Roger Ferguson
Former Federal Reserve Vice Chair, TIAA CEO
One of the things I say about leadership is that it's really all about followership. If you look over your shoulder and no one's following you, then you're not a leader.
Summary
In this episode of “Leadership Matters,” Alan is joined by a renowned economist and CEO who helped chart the course for American monetary policy during one of its most significant crises. Roger Ferguson has served in a variety of roles over the course of his career: vice chair of the Federal Reserve, head of financial services at Swiss Re, and president and CEO of the Teachers Insurance and Annuity Association, TIAA. Driven by a lifelong interest in the financial sector, Roger’s career has been spent attempting to craft a more inclusive American economy.
Roger and Alan’s discussion covers many elements of his life and career, including the early origins of his interest in economics, his role charting a course for the Federal Reserve in the aftermath of the 9/11 attacks, and the advice he has for leaders looking to make a difference in their positions. Though he has left his role at TIAA, Roger remains active in the world of financial technology and is excited about the innovations in that sector that younger generations have made possible.
Mentions & Resources in this Episode
Guest Bio
Roger W. Ferguson, Jr., is the Steven A. Tananbaum Distinguished Fellow for International Economics at the Council on Foreign Relations. Mr. Ferguson is the immediate past president and CEO of TIAA, the leading provider of retirement services in the academic, research, medical, and cultural fields and a Fortune 100 financial services organization.
Mr. Ferguson is the former Vice Chairman of the Board of Governors of the U.S. Federal Reserve System. He represented the Federal Reserve on several international policy groups and served on key Federal Reserve System committees, including Payment System Oversight, Reserve Bank Operations, and Supervision and Regulation. As the only Governor in Washington, D.C. on 9/11, he led the Fed’s initial response to the terrorist attacks, taking actions that kept the U.S. financial system functioning while reassuring the global financial community that the U.S. economy would not be paralyzed.
Prior to joining TIAA in April 2008, Mr. Ferguson was head of financial services for Swiss Re, Chairman of Swiss Re America Holding Corporation, and a member of the company’s executive committee. From 1984 to 1997, he was an Associate and Partner at McKinsey & Company. He began his career as an attorney at the New York City office of Davis Polk & Wardwell.
Mr. Ferguson is a member of the Smithsonian Institution’s Board of Regents and serves on the New York State Insurance Advisory Board. He is a fellow of the American Academy of Arts & Sciences and co-chairs its Commission on the Future of Undergraduate Education. He serves on the boards of Alphabet, Inc.; General Mills, Inc.; and International Flavors & Fragrances, Inc.
He is Chairman of The Conference Board and serves on the boards of the Institute for Advanced Study and Memorial Sloan Kettering Cancer Center. He is a fellow of the American Philosophical Society and a member of the Economic Club of New York, the Council on Foreign Relations, and the Group of Thirty.
Mr. Ferguson served on President Obama’s Council on Jobs and Competitiveness as well as its predecessor, the Economic Recovery Advisory Board, and he co-chaired the National Academy of Sciences’ Committee on the Long-Run Macro-Economic Effects of the Aging U.S. Population.
Mr. Ferguson holds a B.A., J.D., and a Ph.D. in economics, all from Harvard University.
Clips from this Episode
On the impact of Andrew Brimmer as the first African American governor of the Fed
On his experience serving in the Federal Reserve during September 11th
On his career and looking ahead to the future of the economy
Episode Transcription
Alan Fleischmann
You're listening to “Leadership Matters” on SiriusXM and at leadershipmattersshow.com. I'm your host, Alan Fleischmann, and I'm here today with a very special guest. Our guest today is an inspiring and humble leader. He's a renowned economist who has rare qualities that enable him to advise presidents on their financial systems just as easily as he can communicate to consumers about improving their financial literacy. He's also been extraordinary CEO and leader.
Roger Ferguson has worn many hats over the course of his esteemed, decades-long career. He was the vice chair of the Federal Reserve, and led the institution through its initial response to the attack on 9/11. Later, as the President and CEO of the Teachers Insurance and Annuity Association, TIAA, he provided financial services to millions and millions of teachers, public servants, and nonprofit workers.
Though he has recently left TIAA, Roger has remained extremely active and continues to use his in-depth knowledge to promote inclusive capitalism and an economic system that works for everybody. He is big on making it work for all. I'm so excited to discuss the unique trajectory of this incredible man and his career, and really hear about his style of leadership and some principles and ideas that he's developed along the way. So, Roger, welcome to “Leadership Matters.” I have been looking forward to this since you and I were together in Florida. And I said to you, “god, it would be great to have you on the show,” and have just been looking forward to talking with you.
Roger Ferguson
Well, thank you so much. I'm looking forward to this conversation myself.
Alan Fleischmann
So let's go talk a little bit about your background. One of the things about you that I found also special for somebody who lives in Washington, DC as I do, I often don't meet that many people who can claim it as their hometown. You meet a lot of people to come into DC and they stay here, but they always come from here. You were born in Washington, the son of a US Army mapmaker and a public school teacher. So tell us a little bit about your parents and a little bit of your life around the house when you were growing up here in DC.
