Dudley Proves This Isn't Your Father's New York Federal Reserve
Sept. 28 (Bloomberg) -- It's a quiet September morning outside the headquarters of the Federal Reserve Bank of New York on Liberty Street in downtown Manhattan.
The 22-story building, made of limestone and sandstone blocks and decorated with wrought iron, embodies the secrecy with which the central banking system has operated since its founding in 1913. The ground floor, with its vaulted ceilings and iron chandeliers, houses an exhibit on the history of money. In a 10th-floor conference room, William C. Dudley, president of the New York Fed, sits in a leather chair and explains how he's trying to change the image of the central bank as a closed club that caters to Wall Street at the expense of everyone else, Bloomberg Markets magazine reports in its November issue.
"It's important for us to get out into the community to get our message across to explain why we do what we do," says Dudley in a rare interview, breaking with the Fed bank's traditional aversion to publicity. "That's important, because to a lot of people, it's pretty mysterious what the Federal Reserve does."
Dudley, who was chief U.S. economist at Goldman Sachs Group Inc. from 1996 to 2005, has spent more time talking to people in his district than any of his nine predecessors, according to the New York Fed. At these gatherings of local businesspeople in places like the borough of Queens, New York, Dudley speaks about the Fed's unprecedented moves to revive the economy and often faces pointed questions from the crowd.
'Something Very Unfair'
Why did the Fed spend billions in tax dollars to bail out Wall Street during the credit crisis and not help small businesses get loans? Why hasn't the Fed forced banks to modify mortgages? Isn't the Fed causing food prices to spike?
Back at headquarters, Dudley says he understands why people are so angry.
"There is something very unfair about what happened," he says. "The fact that bankers and financiers invented all sorts of crazy products, introduced them in a way that wasn't well thought through and that caused a financial calamity, and then the financial system got rescued while the financial crisis caused them to lose their jobs -- it's completely unfair."
Dudley, 58, is grappling with some of the biggest challenges that a New York Fed president has ever faced. The New York Fed board appointed him in January 2009 in the middle of the worst financial crisis in decades, after Timothy F. Geithner left to become President Barack Obama's Treasury secretary.
Second to Bernanke
Dudley is developing regulations for some of the world's biggest financial firms, such as Goldman Sachs and JPMorgan Chase & Co., aimed at preventing a repeat of the events that brought down Lehman Brothers Holdings Inc. and the global economy.
His position makes Dudley vice chairman of the policy- setting Federal Open Market Committee, second only to Federal Reserve Chairman Ben S. Bernanke in wielding power over monetary policy. In that role, Dudley is trying to keep the economy out of a double-dip recession that could throw an additional hundreds of thousands of Americans out of work at a time of 9.1 percent unemployment.
"There's no question this job is a major, major responsibility and really requires a diverse set of talents," says Mark Gertler, a New York University economist who serves on a New York Fed economic advisory committee. "The president of the New York Fed carries the added responsibility of having to monitor financial markets, and that requires an extraordinary depth of knowledge. It's perhaps second only to the chairman in terms of difficulty of the job and maybe on par."
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