How I Got Here: Martin Grant

A conversation with
Martin Grant

Jun 3, 2021

Jun 3, 2021 • by Martin Grant

Martin Grant

  • Law Clerk, U.S. District Court, Middle District, North Carolina
  • Counsel and Vice President, Federal Reserve Bank of New York
  • Chief Compliance and Ethics Officer, Federal Reserve Bank of New York

When you were a kid, what did you want to be when you grew up? 

I wanted to be a lawyer. I decided this in sixth grade, after doing very well in social studies.

What kind of sixth grader wants to be a lawyer? 

A sixth grader who gets tremendous positive feedback from his parents on professional choices. I think my vision of lawyers was mostly formed from television, watching Perry Mason.

How did you prepare for your future career?

I went to public school in the Bronx, Harry S Truman High School in Co-op City. I was in a magnet program there, and it had a legal track. My teacher, Mr. Lesser, was excellent at communicating about law and the Constitution, and he took us to court a few times. By junior year I was hooked. I went to college planning to study government or political science and then go to law school afterward. I was the first in my school to go to Princeton University, and I think that was a combination of my brother and my academic advisers suggesting that could be a possible choice for me. It was not, in the past, a choice for many of the kids I went to school with.

What was Princeton like?

Princeton was a shock after Truman for a number of reasons. The workload was much more difficult, and the student body drew a cross section of the United States rather different from my community in the Bronx. Co-op City opened in the 1960s, on the grounds of what had been the Freedomland amusement park. It was an integrated working and lower middle class community with a lot of civil servants, and there was a sense of solidarity because it was new, and somewhat isolated, and people grew up together. I was with the same cohort of kids all the way from elementary school through high school. Princeton drew on private schools from across the United States and around the world. It was much more diverse. I grew up with whites and Protestants, but I never met a white Protestant until college. I didn’t know I was short until I went to college. [chuckle]

Did you have trouble fitting into this new environment? 

It took me a while to find a place within Princeton, and the close friends that I cherish to this day. Many of them became lawyers, as I did. Over lunch and dinner in the residential colleges, we forged bonds that have lasted a lifetime.

Which was tougher to adjust to, the social side of Princeton or the academic side? 

The social aspects of Princeton in 1982 were a surprise, in large part because the drinking age was 18 then. I was a bookish kid who hadn’t been exposed much to alcohol, and it was odd to have your initial socialization experiences with people who were largely drunk.

Were you in an eating club?

I joined the Quadrangle eating club at the end of my second year. It was an experience. I joined with seven other roommates. It improved my sense of belonging at Princeton and was a good place for me.

What came after college?

As I was graduating, after having gotten into law school, I briefly wondered whether the choices I had made at 12 were right. Then my mother told me it was important that I go finish my degree, and I went to Harvard Law School.

What was that transition like?

Easy, because it was a dream come true. After four years of Princeton, I felt well prepared, and unlike my lonely high school to college transition, this time I went with more than 30 of my classmates, and that provided both social and academic support.

This was The Paper Chase era.

Yes. That was when I realized I was less outspoken than others.

So Princeton taught you that you were short and Harvard taught you that you were quiet.

Yes. I didn’t understand people who raised their hands and wanted to volunteer. They called on you and you had to be prepared and state the holdings on your cases and the principles the judges were trying to articulate. But it was mostly a terrifying experience.

Why was it terrifying for you, given how well prepared you were?

Because it involved speaking in public.

Were you in a study group? 

I was, and it was an excellent way to learn a tremendous amount of subject matter together. We prepared outlines and questioned each other about the cases and lectures. I enjoyed law school. I was a prelaw tutor, so I had an opportunity to mentor some college kids, and that was an extraordinary experience.

What came after?

I went to work as a clerk for a federal district court judge in North Carolina. It continues to be one of the most important experiences I have had. I was a New York City kid who hadn’t had much exposure to the rest of the country. North Carolina was very different from where I was raised. It was more different from the Bronx than Princeton, for sure. I woke up to the fresh smell of tobacco being cut and processed at the RJR Nabisco factory where Winstons and Salems were produced. It was a small town with a few large businesses—Hanes and Sara Lee were two others. And it had a vibrant law business, because Wachovia Bank had its headquarters there.

What was clerking like? 

It was a great lesson on how people interact with the government and how law helps decide conflicts between individuals. I was able to sit and watch trials and learned a tremendous amount about the criminal justice system. It was like watching Perry Mason again, but in real life.

How did it compare with the TV version?

The drama was more intense. Vast numbers of young men, mostly, were being sentenced under tough crack statutes and sentencing guidelines to very long sentences at young ages. In one case I remember, a 22-year-old went from two relatively minor interactions with the law to a life sentence in his third interaction. He was younger than me. That is seared in my memory.

