Claudia Buck

Q&A with John C. Williams, president and CEO of Federal Reserve Bank of S.F.

As president and CEO of the Federal Reserve Bank of San Francisco, John C. Williams ponders weighty economic theories and sits at the table with the likes of Fed Chief Janet Yellen and other movers and shakers of the U.S. economy.

But as a kid who graduated from Encina High School, he still maintains his hometown ties to Sacramento. This weekend, the 52-year-old economist was scheduled to receive a hometown honor: induction into the San Juan Education Foundation’s Hall of Fame. Ahead of the award, we talked with Williams by phone earlier this week. Here’s an excerpt:

You travel the globe giving speeches, accepting accolades and weighing in on U.S. monetary policy. How does it feel coming back to your hometown to be inducted into your high school hall of fame?

It’s great. It’s also been a reason for me to reflect back on the value of public education, which I’ve benefited from … It has value beyond just education. One of the things that public education does is bring people together, rather than separate them out. With all the problems of income inequality … that’s an important part of being part of society; interacting with people of different socioeconomic backgrounds and family history.

Every Federal Reserve Chief adds his/her own personal style and flavor to the job. How is the Fed different under Janet Yellen, than, say, Ben Bernanke or Alan Greenspan?

They all have different personal styles, both in substance and personality. On substance, the way Janet Yellen runs the FOMC (Federal Open Market Committee) is very similar to that of Bernanke. She sends a very strong signal that she wants us to have a very substantive, very detailed discussion (of Fed policies) with all the different, alternative views presented. She is a person you can have disagreements with and know that having those discussions is a positive thing. ...What I’ve learned from her is that if you have a strong, healthy, robust process, you’re likely to get the right decisions.

But the biggest change is a secret. Ben Bernanke is a fanatical fan of baseball. Janet Yellen, not so much. So in our discussions, all of our references to baseball have declined. (Laughs.)

What role does politics play in the Fed’s debates?

People have their political views away from the table. What’s happening with the economy, what is the right monetary policy to achieve our goals ... there’s nothing partisan about that conversation. If you asked me, I would not know the political party of most of the people on the committee. It just never comes up. That’s striking. Especially given how partisan Washington, D.C., has become, we’re a little oasis.

Homeownership has always been considered part of the American dream, until it was shattered during the housing meltdown. Despite low mortgage rates, homebuying today is stalled by low inventory and high prices, especially for many first-time buyers. Are we where we should be in terms of homeownership? Or is there more the Fed should be doing to encourage homebuying?

There are various federal policies around homeownership that have promoted it as a goal unto itself, rather than thinking carefully about what’s appropriate for people in different circumstances. What we’re seeing now are a couple different cross-currents. Mortgage rates are low, for people to wanting to buy a home or refinance. For people whose credit is not so good or who are young and don’t have a lot of equity to put in a house, it’s more difficult. It’s difficult to get a mortgage loan if you don’t have pristine credit. It’s one of the factors holding back the economy nationwide. Especially right where I live (San Francisco Bay Area).

Where should our housing policy be? A better place in the future would be (that) the tax system and other aspects are as neutral as possible about whether you should own your own home or rent an apartment. There are a lot of younger people and many retirees, who would rather live in an (urban) apartment or condo, than in a single-family home in the suburbs. … We’re seeing a lot of housing construction today, but it’s in multifamily, not single-family homes. To my mind, I’d rather see that mix of housing being driven by people’s preferences and choices, instead of a goal of having high ownership.

That may be true, but certainly in your backyard, the Bay Area, many people living in cramped, high-priced rentals aren’t there by choice.

That is a big challenge, specifically in San Francisco, Oakland and Berkeley. The issue of affordable housing for our community is very important. Here at the San Francisco Fed, we’re a convener, bringing together investors, local governments and nonprofits to develop strategies to preserve housing for moderate and low-income households, and build healthier communities that have access to nutritional food and public transportation. One of the examples is our efforts to preserve affordable housing in neighborhoods like the Tenderloin, the South of Market area. … As much as the San Francisco economy benefits from having people who work for Google and Twitter, it’s also an opportunity with new money coming into the area to make investments in moderate and low-income housing. It’s a big concern for business leaders: If your employees can’t find affordable housing, your business can’t succeed.

And we’re doing similar work in Sacramento. At a recent Greater Sacramento Healthy Community Summit, we brought together 350 people to discuss ways to improve access to affordable housing, public transit, grocery stores... and good schools. Our role was to bring together people who are thinking about these issues…investors and people with ideas of what’s worked – and hasn’t worked – elsewhere.

Student loan debt has reached epic proportions. Many cite it as one of the biggest long-term drags on the economy. What’s your take on the problem? What would you advise a college-bound student or their parents about paying for college?

