William Poole President and CEO   president’smessage

Readers of our 2003 annual report will recall our essay detailing a major change in philosophy for the Federal Reserve Bank of St. Louis. We presented a new mission for our branch offices, one focusing more on intellectual leadership and less on operational functions. Last year’s report proved that the Federal Reserve System and the St. Louis Fed in particular face the same challenges as many private businesses: run a tighter ship, do more with less and leverage your strengths.

This final point—leveraging strengths in order to bring the greatest possible value to customers—sums up why in this year’s report we write about the symbiotic relationship between the Federal Reserve and the U.S. Treasury. Furthermore, we discuss how a key leadership role granted to the Eighth District helps to ensure that the Treasury can continue to count on the Fed as a dependable, dedicated partner.

Our Bank was privileged in 2001 to be chosen as the System’s Treasury relationship office, representing all Reserve banks. The assignment means that St. Louis is the central point of contact for all Federal Reserve products, services and objectives relating to the Treasury. The Fed’s commitment to the agency breaks down to approximately 1,600 employees nationwide providing more than $400 million worth of services annually.

For many years prior to 2001, the St. Louis Fed was a proud provider of Treasury-related offerings. Thus, upon accepting leadership responsibility, we were supremely confident that the knowledge and experience ingrained within our staff—led by First Vice President LeGrande Rives, Senior Vice President Dave Sapenaro and Vice President Judie Courtney—would be something our Treasury colleagues would find valuable.

Teaming up with the Treasury is nothing new for the Federal Reserve. The role of fiscal agent and depository of the Treasury was officially assigned to the Fed in 1915, shortly after the central bank was created. What is new is the type of work the Fed has performed for the Treasury over the past five to 10 years.

In the early years, Reserve banks accepted taxes and customs duties, held deposits for the Treasury, cleared Treasury checks and redeemed Treasury coupons. World Wars I and II witnessed the Fed’s involvement in issuing, servicing and redeeming bonds to defray the costs of the conflicts, with U.S. savings bonds continuing as a popular Treasury offering to this day. The relationship between the two organizations continued to evolve over the years, with emerging technologies like the automated clearinghouse network for electronic payments resulting in product and service advancements on a larger scale.

Since the end of the 1990s, however, the pace of change has quickened. The Treasury has expanded efforts to produce more convenient, reliable and secure services that are good for both the federal government and the general public. Whether we’re talking about new forms of Internet payment, stored-value cards or government direct payment programs, it’s safe to say that the past 10 years have brought more technological change and challenges than the previous 80 years combined.

For the St. Louis Fed, the daily task of managing and coordinating the Reserve banks’ many contributions to the Treasury is a momentous challenge unto itself. I invite you to read our 2004 annual report and learn how, in so many ways and with the St. Louis Fed’s guidance, the Federal Reserve is committed to helping the Treasury achieve its strategic objectives.

William Poole

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