Roger Ferguson
Well, thank you. Indeed, I am a proud son of Washington, DC, being born right here in this great city. And you're right about my parents jobs. My father was a civilian cartographer, a mapmaker for the army, and my mother was a public school teacher for her entire career. But to hear that is just to touch the surface. My mother, as with many educators, really thought education was special. She described it as a gift. And she said, “it's the one thing they can't take away from you.” So she really encouraged me to stay in school for as long as possible. Now, I stayed in school till I was just about 30. I don't think she expected me to stay in school that long, but nevertheless, at home the expectation of ongoing education was unspoken but fully understood.
And my father, though he was professionally a mapmaker, I think the thing that really motivated him the most was an understanding about investing and finance. He had grown up during the Depression. And in his case, the Depression, I think, made him really curious about these mysterious institutions called banks. And so, though we had very little money, he spent a lot of time looking at the financial pages and thinking about interest rates. So I grew up in a house, steeped in education, lots of different ways, both traditional and then what we now call financial literacy.
Alan Fleischmann
So that first idea, the first pathway, I guess, if you're imagining the area that you might be interested in came for your dad.
Roger Ferguson
Oh, absolutely. And what was fascinating — this is maybe true all the time — people think of finance as something arcane and mysterious. To me, it was just the things we talked about at home. You know, the way some dads talk about sports scores and box scores, etc. He talked about interest rates. And so it wasn't an arcane, mysterious thing. For me, it was very much something that my father was interested in. And it turned out I was interested in it as well.
Alan Fleischmann
That's remarkable. Do you have siblings as well? A brother and sister, right?
Roger Ferguson
Absolutely. Yeah.
Alan Fleischmann
Were they interested in the same thing?
Roger Ferguson
My sister was certainly interested in education. She is a school teacher herself. Her great passion was music. She was, and still is, quite a talented pianist. She studied here in Washington in her junior high school years with a woman who went on to become quite famous named Roberta Flack. Roberta Flack started her career here as a junior high school music teacher and then she performed in the evenings in clubs and one thing led to another. So my sister was really fortunate to have some really charismatic music teachers. And my brother, also very interested in education. But he became much more interested in not economics, but philosophy and politics. And so I think each one of us got something from our parents. But this concept of education is that sort of through-line through all three of the Ferguson children.
Alan Fleischmann
It sounds like a big influence from both of your parents. You've spoken about the significance of President Johnson's appointment of Andrew Brimmer to be the first black member of the Federal Reserve Board of Governors. How did that historic nomination contribute to your passion and did that nomination open up a pathway that you hadn't thought of before?
Roger Ferguson
So it absolutely opened a pathway I hadn't thought of before. And then where it contributed was, in hindsight, pretty clear. As I just explained, my father talked a lot about interest rates and banks. And suddenly, Andrew Brimmer was nominated to be on the board of this very important, but not very well known institution called the Federal Reserve. And so for a young black kid growing up in northeast DC and interested in these topics, all of a sudden, now I know where these interest rates come from. It's that very important, but not necessarily well understood thing called the Federal Reserve.
And so the newspaper stories about Andrew Brimmer fascinated me from both perspectives: an understanding of this institution that had something important to do with interest rates, and seeing an African American take on this historic role, when there are many firsts under Lyndon Johnson, and Andy Brimmer was certainly one of them. So that created me the thought, “oh, maybe the thing I want to be is to be an economist,” because that's what Andrew Brimmer was. And not thinking I wanted to be on the Fed necessarily, but the Fed was always therefore also in the back of my mind as this really important institution that was worth watching and understanding and you know, perhaps one day working there. But I wouldn't say it was a career aspiration at the time, but it was an important institution for me.
Alan Fleischmann
Did you end up ever meeting him?
Roger Ferguson
I finally did meet him, absolutely. Once I became a governor of the Fed — I think I'd already been confirmed — and I reached out to him, he was happy to chat with me. And we spent a fair amount of time together actually, in informal activities, we never worked together. And it turned out in the context of a small world, his daughter, Esther Brimmer, was a colleague of mine at McKinsey and Company. So we had this sort of multi-generational relationship, Andy, Esther, and myself. And he was a phenomenal individual: very serious, very cerebral, very demanding. All the kinds of things you'd expect for somebody who start out as a sharecroppers son and end up being the first black governor of the Fed. He was a formidable person. But in many, many ways, just a wonderful role model.
Alan Fleischmann
Well I know Esther Brimmer, but I did not realize that was her father. That's amazing. Well, you went to Harvard. But before I get there, anything in your high school years–any teachers or great mentors?
Roger Ferguson
Oh, so you have to understand that I was absolutely a product of the public schools in Washington DC, up through ninth grade and tenth grade when I went to Sidwell Friends. And I was blessed to have wonderful teachers along the way. In junior high school, there was a math teacher, I think her name was Mrs. Stobaugh, who taught seventh and eighth grade math. What I remember most about her, back to the financial literacy activity, every year during the week of April 15 she made up this fictitious family with an income statement and a balance sheet. And we had to fill out things like a 1040-EZ. It’s funny now. And it was her version of financial literacy. We learned a lot about budgeting and taxes and how the government works. And it was just an amazing, wonderful experience.
