau of the Public Debt and, through the fiscal assistant secretary, the Financial Management Service.

The Bureau of the Public Debt borrows the money needed to operate the federal government and services the debt by issuing trillions of dollars in Treasury securities. The Financial Management Service receives and disburses all public monies, maintains government accounts and oversees a daily cash flow of $50 billion. The Community Development Financial Institutions Fund was created to expand credit in distressed communities.

Steel is not the first Duke chairman to hold federal office. In the 1990s, John Koskinen kept his Duke post when he became deputy director for management of the White House budget office. He removed himself from all higher-education issues and did not raise money for Duke. But even with those restrictions, he said, the double duty was unusual. "Generally, you have to give up everything if you get into a high position," he said.

Light, the NYU professor, said that there is good reason for the rule and that Steel should resign from Duke's board. "The potential conflicts are significant," he said. "His positions violate the spirit of the law that separates public and private service."