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President’s Letter
January 2023

Taking office as the Federal Reserve Bank of Chicago’s tenth President, I share this review of 2022 at a time of
economic challenge. I look forward to supporting your ongoing commitment to the Federal Reserve Bank of
Chicago in 2023 and beyond. We will continue to serve the public by promoting a healthy, stable, and inclusive
economy and financial system in which all have an opportunity to thrive.
The Economy

First, I would like to thank and honor my predecessor as Chicago Fed President, Charles Evans, for his service
to and leadership of the Federal Reserve Bank of Chicago. He had an illustrious career at the Chicago Fed over
three decades and will be missed.
Before retiring, President Evans described 2022 as defined by change and challenge. The year began with
global supply chains still in disarray; after a rapid recovery from the most extreme pandemic-related disruptions,
overall growth stalled in the first half of the year. Yet with consumers resuming travel and other activities
delayed by the pandemic, the economy continued to add jobs at a breakneck pace, bringing the unemployment
rate back to the very low levels seen prior to the pandemic. Worryingly, though, inflation, which had initially
been concentrated in items that were especially sensitive to the pandemic, continued to rise and become more
widespread. Russia’s invasion of Ukraine and ongoing Covid-related shutdowns abroad delivered further jolts
to the economy, adding to already strong inflationary pressures and an uncertain economic climate.
With inflation running far above the Federal Open Market Committee’s 2 percent target, the FOMC began in
March 2022 to remove the extraordinary degree of monetary policy accommodation that had been in place
since the early days of the pandemic. By the end of the year, the FOMC had increased the federal funds rate
range by 4-1/4 percentage points to a moderately restrictive setting. Additionally, the Fed began in June to
reduce the size of its balance sheet, tightening monetary policy further.
The Fed remains focused on reducing inflation. As is always the case, the exact path for monetary policy will
depend on economic developments. And policy always aims to support the Federal Reserve’s dual mandate
objectives of maximum inclusive employment and price stability—goals that, in the longer run, go hand in
hand. I look forward to helping the Federal Reserve achieve our dual mandate goals and create an economic
environment in which all can prosper.

2022 Annual Report


At the Federal Reserve Bank of Chicago (FRBC)

Across the Bank in 2022, work evolved to support monetary policymaking at the highest levels as the demands
of the U.S. economy changed. Bank employees prioritized pathbreaking economic research, careful management
of payments systems, a workplace ethic fostering diversity and inclusion, diligent bank supervision, forwardpushing technology, a return to pre-pandemic outreach and engagement, and continued excellence in cash
operations and employee support.
I invite you to learn more about the work of the Bank over the past year in the following sections.
Austan D. Goolsbee
President and Chief Executive Officer

Chicago Board of Directors:
Identifying a New Seventh District Leader

In 2022 the Board of Directors formed a Presidential Search Committee of eligible Class B and C directors.1
As part of the search process, the committee sought input from a wide range of external and internal audiences. This included a series of focus groups across the Seventh Federal Reserve District, with attendees
representing small business, economic development, agriculture, and labor organizations. The committee
hosted a public town hall and conducted a digital outreach campaign that sought nominations from the
public and feedback on the needs of the District and what the committee should look for in the Chicago
Fed’s next president.

The committee identified a broad, highly qualified, and diverse candidate pool from a variety of backgrounds,
professions, and regions of the country. Committee members conducted multiple rounds of interviews with
candidates before identifying a final candidate. The selection was then approved by the Board of Governors
of the Federal Reserve System. On December 1, 2022, economist Austan D. Goolsbee was announced as the
tenth president and CEO of the Federal Reserve Bank of Chicago.

2022 Annual Report


Supervision and Regulation:
Ensuring Banking and Credit Soundness for All

The Supervision and Regulation Department (S&R) focused on ensuring the safety and soundness of more
than 750 supervised banks and financial institutions.

In 2022, S&R successfully returned to on-site examinations while advancing supervisory programs tailored to
the size, complexity, and risk of firms. As part of a consortium with other Reserve Banks, it joined in launching
a National Cyber Resource Program for the Federal Reserve System. S&R leads the efforts to bolster the security
of the banking system through the control, data, reporting, and scheduling of cyber supervision. S&R continued
to provide System leadership to other critical supervisory programs, such as the Wholesale Credit Risk Center
and Shared National Credit Reserve Bank Partner program, in addition to the National Stress Testing program.
S&R collaborated with colleagues throughout the Bank to contribute to the interagency Community Reinvestment Act proposal, which would overhaul how banks do business with underserved people and communities.
S&R, together with other Bank staff, gathered input from Seventh District communities, considered feedback
from lenders and mission-driven financial institutions, and conducted research analysis that informed the
policy’s design.

