KANSAS CITY — Tom Hoenig waged the biggest battle of his career with the financial security of most Americans hanging in the balance.
Last year the longtime Kansas City figure stepped reluctantly into a national spotlight that few Midwesterners find. He broke with others on the powerful Federal Reserve committee in Washington that sets interest rates to trumpet the populist voice of his region.
Reinforced by lessons from 36 years at the Federal Reserve Bank of Kansas City, 19 of them as president, Hoenig spent all of 2010 fighting the Fed’s persistent easy-money policies.
His case was this: The Fed’s response to the subprime mortgage debacle and financial crisis was necessary but had gone on far too long.
“Experience tells me and economics tells me you may end up making things more difficult later on,” he said in a recent interview.
If he is wrong, and the Fed restores a healthy economy, Hoenig likely becomes a footnote to these trying times.
But if he’s right, we may be in for another boom-and-bust cycle like the one that nearly crippled America’s economy and left its job market in ruins.
Each time the Fed committee met last year, Hoenig voted against the policy its members agreed on. Unable to persuade any other voting members to join him, Hoenig’s eight consecutive dissents put him further out on a limb than any member of that exclusive group had gone alone.
“I hope I’m wrong. I hope they’re right, but I don’t think so,” said Hoenig, whose tenure is the longest among current Fed policymakers.
Along with his unflinching policy dissents, Hoenig has spent nearly two years criticizing how the Fed helped bail out banks and other financial institutions deemed “too big to fail” by merging them into even larger financial behemoths.
But time is beginning to run out for the Kansas City resident. His Fed career ends Oct. 1, when he’ll have reached mandatory retirement age. It will be the 20th anniversary of the day he became president of the Federal Reserve Bank of Kansas City.
All of it makes an unlikely capstone for a Fed lifer who still staunchly defends the institution whose decisions he has so publicly opposed.
“He would welcome anyone else taking this ring. But he has a sense of duty and can’t let it go,” said Lu Cordova, deputy chair of the Kansas City Fed’s board.
Hoenig’s life inside and outside the Fed helps explain why his career culminated in a year of reluctant dissent.
At 64, Hoenig is a hands-on Fed president.
He’s involved in supervising banks across seven states, operating the nationwide system that delivers payments between businesses and consumers, and gauging economic conditions.
Kansas City’s Fed employs 1,200 people at its headquarters and network of branches.
Thanks to his longevity, Hoenig is among the highest-paid Fed bank presidents, earning $374,400 in 2009. It’s a substantial sum but, by staying so long, Hoenig has given up millions he could have taken home as CEO of a corporation.
Hoenig maintains a brutal speaking schedule.
One week in April 2009 he kicked off a Money Smart KC program in Kansas City on Monday. He spent Tuesday morning delivering congressional testimony in Washington and Tuesday evening kicking off Denver’s Money Smart program. On Wednesday he provided regulatory updates to a Denver banking group.
The job has turned Hoenig into a globetrotter — Germany, Peru, Brazil, South Africa, Australia, Singapore, Argentina, Mexico, Abu Dhabi and more — but he also accepted invitations to speak in Decorah, Iowa; Durango, Colo.; and Norfolk, Neb.
Those domestic trips are commercial flights, too. Southwest Airlines. No first-class.
Friends describe him as devoted to his family. A grandkid’s toys were spotted under the couch in Hoenig’s 14th-floor Fed office.
But he’s never far from the job.