Last night, in front of the imposing view from the top floor of the International Affairs Building, William C. Dudley, President and CEO of the Federal Reserve Bank of New York, was right on the money with his insights into the Fed and our economy. Bwog’s Economic Expert Alexandra Svokos was there to report.
I entered last night’s talk expecting to see a strict William C. Dudley viciously defending monetary policy and banks. Instead, I found an amiable “Bill” speaking realistically–and recruiting SIPA students to work at the New York Fed. When not explaining positions available for SIPA grads (hey guys! over 5% of the bank is Columbia affiliated!), Dudley was forthcoming about the future of the economy as he sees it and his experiences at both the Fed and Goldman Sachs.
Dudley was inspired by the community he found when he became president in 2009, especially having been at Goldman from 1986 to 2007. The mission at the Fed, he said, was similar to the Marine Corps: get the job done no matter what it takes, but leave no man behind. This was proven during Hurricane Sandy. The building lost power but they still managed to complete their work that week. Dudley compared the supportive group to the highly competitive atmosphere at Goldman Sachs; the people at the Fed are “there for the right reasons,” to make the American economy and financial system better. There is “no moral ambiguity” at the Fed.
Regarding what’s actually going on in the economy right now, Dudley was also optimistic in his institution. With interest rates at 0%, they have needed to be more innovative (as you can’t lower it more than that…) but the Fed has risen to the occasion with clever initiatives to generate sustainable growth policies, leading to more public confidence, leading to more growth, and on. The Fed focuses on the best idea–not where it comes from–meaning they have not been submitting to the most senior person’s plans. He is “cautiously optimistic with two caveats,” though: “the fiscal cliff and Europe.”
Going over the fiscal cliff does not have to be a disaster, provided that the Democrats and Republicans work together and don’t stop talking like immature school children shouting from across the playground that the other has cooties (that may have been this author’s embellishments). Dudley believes a lot hangs on how the government handles going over the cliff, and nervously laughed that it’s “very unusual to be in November without knowing how 2013 will look.” He is happy with how the Fed has been working, but acknowledged that they want the economy to be growing at a faster rate.
Listening to Dudley talk about Europe is slightly more alarming. ”Watching from afar is aggravating,” he admitted. He sees three major issues. First is the actual structure of their improvement policies: do austerity measures even work or are they making everything worse? Second, the EU is struggling because countries want to be part of a union, but don’t want to give up sovereignty. Finally, overall, “it’s complicated” to deal with so many different countries. As Alexander Hamilton prophesied back in the day, being a unionized group of individual states just does not work.
In general, the economy is on the brink of something at this point. The European situation is somewhat scary, but I was comforted with the surprise that someone as optimistic, genial, and honest as Dudley is in a major position of power over here.
Nice guy Dudley via Wikimedia Commons