Former Fed CEO Shares Economic Experience

As part of McDonough School of Business professor David A. Walker’s “Global Financial Markets and Institutions” course, former president and CEO of the Federal Reserve Bank of Dallas Richard W. Fisher held a question-and-answer session on Oct. 8 with students, in which he discussed various issues ranging from his past experiences to his insights on current events.

Fisher gave a short introduction of the Fed, detailing the structure of the 12-bank system and how it is governed. He said that in addition to its dual mandate to regulate inflation and price stability, the Fed also controls interest rates.

“[Its given purpose is to] keep inflation or deflation at bay and maintain price stability and maximum employment. [The third mandate is to] maintain moderate intermediate-term interest rates,” Fisher said.

However, Fisher said that the Fed is not currently upholding this third mandate, as interest rates are still relatively low.

Fisher also explained the inner workings of the Fed. In particular, he described the three rounds of discussion that mark every Federal Open Market Committee meeting, in which all the committee members are given an opportunity to voice their opinions.

“What’s interesting about the Fed is that when you dissent, nobody holds it against you. It’s hard … when you know that you’re making decisions that will impact the world … and you pray and you think about it and you analyze it,” Fisher said.

Fisher said that before releasing an official statement from the meeting, the entire table will agree on the language of the statement.

“The chair of the Fed must be an extraordinary leader [to accomplish this task,]” Fisher said.

Many students asked Fisher to share his experiences during the 2008 recession. Fisher described the tenseness of those days as “meeting by meeting.”

The recession was the first time in his experience at the Fed that arguments got heated, as people became increasingly anxious about the economy.

“There wasn’t a lot of humor in those days,” Fisher said.

Fisher also spoke about the high levels of anxiety he experienced.

“None of us slept one night for 18 months. … You either had an emergency conference call or you worried about whether you gave the right advice. It was like standing at the edge of a cliff and not knowing whether the wind would push you over,” Fisher said.

Having served as Deputy U.S. Trade Representative during the implementation of the North American Free Trade Agreement, Fisher also offered his opinion on current issues, such as the Trans-Pacific Partnership, which President Barack Obama recently signed.

“The only person who led with his chin in trade agreements was President [Bill] Clinton, [but] hats off to President Obama … for doing what’s right and negotiating a trade agreement,” Fisher said.

Walker said that he admired Fisher’s openness in discussing the Fed’s operations.

“[Fisher was] willing to talk about what really goes on in terms of how they [the Fed] come to their conclusion and how they cooperate and the fact that they’re very flexible about disagreeing with each other,” Walker said. “Also, from my point of view, he brought in a lot of things that we talked about in the course.”

Eric Webber (MSB ’16), a student in Walker’s class, also felt that Fisher offered unique insight into the financial landscape of the United States.

“I thought he offered valuable opinions because he had actually been in the field, so it was interesting to hear from an inside perspective about current events,” Webber said.

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