President Dudley: Let’s put it this way, if it did reach 30,000, I would be concerned about the stock market valuation. I think one of the things that’s interesting post the election is, I think the uncertainty level about policy has gone up enormously, yet markets have actually performed very well, especially the equity market. And that’s actually pretty unusual. Usually markets don’t like uncertainty. And so, one thing to ask yourself the question is, why are markets going up even though the uncertainty level has climbed so much? I think one of the reasons, perhaps, is the notion that political deadlock in Washington is going to ease. Another thing is maybe fiscal policy is going to ride in and provide some support for the economy. But it’s an unusual environment, where uncertainty level goes up and the stock market goes up. There’s a little tension there between those two things. Maureen O’Hara: The VIX which is – President Dudley: Well, that’s the other thing. Volatility in the market is extraordinarily low. So, that’s another thing that doesn’t quite fit. You would think if uncertainty was high, you’d have a little bit more volatility. If I was going to write something down as a prediction, I guess I would think volatility will go up. At some point. 3 / 13  BIS central bankers' speeches  Maureen O’Hara: Well, it is a confusing structure right now. I think it’s hard for anyone to kind of predict this economy. But that kind of makes it fun.
So we have two goals: employment and inflation. And if the world is a really good place, it maybe makes it a little easier to achieve those goals. And if the world is at a more difficult place, maybe it makes it a little harder to achieve those goals. But it doesn’t change our goals, and it doesn’t change our monetary policy mission. Maureen O’Hara: Let me turn that, our focus, just a tiny bit. You’ve been a leading critic of culture in the banking industry, and I kind of have a two-part question here. Do you think the era of bad behavior in banking is behind us? And here’s the second part of the question: some people would argue that the behavior wasn’t really that bad but instead the regulators… President Dudley: Who are those people? Maureen O’Hara: There was Elizabeth Warren, I’ll say that, I think she’s convinced. But some people would argue 6 / 13  BIS central bankers' speeches  that the regulators used the opportunity to extract excessive fines from banks for behavior that maybe wasn’t ideal but wasn’t so horrible. There’s two different perspectives. I think no matter how we look at it, some of the behavior of the banks was sort of unacceptable. Are we past that, do you think? President Dudley: Well, first thing I would say is a lot of the behavior was just totally egregious, totally unacceptable. Not in the gray area.