Another one of our teachers, was a guy named Vincent Reed, who went on to become the superintendent, the much beloved superintendent of the DC public schools. He was just a phenomenal role model for my my junior high school years. And so, all along I could point to teachers who really made a difference, both because of how they carried themselves but also the substance of what it was that they taught.
Alan Fleischmann
What about in high school?
Roger Ferguson
Oh, in high school a number of phenomenal teachers as well. One was a woman, a Spanish teacher. I loved, and still do, the Spanish language. I’m not as good as I should be. But she was fascinating because she, in addition to being a great Spanish teacher, had come to the US as a result of the Spanish Civil War. And so she had this phenomenal story about what she had gone through. And you learned in Spanish class that civics matter and ideas matter. And here we are talking as the Russo-Ukrainian war is underway, you also learn that your ideology does matter. And so Senora was, as with many teachers — her life story was fascinating. And for me, you know, a young kid growing up in Washington, DC, a capital of the world, one of the things about being the capital of the world is that you bring in people from around the world. So interacting with Senora and her husband was an eye-opener, not just around Spanish language, but Spanish history and culture. And, to some degree, the forces that shaped the world with things that she talked about from her own existence.
Alan Fleischmann
You got to see the geopolitical side of her life.
Roger Ferguson
Yeah, absolutely.
Alan Fleischmann
So when you decided where to go to college, obviously with your mother's strong convictions around education and your father in many ways being a great teacher himself for you, how did you decide you wanted to go to Harvard?
Roger Ferguson
Because I take school very seriously. And, Harvard was and still is reputed to be near the best universities in America. And I was fortunate enough to get in. What was fascinating about my class at Harvard, I think this is true, I enrolled in 1969, September 1969. Until recently, I think that class had the largest number of African American students in Harvard's history. And it was just a fascinating time to go to a place like Harvard, right, which I still believe to be the pinnacle of education. The other great schools in the United States, I'm not denigrating any of them, but at a time of great unrest in America, with a class that was by Harvard standards at the moment, incredibly diverse. So lots of forces and cross-currents around campus at that moment, up in Cambridge, Massachusetts. And it was, again, just a fascinating growth and learning experience, both in the classroom and in the dining hall in the dorms with my with my fellow classmates.
Alan Fleischmann
It was at Harvard that you actually got your multiple degrees, right?
Roger Ferguson
It was indeed totally unexpected when I went there. And I often say, they were sort of kind of me, the economics department. It was a particularly rigorous economics department. But I fell under the wing of a number of great professors. One of them was a guy named Richard Caves, who ultimately became my dissertation advisor. But Professor Caves was a wonderful teacher. And he clearly cared about his research, and he cared about his students. And he ended up being my dissertation advisor. I joke that one of the great lessons that he taught me, as he said, “The best dissertations are those that are finished.” And what he really meant, in addition to being literal, was that you start a project, you work on it, and you finish it. And that kind of focus in the academic world, I think, is incredibly important. And so that's one of the things I learned from him. And then I ran into a number of other phenomenal professors. There’s a guy named Ben Friedman, who is a great teacher of money and banking. So he helped me continue my education around the Federal Reserve and interest rates and monetary policy and banking. So I was very, very fortunate to be at Harvard during that period of time.
Alan Fleischmann
I think I read a book of his actually. And you chose a law degree while you were there as well. So based on what you what you shared, I can totally see why you would have gone for a PhD in economics. What made you also get a law degree?
Roger Ferguson
That's a great question. There came a moment in my career, I thought, “you know, this being an economist, it's really tough. No guarantee of a job.” And I thought, you know, getting a law degree will absolutely give me a profession. And it would add to my knowledge around banking regulation. And I was very fascinated, and still am, about the stock market, investing, securities laws, all those things. So an additional interest in economics, you know, the law degree, rounded out a number of things I was interested in, including around securities regulation, bank regulation, anti trust, for example. And it also, though it sounds funny, gave me a very clear path in case this passion in economics didn't prove to be as successful as I had hoped.
And the idea came to me through another great professor name Elizabeth Allison, who was then an associate professor at Harvard. And she mentioned that if I couldn't choose one or the other one, why not try both. And I thought, “wow, that's a that's a fascinating idea.” So because of her and a number of other folks, I ended up putting these two things together. And to be fair, it's worked out really well, because there are elements of my career that are completely driven by my legal background and elements that are completely driven by my economics background, and some that are driven by the intersection of the two.
Alan Fleischmann
I imagine, at some point, you were trying to determine what you wanted to do at Harvard, after the degrees. And I imagine law became the principal focus as you became a lawyer for a little while.
Roger Ferguson
I was a lawyer for two and a half years. And it gave me great exposure to Wall Street, which I wanted. It took some of those general academic concepts from both law and economics and made them very concrete. I went to a law firm, Davis, Polk and Wardwell, which was, and still is in my mind, one of the premier Wall Street firms. And it gave me great exposure to some of the more interesting transactions. One of the things I worked on there was an initial public offering for a company that’s now defunct. But it created a whole new industry, it's called People Express. And they are the ones who created this notion of economy air flight that Southwest Airlines has taken off here in the US and Ryanair in Europe.. So I got a chance to work with some really interesting entrepreneurs who had brand new ideas as well as being their lawyer at Davis Polk, and so that worked out really well.
