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The Long Recovery
in the Southeast
Federal Reserve Bank of Atlanta 2010 Annual Report

Credits
The Federal Reserve Bank of Atlanta 2010
Annual Report was created and produced
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The Federal Reserve Bank of Atlanta is one of 12 regional Reserve Banks in the United States that, with the Board of
Governors in Washington, DC, make up the Federal Reserve System—the nation’s central bank. Since its establishment
by an act of Congress in 1913, the Federal Reserve System’s primary role has been to foster a sound financial system and
a healthy economy.
To advance this goal, the Atlanta Fed helps formulate monetary policy, supervises banks and bank and financial holding
companies, and provides payment services to depository institutions and the federal government. Through its six offices
in Atlanta, Birmingham, Jacksonville, Miami, Nashville, and New Orleans, the Federal Reserve Bank of Atlanta serves the
Sixth Federal Reserve District, which comprises Alabama, Florida, and Georgia, and parts of Louisiana, Mississippi, and
Tennessee.

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The Long Recovery
in the Southeast
Federal Reserve Bank of Atlanta 2010 Annual Report

Contents
2
4
18
20
22
24
27
40
44

Letter from the President
The Long Recovery in the Southeast
A Salute to Pat Barron
Corporate Citizenship Integral to Atlanta Fed
The Retail Payments Office
Milestones
Sixth Federal Reserve District Directors
Sixth Federal Reserve District Officers
Auditing

Letter from the President

Dennis P. Lockhart, president and chief executive officer

RELATED LINK
President Lockhart’s speech:
“The Great Rebalancing”
http://www.frbatlanta.org/news/
speeches/110404_lockhart.cfm

Economically speaking, we in the Southeast probably became a bit
spoiled. During all of the nation’s recent recessions but the last—
2001, 1990–91, 1981–82—our region generally outperformed the
rest of the country. However, that did not happen during the Great
Recession. What’s more, the Southeast continued to lag the rest of
the country as the recovery gained momentum in 2010.
This year’s annual report examines the halting progress in the
region’s long recovery from the recession that lasted from December
2007 to June 2009. It explores why the Southeast has fared comparatively worse than the nation as a whole and what the Atlanta Fed did
to better grasp the complex realities of today’s economy. In addressing these issues, the Atlanta Fed’s 2010 Annual Report considers
several crucial and timely economic topics, including:
•
•
•
•

The debate surrounding long-term unemployment
The gradually improving but still challenging banking conditions
The role of small business in job creation and economic recovery
The housing industry’s prominent role in our regional and
national economy

A look inside the Bank
In one section, the annual report profiles the Bank’s
corporate citizenship program, which is central to
our mission as a public institution. We also report on
our work in identifying and mitigating new sources
of fraud and risk in the nation’s payments system,
which are the by products of advancing technology
in the payments industry. Finally, we pay tribute to
Atlanta Fed retiring First Vice President and Chief
Operating Officer Pat Barron. Pat devoted 44 years
to the Federal Reserve System. As an advocate for
modernizing America’s payments systems, he led the
critical but delicate task of overhauling the Federal
Reserve’s nationwide check processing operations
in response to the migration toward electronic payment methods.
Accountability is a watchword
Beyond the report’s content, I’d like to also note the
reasons why we as a Federal Reserve Bank publish
an annual report. As a public policy organization,
we strive every day to earn the public’s trust. We are
rightly held accountable for our actions in pursuit
of the Federal Reserve’s three areas of economic
stability, financial stability, and payments system
effectiveness. Accordingly, each year, this document
serves as a record of our performance and contributions to our communities, region, and nation. We
hope it demonstrates the value that the Federal Reserve Bank of Atlanta delivers to residents throughout the Southeast.
Victims of past success?
Much of that value, of course, comes through understanding our region’s economy from the grassroots. By understanding what is happening “on the
ground,” so to speak, we can make our most effective contribution to the nation’s monetary policy.
I turn again briefly to the Southeast’s economy.
Rapid population growth, especially in Florida and
Georgia, helped propel the region through earlier
national downturns. But in the current cycle, in-migration slowed or even reversed. In fact, to a significant
degree, some of the very forces that helped create
widespread prosperity in recent decades bedeviled the
Southeast during the Great Recession. The story was
that too much of a good thing really was too much.

Excess residential construction fed severe housing
market woes. Falling home values undercut household wealth, which in turn hampered consumer
confidence and spending. Large accumulations of
unsold homes and planned but incomplete subdivisions not only eroded the finances of construction
and development firms across the region, but also
led to one of the most difficult periods the Southeast’s banking industry has endured in decades.
Meanwhile, throughout 2010, unemployment in the
region remained higher than in the rest of the nation.
We’re tied to the fortunes
of the country at large
Despite certain regional differences, the Southeast’s
fortunes are in the main bound up with those of the
nation at large. Specifically, the United States faces
serious fiscal and economic imbalances that must be
resolved in order to lay a foundation for long-term
prosperity. It is critical that financial regulatory
reforms are enacted in a manner that genuinely
helps to minimize the likelihood of future crises. A
vital component of any sound regulatory regime is,
of course, a truly independent central bank.
We face uncertainties, to be sure. Yet as the calendar turned to 2011, we at the Atlanta Fed detected
stirrings of renewed business and consumer confidence. Improving attitudes, we know, can help steer
the economy in a positive direction.
On behalf of all my associates at the Atlanta Fed,
thank you for your continued confidence and trust.
Please read on, and let us know what you think.

Dennis P. Lockhart

The Long Recovery in the Southeast

Certainly, 2011 brought
some encouragement,
but the year was one
step in what promises
to be a long recovery.

The Southeast economy in 2010 was much like the nation’s, only
more so.
Simply put, we have a steeper climb ahead. After weathering the
past four national recessions comparatively well, the Southeast may
have paid in the most recent downturn for its past successes. Rapid
population growth and its attendant industries, such as construction and retail, powered the region’s bellwether states of Florida and
Georgia through earlier national slumps. But as the Southeast lived
by the hammer, this time it was hammered by the hammer. Florida
and Georgia suffered severe housing market woes, widespread job
losses, and numerous bank failures. Florida alone accounted for an
outsized 50-plus percent of the region’s employment losses during
the recession. The state was home to about 40 percent of all jobs in
the Southeast as of November 2007, the month before the recession
officially started.
Certainly, 2010 brought some promise, but the year was one step
in what promises to be a long recovery, which began in June 2009
as the national recession officially ended. Small improvements
emerged in the region’s major economic sectors, including banking
and credit markets, tourism, and energy production. Auto manufacturing was a standout (see chart 1). The region’s assembly plants
and the parts makers added 1,000 jobs, bringing the regional total
to 75,000, according to the U.S. Bureau of Labor Statistics, or BLS.
Three more assembly plants will open in the region in 2011 and 2012.
The bigger picture, however, remained clouded. The Southeast’s
progress was hindered by several intertwined forces: tepid employment growth, general economic uncertainty that restrained
consumer and business spending, challenging banking conditions,
and still-sickly housing markets in the region’s largest states and
metropolitan areas.
In this report, we examine the region’s economic fortunes in 2010.
We also explore the Federal Reserve Bank of Atlanta’s efforts to
cultivate a deeper understanding of the complex dynamics underlying this performance and the ways in which monetary policy can
make a difference. More specifically, we address the vexing problem
of persistent unemployment in the Southeast, banking conditions,
and the role of small business in job creation and economic recovery. In this report, “Southeast” refers to the six states of the Sixth
Federal Reserve District in their entirety: Alabama, Florida, Georgia,
Louisiana, Mississippi, and Tennessee.
Jobs tell the story of how long the recovery will be
The labor market perhaps best illuminates just how long the recovery will likely be. Despite modest growth in 2010, employment in the

Auto Chart
Production by Regional Vehicle Companies, 2007–10

Chart
1: Production by Regional Vehicle Companies, 2007–10
Production by Regional Vehicle Companies, 2007–10
1,400

2007

2009

2008

2010

Thousands of vehicles

1,200
1,000
800

600
Employment
Chart 1
Unemployment Rate in the Southeast
400
200
0

Honda

Hyundai

Nissan

Mercedes

Southeast

Note: Data are through Sept. 2010 and are in thousand-vehicle units.
Note: Data
are through
Sept. 2010 and are in thousand-vehicle units.
Source:
Monthly
Autocast.com
Source: Monthly Autocast.com

Labor markets are historically
among the last to benefit
from a rebound.

