For the second time in the last two years, a senior ex-Federal Reserve official is going through policy’s revolving doors, and is getting back to business.
Ben Bernanke is joining a hedge fund, about 18 months after former NY Fed Chair Tim Geithner’s late 2013 decision to join private equity firm Warburg Pincus.
This is nothing new for the Federal Reserve: much like the corridors of Washington DC’s government offices, the revolving door between Wall Street banks and the Fed has spun for decades.
Bernanke, in a NY Times interview, said he would have never even considered returning to the banking sector.
“I ruled out any firm that was regulated by the Federal Reserve” to avoid a conflict of interest, the former Fed president said.
But many other ex-Fed Chairs, and branch presidents, DID return to the financial services sector. The practice didn’t begin with Geithner either.
William McChesney Martin spent nearly 20 years as Chair of the Board of Governors of the Federal Reserve, and after, in 1970, went on to hold various directorship positions. G. William Martin would go on to launch his own investment bank after spending just one year as Chair of the Board of Governors of the Federal Reserve, and his successor would do the same.
Paul Volcker, who has more recently railed against the investment banking industry, took a job with a bank after he left the Fed’s chair role in the late 1980s (Volcker joined Wolfensohn & Co., as chairman, after leaving the role of president). Alan Greenspan, who took over from Volcker in the late 1980s, would do launch his own consulting firm after his departure.
Some of the leaders of the New York Federal Reserve Bank have returned right to the banking business. Gerald Corrigan, a vet of both the NY Fed and FOMC, went to work at Goldman Sachs shortly after his term concluded. William McDonough, who would succeed Corrigan at the NY Fed, also went to work in banking; he joined Bank of America Merrill Lynch as a vice president and special advisor, where he would remain until his 2009 retirement.
One of the outliers is ex-New York Fed president Anthony Solomon, who said years after leaving the job to the Times, in the late 1980s: “I’d like to do something that doesn’t involve manipulating money or people.”
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