James M. Lyon - First Vice President
Published May 1, 2010 | May 2010 issue
For the Federal Reserve Bank of Minneapolis (Bank) and the entire Federal Reserve System (System), 2009 was a year like few others. As 2009 dawned, we were mired in the deepest recession since the Great Depression and struggling with severe disruptions in financial markets. Given our mission to foster the stability, integrity, and efficiency of the nation’s monetary, financial, and payments systems to promote optimal economic performance, circumstances called for extraordinary measures and the System responded with a number of new initiatives. The System introduced a variety of special liquidity facilities to address disruptions in normal market functioning. The System undertook a program of large-scale asset purchases to further its monetary policy objectives after having lowered short-term interest rates as far as possible. The System stress tested the balance sheets of large financial firms to assess the adequacy of their capitalization. While some of these initiatives worked better than others, the overall impact has clearly been positive.
Throughout 2009, the outlook gradually improved. Financial markets began to function more normally, although strains remain. The economic outlook has improved, although unemployment remains extremely high and foreclosures continue at record rates. Financial firms began to pay back government support, but the outlook is for bank failures to continue at an elevated level. Our attention has now turned to the manner in which the System will wind down the special liquidity facilities, reduce the size of its balance sheet, and allow financial firms to repay government support.
In 2009, the Bank also experienced major change. Gary Stern retired as the second-longest-serving president in the history of the System, and we welcomed his successor, Narayana Kocherlakota.
During these times of unprecedented challenges, the Bank remains focused on effectively executing its strategic plan, which is directed at ensuring that all System objectives are met while also maximizing the Bank’s operational efficiency and quality of service delivery. In addition, the Bank continues to seek opportunities to make important System contributions that align with our operational expertise and managerial skills. For 2009, the Bank’s many achievements demonstrate our effectiveness in executing our strategic plan and building on our strengths.
Overall, Bank performance was strong in 2009. Bank expenses were below budgeted levels, and the Bank met nearly all efficiency and quality measures.
The Bank’s success in meeting the challenges of this past year is a result of the strong commitment by our employees to excellence and the Bank’s core values. Looking to the future, we will strive to sustain this commitment, successfully meet the challenges that lie ahead, and thereby continue to support the System’s mission to foster stability, integrity, and efficiency in the nation’s monetary, financial, and payments systems to promote optimal economic performance.
James M. Lyon
First Vice President