Chart 1
Chart
2: Unemployment
Rate in the Southeast
Unemployment
Rate in the Southeast
14
12

Percent

10
8
6
4

Alabama
Florida
Georgia
Louisiana

2
0
Jan.
2007

April
2007

July
2007

Oct.
2007

Jan.
2008

April
2008

July
2008

Oct.
2008

Jan.
2009

April
2009

July
2009

Oct.
2009

Jan.
2010

Mississippi
Tennessee
Southeast
U.S.
April
2010

July
2010

Note: Data
Data are
are through
throughSept.
Sept.2010.
2010.TheThegray
gray
indicates
recession.
barbar
indicates
recession.
Source: U.S.
Analytics
Source:
U.S.Bureau
BureauofofLabor
LaborStatistics/Haver
Statistics/Haver
Analytics

Southeast remained well below prerecession levels. The region added
81,300 nonfarm jobs on net last year, according to BLS figures, but
these
added Mississippi
jobs replaced only about 1 in 20 jobs lost during the
Alabama
Florida
Tennessee
recession
and
the early stages of the recovery. From December 2007
Georgia the end
Southeast
through
of 2009, roughly 1.6 million, or 8.1 percent, of the
U.S.
Louisiana
region’s jobs vanished (see chart 2).
Slow job growth is not unusual after a recession. Labor markets
are historically among the last to benefit from a rebound. Yet in
this cycle, southeastern employment has recovered even more
slowly than it did after any of the past four recessions, according to
Atlanta Fed research and BLS data. At the end of 2010, the combined

RELATED LINK
“The Southeast in 2011”
http://www.frbatlanta.org/
documents/pubs/econsouth/
10q4.cfm
RELATED LINKS ON OTHER SITES
Florida Economy at a Glance
http://www.bls.gov/eag/
eag.fl.htm
Georgia Economy at a Glance
http://www.bls.gov/eag/
eag.ga.htm

Homes are where the jobs were
A homebuilding bonanza that peaked in 2005 brought the
Southeast hundreds of thousands of jobs. But when the
housing market faded, so did many of those paychecks.
Since the recession officially began in December 2007, the
Southeast’s jobless rate has exceeded that of the nation.
In the Southeast, housing—historically, about 5 percent of
U.S. GDP—was possibly even more important than it was to the
rest of the nation. Propelled by decades of Sunbelt in-migration,
the region contained some of the country’s fastest growing
housing markets before its dramatic reversal. In 2005, the
peak of the residential construction cycle, southeastern states
authorized 510,020 new private housing units, valued at $75.9
billion, according to U.S. Census Bureau data. But by 2010, the
number of units permitted and the value were both down about
80 percent from peak levels.
Housing bust brought destruction of construction jobs
The homebuilding swoon staggered construction, the employment segment most tightly tethered to home building. This
segment accounted for 20 percent of the 1.4 million nonfarm
jobs lost in the Southeast during the recession, according to
U.S. Bureau of Labor Statistics (BLS) figures.
As 2010 ended, the region’s construction job losses
lingered. Construction employment at year’s end totaled

600

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450
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150

350

100

300
50

Alabama Georgia Mississippi
Florida Louisiana Tennessee

250

0
200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Note: Data are seasonally adjusted, represent an annual rate, and are through Sept. 2010.
Note: Data are seasonally adjusted, represent an annual rate, and are through Sept. 2010.
Source:
Source:National
NationalAssociation
Association ofof Realtors
Realtors

Thousands of homes
Florida

Thousands of homes
Alabama, Georgia, Louisiana, Mississippi, and Tennessee

Southeast
Existing
Home Sales
Southeast Existing
Home Sales

728,200, 46 percent below the 2006 peak and the lowest
level in 17 years, according to BLS data. Considering that by
the end of 2010, the region had regained only about 1 in 20
total jobs lost during 2008 and 2009, regaining lost construction jobs in the near term appears a dim prospect.
Housing market woes worry workers nationwide
Perhaps the housing-related job losses were a harbinger of
economic setbacks to come, as the worst of these job losses
happened before the national recession officially began in
December 2007. Indeed, it appears that economic sectors
closely tied to housing began to lose jobs sooner, and in greater
numbers, than other sectors. During the last 10 months of 2006,
for example, the nation added jobs overall while housing-related
sectors lost about 49,000 jobs, according to Atlanta Fed research.
Employment did not even start falling in many service sectors until
the spring of 2008.
North Georgia is home to one example of the ripple effects of
the housing downturn’s undertow in the Southeast. According to
the Carpet and Rug Institute, an industry trade group, mills based
in and around Dalton, Ga., supply more than 80 percent of the
U.S. carpet market. Between the end of 2006 and the end of
2010, the Dalton metropolitan area shed nearly a quarter
of its 30,200 manufacturing jobs, according to the BLS. Lower
residential carpet sales alone may not completely explain the jobs
losses, but housing is certainly a critical market for floor covering
companies.
Bankers felt the housing bust, too. Given southeastern
community banks’ heavy dependence on residential construction and development lending, the housing slowdown
likely contributed significantly to job losses at financial
institutions. Employment at the region’s commercial banks
declined 19 percent—by roughly 38,000 jobs—between
2005 and 2010, according to data from the Federal Deposit
Insurance Corporation. n

unemployment rate in the region was 10.5 percent, compared to 9.2
percent in the rest of the country excluding the Southeast. What is
more, during 2010, the region’s jobless rate improved by only a third
as much as it did in the rest of the country. Not only was the region’s
jobless rate well above the national average throughout 2010, but
also it was the Southeast’s highest since 1983, according to the
Atlanta Fed.
Florida suffered the worst job losses of any state in the country
during the recession. Employment is coming back gradually in the
state. By the end of 2010, the Sunshine State had regained 5 percent
of the 920,200 jobs it lost between March 2007 and the end of 2009.
As 2010 ended, Georgia was still shedding jobs. The Southeast’s
second-most populous state posted in December its worst nonfarm
employment level since before the recession began.
Unemployment remained stubbornly high despite modest economic
growth. This disconnect prompted extensive discussion and research,
notably into the causes of an alarming increase in long-term unemployment. (See sidebar on the problem of long-term unemployment.) In December, 44.3 percent of unemployed workers nationally
reported that they had been out of work for more than six months,
nearly double the highest level following the 2001 recession, according to the BLS.
Clearly, slimmed-down companies were generally not rehiring in
2010. Atlanta Fed research and business contacts made it clear that
many firms that pared their workforce during the recession were
slow to add to payrolls even as business improved. A surge in productivity probably explains some of that. In several speeches across
the Southeast, Atlanta Fed President Dennis Lockhart pointed out
that output per worker in the U.S. business sector in early 2010
increased at more than double the long-run average. Productivity
gains of that magnitude aren’t likely to last. So eventually, Lockhart
said, businesses will probably need to hire again, but they will likely
do so only gradually.
The housing market also weighs heavily on the labor market,
especially in the Southeast, where residential construction supported at least hundreds of thousands of jobs earlier in the decade.
(See sidebar on housing-related employment.) In 2010, southeastern
housing markets made halting progress. During the first half of the
year, the market benefited from the federal housing tax credit stimulus. Existing home sales continued year-over-year gains, and new
home sales rose temporarily in the spring. The upturn in demand
boosted home prices early in the year.
Good news did not last. The market dropped sharply when the
stimulus expired at the end of April. Furthermore, the number
of foreclosures remained high, and the inventory of distressed
homes—mostly short sales and foreclosures—continued to weigh
down prices across the region.

Florida suffered the
worst job losses of any
state in the country
during the recession.
Employment is coming back gradually in
the state.

