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From the 1930s: Clerks in the Securities Department examine some of the hundreds of thousands of bonds stored in the Minneapolis Federal Reserve's vault. At that time, banks could use the Fed's free safekeeping services to store their municipal and corporate bonds, payable to the bearer. The safekeeping service also included clipping semi-annual interest coupons attached to the bonds and submitting them for payment. This was a labor-intensive process for the Fed; in Minneapolis alone, about eight employees dedicated their time to clipping bond coupons. In the last 15 years, the Fed's role in safekeeping services has decreased significantly. The Depository Institutions Deregulation and Monetary Control Act of 1980 mandated that the Federal Reserve recover its costs and charge banks for services, including safekeeping. This change prompted many banks to withdraw their bonds from the Fed's vaults. Technology has also played a key role in the decreased need for the service. Today, most municipal and corporate bonds are registered, with the owner identified on the certificate, and interest payments are made automatically, eliminating the need to clip coupons. —Patti Lorenzen |
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Annual Report
