Ray Kelly

New York Police Commissioner Ray Kelly—top cop under two different mayors, David Dinkins and (after an eight-year interregnum) Michael Bloomberg—knows more about managing big enterprises than many a corporate C.E.O.
 
At 67, Kelly is a bona fide celebrity—the familiar face of New York's Finest. He is also a smart politician who was all set to run for mayor until his boss, media billionaire Bloomberg, decided to have the city's term-limits law changed so he could stand for a third term. (Kelly is savvy enough to pretend he wasn't disappointed.)
    
He is a career public servant who absorbed his fundamental management principles as an officer in the U.S. Marine Corps. Eight years ago, after Clinton administration jobs heading up enforcement at the Treasury Department and overseeing the Customs Service, he spent all of 10 less-than-satisfying months in the private sector—as the executive in charge of global security at Bear Stearns, the Wall Street firm that cratered earlier this year.
       
Kelly discovered that he preferred the high-stakes challenge of working for the taxpayers, even though the consequences can sometimes be dire. "In the rest of the world, in the private sector, you make a mistake, it costs money," he told Portfolio.com in an exclusive interview. "In this business, you make a mistake, it can cost lives."

Lloyd Grove: You're basically the C.E.O. of a Fortune 500 company here.
 
Ray Kelly: With 52,000 employees.
 
L.G.: So a rather large Fortune 500 company.
 
R.K.: Yes, it is.
 
L.G.: First of all, how disappointed are you that you don't have the option now of running for mayor?
 
R.K.: [Laughs] I am very pleased that Mike Bloomberg has decided to run again. I think it's great for the city.
 
L.G.: If he asked you, would you stay on?
 
R.K.: Well, we haven't had that conversation, but I'm very fond of the city. I love my job.
 
L.G.: You spent exactly one year in the private sector, working for Bear Stearns.
 
R.K.: Less than one year—about 10 months.
 
L.G.: Did it just bore your ass off?
 
R.K.: It's different, I'll put it that way.
 
L.G.: What are the differences working in corporate America for an investment bank like that, versus working in public service, where you've spent all your life?
 
R.K.: Well, I've met a lot of great people in the private sector—well motivated, very smart. In the public sector, you believe that you're doing big things, great things, things that really impact on a lot of people, and in the private sector, obviously, the scope is much narrower, and you're not involved, at least directly, in contributing to the public good. So that's a significant difference. I think here, although it might sound corny, you really do have an opportunity to make a difference that impacts beneficially on many lives.

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L.G.: You were running global security for Bear Stearns. What did that job consist of?
 
R.K.: Well, it consisted of a lot of things—basically the focus on fraud and seeing to it that certain rules and regulations were adhered to.

L.G.: At some point did you realize this just wasn't for you?
 
R.K.: It wasn't so much that, I think it was the horrific events of September 11th that made me realize that I wanted to be back in the game, I had something to contribute, and I felt more at home, given the events of September 11th, back in the public sector, as opposed to the private sector.
 
L.G.: So, Mike Bloomberg asked you to come back.
 
R.K.: Yes, he did.
 
L.G.: Before that, you were actually quoted as supporting Bernie Kerik, hoping that he would stay on.
 
R.K.: Um, it was an issue as to continuity, I think, after September 11th. That was the context in which I had made those statements.

L.G.: Right, continuity was apparently very important. Mayor Giuliani thought it was very important that he stay on as well.
 
R.K.: Sure.
 
L.G.: Tell me if you picked up any management lessons from working at Bear Stearns. Obviously, you know a lot of corporate C.E.O.'s. Did you get to know Jimmy Cayne pretty well?
 
R.K.: I got to know Jimmy Cayne, but I can't tell you I got to know him well. It's a big organization, had 8,000 people when I was there. I would say I was there too short a period of time, I think I picked up a lot of management training from my time in the Marine Corps, which really was 30 years active in reserves. In my time in law enforcement, I was the C.E.O. of U.S. Customs, I was the undersecretary of the Treasury, and I had lots of federal agencies reporting to me—I even was the chairman of the New York State Athletic Commission for a period of time. So I've had a fair amount of executive experience, and I had it in this job, coming up in the job, so I can't say that 10 months in the private sector taught me a lot other than the fact that there were well-motivated, smart, good people in Bear Stearns that I still keep in contact with.
 
L.G.: And you can't tell me today that, had you stayed there, you could've prevented them from going large in subprime derivatives?
 
R.K.: I'm not certain I understand to this day what that all means. Credit default swaps are not my strong suit.
 

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