The perplexing problem of long-term unemployment
The last three months of 2010 marked the sixth consecutive quarter of modest growth in the nation’s gross domestic
product. Yet at 9.4 percent, the unemployment rate at the end
of the year was more than double the prerecession level. The
Southeast’s jobless rate was even higher, at 10.5 percent.
Worse, more people were out of work longer than in past
recessions. In December 2010, 44.3 percent of unemployed
workers nationally reported being jobless for six months or
longer, nearly double the peak of long-term unemployment
during the 2001 recession, according to the BLS.
As unemployment remained widespread and entrenched,
a public debate unfolded over the causes. Was it simply a
cyclical result of economic growth being too feeble to spur
hiring? Or was something more permanent and structural at
work? To the second point, economists questioned whether the
slow employment recovery reflected a fundamental shift in the
“employment contract” between employees and employers, according to Atlanta Fed research economist Julie Hotchkiss. To
examine those questions, she and other Atlanta Fed researchers reviewed current economic literature, surveyed business
contacts throughout the Southeast, and hosted a conference
of leading labor market economists.
Below is a summary of what Hotchkiss found regarding
several prominent hypotheses that economists and other ob-

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“House lock.” According to this view, because of the
drop in housing equity, unemployed people cannot
afford to sell their homes, perhaps at a loss, and move
elsewhere to take a job.
Research mostly shows this is not a major cause
of persistent unemployment. Declines in the number
of people moving within the United States continue
to follow longer-term trends, and there was no shift in
those trends during or after the housing bubble. Further,
some research has found that homeowners with negative
equity are more, not less, likely to move.
•

Skills mismatch. This hypothesis holds that job seekers
lack the skills that employers want. Therefore, jobless
workers will not find a job until they acquire the skills
that are in demand, which will take time.
It is clear that people working in the construction and
financial services industries, for example, were disproportionately affected by the recession. And, though there
might be pockets of mismatch, most research suggests
that the slow employment recovery is explained by weak
employer demand overall, rather than by employers
generally having trouble finding the right workers.
Shortage of credit to small business. This view holds
that if companies can’t secure credit, then they will lack
the funds to hire to prepare for an upturn in business.
The Atlanta Fed’s quarterly small business survey generally does not support this assertion. Numerous firms
are getting the financing they need or want, according to
the survey. Not surprisingly, those having the most trouble
securing financing are in the most troubled industries,
such as real estate and construction.

300
50

Alabama Georgia Mississippi
Florida Louisiana Tennessee

250

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200
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

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Source:
Source:National
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•

600

Thousands of homes
Florida

Thousands of homes
Alabama, Georgia, Louisiana, Mississippi, and Tennessee

Southeast
Existing
Home Sales
Southeast Existing
Home Sales

servers have floated to explain slow job growth and long-term
unemployment:

•

Extended unemployment benefits. Congress passed
unprecedented emergency unemployment insurance
extensions. The theory here is that continued unemployment checks make some people less likely to
accept a job, especially one paying less than the job
they lost.

Business contacts have told the Atlanta Fed they are restructuring
jobs in a way that will require fewer workers than they had before
the recession, even as they increase production levels.

has changed. There is, by definition, less permanency in
the relationship and therefore less stability.
There is some evidence that these dynamics are
indeed changing over time. Business contacts have told
the Atlanta Fed they are restructuring jobs in a way that
will require fewer workers than they had before the recession, even as they increase production levels. While some
production adjustments may have been made during
the recession, it appeared that most contacts have been
adjusting their use of temp workers over a longer period.
This longer-term adjustment may be resulting in longer
employment adjustments—slower hiring of permanent
workers—as the economy improves. Nevertheless, these
adjustments would not be a significant hindrance to hiring if overall demand in the economy were stronger and
more predictable.

Most economists agree that extended unemployment
insurance does indeed act as a “perverse incentive,”
though they estimate the impact to be small.

Hotchkiss concluded that the main reason unemployment has
not fallen faster is “that we were in a very deep hole and it will
simply take us a while to crawl back out.” Uncertainty, she said,
makes the path out even harder to find. n

•

Uncertainty: regulatory reform, health care reform,
general consumer demand, continued availability of
credit. The idea is that if firms are uncertain about future
revenues or costs, then they are unwilling to hire.
Feedback from Atlanta Fed business contacts mostly
supports this view. Almost without exception, businesspeople polled by the Atlanta Fed have said they are in
fact uncertain about future costs and demand and are
therefore not increasing production or hiring permanent
workers.
•

New employment contract: more temp and contract
workers, newly structured production process. If companies are simply producing more with fewer workers by
working their staff harder, this can only last so long. Eventually, as demand increases, firms will add staff. However,
if the firm has maintained production by working differently, rather than just harder, those changes could mean
a permanent need for fewer workers. For instance, if
businesses are more likely to use temporary workers to
cover busier times, then the whole employment contract

Smaller banks face abundant
challenges. But community
banking has history on its side.

RELATED LINKS
Atlanta Fed Small Business
Focus website
http://114.141.73.122/
research/smallbusiness/
macroblog small business posts
http://macroblog.typepad.com/
macroblog/small-business/
Atlanta Fed small business
conference presentations, papers,
and agenda
http://www.frbatlanta.org/news/
conferences/10smallbusiness_
agenda.cfm
RELATED LINKS ON OTHER SITES
FDIC Statistics on Banking
http://www2.fdic.gov/SDI/SOB/
FDIC Failed Bank List
http://www.fdic.gov/bank/
individual/failed/banklist.html

Southeast banking climate still challenging, bifurcated
Housing affects many economic sectors, notably banking. A robust
housing recovery would invigorate the region’s community banks.
As a group, a rebound would bolster loan portfolios and generate
loan demand. It didn’t happen in 2010. Consequently, the Southeast’s
banking sector continued to lag its national peers. We’ll explore
specifics on that later.
The industry also became more bifurcated by size and by location.
A gap widened between larger banks, whose conditions generally
improved, and smaller banks, which continued to face significant
concerns, noted Brian Bowling, a vice president in the Atlanta Fed’s
banking supervision and regulation department. The more diversified loan portfolios of bigger institutions began to stabilize. Thus, the
banks could set aside less money to cover loan losses, which contributed to better earnings. Large banks have also found it easier to
raise capital, something that remains a challenge for many smaller
institutions. Nonetheless, for the first time since the crisis began to
unfold, the Atlanta Fed supervision and regulation staff during 2010
began spotting signs of stabilization, if not improvement, at some
large and small banks across the Southeast.
The year saw other positives. Nationally, more than 60 percent
of the $389 billion in Troubled Asset Relief Program funds lent to
banks was repaid by the end of 2010. The Fed’s October 2010 Senior
Loan Officer Survey indicated that 86 percent of the responding
banks had stopped tightening standards on business loans.
Obstacles still abound, however. At the end of 2010, the Federal
Deposit Insurance Corporation (FDIC) listed 860 “problem institutions” nationwide. In the Southeast, community banks suffered 10
consecutive quarters of net losses through the end of 2010, mainly
because of heavy lending to residential real estate developers, according to Atlanta Fed banking supervision and regulation officials.
Community banks—institutions with under $10 billion in assets—
account for all but six of the 877 commercial banks headquartered
in the Sixth Federal Reserve District. Absent a housing market
recovery that absorbs much of the inventory of unsold homes, many
of these banks with a heavy real estate focus will continue to face
serious challenges, Bowling said.
To appreciate housing’s effect on community banks, consider
metropolitan Atlanta. At the peak of the boom, during 2004 and
2005, residential builders took out nearly 150,000 permits, according
to the U.S. Census Bureau. In 2010, that number plummeted to about
14,000. At the top of the housing cycle, Georgia institutions were
twice as dependent as the national norm on financing construction
and development, as measured by commercial banks’ share of total
net loans and leases in construction and development, according
to FDIC data. Not coincidentally, the Atlanta area suffered more
bank failures than any other metropolitan area in the country—34

from 2008 through 2010. Few observers, Bowling said, believe the
housing industry in the Southeast will return to its mid-2000s level
soon. As a result, many community banks could be forced to find
new sources of loan demand. Bowling added that it may be difficult
for some banks to shift their focus from real estate development to
other lending categories, such as commercial and industrial or small
business lending. Those are different businesses that may require
different lending and risk management skills.
Not surprisingly, lending for construction and development has
already fallen dramatically. Since its peak in early 2008, outstanding
construction and development loans in the region have declined by
more than half, according to the Atlanta Fed supervision and regulation department.
Housing isn’t the only concern for the region’s banks. The costs
of complying with regulation are rising after passage of the Dodd–
Frank Wall Street Reform and Consumer Protection Act. A consensus began to emerge among bankers during 2010 that, in order to
afford those costs, an institution might need to be a minimum size,
according to Atlanta Fed supervision and regulation experts.
Smaller banks face abundant challenges. But community banking
has history on its side. The demand for local financial institutions—
from small businesses as well as consumers—has endured through
many previous economic downturns and outlived many dire predictions, Bowling noted.
Florida, Georgia banking conditions toughest by far
As the performance of large and small banks in the Southeast
diverged, a geographic split also took place. Georgia and Florida
stood apart from the rest of the region during 2010. Those two states
accounted for 97 of the Southeast’s 103 bank failures from 2007
through 2010. Problem real estate loans—again, tied mainly to housing—explain most of the trouble. To cite a single but representative
case: from 2004 to 2006, a south Florida bank that later failed more
than doubled its commercial real estate loans. The bank made most
of these loans to finance home construction and land acquisition for
subdivisions, according to a June 2010 Federal Reserve Inspector
General report. Meanwhile, the number of building permits issued in
the bank’s four-county market area dropped by 79 percent from 2005
to 2007. That scenario is all too common in Florida and Georgia.
Beyond failures, troubles in the two biggest states colored the
wider performance of southeastern banks. More than 43 percent of
banks lost money in 2010, according to data compiled by the Atlanta
Fed. More than half of the community banks in both Florida and
Georgia were unprofitable. In no other state in the region did more
than 20 percent of community banks lose money.
That is not to say that performance was especially strong in the
other states. In fact, profitability measures region-wide remained

Troubles in Florida and
Georgia, the region’s two
biggest states, colored the
wider performance of southeastern banks.

