Fed's Williams Sees Rosy Economy, Bank Culture Still Needs Work
(Bloomberg) -- Federal Reserve Bank of New York President John Williams said the U.S. economy is in “great shape” and indicated he’ll keep pushing for banks to improve corporate culture.
“As a policy maker, solid growth, a strong labor market, and inflation near our target are all exactly what I want to see,” the former head of the Fed’s San Francisco branch said Monday as he addressed a conference on reforming banking culture on his first day in the new job.
The U.S. central bank raised interest rates last week for the second time this year and signaled it would hike twice more in 2018 as inflation nudged slightly above its 2 percent target and unemployment declined to levels last seen in the late-1960s.
Williams, who becomes a key part of Fed Chairman Jerome Powell’s leadership team as its point person on Wall Street, told bankers “we are in a much, much better place, in terms of both the financial sector and the overall economy,” citing tougher rules that leave banks better able to weather future turbulence.
“But paradoxically, it is precisely the sense that things have gotten so much better that worries me most,” he said. “Although we’ve seen marked improvements in the critical areas of capital, liquidity and resolution, we’ve not yet fully addressed the root causes of many of the problems that plagued the financial sector.”
Supervisors need to ensure that bank management and boards are “exerting strong and effective leadership with robust governance.” he said, adding “that means holding management and boards of directors to high standards in terms of culture and conduct, even when the numbers look rosy.”
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