E. Gerald Corrigan's picture is hanging on the wall of several bank trading floors -- for target practice.

That's the latest joke among swap traders, who are bristling at Mr. Corrigan's campaign to rein in their burgeoning market.

The gibe isn't likely to unhinge the burly 51-year-old regulator, who has been president of the Federal serve Bank of New York since 1985. Former colleagues say that he has no qualms about taking unpopular positions and standing by them.

It's not that Mr. Corrigan goes out of his way to antagonize people, it's just that he will do about anything to protect the strength of the Federal Reserve System, they say.

"I would characterize him as a company man," said Manuel Johnson, a former vice chairman of the Federal Reserve Board. "He's prickly, and there are plenty of times when he's tried to go it alone. But he always does what he thinks is best for the institution."

The problems with swap traders stem from a speech he gave last January in which he waved a red flag about the rapid growth of the derivatives markets. Mr. Corrigan's lieutenants soon sent the message to bankers and chief executives at hundreds of foreign and domestic companies under their jurisdiction.

Pressure from Congress

Angry traders and dealers now protest that they are being scrutinized as never before.

Mr. Corrigan also has come under pressure from fellow regulators and Congress. The scandal in Treasury bond trading at Salomon Brothers occurred on his watch, and in the aftermath the New York Fed has been faulted for failing to adequately supervise primary dealers in the bond auctions.

Rep. Edward Markey publicly criticized Mr. Corrigan for not coordinating his supervision with the Department of the Treasury and the Securities and Exchange Commission in a timely fashion, while Federal Reserve governors are said to have scolded Mr. Corrigan before his testimony.

Nevertheless, Mr. Corrigan refused to bend when government critics urged him to shut down the Salomon bond operations. Mr. Corrigan feared the impact of such an action on market stability and kept the operations open despite the firm's admission of illegal bidding.

Some say his tough hide is a legacy from former Fed Chairman Paul Volcker, who named Mr. Corrigan to many of his most important posts.

Indeed, there are Fed watchers who believe the New York Fed president could be a serious contender for the chairman's spot in Washington after Alan Greenspan.

"He could very well make an excellent chairman of the board," said Stephen Axilrod, vice chairman of Nikko Securities Company International and a former senior Fed aide to Mr. Volcker. "His mind runs on public policy lines. He's like Volcker that way."

Priorities Are Clear

Mr. Corrigan, who rarely speaks for the record about his accomplishments or ambitions, would not comment on his career plans. But in a speech last week to a group of international regulators in Cannes, France, he made clear where his priorities lie: system first, ambition second.

"Given all of the banking and financial problems that have emerged over the past 10 years, one must be impressed with the resilience of the international banking and financial system," he said.

"Whether it was the LDC debt crisis, bank failures or near failures, the stock market crash, real estate and other asset price bubbles, the recent turmoil in foreign exchange markets or the financial scandals that have rocked many markets and institutions, the system has held up remarkably well."

Indeed, Mr. Corrigan's friends say that he relishes the key role he played in resolving the financial crises he enumerated. They see it as a testament to his never-flinch-under-fire personality, his determination to master the arcana of the world's payments systems, and a deep personal pride in the distance he has traveled in his career.

From Blue-Collar Town

Unlike many of his colleagues in the international banking community, Mr. Corrigan has a plebeian background. He grew up in Waterbury, a factory town in Connecticut.

He earned his bachelor's degree from nearby Fairfield University and went on to get a master's and PhD in economics from Fordham University in the Bronx, New York.

In 1968, he joined the New York Fed as an economist and has never left the Fed system. Within two years of his arrival, he vaulted over many of his colleagues to snare the powerful job of corporate secretary.

For the next eight year, in various administrative posts that included vice president of personnel, Mr. Corrigan learned the innards of the organization. He mastered both the byways of government administration and the technical aspects of the payment and settlement systems that keep the banking system operating.

In at least one instance, Mr. Corrigan turned his operational expertise into heroics. Associates recall the day in November 1985 when Bank of New York's computer systems crashed, threatening to derail its payments and securities transfer network. Mr. Corrigan, still a neophyte Fed president, stayed up all night and negotiated a $23 billion loan to keep the bank going.