And I have to mention right away, it's also where I met my wife. So if nothing else happened at David Polk, and many things did, meeting my wife of 35 years was critically important. And that was part of the Davis Polk story as well.
Alan Fleischmann
What was her job at the time?
Roger Ferguson
She was also a first year associate along with me. She had gone to Brown and then Columbia Law School, and also was interested in financial institutions, law and regulation. And through the serendipity and good fortune of having married a really talented person, when I was at the Federal Reserve, my wife, Annette Nazareth, was a senior staff and ultimately a commissioner of the SEC. And so our interest overlapped in lots of different ways.
Alan Fleischmann
It sounds like both of you had a public service bug. So was it from Davis Polk that you were tapped by President Clinton? Or was there a gap between?
Roger Ferguson
Oh, no, there was important period in between. So I liked Davis Polk a great deal. But I also thought, I think I want to get involved in advising businesses directly in their strategies, not just with their legal work, but more broadly their business strategies. And so after about two and a half years and a great experience at Davis Polk, I moved over to McKinsey and Company. Again, I think a premier, a great consulting firm. And I stayed there for 13 years and it was there that President Clinton, as you say “tapped me,” to join the Fed. McKinsey was also just a wonderful learning experience in terms of how businesses run. Plus some very practical experiences on analyzing problems and even communication skills. It also developed a phenomenal network of people that I'm still very close to today. And they’ve helped me and I hope I've helped them as well.
Alan Fleischmann
Was there an area or are there areas that you were focused on at McKinsey?
Roger Ferguson
Absolutely, there's a theme here. And so it was financial institutions. So I never strayed too far from my interest in the financial world. I just came at it from very different angles. So economics and law, and then consulting and then regulation. But if one had to sort of find the pretty obvious thread through my life, it's an interest in financial markets, financial institutions, and you know, all things having to do with the financial services world.
Alan Fleischmann
And were your parents around through this period? Were they they still in your life then?
Roger Ferguson
They were absolutely still in my life then. It was very funny, when I told my parents I thought I was going to leave Davis Polk to be a consultant at McKinsey. They'd never heard of that firm. And they were really quite concerned that I was giving up a good life and a promising career, something they understand — which is being a lawyer — to go to being a consultant. I think my father had the image of consultants as being folks who would knock on the doors of small businesses and offer to help them with their problems. So, the thought that this was some huge global institution that had been around and was serving the CEOs of the major Fortune 100 companies — I think it was a world he couldn't even imagine. But they would come to visit me occasionally in New York, and I showed them the office. There's nothing like when you're a young adult and showing your parents that you're actually doing okay.
Alan Fleischmann
Is there any bit of advice — I’m sure there’s much — but is there any really good advice that you’ve gotten from your father or mother that they gave you that you would pass on to your kids?
Roger Ferguson
Oh, absolutely. There are many. Obviously the value of education. And my kids fully understand that. The other is a phrase from both of my parents, but my mother in particular. No job too small that you don't want to do it well. It’s this notion, that there's no such thing as a job too small to do well, every job has to be done well and appropriately completed. And I really take that to heart. My first job at Harvard, I was what they call scrubbies. It was my work study job, to clean my classmates bathrooms. Two hours a day, Monday through Friday, and I did that job really well. And I'm to this day, proud to be what I think of is one of the quintessential scrubbies that Harvard ever created. I'm great at cleaning the bathrooms to this moment. So it's my mother and father, both who said, “Look, everything has to be done to the best of your ability. And that's how you earn the right to do the next thing.”
Alan Fleischmann
That's awesome. It also that there’s nothing beneath us. And if you do it, do it right.
Roger Ferguson
Yeah, absolutely. If you do it, do it right.
Alan Fleischmann
But let's talk your appointment. In 1997, you were appointed by President Clinton to the Federal Reserve Board. And then instantly became one of the nation's top economic policy makers, if not one of them. How did you first you react to being tapped, had that been something you wanted? And was this your first offer to get into public life and public service? Had there been any hesitations or anything like that?
Roger Ferguson
Well, there had been other offers, roughly around the same time. And I said to people, “they all sound very interesting, and they're really important jobs. But I'm not trying to leave McKinsey to do them.” And I said there's one job — there are two or three slots open on the Federal Reserve and I really would like to do that. And these folks they say, “oh, we've got a long list of people, why don’t you look at these other things that we're talking about.” And I called back and said, “No, I'm very serious, I really want to look at the Fed job.” And they said, “Well, okay, fine, you know, recognize that we got a world famous economist and all sorts of folks on the list, but we’ll interview you.”
And oh my goodness, I was so excited about that prospect. And I thought a lot about monetary policy and all I had learned in school and thought about regulatory policy and what I knew about banks, and pull it all together during the time for these interviews. And fortunately for me, though there were probably other economists who had been better known who spent their time in academia, President Clinton chose me and another fella named Ned Gramlich as two of his appointments that year to the Fed.
And it's one of those places where that intersection of economics and law sort of came together. And I think, frankly, differentiated me from others who maybe knew one side or the other side, I think I may have been one of the few could actually speak coherently about both monetary policy and also banking and regulatory policy.
