In his first three months as president and CEO of the Federal Reserve Bank of Richmond, Thomas I. Barkin has spent a fair amount of time traveling throughout the five-state region the bank serves. He’s been to Columbia and Charleston, S.C.; Charlotte, Greensboro, Raleigh and Durham, N.C.; Northern Virginia and Norfolk; Baltimore, Md.; and Washington, D.C. — some more than once.
It’s not too much suitcase time for Barkin, who became accustomed to the traveling life during his 30-year career with the global consulting firm McKinsey & Co., before he was named the Richmond Fed’s eighth president and CEO late last year.
“I feel like I have taken a step down in traveling,” Barkin said during a recent interview in the president’s office on the 24th floor of the Federal Reserve Bank building overlooking the James River in downtown Richmond.
Barkin, 56, estimated he spent three days a week on the road during his years as a business consultant with McKinsey, where he was based in Atlanta for most of his career. His last seven years with the firm, he took more than 90 international trips.
Much like his work as a consultant, which involved helping clients in various industries identify and solve problems, Barkin’s visits across the Federal Reserve’s Fifth District have been fact-finding missions of sorts, seeking out information about the economy — local, regional and national — that can inform his decision-making process as one of the leaders of the Federal Reserve system’s 12 regional banks across the nation.
The Federal Reserve Bank of Richmond serves Maryland, Virginia, North Carolina, South Carolina, Washington, D.C., and most of West Virginia.
Barkin’s role is significant this year as he is a voting member of the Federal Open Market Committee, or FOMC, a panel of rotating regional bank presidents and Fed board members that sets the central bank’s monetary policy, which heavily influences money supply and interest rates on everything from home loans to credit cards.
His selection to lead the Richmond Fed — he was chosen by its board of directors from among 700 candidates and confirmed by the institution’s board of governors — came as some grass-roots and activist organizations called for more diverse representation in the Federal Reserve’s leadership ranks.
Barkin said his background working as a consultant for various businesses gives him a valuable perspective. “I am going to bring what I hope is a pragmatic business perspective to the table,” he said.
“If you look at my background, I have been working with companies when they have been deciding whether to hire people or deciding whether to fire people, when they have been deciding whether to raise prices or lower prices,” he said. “I think and hope I can bring an understanding that will be differential, versus people who will bring other great perspectives from banking or policy or economics.”
Since he started in January, “I have been pretty aggressive about reaching out to a broad range of people in the district,” he said. “I have met with community leaders, civic leaders, small businesses and large businesses, trying to understand what they see happening.”
The selection of Barkin also was something of a departure from tradition for the Richmond Fed.
Previous presidents of the bank had worked for the Federal Reserve for much of their careers and were promoted from within to the top leadership role.
His predecessors also earned reputations as advocates of caution and restraint in using monetary policy to influence the economy.
Previous Richmond Fed presidents have typically been known as “inflation hawks” who saw the Fed’s key role as keeping prices stable and often warned about the risks of inflation. For instance, Barkin’s immediate predecessor, Jeffrey Lacker, dissented a number of times in FOMC votes that kept interest rates at historic lows during the Great Recession as a way to stimulate the economy.
Barkin said he does not rely on any particular economic philosophy or school of thought to guide him.
“I am pretty aggressively trying to represent the country, as opposed to a philosophy or as opposed to a constituent group,” he said. “I think our board wanted me in this job to bring an independent view that took into account all the various perspectives we get.”
Dennis Lockhart, former president of the Federal Reserve Bank of Atlanta, where Barkin served as a board member from 2009 to 2014, also described Barkin as a pragmatic thinker.
“I have talked to Tom about monetary policy many times,” Lockhart said. “I did not detect that he starts with a particular ideology or point of view. I would consider that very much a positive. In the spectrum of policymakers and personality types, he will be a pragmatist.”
Barkin said he is relying a lot on the economists and other staffers at the Richmond Fed to help him through the transition from leader of a private sector consulting firm to leader of a policymaking institution.
While Barkin’s selection is a break with the past, the shift “may significantly benefit the bank,” said J. Alfred Broaddus Jr., who worked for the Richmond Fed for 34 years and was its president and CEO from 1993 until his retirement in 2004.
“Large institutions, like people, need refreshment, and Tom will bring a new perspective both in managing the bank’s daily operations and in developing longer-term strategies for meeting the challenges that lie ahead,” Broaddus said.
Barkin grew up in Tampa, Fla., where his father, also a native Floridian, was a lawyer. His mother, whose family fled Europe when she was a child to escape the Nazis, was a dental hygienist.
In high school, Barkin applied to Harvard University “on a lark” and got accepted, he said.
He planned to major in math, but “about a semester in, I saw that in my one required math class was the entire International Math Olympiad team for the United States, and they were a lot better at math than I was,” he said.
“I was also taking an introductory class in economics,” he said. “I thought economics combined what I loved about history, what I loved about political science and what I loved about math, so I moved over and became an economics major.”
Barkin thought he would follow his father in becoming a lawyer, so he applied to law school at Harvard and got accepted. “That was less of a lark,” he said.