One thing I realized watching people argue in court was that it didn’t strike me as a good fit. I wasn’t confrontational in that way. I liked learning how to write briefs and make an argument. I got a tremendous education on the rules of evidence and how to phrase questions and how to admit evidence into court. But I thought I wasn’t cut out to be a litigator. So I joined the Federal Reserve. Ironically, a few years later, I was back in court litigating and enjoying it.

Why was the Federal Reserve the noncontentious legal option you chose? 

I was interested in public service, and I was interested in the regulation of financial institutions. 


Rudolph Giuliani. I graduated from law school in 1989. He was the U.S. attorney for the Southern District of New York, making a number of cases on insider trading. That got my interest and made me want to return to New York and regulate finance. I joined the Federal Reserve Bank of New York’s legal program because it offered an unstructured or generalist program where you could learn about banking law and contracts in addition to litigation. I could expose myself to a wide range of legal practices.

For the first three years, I wrote long, research-heavy legal memoranda during the day. But then I added another role. It turned out that even though I didn’t love litigation, my clerkship had given me useful skills that few of the other attorneys in the department had. So I ended up spending my evenings preparing and defending the bank in lawsuits.

Did you enjoy doing that? 

I did. I knew I could write and make a persuasive argument. I had to overcome my fear of public speaking, but advocacy turned out to be easier than I had thought when it was done on behalf of an organization I strongly believed in.

Where did you get the self-confidence to make that professional leap forward? 

Age. At a certain point, you come of age and realize you’ve been working on a particular matter and know you are the best one to handle it, and you find your voice and can be more expressive.

When did you ascend into management? 

The failure of the Bank of Credit and Commerce International had a major impact. There was a tremendous investigation and the conclusion was that bankers could be up to no good and the Federal Reserve had to play a more active role in enforcing financial laws. Congress made some changes in the law, and the Federal Reserve created a division at the New York Fed for enforcement. I joined that group and we set our sights on investigating unsound banking practices and banker misconduct.

So you became a cop? 

I became a financial institution regulator. We didn’t put people in jail; we wanted to hold banks and bankers accountable for errant behavior.

Did that create tension in the financial community?

Sure. The Federal Reserve has lender of last resort authority, and the price of that is bank supervision. We are here to support financial institutions that are in distress, and we employ large staffs to ensure the safety and soundness of those institutions and make sure they have appropriate controls in place. Having a separate body critical of both bankers and banks for particular practices was not a perfect fit.

Did you face opposition from people inside the Fed as well? 

The Federal Reserve Bank of New York is an incredible deliberative body that has a consensus orientation. I developed skills as a litigator, putting a case together with evidence, talking to people, getting witness statements. You learn that if the facts are on your side, you can persuade people about a progressive definition of what’s wrong. When I was in law school, we did not study financial derivative products. But when large banks entered this market and confused their clients with their sales practices and pricing, we were able to develop a sense of what was safe and unsafe, sound and unsound, honest and misleading. That was a great learning experience. It’s different from prosecution, where you need clear laws that say, “This is acceptable and this is unacceptable.” In our world, there is room for financial innovation, and institutions and practices are allowed to evolve. But we can set boundaries and establish lines of conduct, say, “This has gone too far.”

That sounds a bit naive. Wise, beneficent experts regulating finance capitalism on behalf of everybody’s best interests, coming to agreement through facts and reason, and then getting appropriate compliance. In the real world, does it actually work like that? 

Take price transparency. We investigated firms that were not sharing full information on pricing with their customers. They backed out some of the fees they had to pay to the government, didn’t put them in the accounting. So when transactions went south and positions got marked to market, the payment was more than expected—the loss on the trade, but also the fees that hadn’t been factored in. Both customers and firms ended up with losses far greater than they had understood, because they hadn’t acknowledged or didn’t realize what the innovative products they were buying really cost. 

Our role was to monitor the system and find fault with institutions that failed to be fully transparent about their prices—that gave their counterparties prices different from what they should have given. Over time, derivative markets have expanded enormously, and we have tried hard to provide clear rules to guide their behavior. I think we have matched intention and conduct. There are now vastly more transactions and yet, because of improved practices, far fewer problems and less need for enforcement.

What’s the difference between the Federal Reserve and the New York Federal Reserve? 

The New York Fed is one of 12 reserve banks that are operational arms for the Federal Reserve System. We all are supervised by the Federal Reserve Board, currently chaired by Jay Powell. The Federal Reserve is mostly known for establishing interest-rate policy. But I’m a lawyer and a compliance professional. The only time I deal with interest rates is with my mortgage and credit cards.

