Moskow, Michael H. and Federal Reserve Bank of Chicago "[Speech Before the] Financial Institution Executives Association, Chicago, Illinois (Outline)." January 8, 1998, https://fraser.stlouisfed.org/title/5967/item/581338, accessed on April 27, 2025.

Title: [Speech Before the] Financial Institution Executives Association, Chicago, Illinois (Outline)

Date: January 8, 1998
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image-container-0 FINANCIAL INSTITUTION EXECUTIVES ASSOCIATION Chicago, Illinois January 8, 1998 ..................................................................... I. Intro A. Pleasure to be here. I appreciate your taking the time to be here tonight. B. Some people are scared off by the prospect of hearing an economist. You may have heard the jokes. 1. If all the nation’s economists were laid end to end, they still wouldn’t reach a conclusion. 2. And the follow-up — that laying all the economists end-to-end would be a good idea. C. Given that sentiment, I won’t be giving you a heavy-duty talk on economic theory tonight. Instead, I’d like to take a more informal approach. 1. First, I’d like to briefly discuss the Fed and its structure. 2. Then, I’ll provide some thoughts on the economic outlook for 1998. 3. And, finally, I’d like to talk about what regulators can do to help prevent a major bank crisis, such as the one that occurred in Asia. 4. First, some brief background on the Fed. II. Fed Background A. The Fed’s mission as the nation’s central bank, of course, is to foster a safe and sound financial system and a healthy, growing economy: 258 Michael Moskow Speeches 1998
image-container-1 1. We formulate monetary policy. 2. We supervise and regulate banks. 3. And we provide financial services to the U.S. government and banks and thrifts. B. The Fed consists of 12 regional Reserve Banks, which are overseen by the Board of Governors in Washington, D.C. 1. This regional setup means we’re decentralized. 2. That’s unusual for a central bank—and a bit of an oxymoron—a decentralized central bank. 3. In fact, the design is a work of American genius, balancing the public and the private, the cen- tral and the decentralized. C. The Chicago Fed serves a five-state region consisting of most of Illinois, Indiana, Michigan, and Wisconsin, and all of Iowa. 1. Our head office is in Chicago. 2. We have a branch in Detroit and offices in Des Moines, Indianapolis, Milwaukee, and Peoria. D. The Federal Open Market Committee, or FOMC, is the best example of the value of the Fed’s region- al structure. It carries out the Fed’s most important responsibility—formulating monetary policy. 1. The FOMC is made up of the seven members of the Board of Governors and five of the twelve Reserve Bank Presidents, who vote on a rotating basis. 2. However, all of the presidents attend the meetings and take part in the discussions regardless of their voting status. 3. In fact, I’ll be traveling to Washington to attend our next meeting on February 3th and 4th. E. The Fed’s regional structure means that the System receives a constant flow of economic intelligence from all over the country. Our perspective isn’t limited to the Washington Beltway. F The Fed’s independence is another hallmark of its structure. 1. To help the Fed focus on the long-term, Congress provided 14-year terms for the Board of Governors. 2. Likewise, the System doesn’t rely on Congressional appropriations to meet expenses. 3. Our budget is reviewed by Congress, however, so we’re still accountable. 4. And the Fed System turns over more than 95 percent of its earnings to the U.S. Treasury— roughly $20 billion each year. 259 Michael Moskow Speeches 1998
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Date: January 8, 1998
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