New York Police Chief Ray Kelly

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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.

L.G.: There's been a lot of talk lately that with Wall Street obviously in a terrible bear market, the economy going into the dumper, that has an impact on crime, particularly here in New York. During depressions and recessions, crime rates tend to rise. What's your sense?

R.K.: My primary concern is that this economic environment we find ourselves in will impact on the resources that we have available to police in this city. The mayor has some pretty difficult choices to make. We have to balance our budget every year. We're not like the federal government where you print money. The budget has to be balanced.

L.G.: And your budget is, what, close to $4 billion?

R.K.: Yes, and 94 percent of our budget is personal services, salaries, so to have any meaningful reductions in the police department, it has to affect our head count in some way, shape, or form. I don't know what they will be. What decisions we'll make haven't been made yet, but that's obviously my concern. So I see that as a bigger issue. I don't see former Lehman Brothers employees going out and sticking up 7-Elevens. I don't think that's the outcome of what we'll have here. The larger picture is the reduction we've done. I think we have transformed this department since September 11th, and we have made it not only a conventional crime-fighting organization, but a counterterrorism entity that I think, in terms of a municipality, is second to none. We have no guarantees, but we have done more to protect this city than any other city has, to the best of my knowledge, in the world.

L.G.: Right. But you also have the normal workaday police work.

R.K.: Absolutely, and we've been able to reduce crime 30 percent since this administration came in, in 2002, with 5,000 fewer officers than we had in 2001. We have about 36,000, but we had 41,000. In the middle of this administration, we had a horrific arbitrary decision of lowering the starting salary to $25,000 from what it was—$40,000—so we went back to the starting salary of 1986. That's another challenge. We've lost 5,000 officers, we've got additional obligations of protecting the city form a terrorist attack, and, oh, by the way, we lowered your starting salary almost 40 percent. Make it work. So we have be able to make it work. Crime is down 30 percent, as I say. Last year we had the lowest number of homicides that we've ever had since we've began to record them accurately in 1962.

L.G.: What was that?

R.K.: 496. Now, if you look at the homicide rate in the city—murder rate—not all homicides are murders, but if you look at the murder rate compared to other cities, New York is by far the safest big city in America. It's the safest out of the top 10, the safest out of the top 25. Now, if you look at New Orleans, New Orleans has a murder rate of 95 per 100,000 population, Baltimore has a murder rate of 45 per 100,000, Philadelphia, I believe is 27 per 100,000, Los Angeles is 10 per 100,000. And we're 6 per 100,000. This is, in my business, a remarkable number.

L.G.: Well, the New York City police department obviously has a reputation for management and crime reduction theory that works. And I gather you've lost a lot of your people to run other police departments. Why is it that other police departments, such as Baton Rouge, want to get New York-style management of their police?

R.K.: I can't criticize other departments, I don't know what's going on in other places. I will tell you this: In most cities, police officers are the most expensive civil service, so cities will come here and are looking for the magic formula, looking for a bit of a gimmick—CompStat or whatever. Now, all these things work, but there's no substitute for boots on the ground. You need the bodies to do it, and we've been able to do it with 5,000 fewer officers. But there's difficulty in other cities paying for the police services, and most cities have a formula that gives you roughly enough police officers to respond to 911 calls and some investigative ability. You need more than that, in my judgment, to aggressively attack crime problems. Not every city has crime problems, but in the cities that do, I think you have to, if at all possible, try to find the resources to provide an adequate number of police officers on the street. Most cities have a formula, about 2.1, 2.2 police officers per 1,000 population. We have about 4. Washington, D.C., has about 6—so it's not a panacea.

L.G.: You use CompStat [a hardheaded and occasionally severe management tool that relies on comparative statistics in individual precincts to evaluate performance, often harshly], right? And under Mayor [David] Dinkins, you developed community policing, so-called, and CompStat, I guess, is credited to Bill Bratton [Kelly's sometime rival who was Mayor Rudy Giuliani's police commissioner].

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