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For William Dudley, the Financial Crisis Yielded More Than Just Policy Insight

On a more personal level, the retired Federal Reserve Bank of New York president sees value in "people who are broad and can put all the pieces together"

Friday, July 26, 2019

By Jeffrey Kutler

Like other central bankers and regulatory officials who had a front-row seat on the financial crisis and contributed to the recovery efforts that followed, William C. Dudley took certain lessons from the experience. But they were not limited to economics and policy.

Dudley, who was president and CEO of the Federal Reserve Bank of New York starting in January 2009 and served in another senior role at the bank for two years before that, brings his learnings down to the personal level and their meaning for financial and risk professionals.

He points out that there was no single, root cause of the crisis, and that argues against approaching jobs and careers in a narrow, one-dimensional fashion.

“People need to think broadly,” Dudley says in the first of a series of GARP interviews with leaders sharing risk-management career insights. The financial crisis was “about the entire system.” It didn't boil down to housing or securitization or any “one thing,” but rather “a whole bunch of different things.”

In addition to those who “dig fairly deep . . . you also need people who are broad and can put all the pieces together,” says Dudley, who retired from the Fed in June 2018 and in February 2019 received GARP's Risk Manager of the Year award. He believes that in the run-up to the financial crisis there was “a failure of imagination. People couldn't see how all the pieces were interconnected. But after the crisis, you could see how all these things amplified each other and led to worse and worse outcomes.

“Being broad, being able to synthesize and keep your eyes on a lot of things is important.”

“Human Capital Growth”

In his own case, Dudley says that his “human capital growth rate” influenced his decision to join the New York Fed after 20 years with Goldman Sachs, 10 of those years as chief U.S. economist.

There was “no next thing that I wanted to do” at Goldman, he says. After 10 years in the same job, “growth of my human capital was beginning to slow,” and so it was “time to look for something else, somewhat different - not so different that you can't do it, but different enough that it opens up a whole new avenue for learning.”

Now senior research scholar at the Griswold Center for Economic Policy Studies, Princeton University, Dudley advises: “Find something you are really interested in. Don't do something just for the money or because it is prestigious. Do it because you're actually passionate about it. Try to be in a position where you continue to learn.”

He adds, “If you're enthusiastic about your job and you're learning, it's a pretty good career. It almost doesn't feel like work.”

Video production by DeLisa White




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