Alan Fleischmann
You're listening to “Leadership Matters” on SiriusXM, and at leadershipmattersshow.com. I'm your host, Alan Fleischmann. I'm here with a great leader, CEO, financier, economist, public servant, Roger Ferguson. We were just talking about your your position at the Federal Reserve, but you actually became vice chair. So you were there for how long altogether?
Roger Ferguson
I was there from 1997 to 2006. So just a few months short of a full decade.
Alan Fleischmann
And one thing I don’t think people talking enough about what they think of you is the time around the attack on 9/11. I'd love to talk a little bit about that. Obviously, it sent our economic systems into a bit of a tailspin, I would say, to be even modest here. Chairman Alan Greenspan was out of the country at the time, when 9/11 happened and the financial institutions turned to you for leadership. You're not one that talks about this as much. So I thought it might be an opportunity for me to force the topic on you a little bit, just to kind of walk through that day. And the days that followed. Because it was such a significant time on so many levels. And there was such worry, such concern. And you were right there.
Roger Ferguson
So yes, you’re right, I haven't spent that much time talking about it. So the day started, I think around ten or nine or something of that sort. My wife, I mentioned her once already, called me from the SEC. The SEC has a desk that monitors Wall Street and the Wall Street area all the time. And she called and said “you better turn on the TV.” I was at my office, she was at her’s. She said something's going on, one of the World Trade Centers is on fire. And it's the heart of Wall Street and the financial district. So both her and I knew that it was going to be a complex day, not knowing quite what was happening.
So I turn on the TV and saw the second plane go into the second tower. And you can imagine all sorts of thoughts. What's going on, the air traffic control system is falling apart. It's sending planes into tall buildings, who can imagine what it was–at least I didn't imagine what it actually was, which was a terrorist attack. It just seemed to me that something had gone terribly wrong in the heart of the financial district in New York. So I immediately called a woman named Louise Roseman, who was then the senior fed staffer in in charge of the payment systems and oversight of reserve banks. And the reason I called her was one, make sure, through her, that the New York Fed building which was in the shadow, quite literally, of the World Trade Center, that we were in touch with them to figure out what was going on, but also to issue a statement.
And by about 9:30 or so on that day, we issued a statement, very technical to the banking community, that basically said that the payment systems that the Fed operates with stay open, as long as need be, to clear all the trades and the payments of the day. Fairly technical, we didn't know quite what the problem was going to be. But it's quite clear that there'd be big disruptions on Wall Street. And so the Fed was in action, trying to reassure Wall Street quietly and technically, within a half an hour or so of the second plane hitting the second tower.
I then went to another part of the Federal Reserve building and was in the room with the folks who do monetary policy planning. And the reason to talk to them was that they deal every day with the New York Fed, again, how how government bonds are trading, and from there, I and others saw smoke coming from the direction of the Pentagon. And I knew that things were just going to be collapsing. I had no idea what was going on, but obviously things were going to be even worse. So you know, we had to make a number of decisions. First, the President had ordered the evacuation of Washington DC. I chose not to do that. And the reason I chose not to do it was not to be disloyal in any way. But because, if we were all evacuating, there would be no nerve center. We had to stay in place to be in touch with the financial world. And quite literally, I mean the financial world. So I decided, we decided, that the Fed would stay open. And I dictated a short statement, it said the Federal Reserve is open and operating. And then second was that the discount window is available to provide liquidity. That's a technical way of saying to the banking community, “don't worry, we've got your back. And we are going to flood the system with as much liquidity as need be.” And that was a very, very important message.
So you know, I convened all the Federal Reserve Bank presidents from around the country, read them the statement, we had a discussion, shall we stay open and operating, it was clear that we had to do that and why. And we issued that statement, around 11:30. And the rest of the day was literally just decisions, one after another, should we lend to international central banks. So we did that for the first time, that's been a technique that's been used since then. They had to work, believe it or not, with the New Jersey governor's office to get currency trucks that shipped from Philadelphia to Manhattan to make sure that there's plenty of currency minion, plenty of dollar bills and ATMs because I didn't want that to be a worry and create a potential run on the bank. Somebody suggested that I recommend to the president that we declare what's called a bank holiday, encourage the banks to close, I refused to do that.
So just lots of decisions back and forth monitoring how markets were doing. Or how the infrastructure was doing, what we could do to get the infrastructure up and running, again, monitoring liquidity needs around the country, and indeed, around the world, and just being in touch with as many people as I could be, to reassure and to keep track of systems.
Alan Fleischmann
Was there a fear in that period that you all could be a target as well?
Roger Ferguson
Yes, I didn't have that fear personally. But, you know, a number of people certainly did. And it was quite clear to people that you didn't have to stay, I didn't lock the doors. And I suspect some, I'm pretty sure some people left, but most stayed. But even my assistant was very worried about the possibility of an attack. So this was one of those moments when I learned an awful lot about leadership under stress. And one of the things you learn about leadership under stress is you got to be empathetic, people will be fearful. And so, you know, there are many traits of leadership, but one of them is certainly empathy. And that's one of those lessons I really learned: you can see fear in people's eyes. And so it's really important to recognize that there was a degree of fear as well. But we had to stay on our watch, because the entire global financial system depends on us.
Alan Fleischmann
Chairman Greenspan was overseas at the time?
