Impact, Local Roots
Author Pamela Stallsmith works in the
Corporate Communications office of the Federal Reserve Bank of Richmond. She
can be contacted at firstname.lastname@example.org.
Wherever Sally Green goes nowadays,
she’s greeted with the same question about the economy.
“Everybody wants to know what’s
going on, and can you fix it,” says the first vice president of the
Federal Reserve Bank of Richmond.
tell them that though we’re going through a very difficult time, our
market economy is resilient,” Green says. “We have learned from
challenging times in the past, and the Federal Reserve takes very seriously
its responsibility to help address the slowing economic conditions and the
As one of 12 regional reserve banks
across the country, the Richmond Fed plays a prominent role in the
nation’s central banking system. It helps formulate monetary policy,
supervises and regulates banks, and assists with the operations of the
nation’s financial and payments systems.
Today the Fed — as it’s commonly
known — finds its job as the “lender of last resort” assuming new
meaning amid the proliferation of lending programs designed to shore up an
Turmoil is nothing new for the nearly
100-year-old Federal Reserve System, which was founded as a response to the
financial panics that plagued the late 19th and early 20th centuries.
“That’s why you see us in the papers
so much,” says Green, who came to the Richmond
Fed in 2006 from the Boston Fed. “There are disruptions in the financial
markets, and one of our roles is to foster financial stability.”
Locally, the Richmond Fed is one of the
city’s largest employers, with nearly 1,700 employees, and has been
recognized as one of the area’s best places to work. Though the 26-story
building along the James River is one of Richmond’s most visible
landmarks, the bank’s functions aren’t always obvious.
Though overseen by a centralized Board
of Governors in Washington, D.C., the Richmond Fed is an independent bank
whose operations rely on local management, a board of directors and several
advisory councils. The Fifth Federal Reserve District, headquartered in
Richmond with branch offices in Charlotte, N.C., and Baltimore, Md., serves
Maryland, Virginia, the District of Columbia, North Carolina, South Carolina
and most of West Virginia.
This structure underscores the
importance of relationships between the Richmond Fed and banking, business
and local leaders across the district. The bank conducts an extensive
outreach program to engage regional constituents and to promote economic
education and community investment.
Lacker, President of Richmond Federal Reserve
Jeff Lacker, who joined the Richmond Fed
20 years ago as an economist and became the bank’s president in 2004, says
a key job of the institution is to monitor regional economic trends.
“While we receive and analyze very
closely reams of national data that come out of Washington, there’s no
substitute for understanding what’s going on in Danville, Northern
Virginia or Wise County because those trends, added up across all the
states, are what drive the national economy,” Lacker says.
That plays into helping the Federal Open
Market Committee (FOMC) decide
the federal funds rate, the rate banks charge each other for overnight loans
and which affects other interest rates.
The committee — which manages the
nation’s money supply as its primary task — consists of the seven
members of the Board of Governors, the president of the New York Fed and
four rotating reserve bank presidents. As of January 2009, Lacker again
becomes a voting member, further enhancing the Richmond Fed’s profile.
He will contribute to the panel the
Richmond Fed’s long tradition of being an “inflation hawk,” sometimes
breaking with system leadership to move more aggressively to bring inflation
“All reserve bank presidents
participate fully in the meetings,” Lacker says. “But when you’re a
voting member and a roll call vote is taken on an interest rate decision,
you’ve got to be able to defend your position publicly. It’s a
particular responsibility we all take very seriously.”
The Richmond Fed also is renowned for
its research, especially in the areas of banking, payments and monetary
policy. The bank was one of the first in the system to build a research
department that emphasized an academic approach, says John Weinberg, senior
vice president and director of research.
“It helps us ensure that our policy
ideas are based on the latest, best, most rigorous analysis,” Weinberg
Recently, much media discussion has
concerned openness with respect to Fed actions. The Richmond bank was an
early proponent of increased transparency in monetary policy. Before 1994,
the FOMC didn’t publicly announce if it changed target rates.
Yet in the 1980s, the bank’s leading
research economist was among the first to publicly challenge Fed
communications practices and secrecy. Now the FOMC releases a statement the
day of a meeting explaining any action and minutes are released in a
timelier manner. “The system has come in our direction,” Weinberg says.
