When it comes to economics and monetary policy, Federal Reserve Bank of Cleveland President Jerry L. Jordan has done it all.
He has guided the economy as a member of the Federal Open Market Committee, developed new tools for modeling the economy as a researcher, offered advice as chief economist for two banks, and served as dean of a business school.
"He is a very solid economist with a good policy orientation," said William A. Niskanen, chairman of the libertarian-leaning Cato Institute and a member with Mr. Jordan of President Reagan's Council of Economic Advisers.
"He is smarter than the rest of us and his head is screwed on straight," said Bick Weissenrieder, president of Hocking Valley Bank, Athens, Ohio. "He is very thoughtful and very aware of the larger issues, but then can translate that down so the Fed provides the services we need."
Mr. Jordan, 56, keeps a very low profile. The Cleveland Fed's Web page includes the text of just seven speeches, only one of which he gave in 1998. The last time Mr. Jordan spoke publicly about bank policy was in October 1996. After giving no public talks in August, he is scheduled to give just one speech in the next six weeks: to Mexican financial executives in Mexico City.
His is the last in a series of American Banker profiles of the 12 reserve bank presidents. All the other presidents agreed to interviews, but Mr. Jordan has refused repeated requests for an interview.
His reclusive attitude stands in sharp contrast to his peers at the other reserve banks, most of whom travel frequently throughout their regions giving public speeches to civic groups. It also is the polar opposite of his life before taking the helm of the Cleveland Fed in March 1992. Back in the 1970s while chief economist at Pittsburgh National Bank, Mr. Jordan was often quoted on monetary policy.
"It is a shame he is not communicating more," one acquaintance said. "He was one of the most quoted-certainly in the top five-corporate economists in the country. He was very good at putting complicated things into English."
Though Mr. Jordan rarely speaks on banking issues, the Cleveland Fed has one of the system's largest research departments devoted to financial services. Recent studies cover everything from fair-lending to capital requirements to the federal safety net.
Based on a pair of 1996 speeches, Mr. Jordan strongly supports market- based regulation. In a March 1996 address sponsored by the Bank Administration Institute, he said regulators should assist, and not resist, market discipline.
"It is now impossible for any individual or supervisory agency to fully comprehend the real-time risk profile of a diverse and complex financial institution," he said. "Consequently, it is essential that we enlist the collective knowledge of many market participants to evaluate an institution's risk-bearing capabilities and to exert discipline on its business practices."
Robert T. Parry, president of the Federal Reserve Bank of San Francisco, credited his colleague as one of the first proponents of market-based regulation.
"He is known for his emphasis on market discipline and how the market itself can bring pressure to bear on institutions," Mr. Parry said.
Mr. Jordan was also an early advocate of risk management, a concept that has clearly taken hold among bankers and regulators. "Given the dynamic nature of the market, it becomes much more important for supervisors and auditors to ensure risk-management systems are adequate and that risk is properly identified, measured, and controlled on an ongoing basis," he told the BAI audience.
In the same address, he advocated letting banks enter new businesses without first seeking regulatory approval. "If regulators want to prevent the action, the burden should be on them to intervene in a timely way to demonstrate that the costs exceed the benefits," he said.
Speaking in October 1996 on the future of banking, Mr. Jordan said banks must embrace technology if they expect to continue to thrive. This will allow them to cut costs, improve the quality of existing products, and deliver expertise to consumers when they need it, regardless of their location.
Technology, however, also could kill banks if they are not careful because the Internet lets consumers shop for the best rates on loans and savings accounts, he said. "Banks may be reduced to commodity providers," he warned.
Mr. Jordan earned his doctorate in economics from the University of California at Los Angeles in 1969, after receiving his bachelor of arts degree in economics from California State University, Northridge.
While working on his doctorate, Mr. Jordan took a job in the research department at the Federal Reserve Bank of St. Louis. Eventually he became the St. Louis Fed's research director and helped develop a tool to help control the economy by adjusting the money supply.
He left in 1975 to become Pittsburgh National's chief economist. After five years, he became dean at the R.O. Andrews School of Management at the University of New Mexico.
Taking 15 months off in the early 1980s, he served on President Reagan's Council of Economic Advisers, where he was one of three economists-though the only one with country and western music blaring in his office-credited with establishing a version of supply-side economics.
Murray Weidenbaum, then the council's chairman, said Mr. Jordan was a natural pick for the post. "I needed an outstanding macroeconomist who was on the wavelength of the Reagan administration," said Mr. Weidenbaum, who now heads the Center of the Study of American Business at Washington University, St. Louis. "He is of the monetarist persuasion who was comfortable with supply-side economics."
Mr. Jordan returned to the University of New Mexico for two and a half more years. He left in 1985 to become chief economist at First Interstate Bancorp, Los Angeles, the job he held when the Cleveland Fed hired him.
On monetary policy matters, Mr. Jordan is one of two members of the Federal Open Market Committee who advocates controlling the economy by manipulating the money supply. Though meetings of the Fed's interest rate- setting body are closed to the public, it has been reported that Mr. Jordan and St. Louis Fed President William H. Poole have advocated a hike in the Fed funds target rate because recent increases in the money supply indicate that inflation is likely to take off shortly.
"He is the one most closely associated with monetarism," Mr. Parry said. "There were a number of years when he was the only monetarist voice at the FOMC table."
Mr. Jordan is clearly a fan of President Reagan. In his only speech this year, he spoke fondly of the Republican's commitment to boosting the economy by shrinking the government. "It was very evident that many of the reforms being proposed would have effects only over a long period," he said at a University of California, Santa Barbara, conference. "Fortunately, we had a leader who was willing to be very patient."
He appears to share President Reagan's wariness of government.
"The government's relationship to its citizenry is not that of an architect, engineer, carpenter, or any other metaphor implying activism," he said. "I think of the state as a nurturer of an economic garden. It cultivates a soil that allows growth to take root, wards off pests who seek to feed off the budding crop, and keeps weeds from suffocating the plant before it achieves its potential."
