Federal Reserve Gov. John P. LaWare, a genial former Boston banker who helped guide the Fed in dealing with the nation's severe banking problems, unexpectedly announced his retirement yesterday.
LaWare, 67, a Democrat appointed by President Ronald Reagan, has served as one of the board's seven members since 1988.
In addition to playing a leading role in bank regulatory matters, LaWare gradually became one of the Fed's more outspoken foes of inflation.
LaWare said there were no policy factors in his decision to leave, which, he said, was driven by a desire to take it easier. He said he plans to divide his time between a Boston town house and a home on Sea Island, Ga.
"Retirement is pretty attractive when you have been going flat out for 42 years," LaWare said in an interview. "The banking system is in good shape. . . . This is a good time for me to scoot."
His departure, effective at the end of next month, will give President Clinton an opportunity to name a third person to the board. Administration officials said yesterday that a search for a replacement would be launched immediately.
Economist Laura D'Andrea Tyson, head of Clinton's National Economic Council, and Deputy Treasury Secretary Frank N. Newman told reporters they would not be candidates for the post.
Treasury Undersecretary Lawrence H. Summers would not comment when asked if he was interested in the job.
LaWare will attend no more policymaking sessions at the Fed, including today's Federal Open Market Committee meeting, which will set the central bank's interest rate policy.
Analysts said LaWare's departure is not likely to have a noticeable impact on monetary policy unless Clinton were to choose a replacement much less intent on keeping inflation low than the remaining group of policymakers.
In his resignation letter sent to the president yesterday, LaWare urged him to find a banker to fill the job. "The quality of board deliberations and decisions on banking matters is enhanced by the direct participation of a member with personal private-sector experience in banking," he wrote.
In the interview, LaWare said he also is "pretty content" with the policies the Fed has adopted during his tenure and the impact those policies have had on the U.S. economy.
"By and large, over the six and a half years and all the meetings, I was never in violent disagreement" with other Fed officials, he said. "If I was a dissenter or a reluctant follower, it was always a matter of timing, as it was last December."
At a meeting of the Federal Open Market Committee just before Christmas, a majority of the policymakers preferred to leave interest rates unchanged while LaWare wanted to increase short-term rates another half percentage point.
"There was not anybody around the table who didn't think we had to move again, but it was again a question of timing," LaWare said, noting that the committee did raise rates by half a point at the following meeting in February.
As the only former banker on the board, LaWare has been chairman of its Committee on Banking Supervision and Regulation, which oversees the central bank's regulation of all bank holding companies and state-chartered commercial banks that are members of the Federal Reserve System.
LaWare has represented the Fed in interagency meetings with other bank regulators and testified frequently on banking issues before Congress.
Last year, LaWare helped scuttle an administration proposal that virtually would have eliminated the Fed's supervisory and regulatory responsibilities.
Now, he said, any consolidation of federal banking regulatory agencies should wait until Congress decides on the future of the financial services industry, including whether to allow banks, securities firms and insurance companies to be combined into financial services holding companies. Staff writer Clay Chandler contributed to this report. CAPTION: John P. LaWare