What sweeping changes are in store for the Federal Reserve Bank of New York now that University President Lee Bollinger will be chairing its board of directors?
Not many, at least for the moment, according to Bollinger.
Bollinger, who was named chair of the bank’s board of directors in July after previously serving as a member of the board, told the Spectator recently that the Reserve Bank—which has had a turbulent few years amid claims of conflicts of interest among board members—“is a very impressive organization, from my point of view.”
The Federal Reserve Bank of New York is one of 12 Reserve Banks in the country that make up the Federal Reserve System, which is overseen by the Board of Governors in Washington, D.C.
New York’s is the largest of these Reserve Banks when it comes to assets and volume of activity, and it oversees the soundness of economic and financial systems.
Primarily, the New York Fed focuses on implementing monetary policy (which is decided in D.C.), supervising and regulating financial institutions, and working with international currencies.
The past few years have been turbulent. Bollinger’s appointment follows the resignation in 2009 of former chairman Stephen Friedman, Law ’62 a and former chair of Columbia’s board of trustees.
As the former CEO of Goldman Sachs, Friedman regulated the bank while still holding stock there, at a time when Goldman Sachs had been receiving government aid. An interim chair has been serving since.
While Bollinger sees the organization as “evolving,” he said the system doesn’t need significant revision.
“We’re in a time of transition,” he said.
Time will tell how Bollinger’s leadership style plays out, as Fed watchers say the nature of the position sometimes depends on the chairman’s personality.
While Bollinger is known for his expertise on the First Amendment, he doesn’t think his non-traditional economics background will pose a problem.
“You also want people who bring general knowledge and common sense,” he said.
And he’s managed to keep the wheels running at Columbia: He reminded Spectator that, after all, he has “experience running institutions.”
David Jones, a Fed watcher and former economist at the New York Federal Reserve, said he thought Bollinger was an ideal choice. With so much controversy surrounding the Fed, its president, and its board of directors recently, Bollinger brings a “stabilizing factor,” Jones said.
“He’s had high visibility as Columbia University’s president, in a good way,” he added.
While the role of chairman may not have drawn much attention in the past, Jones thinks the position has been subject to more scrutiny as of late—and that may be part of the reason why
Bollinger’s professional and scholarly background seemed appealing.
“It certainly is not unprecedented,” Jones said. “I think it’s actually a welcome development … given the criticism of the former chairman of that board.”
He added, “It’s a breath of fresh air.”
Jones has seen a variety of interpretations of the chairman’s position—their influence on decision-making on the board can vary. It’s usually up to the personality, he said, to decide whether to play a more judicious or moderating role.
For Bollinger, it’s simple: “It’s a form of public service.”
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