Federal Reserve Financial Services:
Driving Payments Innovation

In 2022, the Federal Reserve payments product and support office structure, including the Chicago Fed’s
Customer Relations and Support Office, transitioned to an enterprise model for Federal Reserve Financial
Services (FRFS). Chicago Fed staff made significant contributions to the FRFS enterprise, beginning with
selections to serve in key leadership roles across the enterprise and executive leadership roles in technology,
product, and relationship management and in diversity, equity, and inclusion.

Concurrently, Chicago staff, through FRFS, continued to lead efforts in support of the FedNow Service, the
instant payments service targeted for release in mid-2023. In October 2022, FRFS worked with the Chicago
Fed to host its 22nd annual Chicago Payments Symposium, with a focus on building customer-centered and
adaptive networks.
2022 Annual Report


Economic Research: Advancing Economics and Supporting
Monetary Policymaking

The Economic Research Department provided valuable expertise across the Federal Reserve System throughout
2022. The department had 32 papers accepted for publication, including at some of the top refereed academic
journals in economics and finance. In addition, a record 55 original research papers were added to the Chicago
Fed working paper series, covering topics including the growth in university-level online learning and redlining
in the 1930s. In addition to recurring policy memos, Economic Research staff prepared 33 special memos and
briefings to support the president in his monetary policymaking role. These briefings covered the projection
of growth and inflation and longer-term monetary policy strategies, among other topics. Additional briefings
for the Chicago Fed and Detroit Branch boards of directors, as well as the Board of Governors of the Federal
Reserve System, were prepared by Economic Research staff. These included a briefing on the financial stability
risks in insurance and another one on the stresses in commodity markets due to Russia’s invasion of Ukraine.
Economic Research celebrated a successful launch of the Economic Mobility Project, which is amplifying the
voices of Chicago Fed researchers in policy conversations. The department also resumed hosting large-scale
in-person events, including the annual Midwest Agriculture Conference and Economic Outlook Symposium.

Community Development and Policy Studies:
Strengthening Economic Mobility and Resilience

Community Development and Policy Studies (CDPS) worked to promote economic mobility and resilience
among low- and moderate-income and historically underserved people and places across the Seventh District.

Working with Public Affairs and the Financial Markets Group, CDPS was a leader of the Chicago Fed’s Lead
Service Line Replacement work, an initiative to help rapidly accelerate the replacement of municipal lead pipes
that deliver water into homes. By publishing articles and convening diverse stakeholders, staff enhanced awareness of the need for private capital markets in financing lead service line replacement and the importance of
equitable financing solutions.
2022 Annual Report


Staff in CDPS supported federal rulemaking efforts on the Community Reinvestment Act and led the development of the National Interagency Community Reinvestment Conference—a U.S.-wide conference that explored
the role of community development in shaping a more resilient economy. Staff also worked to increase the
diversity of participants in the Beige Book survey, which informs monetary policymaking, and to raise awareness
of the barriers to economic inclusion through research and outreach. This research included analyzing evidence
of racial discrimination in the $1.4 trillion auto loan market and exploring why millions of dollars in tax refunds
are going unclaimed by low-income families.

Diversity, Equity, and Inclusion: Taking Action and
Making Progress

In 2022, the Bank continued to advance its three-year DEI strategy, leading to meaningful gains in officer
representation and in the Bank-wide percentage of employees of color.

The Bank worked to build a diverse pipeline of talent by supporting early career workers via the Year Up
Chicago program and the Corporate Work Study Program. The culture of inclusion was strengthened through
active participation in Employee Support Network Groups, the launch of an extensive DEI learning curriculum,
and the creation of new leadership development opportunities.
The Bank aspires to buy supplies from a diverse vendor group. Spending continued to increase for the fourth
consecutive year: 21 percent of the budget was spent with minority- and women-owned businesses. Moreover,
the ninth annual Business Smart Week was hosted by the Bank to support diverse and small businesses and
was attended by over 220 participants.

Administrative Services: Reimagining Workflow and Collaboration
Administrative Services continued to adjust offerings to enable the business of the Seventh District. In response
to the pandemic, Facilities Management introduced a new dedicated coworking space that is self-service and incorporates innovative technology and collaborative areas. Hospitality Management reinvented their service model
to support hybrid meetings in the Conference Center as well as large events hosted on site. Law Enforcement
continued to make progress on a multiyear investment in the Law Enforcement Training Suite.
2022 Annual Report


People and Culture: Rapidly Shifting Benefits

Workforce benefits needs have rapidly shifted amid a prolonged global pandemic, heightened commitment to
DEI, and a competitive job market. Throughout 2022, the Chicago Benefits Team developed a new vision to
attract and retain talent, offering enhanced benefits such as an improved personal time off policy and tuition
reimbursement plan. Further changes designed to provide more financial support, greater flexibility, and
additional enhanced benefits to Chicago Fed employees are planned.

