San Francisco Chronicle - (Sunday)
Bank president helped ease 1987 stock crash
“He played a crucial role providing the psychological reassurance for a few critical days after the stock market crash.”
Paul Volcker, former Federal Reserve Board chairman
E. Gerald Corrigan, who as the aggressive president of the New York Federal Reserve Bank helped cushion Wall Street’s crash in the late 1980s, died May 17 in a memory-care center in Dedham, Mass. He was 80.
The cause was complications of Alzheimer’s disease, his daughter Elizabeth Corrigan said.
As president of the Federal Reserve Bank in Minneapolis from 1980 to 1984 and then of the New York Fed from 1985 to 1993, Corrigan used his prerogatives as a regulator to help resolve national and global financial crises, and to remedy some of the causes of episodic market instability.
“He played a crucial role providing the psychological reassurance for a few critical days after the stock market crash,” Paul Volcker, the former Federal Reserve Board chairman, said when Corrigan retired from the Fed in 1993, referring to his actions after the Dow Jones industrial average dropped more than 22% in a single day in October 1987.
In that upheaval, Corrigan urged the Fed chairman, Alan Greenspan, to reassure the markets that the Federal Reserve would pump whatever money was necessary into the financial system to reduce volatility. He also played vital roles in other crises: He helped the Fed to address the collapse of the investment bank Drexel Burnham Lambert in 1989 and of Salomon Brothers in 1991, and to deal with rising inflation, emerging market debt and the need to regulate worldwide credit risk.
After Corrigan retired from the Fed, he joined Goldman Sachs, where he became managing director in 1996 and later chairman of the firm’s international advisers, co-chairman of its business standards committee and the first nonexecutive chairman of its commercial bank, now known as Goldman Sachs Bank. He retired from Goldman in 2016.
Edward Gerald Corrigan, known as Jerry, was born June 13, 1941, in Waterbury, Conn. His father, Edward, was a restaurant manager. His mother, Mary (Hardy) Corrigan, was a librarian.
He earned a bachelor of social science degree in economics from Fairfield University in Connecticut in 1963. At Fordham University in New York, he received a master’s degree in economics in 1965 and a doctorate in the same subject in 1971. (Years later, he donated $5 million to each university to establish professorships.)
After teaching for a year at Fordham, he joined the Federal Reserve Bank of New York as a researcher in 1968 while still working on his doctorate. When Volcker, the New York Fed’s president, became chairman of the Federal Reserve Board in 1979, he recruited Corrigan as a special assistant.
During his tenure at the Fed, Corrigan was named chairman of the Basel Committee on Banking Supervision by the governors of the world’s central banks, a position he held from 1991-93. He also served as vice chairman of the Federal Open Market Committee from 1984-93. In 1992 he was named a co-chairman of the Russian-American Bankers Forum, which helped the former Soviet Union develop a market-driven banking and financial system.
In addition to his daughter Elizabeth, Corrigan is survived by another daughter, Karen Corrigan Tate, from his marriage to Linda Barlow, which ended in divorce; his wife, Cathy Minehan, who was president of the Federal Reserve Bank of Boston from 1994 to 2007; his stepchildren, Melissa Minehan Walters and Brian Minehan; a sister, Patricia Carlascio; and five grandchildren.
Corrigan’s romance with Minehan raised questions of a possible conflict of interest when she was at the Fed and he was at Goldman Sachs in the mid-1990s, but he said at the time that they had consulted lawyers to prevent leaks of sensitive information that might benefit his company.
During his stewardship, the Fed was criticized for failing to curb abuses by the scandalscarred Bank of Credit and Commerce International. But Corrigan said when he retired that “if it wasn’t for the Fed, there is a pretty good chance that BCCI would still be in business.”
In his remarks in 1993, Volcker said Corrigan had “a good conceptual understanding of the financial world, but most importantly he knows how to get things done.”
“That’s a rare quality in the bureaucratic world in which he has grown up,” Volcker added.
When the market crashed in 1987, for example, Fed officials planned to deliver a turgid technical response.
“I said that’s the last damn thing we need,” Corrigan was quoted as saying in Sebastian Mallaby’s “The Man Who Knew: The Life and Times of Alan Greenspan” (2016). “What we need is a statement that has about 10 words in it.”
Greenspan took Corrigan’s advice, saying (in 30 words) that the Fed would make available whatever money was needed while Corrigan importuned major banks to continue lending to undergird the markets.
When Corrigan retired from the Fed, he said he would take a job in private industry where “I’ll try to limit myself to working six days a week, instead of seven.” The aftermath of the market crash in 1987, he said, had been his most memorable moment.
“In terms of my pulse rate,” he said, “that one takes the prize.”