The answer is an admission of reality: We juiced the trading and risk markets so extensively that they became somewhat addicted to our accommodation of their needs. You may remember the “taper tantrum” market operators threw last spring when we broached the idea of temperance. It went over about as big as would saying you wanted to ban Hurricanes and other happy-making libations here in New Orleans! Preventing market seizures and the DTs Until just recently, Herb Kelleher was chairman of the Dallas Fed board. I can safely say that I had the funniest chairman of any Federal Reserve Bank, and one of the smartest ever. Herb is not only the iconic founder of Southwest Airlines, but he is also an iconic consumer of Wild Turkey Bourbon. A wise man, he advised me that you can’t go from Wild Turkey to cold turkey overnight. So despite having argued against spiking the punchbowl to the degree we did, I have accepted that the prudent course of action and the best way to prevent the onset of market seizures and delirium tremens is to gradually reduce and eventually eliminate the flow of excess liquidity we have been supplying. The financial markets now seem to be unperturbed by and appear to be fully discounting the reduction pattern I am supporting. You should bear in mind that the Fed works directly only with depository institutions.
Richard W Fisher: Comments on tailored regulation and forward guidance (with reference to Dr Seuss, Strother Martin in Cool Hand Luke and other serious economists) Remarks by Mr Richard W Fisher, President and Chief Executive Officer of the Federal Reserve Bank of Dallas, before the Louisiana Bankers Association 114th Annual Convention and Expo, New Orleans, Louisiana, 9 May 2014. *  *  *  The views expressed by the author do not necessarily reflect official positions of the Federal Reserve System. Thank you, Drake (Mills). Your service as president of the Federal Reserve Board’s Community Depository Institutions Advisory Council is greatly appreciated. You are kind to have a Texan come speak to you and your fellow Louisiana bankers, though this is not without precedent: The great blues guitarist and singer Clarence Garlow may have been born in Louisiana, but he had long lived in Texas before he recorded “Bon Ton Roula” in 1949 and gave New Orleans the reputation of the American city where les bon temps rouler. It would be hard to say that the good times are rolling for community bankers, though the pace and rhythm of the economies of the U.S. and Louisiana and your next-door neighbor, Texas, are getting stronger daily. I have been outspoken as to why our community banks feel besieged. Everyone in this room and their sister or brother knows what I preach about the continuing problem of banks considered “too big to fail” and the witches’ brew that was concocted by Congress, known as Dodd-Frank.