FDIC-Insured Bank Failures
Bank Failures in the Southeast
inFDIC-Insured
the Southeast
Alabama
Florida
Georgia
Louisiana
Mississippi
Tennessee
Southeast

2007
0
0
1
0
0
0
1

2008
0
2
5
0
0
0
7

2009
3
14
25
0
0
0
42

2010
1
29
21
1
1
0
53

Note: 2010 data are through December 31.
Note: 2010 data are through December 31.
Source: FDIC press releases
Source: FDIC press releases

below prerecession levels. Through the first three quarters, only
Louisiana’s community banks recorded a state-wide median return
on average assets above 1 percent, often considered a benchmark
for healthy earnings, and Louisiana’s median fell below 1 percent in
the fourth quarter. Across the region, the median return on average assets for community banks was 0.15 percent during the fourth
quarter, compared to the national median of 0.66 percent.

Retrenchment was the banking norm in 2010.

Lenders cautiously seeking new business
Retrenchment was the banking norm in 2010. Loan growth is typically the lifeblood of commercial banks. Yet many southeastern
institutions focused instead on “cleaning up” their portfolios, not
expanding them. The October–December period of 2010 marked the
ninth consecutive quarter of declining loan levels for the region’s
community banks, according to bank call report data. Although led
by persistent drops in construction and development loan levels, all
major areas of banks’ lending portfolios declined, according to data
compiled by the Atlanta Fed.
Lending has declined for various reasons. In addition to institutions
shoring up their balance sheets, credit standards have tightened since
the recession. At the same time, loan demand from creditworthy
borrowers has fallen as wary businesses and consumers hesitate to
assume debt.
Small business is a big deal for banks, the economy
Prominent among the cautious were small businesspeople. To help
disentangle the complex contributions of small businesses to economic growth and development, the Atlanta Fed in 2010 sponsored
conferences, stepped up research, and launched an online small
business information hub.
Credit was a major focus. The Atlanta Fed and its partners sought
to advance the conversation about how to encourage safe lending
while ensuring credit availability to creditworthy small businesses.
As part of a nationwide series of meetings convened by the Federal
Reserve, the Atlanta Fed held gatherings in each southeastern state
to examine the credit challenges facing small businesses. Those
meetings produced a consensus that small business sales and balance
sheets had been pinched by the recession, hurting the creditworthiness of many firms and discouraging many from taking on debt.
However, opinions differed concerning the reasons why lenders curtailed credit. Some small businesspeople argued that banks’
lending requirements were making it difficult for even solid firms to
borrow. Many bankers countered that there simply was insufficient
demand from the small companies that could meet tougher lending
requirements necessitated by tighter regulation. They also pointed
to their own troubled balance sheets and the difficult economy. As
Atlanta Fed head of supervision and regulation Michael Johnson

Recommendations to improve small business financing
•

Increase funding to community development financial
institutions and improve the referral network between
banks and community development financial institutions.

•

Provide technical assistance to small businesses before
and after they receive financing, and encourage advisory
service providers to consider the entire financing continuum
from equity to debt.
Assemble more timely and comprehensive data on small
business lending activities.

•

The Federal Reserve convened more than 40 meetings
across the country during 2010, including six organized by
the Atlanta Fed in the Southeast, to examine small business
credit concerns. Lenders, government agencies, small business
assistance providers, and other experts shared their perspectives on the financing challenges facing small businesses and
strategies to address those issues. The Federal Reserve hosted
a national event to culminate the series of meetings. At that
event, high-level decision makers including the Federal Reserve Board of Governors and the Small Business Administration (SBA) received recommendations. Here is a summary:
•

Modify SBA programs to extend indefinitely the higher
loan guarantee limits and fee waivers instituted by the
2009 American Recovery and Reinvestment Act and to
increase loan sizes for popular SBA programs. The Small
Business Jobs Act of September 2010 addressed many
of the recommendations related to the SBA.

•

Improve communication between banks and regulators
and clarify supervisory practices. Possibly expand Community Reinvestment Act consideration to include small
business credit and investment activities.

•

Encourage lenders to offer “second-look” programs for
denied loan applications and improve processes for referring businesses to alternative financing and technical
assistance resources.

The series of forums is not all the Federal Reserve did in 2010
to work toward improving small business access to credit.
Through its Community Affairs offices, the Federal Reserve
System developed strategies to address the issues identified in the regional forums, including additional outreach and
research initiatives. The Atlanta Fed continued to host forums
on small business credit needs and to promote new programs
designed to increase access to financing. In addition, the
Atlanta Fed sought to tighten links among banks, alternative
financing providers, and small business assistance providers.
The Reserve Bank also convened focus groups on business
incubators and alternative financing. n

said in his quarterly Financial Update column, “The story is not
straightforward.”

Small firms that historically
relied on personal credit,
including credit cards and
home equity lines, were
“much more likely to receive
no financing.”

Untangling the complex story of small business credit availability
A few things seemed fairly clear. For one, small business lending
remained near record low levels throughout 2010. According to
the December issue of the Atlanta Fed’s monthly Small Business
Trends report, the volume of small business loans outstanding in the
Southeast fell in each successive quarter of 2010. Late in the year,
the level was less than it was six years earlier. To be sure, credit
contraction was hardly isolated to the Southeast: in 2009, total credit
market borrowing in the United States fell by $634 billion, only the
second such decline since World War II, before it picked up slightly
in 2010, according to Atlanta Fed research.
It appeared that not many small firms actually sought credit. Less
than a third of small businesses in a National Federation of Independent Business survey reported borrowing on a regular basis during
the third quarter, “not surprising given the persistent emphasis on
cost cutting and the curtailment in capital expenditures,” according to Small Business Trends. “Borrowing that does occur tends to
be for the purpose of smoothing cash flow rather than for funding
expansion or hiring.”
Small construction and real estate companies, in particular, had
difficulty securing credit. On average, more of those businesses than
small firms in other industries sought credit, according to an Atlanta
Fed survey conducted in late 2010.
On the flip side, small business sentiment might be improving. The
number of discouraged borrowers—that is, the percentage of small
companies that did not borrow only because they expected denial
or unfavorable terms—declined in the second half of 2010. Furthermore, just 17 percent of small firms applying for credit said they
received none of the financing they requested.
Most of the Atlanta Fed survey information came from established
small companies. But capital to start businesses—notably, personal
wealth—also continued to dwindle during 2010. As commercial
banks traditionally do not offer high-risk seed financing, entrepreneurs commonly turn to friends and family, credit cards, and their
own wallets. Research presented at an Atlanta Fed conference noted
that plummeting home values across the United States have not only
eroded individual wealth, but also limited access to home equity
lines of credit, sapping a key source of startup funding. American
homeowners’ equity in real estate at the end of the third quarter of
2010 totaled $6.4 trillion, 52 percent lower than at the end of 2005,
according to the Federal Reserve’s Flow of Funds Accounts of the
United States. Meanwhile, American households’ combined net
worth was $54.9 trillion at September 30, 2010, down more than
$10 trillion from the peak in 2007.

