Federal Reserve Bank of Richmond President Jeffrey Lacker, a frequent dissenting voice at the central bank who criticized bank industry bailouts, will retire in October, the Fed announced Tuesday.
Lacker, 61, has served in the role since August 2004, making him the longest-serving among the current presidents of the Federal Reserve’s 12 district banks. The Richmond Fed’s territory includes the Carolinas and its examiners monitor big banks such as Charlotte-based Bank of America.
In a statement, Richmond Fed spokeswoman Laura Fortunato said Lacker’s decision is based on “his intent to pursue his professional interests in research, writing and teaching.”
He is considered among the Fed’s most “hawkish” members, a term for policy makers with a strong focus on keeping inflation from becoming excessive. He has called for the Fed to raise interest rates at a faster pace since the central bank slashed them in 2008 to help stimulate the economy during the Great Recession.
The Richmond Fed has a branch in Charlotte and one in Baltimore, and its footprint covers Maryland, Virginia, the Carolinas, most of West Virginia and Washington, D.C.
In the most tense period of his tenure, Lacker and his staff participated in the government’s efforts to stabilize the banking industry during the financial crisis. Later, he became known for his criticism of bank bailouts, saying such rescues might encourage bad behavior by bankers in the future.
A “well-functioning financial system must allow firms to fail, even if they are large and interconnected,” Lacker and a co-author wrote in a 2014 essay.
Other top banking regulators, however, have defended their efforts to buttress the financial system in 2008 and 2009, arguing it prevented a much bigger meltdown and further economic catastrophe. In his book on the crisis, former Treasury Secretary Tim Geithner contrasted his aggressive efforts with Lacker’s resistance to bank rescues and his focus on containing inflation.
“I found the more hawkish obsessions with moral hazard and inflation during a credit crunch bizarre and frustrating,” Geithner wrote.
Asked about his experience during the crisis, Lacker told the Observer in 2013 that it was a “hectic time,” with lots of late nights, weekends and pizza.
“There were different points of view of interpretations of what we were going through, and so there were different philosophies in terms of policies of what we should be doing,” Lacker said. “But those things got hashed out.”
Search committee formed
Lacker, who holds a doctorate in economics from the University of Wisconsin, joined the Richmond Fed in 1989 as a research economist. In 1999, he became a research director.
In a statement Tuesday, Lacker said it was his “deepest privilege” to lead the Richmond Fed “and the dedicated people who work here.”
“I feel fortunate to have spent time throughout the Fifth District learning first-hand about people’s economic experiences and to have participated in some of the most extraordinary policy deliberations in our nation’s history,” he said.
Reserve Bank presidents are subject to mandatory retirement at 65 years of age. Presidents serve five-year terms. Lacker began his current term last year.
The Richmond Fed said its board of directors has formed a search committee to identify a replacement for Lacker, whose retirement is effective Oct. 1. Margaret Lewis, chair of the board and former president of the capital division for hospital chain HCA, will lead the search committee.
Executive search firm firm Heidrick & Struggles will assist the committee in the nationwide search.