Information Technology & the Innovation Office:
Supporting the Bank’s Digital Transformation

Information Technology and the Innovation Office continued to partner to support the Bank’s Digital
Transformation strategic initiative. As one part of digital transformation, the Bank-wide focus on the transition
to the cloud will enable a wealth of new features and functionality, allowing Bank departments to operate
effectively and efficiently in a hybrid environment and accelerate their adoption of automation to improve
business processes.

2022 Annual Report


The Human Rights Campaign Corporate Quality Index recognized the
Bank as one of the nation’s Best Places to Work for LGBTQ+ Equality
in 2022.

2022 Chicago Board of Directors
Lisa Cook
Class B

Helene D.
Class C

David C.
Class B

Linda Hubbard
Class B

Linda Jojo
Class B

Christopher J.
Murphy III
Class A

Class A

Juan Salgado
Class C Director,
Deputy Chair

Class C Director,

Susan Whitson
Class A

2022 Annual Report


2022 Detroit Board of Directors
Sandy K.

Anika Goss

Ronald E. Hall

James M.

Kevin Nowlan

Dr. Roy

Linda Hubbard

Directors who joined the Board during 2022:

Lisa D. Cook, Professor of Economics and International Relations, Michigan State University, East Lansing, Michigan was
elected as a Class B (nonbanker) director to serve a three-year term. She was elected by Group 1 banks, which have a capital
and surplus level of $460 million and over. [Effective January 1, 2022] Cook resigned her position upon her appointment to
the Board of Governors later in the year.
Jennifer F. Scanlon, President and Chief Executive Officer, UL Solutions, Northbrook, Illinois, was appointed by the Board
of Governors of the Federal Reserve System to serve two remaining years of an unexpired three-year term.
[Effective January 1, 2022]

Juan Salgado, Chancellor, City Colleges of Chicago, Chicago, Illinois, was appointed by the Board of Governors of the Federal
Reserve System to serve as a Class C director. [Effective June 9, 2022]
Linda P. Hubbard, President and Chief Operating Officer, Carhartt, Inc., Dearborn, Michigan, was elected as a Class B
(nonbanker) director to serve the remaining years of an unexpired three-year term, from October 25, 2022, through 2024.
She was elected by Group 1 banks, which have a capital and surplus level of $460 million and over.

Dr. M. Roy Wilson, President, Wayne State University, Detroit, Michigan, was appointed by the Board of Governors of the
Federal Reserve System to serve two remaining years of an unexpired three-year term. [Effective January 10, 2022]

Anika Goss, Chief Executive Officer, Detroit Future City, Detroit, Michigan, was appointed by the board of directors of the
Federal Reserve Bank of Chicago to serve a three-year term. [Effective January 1, 2022]

Kevin Nowlan, Chief Financial Officer, BorgWarner, Auburn Hills, Michigan, was appointed by the board of directors of
the Federal Reserve Bank of Chicago to serve two remaining years of an unexpired three-year term. [Effective January 1, 2022]

2022 Annual Report


Financial Statements
Auditor Independence

The Federal Reserve Board engaged KPMG to audit the 2022 combined and individual financial statements
of the Reserve Banks and the financial statements of the three limited liability companies (LLCs) that are
associated with the Board of Governors’ actions to address the coronavirus pandemic, of which two LLCs
are consolidated in the statements of the Federal Reserve Bank of New York and one LLC is consolidated in
the statements of the Federal Reserve Bank of Boston.2

In 2022, KPMG also conducted audits of internal controls over financial reporting for each of the Reserve
Banks. Fees for KPMG services totaled $9.2 million, of which approximately $1.5 million were for the audits
of the LLCs.3 To ensure auditor independence, the Board of Governors requires that KPMG be independent
in all matters relating to the audits. Specifically, KPMG may not perform services for the Reserve Banks or
affiliated entities that would place it in a position of auditing its own work, making management decisions
on behalf of the Reserve Banks, or in any other way impairing its audit independence. In 2022, the Bank did
not engage KPMG for any non-audit services.
Financial Statements: Federal Reserve Bank of Chicago--As of and for the Years Ended December 31, 2022
and 2021 and Independent Auditors’ Reportrt
The Federal Reserve System’s Board of Governors appoints Class C directors, while Class B directors are nominated and
elected by the member banks in a Reserve Bank district.

In addition, KPMG audited the Office of Employee Benefits of the Federal Reserve System (OEB), the Retirement Plan for
Employees of the Federal Reserve System (System Plan), and the Thrift Plan for Employees of the Federal Reserve System
(Thrift Plan). The System Plan and the Thrift Plan provide retirement benefits to employees of the Board, the Federal Reserve
Banks, the OEB, and the Consumer Financial Protection Bureau.

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

2022 Annual Report