Thoughts from the New Chairman on the Fed and the Community
Published February 1, 1991 | February 1991 issue
Normally, this column is reserved for Gary Stem, the president of the Federal Reserve Bank of Minneapolis. In it he typically discusses economic issues of the day, but since I have assumed the chairmanship of the bank's board of directors, Gary has graciously yielded the space.
Over 75 years ago, the Federal Reserve was created by an act of Congress. At the same time it gave the newly formed Federal Reserve a private charter, so that it would have a unique character. Each of the 12 banks within the system was instructed to set up a board of directors comprised of private citizens from within the geographic boundaries of the respective districts. The intent was to create a decentralized system, quite unlike the typical governmental agency.
Now, many years later, I lead the current Minneapolis board and plan to continue the well-established traditions of this illustrious group.
Understanding our task as board members is not difficult because it is quite like that of most boards of directors for major private sector enterprises. We approve officer appointments, appraise management performance, set annual budgets and so on. No surprises, except that we are called upon to scan the business and economic horizon and periodically report our findings. This is an important part of the Federal Reserve's information network, used by the decision-makers to set the nation's monetary policy.
You would expect that each of the 12 Federal Reserve banks across the United States would be without institutional personality: essentially the same. Having already served several years as a board member, I know that's simply not true. Granted, all banks have a set of common responsibilities, but each goes about its own work in quite separate ways. Over the years these differences have come about because of differences in leadership emphasis given by succeeding boards, bank presidents and key officials. The great benefit of our decentralized system is that we can pursue creative solutions appropriate for our region, and not mechanically exist as organizational clones of each other. Just like people, no two banks are exactly alike, and that's a good thing.
And this brings me finally to the point of the column. I feel strongly that Federal Reserve bank employees should be encouraged and supported to become more involved as volunteers in the community. Already, a good number of people from the bank have found their way independently to worthy organizations, volunteering to tutor for the less gifted, cook and serve for the homeless, read for the blind, answer phones for crisis lines, and officiate in the Special Olympics.
We know about the generous people on our staff, who would give even more time and help to recruit others, if properly supported with training, formal recognition and a good system to help identify genuine unmet community needs.
Corporations call such organized efforts "corporate volunteerism" and have found that productivity increases by some measure as a result. The reasons vary for the productivity gains, some citing the development of a greater sense of pride in their company that energizes and motivates, while others observe creative cross-pollination of ideas between employees standing shoulder to shoulder in (say) a Paint-a-thon, who otherwise might have no reason to even speak to each other during the work day. Perhaps, the skills that one develops leading a volunteer work group transfer back to the workplace and make that person better at their job as a supervisor, manager or officeror a better candidate for the next higher position?
I understand that corporate volunteer programs have the greatest chance of succeeding if true support comes from the top. Well, this chairman of the board supports the idea and seriously encourages the bank to help improve the quality of life for the disabled or less fortunate of our community through volunteerism. Minnesotans talk a great deal about our quality of life; this could be an opportunity to make it even better.
In three years, my term as chairman will come to an end. I expect that between now and then the bank will have operated as efficiently as ever, contributing to monetary policy, supervising and regulating financial institutions, and providing a wide range of financial services. Of this I will be proud. I hope that pride will be matched by an equal feeling about our then fully evolved bank volunteer program. It will be the board's legacy and a continuation and deepening of the Federal Reserve Bank of Minneapolis' special character.
Stern Named to Blue-Ribbon Panel on Bank Reform
Minneapolis Fed President Gary Stern was recently named to a blue-ribbon panel of financial industry experts to review proposals for bank reform.
The 10-member Committee for Responsible Financial Reform, headed by former Federal Reserve Board Vice Chairman Frederick H. Schulz, will address such issues as the Glass-Steagall Act, interstate banking and deposit insurance reform.
In the next issue of The Region, Stern will return to the "Top of the Ninth" to comment on the committee's efforts.