Roger Ferguson
Well, I talked to him, he was at an international meeting in Switzerland. The airplane had to turn around and head back. So I finally talked to him at about 5:30 or six that evening. He asked me what I had done, I explained everything. And he did one of those most courageous things. He said, Roger, sounds like you've done all the right thing. You're in charge. I trust you completely. And I thought he'd call and try to micromanage and spend hours saying do this, do that, you know, and he did just the opposite. And it was, you can imagine, reassuring, invigorating, empowering. And he finally got back late the next day. He talked quietly to the staff, and he called me in and said, I've been told you did a superb job. I, Alan, will sit and think about what the next monetary policies move should be. I want you to keep running the system on a day-to-day basis. Let me know if I can be helpful, but he basically put me in charge of not just the first couple of days, but the entire week, where it fell to me to make all the decisions that had to be made around these around these topics. And then the following Monday, we met at a extraordinary FOMC meeting. He obviously chaired that meeting. And we just continued from there sort of a strong partnership, overseeing the system and making sure that things came together.
Alan Fleischmann
Great way to divide and conquer at a rather urgent, difficult environment, for you to take the lead. And obviously, he saw you'd already done so. But it also was a time where you were otherwise anonymous, in many ways, in the public stage. But that's really when a lot of people, more broadly than those in Washington or those who understood the financial services industry were you obviously were well known already, but all of a sudden you became well known to many more people across the country. During that period, when you stepped out, what was it like to suddenly be go from being well known and respected in your lanes of leadership to all of a sudden being well known and respected in a much broader ways?
Roger Ferguson
It was daunting in some ways, and obviously humbling, but the most important thing about that, from my standpoint, is if you become a leader or have some sort of leadership thrust upon you, it's a big responsibility. And from my standpoint, it was making sure that I carried myself the right way, working extra hard to have useful, insightful things to say. I very much wanted to be, as I still am, seen as a substantive person. I'm not a flashy, showy person. And so I think the post 9/11 world for me has been very much one, I hope, meriting on a day-to-day, week-to-week basis, the kinds of responsibilities that have fallen to me, and meriting that based on, I hope, technical knowledge plus leadership skills and capabilities. And so that's the way it affected me: well, people are going to be looking to me in a different way, I have to really be prepared and step up to do the job and not let people down.
Alan Fleischmann
That's great. And then obviously, there's a big part of the coordination with the White House that you were probably involved in as well.
Roger Ferguson
Oh, no, absolutely. Policy matters, talking to all the regulators, all those things become an important part of the job. They go with being the vice chairman of the Fed, for sure. But having been tested in that fire around 9/11, I think it gave many people an extra sense of confidence that I could be an important part of important decision making, more broadly around financial regulation and the execution of monetary policy.
Alan Fleischmann
And you went from the Federal Reserve to work at Swiss Re. Tell us about that transition. And, again, any learnings that you applied when you got there from, at this point, your pretty extraordinary experiences at McKinsey and at the Federal Reserve?
Roger Ferguson
So I decided to leave the Fed in early 2006, as I said, I had been there almost a decade. And the first that one has to do when you decide to leave that kind of government positions is where's the right place to go next. And because I had been a senior bank regulator, I didn't want to go into the banking sector because my wife was a commissioner at the SEC, I didn't want to go into the security sector, because I didn't want to create this revolving door image or appearance of conflicts. And I was fortunate enough to run into the individual who was then the CEO of Swiss Re. For those who don't know, reinsurance is basically insurance for insurance companies. So it's the ultimate backstop.
And insurance was an important part of the financial services world, I hadn't had much exposure to it. Being involved on the global stage was very exciting, Swiss Re is the largest or second largest of the reinsurance companies. And it proved to be a great opportunity. My job was to manage the investments on the asset side of the balance sheet. So again, back into financial services back into the investing world. Importantly, Swiss Re was one of the first if not the first big company to suffer any losses from the subprime mortgage crisis. I joined there in 2006. So in late 2007, this occurred, and that was incredibly important learning, obviously, in terms of the risk in subprime and how it could affect even the best companies. And I took that with me to my next job as well, knowing that the subprime problem was deeply embedded in almost everybody's portfolio was an important lesson from from Swiss Re.
Alan Fleischmann
That was probably a very powerful moment there. But I also know you as having been the CEO of TIAA, the Teachers Insurance and Annuity Association, which you served in incredible capacity as a CEO until last year when you stepped down to start the next chapter of life. With your background, you could have gone to any financial institution at that point with your skills and your experience. But you chose one that is working to provide financial security to teachers, public servants, nonprofit workers. Obviously, you were a public company. And you are obviously right there among other great Wall Street leaders by being the CEO of TIAA, but it had a purpose. And I imagine, looking at your whole life at that point, that intersection between public life and private life and civil society must have been what really drew you there.
