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So much for economic forecasting.

In the past year, Fed Gov. Kroszner has been the point man as the central bank, in response to the housing and financial market meltdown, has crafted the most sweeping consumer-protection regulations in its modern history: It has proposed wide-ranging national standards for tens of thousands of mortgage lenders and targeted unfair and deceptive credit card practices.

Kroszner has also worked with lenders, loan servicers and non-profit counseling groups as part of wider federal efforts to help millions of troubled borrowers refinance into affordable mortgages.

The Harvard-trained economist's unexpected role illustrates a major shift now underway at the Fed.

Best known to consumers for its power to set interest rates, the central bank also has broad authority to regulate lenders nationwide. Under the chairmanship of Alan Greenspan earlier in the decade, the Fed was reluctant to use its full powers, even as mortgage lenders made risky loans that contributed to the acceleration of the U.S. housing market boom. As housing crashed and financial markets began to founder, the central bank still hesitated, prompting House Financial Services Committee Chairman Barney Frank, D-Mass., to warn the Fed to use its power, or lose it.

In recent months, Fed Chairman Ben Bernanke has pushed an activist agenda of rate cuts, innovative lending and stepped-up oversight. Kroszner, chairman of the Fed's internal committee on consumer affairs, has had a major role in implementing and shaping the central bank's rulemaking.

"Randy knows a free-market failure when he sees one," says Robert Litan at the non-profit Brookings Institution, who served with Kroszner on the Shadow Financial Regulatory Committee, a group of experts who analyze government policy. "There has to be widespread recognition at the Fed that they have to get control of the horses before they bolt from the barn again."

Kroszner wins high marks from disparate players such as Travis Plunkett, legislative director at the Consumer Federation of America, and Robert Davis, executive president at the American Bankers Association, for his even-handed treatment. Still, he remains a man in the middle.

Consumer groups, though saying the Fed has gone further than expected, have mounted letter-writing campaigns and other lobbying tactics to beef up proposed rules. The ABA has met with the Fed to argue the proposals go too far and will stifle competition. Lawmakers are considering even tougher legislation.

Kroszner hasn't assuaged Senate Banking Committee Chairman Christopher Dodd, D-Conn., who has refused to schedule a vote on his nomination to a full 14-year Fed term. Kroszner, initially approved to fill out a partial term that expired Jan. 31, can remain at the Fed until a successor is named.

The impasse has given rise to some awkward moments, including an instance where Fed Vice Chairman Donald Kohn testified to Congress in Kroszner's stead. Dodd is also holding up two other Fed nominees, leaving the board short-staffed in the midst of the most challenging economic conditions in decades. Kroszner continues voting on interest rate policy, making speeches and filling other duties.

Kroszner, who earned a bachelor's degree in applied mathematics-economics at Brown and a doctorate at Harvard, says he's doing what he always has: analyzing facts to make the best decision.

"Being a very much empirically oriented economist, … I'm really trying to get into the data and see what the data say. That's how I come to my approach and how I've always come to my conclusions," Kroszner says.

A member of President Bush's Council of Economic Advisers from 2001 to 2003, Kroszner is an expert on finance and banking. His past research has challenged economic assumptions underpinning Depression-era laws that limited the ability of banks to range into other financial areas. He has examined whether private-market forces provide sufficient incentives for self-regulation, looking at such things as credit ratings and structural innovations in futures markets. Kroszner is also co-author of a 1994 book examining a possible world with completely deregulated money and banking.

"I would have expected him to be helping to repeal some of the regulations that were passed in a hurry during the New Deal. … I guess that hasn't happened," says Lawrence White, professor of economic history at the University of Missouri-St. Louis, who has analyzed some of Kroszner's research.

An aficionado of modern architecture, Kroszner titled a 1998 paper on international finance with the phrase "Less is More," borrowed from architect Ludwig Mies van der Rohe. Lately, he's been spending time looking over some less visionary building: visiting areas of Cincinnati, Las Vegas, Boston, Miami and Minneapolis hard hit by the housing downturn. Kroszner says the mix of data, on-the-ground visits and outreach inform his decisions.

"The Federal Reserve has taken immense strides … in understanding the abusive practices in the marketplace hurt not only consumers but the market overall," says Plunkett, saying he was surprised to get a call from Kroszner "out of the blue" following up on proposed credit card rules.

Recent Fed efforts have brought flak from Kroszner's former colleagues on the Shadow Regulatory Financial Committee. In a recent statement, the committee said aggressive Fed initiatives were inviting political pressure that could "poison" broader policy goals. It said the Fed, "at a minimum" should be relieved of consumer-protection duties.

"There aren't very many libertarians in financial-crisis foxholes," says Tom Schlesinger, executive director of the non-profit Financial Markets Center, who said when Kroszner was first named that his academic work evinced contempt for the public sphere. He says the Fed evolution and Kroszner's "are two separate issues. … To some degree I'm still a little skeptical."

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