With traditional seed capital sources blocked, when entrepreneurs
turned to commercial banks, the results were not always good.
Small firms that historically relied on personal credit, including credit
cards and home equity lines, were “much more likely (than other
companies) to receive no financing” during the third quarter of 2010,
according to the Atlanta Fed’s Small Business Survey.
All things considered, it appeared both sides of the small business credit debate were right, Bowling pointed out. Credit supply
decreased, as many banks instituted more restrictive lending criteria
and shrank their loan portfolios. Small companies also demanded
less credit. Fewer qualified to borrow under stricter lending policies,
and creditworthy firms were generally not keen to assume debt in an
uncertain economy, or they chose not to borrow because they didn’t
like the terms banks offered.
These are important concerns. Bank financing is vital to small
companies because they typically cannot access the corporate credit
markets open to large firms via vehicles such as corporate bonds
and commercial paper.
When small businesses borrow, what do they do with the money?
Atlanta Fed survey respondents on average said credit availability
most affected whether they diversify operations by, for example, introducing new products or expanding into new geographic markets.
In a late 2010 survey, 108 firms—about a third of firms responding—
indicated that credit substantially influences whether they hire or
rehire employees.
Money isn’t the only issue facing small businesses
Important as it is, financing is but one issue facing small businesses.
Unlike larger corporations, most small firms do not enjoy a financial
cushion to withstand a temporary downturn in business, nor the
option to turn to global markets if growth opportunities at home are
limited. Moreover, startup companies, an important class of small
businesses, are less likely to form when financing is scarce. That
matters not just to individual small businesspeople, but also to the
U.S. economy at large.
That’s because start-up businesses are job creators. Over the
past 20 years, start-up companies less than two years old generated
about one of four gross new jobs, Fed Chairman Ben Bernanke said
in a July 2010 speech. Though these companies are small employers
overall—they employ less than 10 percent of the nation’s workforce—
based on their size, they are responsible for a disproportionate share
of new jobs.
“If small and, importantly, young firms are a significant jobs engine
and they are not growing, then it means a slower recovery,” said
Atlanta Fed senior economist Paula Tkac.
Not surprisingly, start-up activity appeared to stall during the
recession. In developed countries generally, the formation of

Seed capital is often not
available to young firms.

RELATED LINK
Small Business Trends newsletter
http://www.frbatlanta.org/
research/smallbusiness/sbresearch/
RELATED LINK ON OTHER SITES
Bernanke speech: “Restoring
the Flow of Credit to Small
Businesses”
http://www.federalreserve.gov/
newsevents/speech/
bernanke20100712a.htm

As businesses become more
assured that growth will
continue and their revenues
will grow, they will increase
investment and hiring.

incorporated companies showed zero growth in 2008 and declined
10 percent in 2009, according to research presented at an Atlanta
Fed conference. Other research from the conference indicated a
significant rise in the number of “entrepreneurs of necessity” at the
same time. These entrepreneurs of necessity are people who start
working for themselves in an informal, unincorporated capacity and
generally do not hire employees. Metropolitan areas with high unemployment saw more of these entrepreneurs than did other areas,
according to a research paper presented at the conference.
How do we square those perhaps contradictory findings? It is
not entirely clear what they ultimately mean for the recovery of
the regional and national economies, Atlanta Fed research economist John Robertson observed in the Atlanta Fed’s macroblog. For
example, researchers do not know how quickly or how often new
one-person businesses start hiring other people, nor how fast those
enterprises tend to grow. It is an area that warrants additional study,
Robertson noted.
Another step in a long recovery
In small business, banking, housing, and the entire economy, 2010
was a transitional milestone in the long recovery. While conditions
remained difficult, there was progress. Importantly, consumer and
business confidence appeared to be improving as we entered
2011, according to business contacts and other soundings taken by
Atlanta Fed researchers.
Psychology matters. Until late in 2010, Atlanta Fed economists
detected scant confidence among the region’s businesspeople and
consumers, according to Michael Chriszt, who coordinates the
Atlanta Fed research department’s Regional Economic Information
Network, or REIN. The Atlanta Fed identified this uncertainty as a
serious impediment to a durable and sustainable recovery. Improving attitudes about the future, therefore, could be a significant positive influence on the direction of the economy.
“I believe,” Lockhart said in a January 2011 speech, “that as businesses become more assured that growth will continue and their
revenues will grow, they will increase investment and hiring.” n

Feature Pages
A Salute to Pat Barron

It’s a long way from the service department at Buckhead
Chrysler Plymouth to the executive suite at the Federal
Reserve Bank of Atlanta.

Corporate Citizenship Integral
to Atlanta Fed

Corporate citizenship is essential to the Federal Reserve
Bank of Atlanta.

The Retail Payments Office

Amid the long recovery, the Federal Reserve’s Atlanta-based
Retail Payments Office, or RPO, continued to refine a key
component of the nation’s financial infrastructure.

A Salute to Pat Barron

Culminating 44 years with the Federal Reserve, Pat Barron retired in early 2011
as first vice president and chief operating officer of the Atlanta Fed. Pat began
his working life as an auto mechanic in his hometown of Atlanta. Known for
integrity and a tenacious work ethic, he joined the Atlanta Fed in 1967 in the
computer operations area and worked his way steadily upward.

It’s a long way from the service department at Buckhead Chrysler
Plymouth to the executive suite at the Federal Reserve Bank
of Atlanta.
But Pat Barron made the trip in grand style. Barron, who retired
in early 2011 as first vice president and chief operating officer of the
Atlanta Fed, began his working life as an auto mechanic in his hometown of Atlanta. The first in his family to graduate from college,
Barron was never a stranger to hard work. Growing up, he helped
his mother pluck chickens, ran a paper route, and mowed lawns.
His modest childhood, he said, “always pushed me to want to
do better.”
So he did. Barron launched his Atlanta Fed career in 1967 in the
bank’s computer operations area, when computers were curiosities
the size of small cars. It was a time when people paid for things with
pieces of paper—cash and checks. That has changed, and Barron
has been instrumental in effecting that change and many others.
That is no surprise. Long-time Atlanta Fed colleague Rich Oliver
calls Barron “the hardest working person I know.” That work ethic
fueled a steady rise at the Federal Reserve: from data processing,
to the check collections section, to a vital role in establishing the
Atlanta Fed’s Miami Branch, to branch manager. After five years as
first vice president and chief operating officer of the San Francisco
Fed, Barron for the past 15 years held the same position at the
Atlanta Fed, while serving as retail payments product director for
the entire Federal Reserve System.
It was in the latter role that Barron perhaps made his most lasting
contribution to the Federal Reserve and the nation. As an advocate
for modernizing the nation’s payments systems, Barron led the critical but delicate task of overhauling the Federal Reserve’s nationwide
check processing operations in response to the migration toward
electronic payment methods. “In this effort, he made tough but
appropriate decisions for the Federal Reserve and the nation’s economic welfare while treating employees with empathy and respect,”
reads a resolution in Barron’s honor signed by Federal Reserve Chairman Ben Bernanke and the Atlanta Fed board of directors.
Barron likewise was at the forefront in restoring check processing
and other retail payments across the country after the September 11,
2001, terrorist attacks. Four years later, he led an Atlanta Fed team
that overcame major obstacles to keep cash, checks, and electronic
payments flowing in the wake of Hurricane Katrina. Just as important, he ensured that the 179 members of the New Orleans Branch
staff were safe and secure.
“No matter the challenge,” Barron’s resolution states, “he will long
be remembered for his steady calm in the eye of any storm.” n

“No matter the challenge” Barron’s resolution states, “he will
long be remembered
for his steady calm in
the eye of any storm.”

Corporate Citizenship Integral to Atlanta Fed

This engagement is mutually beneficial, helping both the Atlanta Fed and
the public we serve. Maintaining the public trust necessary to function as a
central bank requires engagement on several fronts.