Roger Ferguson
No, you put your finger on it? Absolutely. I’ve said to everyone, it was sort of the pinnacle of my career: it brought together everything. Public service, in my sense, the financial services, can serve the greater public good. Serving teachers and others, the not-for-profit sector. Again, coming out of a house that valued education, TIAA is a very sophisticated investor and one of the leaders in alternative investments and a big leader in ESG and socially responsible investing. And it just brought together all the threads of my career — back to Wall Street, but with a public service mindset focused on financial security and financial literacy, and supporting individuals who dedicate their lives to others in the not-for-profit sector, including teachers and professors. So it was, for me, absolutely the right spot at the right time. I joined in 2008. So right in the face of another crisis. Fortunately, as the crisis got going, we had no material amounts of subprime. We managed to clear that out very early in the crisis, but it was still quite a daunting challenge being responsible for the life savings of millions of Americans as we go into what was the deepest downturn since the Great Recession. So, again, almost 24/7 work to make sure that TIAA was safe and secure, and that nobody's retirement was ever missed during the great financial crisis.
Alan Fleischmann
During your time at TIAA, you experienced pretty remarkable growth. AUM, the assets under management, grew from $435 billion, which is pretty extraordinary in itself, to $1.2 trillion. I would say, even today, we don’t talk about trillions too often. It's a pretty formidable figure. But as responsible investing and ESG investing, as you mentioned, has grown in importance. How did and how does the the E and the S — the social and environmental factors — how did they influence your decisions when it came to which businesses and industries to support with your clients finances?
Roger Ferguson
Well, TIAA has a long history of being one of the leaders in socially responsible investing. We got started there long ago, because our particular group of participants, as we call them, I think tend to have a focus on those kinds of issues. And so for our company, it's just part of the DNA. And I'm really proud to say that during my period, with the team around that every all of the investments of TIAA are screened through an ESG screen. If somebody wants to make an investment that has some risk in that regard, then it's going to be really important to understand what the return is. Recently TIAA announced that they're going to sort of work to reduce and decarbonize the footprint for the investments plus other things they do out of their general account. Again, being one of the industry leaders.
And TIAA is well known for quiet engagement with companies. We were one of those that led what's called “say on pay,” giving shareholders the right to have an advisory vote on the pay for CEOs. And the last few years, we've been very focused on the question of diversity at the at the board table. So using our vote and the quiet diplomacy that TIAA is known for, to increase diversity, African American and women diversity, at the board table for not just the largest companies, but going down through all of the Fortune 500 plus more. So there are many, many ways in which TIAA has been a leader in this space. And I'm really proud that we were a leader in a separate way, which was when I stepped down the board and its wisdom chose an African American woman, Thasunda Brown Duckett, to be my successor. So the first time in a Fortune 100 size company that had an African American leader, followed by another African American leader, and going from male to one of the few female African Americans leaders. So the company continues to be in the forefront of thinking about these issues. And more than thinking about them, but acting on these issues, including bringing an African American woman to succeed an African American male, and Thasunda is doing a phenomenal job.
Alan Fleischmann
That's so wonderful to hear. I’ve seen her in a number of different places, she's quite impressive. What does it mean to you to be a socially responsible leader?
Roger Ferguson
Oh, it means recognizing, particularly in the world of finance, that the point of finance is to allow everyone to succeed and live their dreams. There's sort of a noble purpose to me in finance in a capitalist system. And so what that means is that the way you carry yourself and you run your company is consistent with your high ethical principles for sure. If you are doing as TIAA is doing, investing literally billions of dollars of other people's money, making sure you're thinking about that over a long term horizon. And certainly, as they do, using your position as a shareholder to influence your portfolio companies for better outcomes.
So for me, the whole notion of socially responsible investing and that whole panoply of topics, is really around making sure that finance does what it's supposed to do, which is to make the world a better place, particularly for individuals who depend so much on the system to provide, in the case of TIAA great retirement. So I hope at the end, people will look back and say that those investments did not just give a good financial return, but also contributed to creating a better world in different ways: more diversity, more ESG focus on climate issues, whatever the topics may be. Investing with those broader principles in mind, while also making a good return, I think is what this is all about.
Alan Fleischmann
That's great. And then you were able to pick your own leadership team and formulate that kind of team? Did they stay with you for long?
Roger Ferguson
Oh, yeah, my team stayed for quite a while. Obviously, some people had different options and different things to do. But I think we had a very stable team at the top of the house. And the investment team in particular, I think, has done a superb job in both getting good returns and also living up to the values of socially responsible investing.
Alan Fleischmann
I love that. I think of you, actually, in many ways, because of the ways you were out there as a thought leader, as well as a leader. And because of who you represented. A lot of the conversations we're having today, and a lot of the reasons why we're having those conversations today, are because of things that you did.
Roger Ferguson
Well first, I think of them as things things that we did, because TIAA really stands for this set of topics and it's at a scale that makes a difference. So I'm really proud of the leadership role that the entire company has played. I'm obviously proud of my moment of leadership there for 13 years. But all these things really are driven by a leader and team. And one of the things I say about leadership is that it's really all about followership. If you look over your shoulder and no one's following you, then you're not a leader. And so, when I think about leadership, I think, well, what are the traits that make someone want to follow you? And one of those is clearly expertise. People don't want to follow amateurs, they want a clear statement of vision and purpose on where you're going. That's obviously important. One is fortitude, that came through on 9/11. But it comes in many other ways. And then one is this thing we already talked about, which is empathy. But all of those things are focused ultimately on how they impact the team. Because leadership is really all about, I believe, fostering and getting the best out of out of a team. And, so that's why I see teamwork and leadership as being basically two sides of a coin.
