Anyone but Yellen

Roger Ferguson Is Wall Street’s Fantasy for Federal Reserve Chairman

Just as Janet Yellen looks like she has the Fed job in the bag comes talk of Roger Ferguson.


All signs still point to Janet Yellen as the next chairman of the Federal Reserve. The White House has been rounding up senators to vouch for her. She canceled a speech scheduled for next week in New York. (The tea-leaves readers suggest she did so because her nomination is imminent.) The Wall Street Journal ran a big feature Monday about her management style (tough but fair).

And yet, even in the wake of Larry Summers’s withdrawal, other names surface. Names broached have included former Treasury secretary Tim Geithner and former Fed vice chairman Donald Kohn. The latest to pop up on the radar is Roger Ferguson, with senior Wall Street executives talking up his prospects. Last week I was on the road for several hours and tuned in to Bloomberg Radio on satellite. I heard Ferguson’s name pop up several times. A piece from back in August in The Washington Post mentioned Ferguson as a possibility. And last week both Reuters and Business Insider ran articles suggesting that Ferguson was on the shortlist.


Roger Ferguson is a highly respected financial manager, a distinguished executive and statesman who keeps a distinctly un–Wall Street low public profile. A three-time graduate of Harvard (B.A., J.D., Ph.D. in economics), he worked as a corporate lawyer and then spent 13 years at the consulting firm McKinsey before joining Alan Greenspan’s Federal Reserve in 1997, becoming only the third African-American to serve on the Fed’s Board of Governors. In 1999 he was named vice chairman of the Fed. On 9/11, he was the highest-ranking Fed official in the country. After leaving the Fed in 2006, he worked briefly at insurer Swiss Re and in early 2008 joined TIAA-CREF as chief executive officer.

TIAA-CREF, which traces its origins to an organization started by Andrew Carnegie in 1918, is a fantastic organization. Along with Vanguard, it is one of the few unalloyed forces for good in the asset-management world. It’s a nonprofit that invests on behalf of educators—college professors, people who work at universities. TIAA-CREF has $523 billion in assets under management. It boasts extremely low cost ratios and offers low-cost financial products like life insurance.

TIAA-CREF is a significant advertiser and a major real estate investor, but it’s pretty rare to see the company’s name in the news. TIAA-CREF hasn’t gotten into any trouble to speak of in recent years. Ferguson and his colleagues did nothing to embarrass themselves in the credit boom and bust, didn’t participate in the bailouts, and have avoided any brush with scandal. Like TIAA-CREF, Ferguson has been a good and useful citizen. He is eminently qualified to be the head of the Fed and would do an excellent job if appointed.

And yet. The Post reported that Ferguson has visited the Obama White House frequently, where he was an informal, trusted adviser. Ferguson served on the President’s Economic Recovery Advisory Board and the President’s Council on Jobs and Competitiveness. But he didn’t take an administration post. And despite his tremendous résumé and record, Ferguson hasn’t been an influential thinker or speaker about the economy, the challenges the Fed faces, or monetary policy. Meanwhile, the job of an American central banker has changed enormously since Ferguson left Washington seven years ago. Ferguson has proved extremely competent at every job he’s had. But it’s difficult to see how someone who essentially rode out—or sat out—the financial crisis and the aftermath is the best person to helm the Fed come January 2014. And for that reason, among many others, I think it’s still most likely (even overwhelmingly likely) that Janet Yellen, the current vice chairman, will be appointed to succeed Ben Bernanke.

So why do other names keep surfacing? It should be noted that most of the chatter I’ve heard about Ferguson has come via Wall Street sources, not Washington ones. And I think that speaks to something else going on in the Anyone but Yellen crowd.

The Fed exerts a huge amount of power over Wall Street, as a regulator, as the force that sets short-term interest rates (and hence asset prices), and as the chief bailout agency. And at some level, Wall Street is still having difficulty coming to grips with the notion that the next Fed chair may not be a member of the club, someone they know and trust. Now, not all Federal Reserve heads have come from Wall Street. Bernanke was an academic, but he was a Republican and had served in the Bush White House, so he was reliable. Greenspan was infatuated with all sorts of markets, including financial ones. Paul Volcker had worked at Chase.

While he hadn’t spent much time on Wall Street, Summers was definitely a member of the club. A former president of Harvard, former Treasury secretary, and habitué of Davos, he had spent time at the hedge fund D.E. Shaw and had lucrative consulting and speaking gigs at big banks and venture-capital firms. (It was these connections, by the way, and not any role in 1990s-era deregulation, that ultimately sank Summers’s nomination. Democrats and Republicans alike, rightly or wrongly, viewed him as part of the problem—the problem being conflicted, money-obsessed, unrepentant, arrogant Wall Street, dependent on federal aid yet contemptuous of regulation, unable to reform, incorrigible.) Ferguson, the CEO of an entity that controls one of the world’s largest pools of investable assets, is also a member of the club.

But while she has spent a fair chunk of her adult life working in the White House and at the Fed, Yellen simply isn’t part of the world that Wall Street inhabits. Wall Street is East Coast, with a little Stanford thrown in. Yellen is based on the West Coast and ran the San Francisco Fed. While she has an Ivy League pedigree, Yellen has tenure at a state school, the University of California, Berkeley, a place many Ivy League baby boomers identify as a hotbed of anti-capitalist radicalism. Wall Street is obsessed with capital and the prerogatives of management. Yellen has spent a lot of time studying and writing about labor and labor markets. (On Wall Street, labor is something your wife goes into.) Yellen hasn’t served on corporate boards or made buck-raking speeches at investor conferences or consulted for hedge funds. She’s just not part of that world. And, perhaps most galling to Wall Street elites, she doesn’t seem to have that much interest in it. Were she to be passed over for Fed chairman, one could easily imagine Yellen returning to Berkeley to teach and write. I can’t recall seeing her at Davos.

Lastly, and not to put too fine a point on it, Yellen is a woman. And on Wall Street, even in an era in which women are governors, secretaries of State, Supreme Court justices, and CEOs of huge companies like IBM, Yahoo, and Pepsi, Wall Street is largely a male preserve. The elite levels of the hedge fund, private equity, and investment banking sectors remain male-dominated. (Quick, name a well-known female senior investment banker.) Wall Street is a world where you may have occasionally have women as clients, but rarely as your colleagues, and never as your boss.