Reserve banks are commonly called
“banker’s banks” because they provide currency and coins to commercial
banks, process and settle their checks and electronic payments, and
supervise commercial banks in their regions. In addition, they destroy unfit
currency. Nationally, reserve banks transfer about $4.9 trillion a day,
Green says, some of it in the form of direct payroll deposits.
Like other reserve banks, the Richmond
Fed operates a “discount window” where depository institutions can
borrow money. This district as a whole has a very robust banking community,
Green says. Across the Fifth District, there are 314 community banks (banks
with less than $1 billion in assets); in Virginia, that number is 88. The
bank also offers some unique programs. Because of the Richmond Fed’s
proximity to Washington, it has an important relationship with the U.S.
Treasury, serving as its payments provider. The bank’s Currency Technology
Office works with the U.S. Bureau of Engraving and Printing and the U.S.
Mint to design money and help thwart counterfeiters.
Monitoring the District’s Economic Pulse
As part of its mission to keep its
finger on the district’s economic pulse, the bank has launched an outreach
effort that includes regional forums for senior leaders and meetings with
bankers, as well as initiatives to promote economic and financial education.
Since 2006, senior bank leaders have
taken several trips a year across the district to meet with business,
government and community leaders in regional forums. Places visited include
Abingdon; Frederick, Md.;
central West Virginia; and upstate South Carolina.
The bank’s economic education staff
reaches hundreds of teachers and thousands of students across the district
every year. In September, the bank partnered with the Virginia Council for
Economic Education and, through the Lynchburg College Center for Economic
Education, held a free workshop for more than 40 teachers about the Great
“We have a great democracy here in
America, and I feel like a good part of that democracy is our free-market
economy,” says Steve Malone, assistant vice president of public affairs.
“For consumers to truly realize the benefits of a democracy, they need to
understand the basics of economics and how the choices that they make have
The mortgage foreclosure crisis has
taken the bank’s community affairs staff throughout Virginia to learn
about the situation and provide information to local officials, especially
hard-hit areas such as Prince William County. The bank sponsored forums in
Fairfax, Farmville and Hampton Roads, as well as Greenville, N.C. Bank
economists have visited newsrooms to discuss economic conditions to help
reporters better understand the situation.
“A lot of what we do focuses on
learning about and understanding regional economic conditions within
Virginia and the district, but we also bring resources that help teach and
train those communities as well,” says Marsha Shuler, senior vice
president of community affairs, public affairs and human resources.
What the recent financial turmoil shows,
Green says, is how interdependent global markets are. Central banks across
the world are acting in concert, with coordination on the global, national
and regional scale. “It’s times like this where
the structure of the Federal Reserve System is very important,” Green
says. “Decisions are not just being made by people in Washington or New
York. Through our relationships in the communities across the country, we
can understand what is going on in local markets and bring that to the table
when policy decisions are made.”
On the local level, part of what the
Richmond Fed does is act as a good corporate citizen. Members of the bank
are involved in a number of local civic and leadership organizations. The
bank offers a new benefit that provides two days of leave a year to
employees who want to volunteer in the community.
“We’re involved in trying to help
Richmond and the state of Virginia be vibrant,” says Green, who serves on
the boards of directors of the Boys and Girls Clubs of Metro Richmond and
the United Way of Richmond and Petersburg, as well as chairing the United
Way’s Women’s Leadership Council.
Virginia has its distinct historic
claims to the Federal Reserve System. Carter Glass of Lynchburg — later a
Treasury secretary — sponsored the legislation that created the reserve
system in the U.S. House of Representatives, which Staunton-born President
Woodrow Wilson signed in December 1913.
Much has changed in the system since the
Richmond Fed opened on Nov. 6, 1914. For instance, the bank is easing out of
processing checks — for decades a core duty — as consumers increasingly
use credit cards and other forms of electronic payments.
“We’re moving from an organization
that provides those kinds of services to one that is much more about
gathering and sharing of information and insight,” Weinberg says. “That
requires us to continually strengthen our ties to the communities we