Alan Fleischmann
Leading people and having people wanting to be led by working together.
Roger Ferguson
That’s exactly right.
Alan Fleischmann
So Russia's invasion of Ukraine has been a major disruption to the global economy, obviously. And already there had been some challenges with inflation coming out of the pandemic. And now we've got more more challenges going forward with inflation, with supply chains. And obviously, energy prices are soaring. How do you anticipate and what would you advise we do as a country? But also how would you anticipate and advise the Federal Reserve? Or how do you think they would respond and will respond going forward?
Roger Ferguson
I think the Federal Reserve has been very clear that they see inflation, as a clear and present danger. And they clearly stated that they intend to take the right kinds of actions, which is to say, basically tightening the stance of monetary policy, and also gradually reducing the size of the balance sheet, in order to keep inflation and inflation expectations under control. I think that's absolutely the right thing to do. The challenge there is going to be in pace and timing and execution. So more broadly, what are the lessons that we as a country have learned, both domestically and internationally around the various crises that we've confronted over the last several years? Obviously, we've learned how fragile and in some ways how an inequitable our healthcare system is. So I think we really have to focus on on fixing those problems. As the leading economy in the world, I think we really have learned that sometimes our healthcare system is not up to the challenge. You know, healthcare workers did a phenomenal job not taking anything away from them. But we also saw some inequities in health outcomes. We certainly learned that, with this Russian invasion of Ukraine, that our Western allies and alliances are really important. And President Biden has just proposed a budget that increases defense spending. In some ways, one wishes that weren't really necessary, but the world really is a challenging place.
I think we've also learned that it's really important for us to stand up for what is right. And I think one of the reasons internationally that the alliance came together, it is so clear to me and so clear to many, that what the Russians are doing is wrong. And it is important to draw clear distinctions between right and wrong. And that depends on America, back to the theme of this discussion, to take a leadership role. Again, showing fortitude, showing expertise, and showing direction. So leadership is not just about individuals, but it's also in the international arena about countries that do stand up and act very boldly when need be, and rally others around. In the role of leader, as you point out, but leaders need followers and that's true on the national level as well as a local or individual level.
Alan Fleischmann
That's great. You've had an extraordinary career. Again, as I said, across public, private and civil society life. You're so young, you're no longer tied down to being the CEO. What other projects or initiatives are you working on, how do you kind of full that pie wheel, I guess, of life?
Roger Ferguson
Oh, well, a couple of things. One is recognizing and still fortunately being blessed with good health so I tend to be very involved. I expect involvement on two or three different levels, maybe a bit more. So one is I am a distinguished fellow at the Council of Foreign Relations. My work there revolves around the future of capitalism, as well as thinking about, the monetary fiscal policy of the day. So staying involved in the world of policymaking is one of the elements of what's important to me. I'm on a number of boards for large public companies, including Alphabet, and Corning and a few others. And that's really important to me, because I have learned a great deal from being a CEO and trying to share that with other CEOs.
And I spending a fair amount of time with young entrepreneurs in FinTech and health tech, some defense tech, actually, and I described that as spending half my time with people half my age. And there, what I find so exciting, is these next generation of visionary leaders sort of building the future. And I want to be part of that. As you observe, I've been very fortunate through a 40-year career. But the future, by definition, somebody's got to build it. And I want to be part of the work by these young teams, these young entrepreneurs, in building a future as an advisor, as an investor, maybe running a fund, that kind of thing. So I’m fully involved in and around the world of financial services, hoping to continue to do what I can to make the world a better place on a daily, weekly, monthly basis.
Alan Fleischmann
That's very inspiring. And so needed. So we have maybe a minute or so left, if there's one bit of advice, Roger, that you would give to an aspiring CEO, or even a current CEO, about a principle or two that you live by every day. And you certainly tested it when you were CEO. What would it be?
Roger Ferguson
A couple of them. One is, it really is all about the team. There's no CEO that executes everything, it gets done through the team. So think about your team, give the team credit, work with the team. And the other is that the CEO casts a huge shadow, is how I describe it. So be very mindful of what you do, how you do it, how you carry yourself. I used to say when I was CEO, if I raised one eyebrow, somebody in the organization was gonna have to work all night to try to figure out what it was I was worried about. So just be really mindful that people are watching you. And hold yourself with the highest possible integrity and the highest principles. We've seen great CEOs had their careers come to an end because of some personal misbehavior, and there's just no room for that if you're up on the high wire as a CEO of a major company.
Alan Fleischmann
This has been an absolute pleasure. You've been listening to “Leadership Matters” on SiriusXM, and at leadershipmattersshow.com. I'm your host, Alan Fleischmann, and we just spent the last hour with a really amazing guy, Roger, you're an extraordinary leader. I'm thrilled that you have not slowed down at all, and that you continue to contribute both in not only helping others lead, which is what you do as a role model and what you do as a mentor. But also, you're right there in the arena working away. I bet you’d make your father and mother very proud today because what they reached out to you and shared with you in your young life, you have proved to transform and take on at a scale that frankly, few could imagine doing. Roger Ferguson, thank you for all that you do and thank you for being a friend.
Roger Ferguson
Alan, thanks for giving me this opportunity. Look forward to much more.