You’re a financial institution regulator in New York. Why have you traveled so much abroad?

So, in 2005, I transitioned to a role as the bank’s chief compliance officer. One of the things the Federal Reserve does beyond monetary policy is hold dollar reserves for much of the rest of the world. There is a payment business associated with that, part of what is broadly considered correspondent banking. I liaise with the Office of Terrorism and Financial Intelligence in the Treasury Department and with the larger intelligence community in order to understand the transactions that go through our books and note irregularities.

Can you tell any stories about that? 

Several years ago, we saw a rise in requests for large amounts of currency by the Central Bank of Iraq. We asked them to provide more data. And when they provided more data, we came to understand that they were providing access to dollars for the Central Bank of Iran and an Iranian commercial bank—something that violated agreements and commitments they had made. 

The Federal Reserve of New York delivers dollars to the world, largely hundreds and fifties. We had intermediaries, like UBS, who were responsible for the second-level distribution. Lots of dollars were found in Iraq. Looking at the serial numbers, we knew they were not supposed to be there. After a tremendous amount of work, we were able to backtrack and see that they came from our facilities in New Jersey. It turned out that UBS had not lived up to its obligations, was misreporting data, and understood that the currency was being transshipped to places that weren’t supposed to get it. At this time, money-service businesses in ISIS-controlled territories were also a concern. So I and others at the bank developed a more rigorous and robust compliance program, in order to enforce sanctions better and prevent illegitimate business being done with enemies of the United States. 

There are lots of dollars around the world, since people everywhere like to hold their savings in fifties and hundreds. They move around, and eventually they come back to us. I follow the patterns, which are very interesting. We never shipped money to Turkey, for example, but we got a lot of dollars back from them. At one point, in fact, more dollars were being returned from Turkey than from any other place on the globe. I would inquire about that kind of case, go to Turkey and engage with bankers and government officials. There are lots of good reasons for something like that to happen. But there are also bad reasons. We are always looking to have a better understanding of dollar flows.

Many people would be surprised to hear the Federal Reserve has a chief ethics officer. What do you do in that capacity? 

We support the personal integrity of our staff, primarily to make sure that they don’t have any conflicts of interest that would interfere with the objective and independent discharge of their responsibilities. We don’t allow people who own Microsoft to decide whether we should do business with Microsoft. We don’t allow people who oversee a large financial institution to have stock in that institution. Federal employees who make more than about $140,000 have to provide financial disclosures.

How many people do you supervise? 

About 40 people. It’s a great privilege and honor to support people’s careers and aspirations. And we are lucky at the Federal Reserve that there’s so much important work, people have opportunities to do things they never imagined. As a manager, I need to make sure they have the resources to accomplish their mission and the guidance and support to answer the challenge. There are bureaucratic elements to the Fed, but we are still agile and adaptable to the circumstances. The [2007-8] financial crisis drove tremendous innovation and improvisation by policymakers to restore access to credit. When we have to act, we can act very quickly. We just try to have some thought and deliberation first.

Given what you just said, do you resent the times when you have to walk through protesters to get to the front door, with people screaming about how the Fed is messing up the world? 

I think it is healthy for public institutions to have a dialogue with the public and for officials to understand why people are angry. Policymakers have an obligation to explain the reasons for their actions and respond to criticism.

As a regulator, do you worry about capture from the financial industry and its interests? 

I no longer worry about that. The dialogue that the Federal Reserve had with the public in the wake of the financial crisis made us much more mindful of public concerns, and we have put into place lots of efforts to keep our analysis and oversight of financial institutions independent and objective.

How has race affected your career? 

There are always challenges for African Americans in work, but I feel like I’ve been extremely lucky in my career. The luck, in my case, was trusting my gut that if I put in the work, my effort and accomplishments would be treated fairly by public-spirited professionals.

How about being gay?

In 2010, banks recognized National Coming Out Day for the first time. I was one of the first people to announce my sexual orientation and describe a little bit about my life as a gay man.

Was that difficult? 

I was so happy and proud to do it. Our society has changed so much, and it’s important to make visible the successes of alphabet people like myself.

What are you proudest of in your career? 

I’m proud of the team I have and the work I’ve done as compliance and ethics officer. These are important jobs, and I’m happy to have had the opportunity to do them well.

What are your greatest regrets? 

Having found so much purpose in the work we have done, I have few regrets. Still, having spent over thirty years at one institution, I sometimes wonder about the professional avenues left unexplored.

Any advice for those starting out? 

Learn what you like and what you don’t and try to find jobs that match your interests and your abilities. It makes work less like work. 

This interview has been edited and condensed.