The aftermath of a major Cabinet Secretarial smack down yielded Federal Reserve Chairman G. William Miller's nomination for Treasury's top spot -- by the economically challenged President Jimmy Carter -- this week on July 19, 1979.

Short in stature but 'long' in energy, Miller was a successful lawyer and corporate CEO (Textron, Inc.) before he made the leap to public service. By the time he was tapped to serve the Cabinet, the U.S. economy was under the spell of evil twins: a morbid economy and rampant inflation. A Keynesian at heart, Miller's strategy to fight stagflation earned him the scorn of many Wall Streeters as well as both of his predecessors: Michael Blumenthal (Treasury) and Arthur Burns (Federal Reserve) -- who advocated a more aggressive increase in interest rates (limiting economic expansion to fight inflation) and a decrease in the growth rate of the money supply.

Miller's inability to control skyrocketing consumer prices and rev up the sluggish economy has resulted in many analysts taking a decidedly dim view of his Treasury stint. Some historians would regard him more kindly however, as the prime orchestrator of Chrysler Corporation's government bailout. Though the Fed's picking up the tab for bungled business decisions was not and still is not unheard of, Miller stared down numerous numbers of naysayers with the Fed's $1.5 billion loan guarantee package to the carmaker.

By the 1980's, Chrysler had regained profitability due to aggressive belt tightening measures and financial maneuverings...and "paid" the loan back seven years early.

This Week in Wall Street History

7/14/08