Adam: Thanks again for taking the time to share your story and your advice. First things first, though, I am sure readers would love to learn more about you. What is something about you that would surprise people?
Bob: At the end of World War II, I was five years old and my mother and I lived in a cave near the Rhine River in Germany. The American troops had just made their first crossing of the river over the famous bridge at Remagen — only 10 miles away from us — and the Germans were fiercely defending their home turf. As the battle began to rage near us, we moved into the cave to escape the bombing and shelling. For a five-year-old boy, it was a great adventure!
Adam: How did you get here? What experiences, failures, setbacks or challenges have been most instrumental to your growth and success?
Bob: I came to the United States to study for a year at Parsons College in Fairfield Iowa. It was nicknamed “Flunk-Out-U” and had the reputation of being the worst college in Mid-America. After graduation, I saw the opportunity to get a Ph.D. degree at UC Berkeley. When I was able to become an Assistant Professor of Economics at UCLA, I thought I had gone to heaven. Subsequently, I chaired the Economics Department at the University of Hawaii for a brief period and then moved to the International Monetary Fund in Washington DC to lead the Financial Studies Division there. This position brought me in contact with countless present and future leaders in international economics and finance – many of which are still my close friends today. From there I moved to Bank of America as a Senior Vice President and Director of International Economics. I enjoyed that position until President Reagan nominated me to the Board of Governors of the Federal Reserve System in Washington DC.
Adam: What were the highlights from your time serving as a member of the Board of Governors of the Federal Reserve?
Bob: Most important of all, I was able to participate in the formulation and execution of monetary policy – probably the most interesting and exciting position for any economist in the country and maybe the entire world.
On the regulatory side, I cast the deciding vote to allow commercial banks to take the first step to enter the investment banking business, thereby helping to create today’s universal banks. This action opened up the Glass Steagall barriers that had kept the American banking system bifurcated between commercial and investment banks since the 1930’s. It was eventually followed by Congressional legislation eliminating the barriers entirely, thereby validating the Fed’s action. This move created a more diversified and therefore safer banking system for the entire country.
Adam: Do you believe that the Fed fulfills its Congressional mandate?
Bob: Congress has given the Fed the so-called Dual Mandate: to achieve price stability and maximum employment. I believe that the current two percent inflation target set by the Federal Open Market Committee is not in conformity with the Congressional mandate of price stability. With two percent inflation, the price level will double every 35 years. Over a lifetime of 70 years, the price level will quadruple. That is not price stability as I would interpret it. I think the Fed should return to true price stability – that is, zero inflation — so that the dollar will retain its full value and be a true measuring rod of value overtime.
Adam: What should the public better understand about the Fed?
Bob: The Federal Reserve Board is a very collegial and consensus-driven institution that prizes collective decision making and unanimity of purpose. This harmony and accord gives the Fed the ability to rise above politics and helps to preserve its independence even in times of outside political attacks.
Adam: What is one of the best lessons you learned from your time leading Visa’s U.S. business?
Bob: A distinct corporate culture is very difficult to establish and even more difficult to change. Dee Hock, Visa’s founder, championed the creation of a “chaordic” organization – a company that combines both chaos and order in itself. These two contrasting elements still characterize the Visa corporation as it exists today. While its internal battles may often seem chaordic, they also strengthen the organization and bring about its best and enables it to survive in a rough-and-tumble, ever-changing world.
Adam: In your experience, what are the defining qualities of an effective leader? How can leaders and aspiring leaders take their leadership skills to the next level?
Bob: In my memoir entitled The Unlikely Governor, I define integrity, consistency and decisiveness as the most important leadership traits. In addition, leaders should be able to articulate a vision that people understand, respect and emulate. This makes it possible for the leader to take the organization to the next level.
Adam: What is the best advice you have on building, managing and leading teams?
Bob: I believe that a cooperative and consensus-driven leadership structure serves most organizations best. In addition to the leader, this will involve many persons in the organization and make it possible for the best ideas of these people to percolate to the top and to be incorporated in the company’s strategy. By engaging these people from the outset, the leader will also facilitate their buy-in into the goals and objectives of the organization, thereby strengthening the commitment of all to the ultimate goals.
Adam: What is your best tip applicable to entrepreneurs, executives and civic leaders?
Bob: Follow the advice of the old Romans: “Numquam incertus – Semper obertus”, which translates into: “Never uncertain – Always open!”
Adam: What makes a good board member? What advice do you have for those interested in serving on boards?
Bob: Good board members make their points in a polite and congenial manner, listen carefully to what others have to say and are willing to compromise to reach a consensus.
My best advice to those aspiring to be on a board is to network and eat lunch with your friends.
Adam: What is the single best piece of advice you have ever received?
Bob: Walter Hoadley, my boss at Bank of America, said to me when I was offered the opportunity to join the Federal Reserve Board: “Grab the brass ring – it comes around only once in life!”
Adam: What are your hobbies and how have they shaped you?
Bob: I have always enjoyed sailing. It teaches you that there is never a straight line to your ultimate goal. Just like in life, you have to change and adapt your course to the ever-changing wind and wave environment to reach your final destination.
Adam: What is one thing everyone should be doing to pay it forward?
Bob: Leaders can help the next generation by generously giving their time, advice and wisdom to help them get ahead in this world.
My wife says that “kindness is contagious!”
Adam: Is there anything else you would like to share?
Bob: One fun tidbit: With the help of my then 14-year old daughter, I created the official flag of the Federal Reserve System, which now flies proudly over the Federal Reserve building on Constitution Avenue in Washington DC. It will be there forever!