Corporate citizenship is essential to the Federal Reserve Bank of Atlanta. It embodies the Bank’s commitment to participate fully in the life of our communities,
both within and outside the normal scope of our work.
The Atlanta Fed’s mission is critical to the economic
health of our region and communities, so it is only
logical that the bank be engaged in volunteer and civic
activities that strengthen their economic vitality.
This engagement is mutually beneficial, helping
both the Atlanta Fed and the public we serve. Maintaining the public trust necessary to function as a
central bank requires engagement on several fronts,
including three we will spotlight:
•
•

•

Operating in an environmentally responsible
manner
Serving in civic and nonprofit organizations that
strengthen our communities through education,
sustainability, and health and well-being
Respecting our employees and valuing the diversity of ideas, skills, talents, and cultures they
bring to the bank

Environmental stewardship and sustainability
In 2010, the Atlanta Fed adopted its first five-year
environmental plan. The document addresses nine
areas that cover the Sixth Federal Reserve District’s
environmental impacts: recycling and waste reduction, water, energy, transportation, green purchasing,
buildings, education and communications, business
methods, and public engagement.
The plan includes specific goals for each area.
For instance, over the next five years, the Bank
aims to reduce water use by 10 percent, electricity
consumption by 15 percent, and paper use by 20
percent. The Bank is making progress toward these
and other green objectives through a comprehensive
recycling program, water conservation measures
including low-flow faucets, automated lighting systems, and fuel-efficient fleet vehicles.
The Atlanta Fed has also incorporated sustainable design and construction standards. Last year,
the bank achieved the coveted Leadership in Energy
and Environmental Design, or LEED, certification for
the renovation of the employee café in the Atlanta
office. Moreover, the Bank’s early steps to green its
operations received recognition from the state of

Georgia in 2010 with the Partnership for a Sustainable Georgia’s Silver Award.
Community and civic engagement
Atlanta Fed employees have a firm commitment
to community involvement. Throughout the Sixth
Federal Reserve District, employees volunteer time
and expertise through a strategic program focused
on three areas critical to the economic vitality and
general health of our communities: education,
health and human services, and community development. Last year, employees volunteered more than
5,500 hours of their time in 99 different projects. In
addition, many Atlanta Fed staff members serve in
leadership roles in numerous nonprofit organizations throughout the Southeast.
One of the bank’s longest-standing projects is the
annual Financial Education Day, which takes place
every fall. Since its inception in 1997, this program
has reached more than 2,000 eighth graders, who learn
basic personal finance from Atlanta Fed volunteers.
More than 50 years ago, staff members created
an employee-owned charitable fund that regularly
donates to nonprofit agencies in the Southeast. In
2010 alone, the fund raised and donated more than
$430,000. (The Federal Reserve itself is prohibited
from directly contributing to charitable organizations.)
Diversity and inclusion
Like environmental stewardship and community
involvement, diversity and inclusion, in action and
thought, are essential to the Atlanta Fed. Since 2004,
the bank has woven this commitment into the daily
fabric of our organization by
•
•
•

Codifying a business case for diversity
Adopting a Diversity and Inclusion Strategic Plan
Instituting mandatory diversity and inclusion
training for all employees

Building on this foundation, in 2010, the Atlanta
Fed established an Office of Minority and Women
Inclusion, as called for by the Dodd-Frank Wall
Street Reform and Consumer Protection Act. n

The Retail Payments Office

In 2010 alone, the RPO’s costs plummeted 36 percent from the previous year,
to $270.5 million. As the RPO’s costs have fallen, it has in turn lowered fees
to its customers, mainly financial institutions.

Amid the long recovery, the Federal Reserve’s Atlantabased Retail Payments Office, or RPO, continued
to refine a key component of the nation’s financial
infrastructure: national retail payments services, the
system through which consumers and businesses
pay for goods and services.
The RPO handles billions of dollars in transactions
every day. Those transactions pass through Fed networks, such as the automated clearinghouse (ACH),
which processes online bill payments, direct paycheck
deposits, mortgage payments, and other consumer and
business transactions. The RPO also processes a large
number of check payments deposited at the Fed by
financial institutions across the United States.
While the RPO does not process all retail payments—it does not handle credit and debit cards—its
suite of payments services is extensive enough to
make the Fed an important and influential player
in the industry. The RPO undertook a multi-year
initiative to enhance the speed and efficiency of
check clearing by converting paper checks into
electronic images. In addition to helping to make the
nation’s overall payments system more efficient, that
effort has allowed the RPO itself to operate with
significantly fewer personnel and to largely stop
transporting paper checks across the country. Since
November 2003, the RPO has reduced the number
of Federal Reserve check processing sites nationwide from 45 to one in response to the rapid slide in
paper check writing and the accompanying rise in
electronic payments.
In 2010 alone, the RPO’s costs plummeted 36 percent from the previous year, to $270.5 million. As the
RPO’s costs have fallen, it has in turn lowered fees to
its customers, mainly financial institutions. The RPO
structured these prices to encourage customers to use
electronic methods of processing payments.
Importantly, the RPO also serves as a knowledge
center. Every three years, the RPO conducts the only
comprehensive, ongoing study of the fluid payments
industry. The study is one of the primary tools the
RPO uses to track the industry. Released in December 2010, summary findings of the RPO’s most recent
study showed that Americans increasingly prefer
electronic payments methods, including debit cards,
credit cards, prepaid cards, online payments, and
ACH transactions. Electronic payments accounted

for more than three-quarters of noncash payments in
2009, the biggest portion ever. Meanwhile, the share
paid by check kept falling, from a third in 2006 to less
than a quarter in 2009. In particular, during the three
years covered by the study, debit cards surpassed
checks to become the single most popular noncash
retail payments option, representing about 35 percent
of payments made with a method other than cash.
New technology also means more fraud
As technological advances create new methods
of payment, they likewise open new channels for
fraud and crime. To help identify and mitigate these
emerging risks, in 2008, the Retail Payments Risk
Forum grew out of the RPO. The Forum addresses
challenges faced by the payments industry, bank
regulators, and law enforcement in managing retail
payments risks and enhances collaboration among
these parties to detect and mitigate fraud.
To that end, the Forum convenes conferences,
conducts research, serves on industry workgroups,
and disseminates information through channels
including a blog, podcasts, and white papers. Forum
research has helped to illuminate truths about the
risks of America’s traditional plastic. To wit, the
magnetic stripe debit and credit cards that predominate in America are far more vulnerable to fraud
than are the chip-implanted cards rapidly being
adopted in many other countries.
The Forum’s role as convener has proven particularly valuable in a fragmented industry. For example,
the Forum fostered collaboration between financial
institutions and law enforcement agencies that
produced a set of tools the financial industry will
use to better report fraud and thus help in criminal
investigations.
Significant in 2010 was the Forum’s partnership
with the payments research group at the Boston Fed
to establish the Mobile Industry Work Group. The
group is the first initiative that convenes all participants in the burgeoning mobile payments industry—
from banks to telecommunications firms to card
networks to handset makers—to examine common
concerns and to advance the adoption of mobile
payments in the United States. n

Milestones
First quarter
•
The Real Estate Research blog debuted, which showcases
analysis of topical research and issues in housing and real
estate economics.
•
The Local Economic Analysis and Research Network conference
examined the economic outlook in six southeastern states.
•
New banking supervision and regulation department head Michael
Johnson joined the Atlanta Fed. The department restructured
its supervisory framework to incorporate a systemic, multidisciplinary perspective.
•
The supervision and regulation department hosted the annual
Industry Outlook Conference on challenges facing bankers and
regulators.
•
The Atlanta Fed launched its five-year plan for environmental
sustainability.
•
The Atlanta Fed website added the Inflation Project, a compendium of links to indicators, reports, and research on inflation.
•
The Atlanta Fed processed its last paper check, ending an era that
lasted 96 years.
•
The Bank published its first report on corporate citizenship
activities.
•
The Atlanta Fed expanded communications with elected officials
about the implications of regulatory reform.
Second quarter
•
FDIC Chairman Sheila Bair spoke at a financial literacy forum
cosponsored by Operation Hope and the Atlanta Fed about the
renewed urgency of financial education after the financial crisis
and recession.
•
The Atlanta Fed launched its social media presence with a Facebook page and Twitter account. The new outlets give readers easy
access to Fed research, information, and policy views.
•
The Atlanta Fed announced that its Nashville cash operations will
be discontinued in favor of a cash depot in mid-2011.
•
The Atlanta Fed’s Financial Markets Conference gathered policymakers and financial practitioners to consider the postcrisis financial landscape from policy and practical perspectives. (Podcasts:
Research director Dave Altig and economist Paula Tkac discuss
the conference.)
•
The Bank hosted a Public Affairs Forum on the economics of
income inequality.
•
President Dennis Lockhart, cochair of the United Way of Metropolitan Atlanta’s Early Education Commission, completed work on
institutionalizing improvements in early childhood education.

•

Through the Regional Economic Information Network, or REIN,
the research department closely tracked the economic effects of
the Gulf oil spill.