The best research about the returns on higher education, including some done by the Federal Reserve, shows that more education, properly invested, has a very high rate of return on future income and job prospects. … In terms of debt, where a lot of people got in trouble is taking on debt for education that doesn’t have clear benefit in terms of marketable skills or good-paying jobs. The best advice is to make sure the programs have proven track records into good-paying jobs, getting the skills needed to achieve (your) goals. … In construction and higher-skilled trades, those jobs are out there. There’s a huge demand for experienced plumbers and welders. … The investment in learning those trades is there.

For years, the Fed has always had specific targets – hitting 6.5 percent unemployment and 2 percent inflation – as the triggers for raising interest rates. But recently, the Fed is indicating that those old benchmarks no longer work. What’s your feeling?

In my own view, the time for those specific thresholds is gone. Now that unemployment is roughly 6 percent and inflation is at 1.5 percent, we’re not far from our goals. It was useful in the past, but it’s not useful in the future. What we really should be moving toward is explaining our policy intentions, not saying that it depends on X or Y but doing our best to explain our thinking. I don’t see any need going forward to put numerical markers in our statements.

The stock market’s had a great year and the U.S. dollar is strong compared with just about any other currency worldwide. How much of that will change if the Fed starts raising interest rates?

Whether it’s bond or mortgage rates, the markets have already expected us to raise interest rates sometime next year and do it gradually. It’s already built into the stock market. If the economy continues to improve as most people expect, that’s already in there, so I wouldn’t expect a big change. Assuming we do it (raise rates) consistently and as long as we communicate our views and intentions reasonably clearly, I wouldn’t expect a big market correction.

And the final consumer question: when are interest rates going up?

My own personal view is that the first raising of interest rates would be the middle of next year. It’s all about how the economy’s doing.


Age: 52

Job: President and CEO, Federal Reserve Bank of San Francisco

Annual salary: $367,500

Education: Sacramento native, graduate of Caleb Greenwood Elementary and Encina High School. Has three economics degrees: undergraduate from UC Berkeley, master’s from London School of Economics, Ph.D. from Stanford

Boyhood highlight: As a Sacramento Bee newspaper carrier, he won a national contest in 1978 for selling newspaper subscriptions.

Career: Started in 1994 as research economist at Federal Reserve’s board of governors in Washington, D.C.; moved to Fed’s San Francisco bank in 2002 as a research adviser. Named president in 2011, serving five-year term.

Personal: Married with two sons, lives in Bay Area

Favorite sports teams: San Francisco Giants and 49ers

Currently reading: “Cloud Atlas” by David Mitchell. “I spend all of my day reading (about the economy). When I get away from work, it’s science fiction, detective stories or good fiction.”


Headquarters: 101 Market St.

Territory: Largest of the Federal Reserve’s 12 regions, it covers nine Western states, including Alaska and Hawaii.

What it does: Supervises hundreds of banks, from small community banks to global financial conglomerates. Processes paper check and electronic payments for banks; also stores and distributes billions in currency and coins. Also acts as U.S. government’s banker, processing Social Security and federal payroll payments. In 2013, the San Francisco bank handled 20.1 billion pieces of currency. Its high-speed, computerized systems detect counterfeit bills and instantly destroy worn-out paper bills. As of December 2013, the bank held assets of $460.5 billion.

For consumers: The San Francisco bank’s website,, hosts “Dr. Econ,” an online Q&A where questions are answered by staff economists. It also has consumer info on credit reports, credit cards, home foreclosures and other topics, as well as how to file a complaint against your bank.

Money museum: The bank houses what it calls the country’s most complete collection of U.S. currency, including a 1776 paper bill engraved on Ben Franklin’s printing press. One of its rarest: an 1890 $1,000 bill, known as a “Grand Watermelon” for its overly-rounded, striped zeroes. There’s also a display on counterfeit money, showing how U.S. paper bills are imbedded with holograms, watermarks, colored inks and security threads to deter fraud.

Free tours: For security reasons, the bank no longer offers individual tours. Group tours of 10 or more are by reservation only, Monday through Thursday, with priority given to educators, high school and college students, and the business community. For details: Call (415) 974-3252 or go to and click on “How do I book a tour?”


What it does: Acts as the nation’s central banking system, overseeing financial institutions, setting monetary policy (i.e., interest rates) and ensuring overall financial stability. Its primary policy goals are maximum employment and low inflation.

How it’s set up: The Federal Reserve is run by a board of governors, whose seven members are appointed by U.S. presidents to staggered, 14-year terms. The current chairman is Janet Yellen. In addition, there are 12 Federal Reserve district banks, from Atlanta to San Francisco, that supervise financial activities of banks in their regions. The seven board members, together with the 12 regional bank presidents, meet eight times a year in Washington, D.C., to debate and determine U.S. monetary policies.

History: After a series of U.S. financial panics, notably a 1907 banking crisis that led to the country’s then-worst depression, Congress created the Federal Reserve System in 1913 to provide long-term stability.