Indeed, Mr. Corrigan is said to have frequently taken lumps from colleagues for his absorption in "plumbing" issues that didn't grab headlines.

Shortly after he took the top New York post, he repeatedly drove home to his superiors the need to establish backup systems for the Fed's own computers.

There was a reluctance, sources said, to spend millions of dollars to insure something that was not broken. But three years later, New York City experienced a power failure that would have derailed the national payments system if the Fed hadn't agreed to Mr. Corrigan's plan.

His expertise in such nitty-gritty issues of central banking wins almost universal praise today.

"Jerry has developed great skills when it comes to judging systemic risks," said Henry Kaufman, president of Henry Kaufman & Co. and former chief economist at Solomon Brothers Inc.

Mr. Corrigan is preoccupied with the intricate links that have rapidly grown among the world's payment systems and securities markets.

His comprehensive knowledge of world markets -- plus the independence of his office -- is what gives him the strength to persist with policy initiatives that sometimes infuriate bankers, friends say.

When things go wrong with the system, they add, Mr. Corrigan is in his element.

"He masters all the details and gets a plan," said Scott Pardee, chairman of Yamaichi International and a former Fed colleague. "He thrives on crisis and solving problems."

But it was Mr. Corrigan's zeal for administrative detail that impressed Mr. Volcker, who was chosen as president of the New York Fed in 1975. When the cigar-smoking banker moved to Washington in 1979 to become chairman of the Federal Reserve Board, he took Mr. Corrigan with him as his assistant.

"I had to go down there unexpectedly," said Mr. Volcker, now chairman of the investment banking firm James D. Wolfensohn Inc. "I wanted somebody I knew I could lean on at the time. He's got a very practical bent of mind. He was a man you could expect would do what needed to be done without minute-by-minute guidance."

A Boost from Volcker

One year later, sources said, Mr. Volcker used his influence to have his protege appointed president of the Minneapolis Fed. Even then, Mr. Corrigan traveled to Washington almost monthly to confer with his boss.

"Corrigan ended up as Volcker' troubleshooter on every issue that came up," said Kenneth Guenther, who was an assistant to the Fed board in 1979 and is now executive vice president of the Independent Bankers Association of America.

Whether Mr. Corrigan truly aspires to the top job of chairman of the Fed remains uncertain. Mr. Volcker said he believes Mr. Corrigan has had a number of job offers from private companies that would pay more than his regulator's salary.

Bur Mr. Corrigan is no pauper. He now makes almost twice the $125,100 that Mr. Greenspan draws as Fed chairman.

On top of that Mr. Corrigan's New York post has a certain international cachet. Indeed, in recent years he has quietly built a worldwide sphere of influence for himself from his New York perch.

Mr. Corrigan is chairman of the Basel Committee on Banking Supervision, which has become the key mechanism for devising international bank capital standards and negotiating intercountry regulation.

He also has traveled to Russia 12 times in the last 10 months to help coordinate the Russian-American Bankers' Forum.

Enthusiasm Observed

The six Americans and five Russian in the group are trying to create almost overnight a full-blown banking structure -- with retail banking and payment system services, an interbank lending market, and a market for government securities.

"Mr. Corrigan is enthusiastic to the point where his eyes are shining," said Sergei Yegorov, president of the Association of Russian Banks.

If Mr. Corrigan does seek the top Fed job, he would have to soften his characteristic bluntness. While often refreshing, it is a trait that could interfere with the top job's ambassadorial requirements in negotiating with the White House and Congress.

He is also criticized by some for his inability to delegate. Despite his multiple roles as chief executive of a 3,780-person bureaucracy, senior regulator, and central banker, he still insists on writing his own speeches.

But Mr. Corrigan, with his tousled red hair and short-sleeve shirts, also has a reputation for unselfishness and collegiality.

He loves fly fishing, which he learned from Mr. Volcker. His small inner office at the Fed contains more than one mounted fish he caught, along with pictures of Mr. Corrigan fly fishing with Mr. Volcker and other regulators.

Neal Soss, the chief economist at First Boston & Co., recalls his days as an assistant to Mr. Volcker in 1982 and 1983. "You'd call Corrigan and say, |The chairman has X on his mind. What do you think that means?' And Corrigan was always helpful and very knowledgeable."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.