The 44-year-old executive, picked for her financial acumen, faces the question of whether she’ll get free rein to use it to turn around a struggling $900 billion economy. President Recep Tayyip Erdogan, whose victory this May stretches his 20-year rule into another decade, has clung for years to the unorthodox belief that low rates fight inflation instead of fueling it. He’s fired three bank governors, and Erkan—who’s working alongside Finance Minister Mehmet Simsek, another Wall Street veteran—is the fifth in her job since 2019.
Erkan, who declined to comment for this story, hiked rates more mildly than expected on Thursday for the second time in her first few weeks on the job. Erdogan has stood behind the new policy, though his patience has proved to run thin when his popularity is threatened. After two shock resignations in the span of about a year, she’ll have to find a way to make her new influence stick.
“Gaye is a proven leader. The president’s appointment is a recognition of her many achievements,” said Bill Ford, who runs private equity firm General Atlantic and served for years on the First Republic board. “The Simsek-Erkan team has the potential to have a transformative impact.”
The story of how she ended up as a top central banker—based on interviews with eight people with knowledge of her thinking or career, with some asking not to be identified so they could speak freely—isn’t neat or even. Her climb to become First Republic’s heir apparent ended in her surprise resignation.
“It didn’t seem as abrupt to me, from my perspective. There was a lot of thinking. It was a difficult decision,” she said on Bloomberg Television last year. “It was time for a change.”
She left to run a real estate lender called Greystone alongside its founder. Her resignation after a few months late last year opened the door to her role shepherding an economy an ocean away.
Erkan has now returned to where her ascent began. She was born in Istanbul to an engineer dad and a mom who taught math and physics, according to a First Republic biography that’s still online. It says that her college named her not just valedictorian but “Best Student in the Last 10 Years.” In 2005, just before getting a Ph.D. in operations research and financial engineering from Princeton, she started work at Goldman Sachs Group.
Marty Chavez, a former top executive there who’s now vice chairman of Sixth Street Partners, said their careers both benefited from good timing.
“We were both on Wall Street at a time when people with our skill set were embraced,” he said. “We went from ‘Can you help me turn the computer on?’ to ‘We can do really great things for our clients with math and computers.’” It helped, he added, that “we’re good at math, and we’re good at software, and that’s a gift.”
As Goldman was cutting jobs in 2011, it promoted the fewest colleagues in years to the coveted rank of managing director. Erkan was one of them.
Jim Herbert, the First Republic boss who still loomed large over the bank decades after founding it, met Erkan while interviewing bankers to help build a risk-management program. He was impressed, the First Republic biography says, hiring Goldman as an adviser on the condition that she be part of the team. Once he poached her in 2014 to be chief investment officer, he presented her with three plaques: “Culture Wins,” “Make It Happen” and “Work Hard, Stay Humble.”
Several former colleagues said she struck them as outgoing, smart and charming. She soon became the bank’s chief deposit officer, then its president. In 2019, she joined the board.
Erkan was positioned to succeed Herbert. As time went on, though, her relationship with some members of First Republic’s board grew fraught: She was ready to run the bank solo, according to two people close to the bank who asked not to be identified describing internal business.
As she waited to take over, a mentor encouraged her to protect herself by getting something in writing, the people said. She did: When First Republic promoted her to co-CEO with Herbert in 2021, her contract said that if she didn’t take over the top seat by the end of the following year, and if she left the bank because of it, First Republic would have to pay up. Thanks to that agreement, she took an extra $10.1 million with her on her way out the door. She left with more than $23 million, regulatory filings show.
That she never held First Republic’s reins alone ended up protecting her career outside of it: By the time the San Francisco-based lender collapsed this May, she was long gone. Its downfall was partly triggered by the interest-only loans it offered to wealthy clients, a practice that reached its height amid rock-bottom interest rates in 2020 and 2021. During that time, Erkan was president and then co-CEO, though the practice predated her and continued after her departure.
Erkan had landed what was, on paper, the sole top job inside Greystone. But the firm, like First Republic, has long been shaped by its founder: Last June’s announcement said she’d report to Steve Rosenberg, who would remain as the board’s executive chairman. He was “excited to partner with her,” he said at the time.
He added in an interview with Bloomberg Television around then that the lender intended to build a “world-class” banking organization with Erkan at the helm. “We totally expect that a bank will be in our future,” he said.
Erkan was equipped for it, after helping triple First Republic’s deposits and total assets in less than a decade. But it turned out to be a gruesome era for banking. With rates rising, Greystone’s plans to expand into private banking and financial services didn’t come to fruition. She left by the end of the year.
Erdogan announced Erkan as his new monetary chief in early June. She isn’t the only alum from the American finance industry steering the economy away from Erdogan’s unorthodox policy. Simsek, a former Merrill Lynch strategist, has said the country has no option aside from returning to convention.
Simsek, along with two influential businessmen close to Erdogan, were instrumental in having Erkan take the reins at the central bank. Simsek already knew her, and Erkan was among a handful of names he recommended to Erdogan, people familiar with the developments said, asking not to be identified because of the sensitivity of the subject.
“We thought we ought to have also a female governor at the central bank,” Erdogan said in June. Colleagues had “relayed to me the great successes of this sister of ours, from her time at Goldman Sachs to all the work she’s done in the finance sector.”
When it was time for Wall Street analysts to make predictions about her first rate decision, they were so unsure of what to expect that the spread of the forecasts they made was their widest ever. For her next decision, Goldman refrained from making a prediction of its own. Other analysts expected another modest hike, despite high inflation and a weakened lira.
The hike was even milder than predicted, though it came with pledges to amplify its impact using alternative measures.
Erkan made her debut public appearance as governor a day after the first rate decision, when she met with a group of banking executives in Istanbul. “We will fight against inflation,” she said. The meeting, she added, was “constructive.” She’s due to answer questions from reporters at her first press conference Thursday.
Chavez, her former Goldman colleague, said Erkan’s appointment makes him “feel better about the world.” He’s happy, he added, whenever smart people who want to do the right thing end up in jobs this important.