Paul after PIMCO
By Jennifer Ablan and Matthew Goldstein
Paul McCulley says working at bond giant PIMCO was like being in Camelot. But in some ways, Bill Grossâ€™s former top Federal Reserve watcher seems a lot happier and more at peace with himself since leaving the Newport Beach, Calif.-based firm at the end of 2010.
These days McCulley, who is credited with coining the phrase â€śshadow bankingâ€ť to describe the role Wall Street banks and hedge funds play in pumping liquidity into the financial system, looks more like a professor at some liberal arts college than a once mighty money manager of some $50 billion.
His hair is longâ€”down to his shoulders. He sports a beard and has lost 20 pounds. He regularly walks 8 miles a day and spends as much time fishing as he does thinking about ways to get the U.S. economy out of its current liquidity trapâ€”a situation in which all the Fedâ€™s priming of the pump does little until consumers can get relief from all the mortgage and credit card debt they accumulated in the past decade.
McCulley decided to leave PIMCO shortly after he got nixed from consideration by President Obama for a Federal Reserve governorship. McCulley doesnâ€™ t like to talk about the consideration process but he admits that he always dreamed of being on the Fed.
But during a recent visit at his home, which sits on a lagoon and provides easy access to his two boatsâ€”Minksy Moment, an 18 foot electric Duffy boat, Â and Moral Hazard, a 32 foot restored 1992 Blackfin fishing boatâ€”McCulley says heâ€™s moved beyond the thought of working for the central bank. Heâ€™s now putting much of his energies into private philanthropy, funding some start-up ventures and working as a senior fellow with the Global InterdependenceÂ Center, a Philadelphia-based think tank.
And McCulley says he doesnâ€™t regret leaving PIMCO, noting the timing for a change was right given how the financial landscape has changed in the aftermath of the worst financial crisis since the Great Depression.
â€śI was at a point in myÂ life where I wanted to make some changes,â€ť says McCulley, who turns 55 in March. â€śThe era of Wall Street driven capitalism has come to an end.â€ť
In hindsight, McCulleyâ€™s timing was impeccable. Last year was Grossâ€™s worst in more than three decades in the business. And thereâ€™s talk about PIMCO, the firm Gross co-founded and launched to fame, losing some of its edge and mystique.
Now McCulley, who says heâ€™s more able to openly speak his mind because he isnâ€™t responsible for managing other peopleâ€™s money, seems to be enjoying the freedom to say what he thinks needs to be done to fix the economy. And he sees the need forÂ a lot fixing, noting there needs to be more emphasis these days on social justice and income inequality.
â€śOur society was ripe for a conversation about social justice,â€ť says McCulley. â€śThis is a conversation we needed to have for a long time.â€ť
And itâ€™s a conversation that McCulley is fully ready to embrace.
To read our Special Report on Bill Gross, Twilight of the Bond King, click here.