Third quarter
•
The U.S. Census Bureau Research Data Center selected the Atlanta Fed as regional host. Bank partners include Georgia State,
Emory, Georgia Tech, the University of Georgia, the University
of Alabama at Birmingham, and the Centers for Disease Control
and Prevention.
•
New Orleans staff contributed to a Brookings Institution study
on the city’s recovery five years after Hurricane Katrina.
•
The Center for Real Estate Analytics sponsored a conference
on the crisis in real estate and its impact on government finances.
•
The Bank hosted hearings on potential changes in the Home
Mortgage Disclosure Act, which requires mortgage lenders to
provide regulators and the public detailed annual reports of
their lending.
Fourth quarter
•
The Atlanta Fed held a historic conference to mark the 100th
anniversary of the 1910 Jekyll Island meeting that resulted in
draft legislation (the Aldrich Plan) for the creation of the U.S.
central bank. Participating in the conference were current Fed
Chairman Ben Bernanke and former Fed chairmen Paul Volcker
and Alan Greenspan, among others.
• The Americas Center and the American Society of Hispanic Economists organized a workshop on Hispanic economic issues.
• The Atlanta Fed held a conference that explored the dynamics of
small business, entrepreneurship, and economic recovery.
• The new Center for Human Capital Studies hosted a conference on
employment and the business cycle.
•
More than 10,000 teachers attended 207 Atlanta Fed workshops
and presentations throughout the year.
• The Retail Payments Office released summary findings of its
2006–9 study showing that debit card payments are more popular
than checks and credit cards.
• Leaders were appointed for the new Office of Minority and Women
Inclusion.
• The Atlanta-based Retail Payments Office launched cross-border
service that allows U.S. financial institutions to send payments to
more than 20 European countries.
• The Atlanta Fed’s cash operations processed 5.43 billion notes.
• The Fed’s Atlanta-based Retail Payments Office processed 10.5 billion electronic commercial automated clearinghouse transactions
and 7.8 billion checks. Of the checks, 99.4 percent were electronic;
the remaining 0.6 percent were paper.

Cities from top to bottom: Atlanta,
Birmingham, Jacksonville, Miami,
Nashville, New Orleans

Sixth Federal Reserve
District Directors
Federal Reserve Banks each have a board of nine directors.
Directors provide economic information, have broad oversight
responsibility for their bank’s operations, and, with the Board
of Governors approval, appoint the bank’s president and first
vice president.
Six directors—three class A, representing the banking
industry, and three class B—are elected by banks that are
members of the Federal Reserve System. Three class C directors (including the chair and deputy chair) are appointed by
the Board of Governors. Class B and C directors represent
agriculture, commerce, industry, labor, and consumers in the
district; they cannot be officers, directors, or employees of a
bank; class C directors cannot be bank stockholders.
Fed branch office boards have five or seven directors; the
majority are appointed by head-office directors and the rest by
the Board of Governors.

Atlanta Board of Directors

CAROL B. TOMÉ
Chair
Chief Financial Officer and
Executive Vice President
The Home Depot
Atlanta, Georgia
THOMAS I. BARKIN
Deputy Chair
Director
McKinsey & Company
Atlanta, Georgia
RICHARD H. ANDERSON
Chief Executive Officer
Delta Air Lines Inc.
Atlanta, Georgia
RENÉE LEWIS GLOVER
President and Chief Executive Officer
Atlanta Housing Authority
Atlanta, Georgia
T. ANTHONY HUMPHRIES
President and Chief Executive Officer
NobleBank & Trust N.A.
Anniston, Alabama

CLARENCE OTIS JR.
Chairman and Chief Executive Officer
Darden Restaurants Inc.
Orlando, Florida
RUDY E. SCHUPP
President and Chief Executive Officer
1st United Bank
West Palm Beach, Florida
LEE M. THOMAS
Chairman and Chief Executive Officer
Rayonier
Jacksonville, Florida
JAMES M. WELLS III
Chairman and Chief Executive Officer
SunTrust Banks Inc.
Atlanta, Georgia

FEDERAL ADVISORY COUNCIL MEMBER
RICHARD G. HICKSON
Chairman and Chief Executive Officer
Trustmark Corporation
Jackson, Mississippi

Left to right: Wells, Tomé, Thomas, Schupp, Humphries, Glover, Barkin, Otis; not pictured: Anderson

Birmingham Branch Directors

MARYAM B. HEAD
Chair
Chairman
Ram Tool and Supply Company Inc.
Birmingham, Alabama
JACK HAWKINS JR. (Resigned)
Chancellor
Troy University
Troy, Alabama
JOHN A. LANGLOH
President and Chief Executive Officer
United Way of Central Alabama
Birmingham, Alabama
MACKE B. MAULDIN
President
Bank Independent
Sheffield, Alabama

C. RICHARD MOORE JR.
Chairman, President, and Chief Executive Officer
Peoples Southern Bank
Clanton, Alabama
F. MICHAEL REILLY
Chairman, President, and Chief Executive Officer
Randall-Reilly Publishing Company LLC
Tuscaloosa, Alabama
THOMAS R. STANTON
Chairman and Chief Executive Officer
ADTRAN Inc.
Huntsville, Alabama

Left to right: Moore, Head, Reilly, Mauldin; not pictured: Hawkins, Langloh, Stanton

Jacksonville Branch Directors

H. BRITT LANDRUM JR.
Chair
President and Chief Executive Officer
Landrum Human Resource Companies Inc.
Pensacola, Florida
HUGH F. DAILEY
President and Chief Executive Officer
Community Bank & Trust of Florida
Ocala, Florida
JACK B. HEALAN JR.
President
Amelia Island Company
Amelia Island, Florida
OSCAR J. HORTON
President
Sun State International Trucks LLC
Tampa, Florida

LEERIE T. JENKINS JR.
Chairman and Chief Executive Officer
Reynolds, Smith and Hills Inc.
Jacksonville, Florida
D. KEVIN JONES
President and Chief Executive Officer
MIDFLORIDA Credit Union
Lakeland, Florida
LYNDA L. WEATHERMAN
President and Chief Executive Officer
Economic Development Commission
of Florida’s Space Coast
Rockledge, Florida

Left to right: Jenkins, Horton, Jones, Dailey, Healan, Landrum; not pictured: Weatherman

Miami Branch Directors

GAY REBEL THOMPSON
Chair
President and Chief Executive Officer
Cement Industries Inc.
Fort Myers, Florida
LEONARD L. ABESS
Chief Executive Officer
City National Bank of Florida
Miami, Florida
WALTER BANKS
President
Lago Mar Resort and Club
Fort Lauderdale, Florida
W. CODY ESTES SR.
President and Owner
Estes Citrus Inc.
Vero Beach, Florida

DENNIS S. HUDSON III
Chairman and Chief Executive Officer
Seacoast Banking Corporation of Florida
Stuart, Florida
EDUARDO J. PADRÓN
President
Miami Dade College
Miami, Florida
THOMAS H. SHEA
Chief Executive Officer, Florida/Caribbean Region
Right Management
Fort Lauderdale, Florida

Left to right, standing: Hudson, Thompson, Estes, Banks, Abess; left to right, seated: Shea, Padrón

Nashville Branch Directors

DEBRA K. LONDON
Chair
Retired President and
Chief Executive Officer
Mercy Health Partners
Knoxville, Tennessee
JENNIFER S. BANNER
Chief Executive Officer
Schaad Companies LLC
Knoxville, Tennessee
RICH FORD
President
Hylant Group of Nashville
Nashville, Tennessee
CORDIA W. HARRINGTON
President and Chief Executive Officer
Tennessee Bun Company
Nashville, Tennessee

DAN W. HOGAN
President and Chief Executive Officer
Fifth Third Bank, Tennessee
Nashville, Tennessee
WILLIAM J. KRUEGER
Senior Vice President - The Americas
Manufacturing, Purchasing, Supply
Chain Management and Total
Customer Satisfaction
Nissan North America Inc.
Franklin, Tennessee
PAUL G. WILLSON
Chairman and Chief Executive Officer
Citizens National Bank
Athens, Tennessee

Left to right, standing: London, Krueger, Hogan, Ford; left to right, seated: Willson, Harrington, Banner

