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Annual Report Home | Introduction | Chairman's Message
Monetary Policy | Bank Supervision | Financial Services | Conclusion
Financial Statements | Boards of Directors, Economic Advisory Council, and Officers

The last 20 years have been a period of remarkable change for the Federal Reserve System. To some, this may be a revelation. Although most of us are familiar with the reengineering success stories of American business, the tale of how the Federal Reserve has retooled in the face of tremendous market change is subject to little fanfare. That is because, to a great extent, changes at the Fed have been transparent to the public.

Most of what the Fed does -- regulate banks, conduct monetary policy and oversee the payments system -- affects the economy profoundly. Sweeping, unpredictable changes in the Fed's operations could lead to uncertainty in financial markets and produce undesirable effects throughout our economic system. So, while the private sector captures headlines with pronouncements of rapid restructuring and dramatic changes in purpose or tactics, the Fed quietly makes deliberate but incremental moves to adjust to -- or stay ahead of -- the evolving marketplace.

These incremental moves are the subject of this year's annual report. On the following pages, you will see that the Fed acts, within the confines of its structure, in a manner similar to the private sector. It is continually analyzing its own operations and methods, and making adjustments when necessary to keep on top of its game: ensuring a steadily growing economy. In this regard, the Fed must be effective at both anticipating and reacting to changes in the marketplace, while maintaining public confidence in the workings of the economy. It is not an easy task.

Before we begin, however, I'd first like to thank several of my retiring colleagues on the boards of this Bank and its Branches for their years of distinguished service. It has been my privilege to serve this organization with Sandra B. Sanderson from the St. Louis board, Robert D. Nabholtz Jr. and Lee Frazier from Little Rock, John A. Williams and Thomas E. Spragens Jr. from Louisville, and Lewis F. Mallory Jr. from Memphis.

I especially want to thank Tom Melzer for his 12 years as president and chief executive officer of the St. Louis Fed. He ably served this Bank, its region and the nation's economy through his unparalleled leadership, integrity and professionalism. Tom's disarming manner and calm, reasoned approach won him respect throughout the Federal Reserve System and from all who had the opportunity to work with him.

At the same time, we are extremely fortunate that William Poole has recently joined the Bank to replace Tom. Getting his start on the staff of the Federal Reserve Board in 1964, Bill brings his distinguished career as an academic scholar and economist full circle in his new role as president. I am confident Bill will provide strong continuity and innovative evolution to the monetarist tradition that is the hallmark of the St. Louis Fed.

John F. McDonnell Chairman of the Board

WILLIAM POOLE took office as president and chief executive officer of the St. Louis Fed on March 23, 1998. Prior to joining the Fed, Poole was the Herbert H. Goldberger Professor of Economics at Brown University. He was a member of the Council of Economic Advisers during the first Reagan Administration, an adjunct scholar at the CATO Institute since 1985 and a member of the Shadow Open Market Committee over that same period. He was also a member and later a senior advisor for the Brookings Panel on Economic Activity from 1970 to 1990 and held several positions at various Federal Reserve offices. He holds M.B.A. and Ph.D. degrees from the University of Chicago.