He earned a law degree and a master’s degree in business from Harvard. After doing some summer internships for consulting firms, “I decided that was much more interesting to me and a better way to have an impact than going on to be a lawyer, so I signed on with McKinsey in Atlanta in 1987.”
McKinsey & Co., founded in 1926, now has about 14,000 consultants worldwide and is known as one of the most influential management consulting firms.
McKinsey consultants typically do not comment on the specifics of their work for clients. Barkin said he worked with “a lot of companies in a lot of different industries, on a lot of different problems.”
He led the firm’s North American transportation practice for a while, and he had clients in the airline industry, but he also focused on corporate strategy and finance, did a lot of mergers and acquisitions work, and a lot of “shareholder value maximization” projects.
For 10 years at McKinsey, Barkin oversaw the firm’s Southern offices, which included Florida and Georgia, the Carolinas and Virginia.
From 2009 to 2015, he was chief financial officer, making him one of eight people on the firm’s management committee. When his term as CFO expired, he remained on the management committee and became the firm’s chief risk officer, which included overseeing such things as cybersecurity, a role that is “very relevant” for the Richmond Fed, Barkin said, because it handles information technology functions for all of the Fed’s regional banks.
In 2009, Barkin was asked to serve in the part-time role as a member of the board of directors of the Federal Reserve Bank of Atlanta, and he was chairman of the board in 2013 and 2014.
Lockhart, the Atlanta Fed president who invited Barkin to serve on the board, said Barkin’s background with McKinsey was a plus. “It is a very evidence-based consulting firm that cares a lot about data and truth. In advising its clients, it is not overly subjective but very disciplined,” he said.
Barkin joined the Atlanta board as the Fed was still navigating its response to the worst economic recession since the Great Depression.
“I walked in with a deep respect for the institution,” Barkin said. After watching how Fed officials approached the crisis over time, “I was even more impressed with the depth and thoughtfulness with which they approached the problem, the amount of debate and the quality of the debate, on what was a very, very difficult set of choices that in many cases were incredibly controversial.”
In Atlanta, Barkin has served in various civic capacities, including on the Emory University Board of Trustees and as a director of the Metro Atlanta Chamber of Commerce. He also was a member of the Atlanta Committee for Progress, a coalition of about 30 CEOs of companies based in Atlanta and seven college and university presidents, which works to advise the mayor on key issues important to economic growth for the city.
Duriya Farooqui, executive director of the coalition, said Barkin is “approachable and unassuming, but with a very sharp intellect that should not be underestimated. He tends to bring great business insight, coupled with really a genuine interest in community.”
When he reached age 55, Barkin agreed that he would retire from McKinsey & Co. within five years, a common practice for the firm, he said.
“It was clear in my mind that it was an appropriate time for me to leave McKinsey, but I wasn’t ready to retire,” he said.
When an executive search firm approached him about the Richmond Fed job, it seemed a good fit.
“I thought, ‘I know the institution, I know a number of people in the institution, I like the people, I trust the values, I like the mission, and I like the idea of giving back,’” he said.
Barkin and his wife, Robyn, have been married for 25 years and have a son who is in college and a daughter who is about to finish high school. They plan to find a home in the Richmond area once their daughter finishes high school this year.
The FOMC has held two meetings since Barkin became a voting member.
In February, the committee decided to hold the Fed’s benchmark interest rate unchanged in the range of 1.25 to 1.5 percent. In March, it raised the benchmark rate to a range of 1.5 percent to 1.75 percent. It was the sixth rate hike since the FOMC began raising rates from near-zero in December 2015.
Barkin voted in favor of both measures.
Barkin said the unanimity reflects the fact that the economy is heading in a direction that calls for the measured rate hikes the Fed has signaled.
He noted that the unemployment rate is as low as it has been since 2000, with economic growth supported by positive business and consumer sentiment, fiscal initiatives and an international economy that seems to have recovered.
“There could always be shocks but, at this point, you are talking about a very healthy underlying growth trend,” he said. Inflation remains below the Fed’s 2 percent target but seems to have picked up lately, he said.
At the same time, “a strong economy does not mean a perfect economy, and I don’t think anyone here would suggest that it is perfect,” Barkin said.
The Fed’s mandates in using monetary policy are to maximize employment, stabilize prices and moderate long-term interest rates.
“While it is not explicit in our mandate, as a policymaker and an individual, the notion of balanced growth is something I care about,” Barkin said. “One of the things I have been doing is digging into our district to understand where the overall outcomes are not fully duplicated.”
Rural areas, for instance, have not seen the job gains that urban areas have, Barkin said. A “skills mismatch” seems to be making it more difficult for people to get some of the available jobs.
“In the low unemployment market that we are in, there are still a lot of jobs that are going unfilled,” said Barkin, adding that he recently visited a hospital where administrators talked about difficulties finding nurses, and he recently spoke to construction firm owners who talked about difficulty finding skilled tradesmen.
“We can’t ignore that even in 4 percent unemployment, there are a lot of people who would like to find jobs, and better jobs,” he said.
“All of those are relevant issues that as we think about our mission of employment, we should look at. How can we get more people off the sidelines to work, and how can more people find the jobs they want in rural areas?”
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