New Orleans Branch Directors

CHRISTEL C. SLAUGHTER
Chair
Partner
SSA Consultants LLC
Baton Rouge, Louisiana
ROBERT S. BOH
President and Chief Executive Officer
Boh Bros. Construction Company LLC
New Orleans, Louisiana
GERARD R. HOST
President and Chief Operating Officer
Trustmark National Bank
Jackson, Mississippi
R. KING MILLING
Member, Board of Directors
Whitney Holding Corporation and
Whitney National Bank
New Orleans, Louisiana

MATTHEW G. STULLER SR.
Chairman and Chief Executive Officer
Stuller Inc.
Lafayette, Louisiana
JOSÉ S. SUQUET
Chairman, President, and
Chief Executive Officer
Pan-American Life Insurance Group
New Orleans, Louisiana
ANTHONY J. TOPAZI
Executive Vice President and
Chief Operating Officer
Southern Company
Birmingham, Alabama

Left to right: Stuller, Topazi, Host, Slaughter, Suquet, Milling; not pictured: Boh

Sixth Federal Reserve District Officers
Management Committee
Dennis P. Lockhart
President and Chief Executive Officer
Patrick K. Barron
First Vice President and
Chief Operating Officer

Marie C. Gooding
Executive Vice President and
Retail Payments Product Manager
Frederick R. Herr
Senior Vice President
System Retail Payments Office

David E. Altig
Senior Vice President and
Director of Research
Research Division

Michael Johnson
Senior Vice President
Supervision and Regulation

André Anderson
Senior Vice President
Corporate Engagement

Richard R. Oliver
Executive Vice President
System Retail Payments Office

Christopher G. Brown
Senior Vice President and
Corporate Secretary
Corporate Engagement

Lois C. Berthaume
Adviser
Senior Vice President and
General Auditor
Auditing Department

Leah Davenport
Senior Vice President
District Operations and
Administrative Services
Anne DeBeer
Senior Vice President
Corporate Services/
Financial Services Division

Richard A. Jones
Adviser
Senior Vice President and
General Counsel
Legal Department

Left to right, standing: Johnson, Altig, Herr, Jones, Lockhart, Gooding, Anderson, Brown, Davenport; left to right,
seated: Berthaume, Barron, Oliver; not pictured: DeBeer

Other Officers

Scott H. Dake
Senior Vice President

Suzanna J. Costello
Vice President

Mary M. Kepler
Vice President

James M. McKee
Senior Vice President

Thomas J. Cunningham
Vice President and
Associate Director of Research

Jacquelyn H. Lee
Vice President

Robert J. Musso
Senior Vice President and
Regional Executive
New Orleans
Donald E. Nelson
Senior Vice President
William J. Tignanelli
Senior Vice President

Juan del Busto
Vice President and
Regional Executive
Miami
William J. Devine
Vice President
Brian D. Egan
Vice President

Robert A. Love
Vice President
Mary M. Mandel
Vice President
Bobbie H. McCrackin
Vice President and
Public Affairs Officer

Cheryl L. Venable
Senior Vice President and
Chief Information Officer

J. Stephen Foley (Retired)
Vice President

Christopher L. Oakley
Vice President and
Regional Executive
Jacksonville

Nicole Bennett
Vice President

Richard M. Fraher
Vice President and Counsel

Cynthia L. Rasche
Vice President

W. Brian Bowling
Vice President

Amy S. Goodman
Vice President
New Orleans

John C. Robertson
Vice President

John S. Branigin
Vice President
Michael F. Bryan
Vice President
Joan H. Buchanan
Vice President and
Chief Diversity Officer
Annella D. Campbell-Drake
Vice President

Cynthia C. Goodwin
Vice President
Todd H. Greene
Vice President
Lee C. Jones
Vice President and
Regional Executive
Nashville

Melinda J. Rushing
Vice President
Juan C. Sanchez
Vice President
Robert M. Schenck
Vice President
David E. Tatum
Vice President

Julius G. Weyman
Vice President and
Regional Executive
Birmingham
Stephen W. Wise
Vice President
Christopher N. Alexander
Assistant Vice President

Amelia L. Johnson
Assistant Vice President
Bradley M. Joiner
Assistant Vice President
Evette H. Jones
Assistant Vice President
John A. Kolb Jr.
Assistant Vice President

Adrienne L. Slack
Assistant Vice President and
Branch Operations Officer
New Orleans
David W. Smith (Retired)
Assistant Vice President
Maria Smith
Assistant Vice President

S. Dwight Blackwood
Assistant Vice President and
Assistant General Counsel

Stephen A. Levy
Assistant Vice President

Timothy R. Smith
Assistant Vice President and
Community Relations Officer

Michael Chriszt
Assistant Vice President

Duncan B. Lyons
Assistant Vice President

Clifford S. Stanford
Assistant Vice President

Karen W. Clayton
Assistant Vice President

Margaret Darlene Martin
Assistant Vice President

Allen D. Stanley
Assistant Vice President

Chapelle D. Davis
Assistant Vice President

Daniel A. Maslaney
Assistant Vice President

Jeff Thomas
Assistant Vice President

Angela H. Dirr
Assistant Vice President and
Assistant General Counsel

Lantanya N. Mauriello
Assistant Vice President

Paula A. Tkac
Assistant Vice President

Huston McKinney
Assistant Vice President

Joel E. Warren
Assistant Vice President
Jacksonville

Gregory S. Fuller
Assistant Vice President
Richard B. Gilbert
Assistant Vice President
Paul W. Graham
Assistant Vice President and
Branch Operations Officer
Miami
Robert D. Hawkins
Assistant Vice President
Carolyn Ann Healy
Assistant Vice President
Kathryn G. Hinton
Assistant Vice President
Susan Hoy
Assistant Vice President and
Assistant General Counsel

Marie E. McNally (Retired)
Assistant Vice President
Elizabeth McQuerry
Assistant Vice President
Annita T. Moore
Assistant Vice President and
Branch Operations Officer
Nashville
D. Pierce Nelson
Assistant Vice President and
Public Information Officer

Charles L. Weems
Assistant Vice President
Kenneth Wilcox
Assistant Vice President
Christina M. Wilson
Assistant Vice President and
Branch Operations Officer
Jacksonville
Torion L. Wright
Assistant Vice President

Doris Quiros
Assistant Vice President and
Assistant General Auditor
Jeffrey F. Schiele
Assistant Vice President

Auditing
In 2010, the Board of Governors engaged Deloitte & Touche LLP
(D&T) for the audits of the individual and combined financial
statements of the Reserve Banks and the consolidated financial
statements of the limited liability companies (LLCs) that are associated with Federal Reserve actions to address the financial crisis
and are consolidated in the financial statements of the Federal
Reserve Bank of New York. Fees for D&T’s services are estimated
to be $8.0 million, of which approximately $1.6 million were for the
audits of the LLCs. To ensure auditor independence, the Board of
Governors requires that D&T be independent in all matters relating
to the audit. Specifically, D&T may not perform services for the Reserve Banks or others that would place it in a position of auditing
its own work, making management decisions on behalf of Reserve
Banks, or in any other way impairing its audit independence. In
2010, the Bank did not engage D&T for any non-audit services.

RELATED LINK
Federal Reserve Bank of Atlanta
2010 Financial Statements
http://www.federalreserve.gov/
monetarypolicy/files/
BSTAtlantafinstmt2010.pdf

Each LLC will reimburse the Board of Governors for the fees
related to the audit of its financial statements from the entity’s
available net assets.

Web Communications Director
Carole Starkey

Nashville Branch
301 Rosa L. Parks Avenue
Nashville, Tennessee 37203-4407

Graphic Designers
Peter Hamilton
Darryl Kennedy
Odie Swanegan

New Orleans Branch
525 St. Charles Avenue
New Orleans, Louisiana 70130-3480

Writer
Charles Davidson
Editor
Nancy Condon
Web Team
Howard Fore
Shawn Gorrell
Leslie Williams
Photographer
Flip Chalfant
Printing
Bennett Graphics

For additional copies contact
Public Affairs Department
Federal Reserve Bank of Atlanta
1000 Peachtree Street N.E.
Atlanta, Georgia 30309-4470
404.498.8020
frbatlanta.org

frbatlanta.org

The Long Recovery
in the Southeast
Federal Reserve Bank of Atlanta 2010 Annual Report

Full text of Annual Report of the Federal Reserve Bank of Atlanta : 2010 Annual Report : The Long Recovery in the Southeast : Annual Report

FRASER