ByJohn F. McDonnell
As you learned on this page last issue, the St. Louis Fed is currently seeking a new president, following Tom Melzer's recent resignation. As chairman of the Bank's board of directors, I am responsible for directing the nationwide search for a candidate to fill this important position. Which begs the question, what is it exactly that a Reserve Bank president does? The answer is twofold.
First, the president has a broad range of responsibilities as chief executive officer since, in practice, Reserve Banks are run much like private corporations. And, like the CEO of a private corporation, a Reserve Bank president is responsible for establishing the organization's direction, achieving its short- and long-term objectives and running an efficient operation. For these responsibilities, the president answers to a board of directors.
Also like other CEOs, the Reserve Bank president represents the institution before its core constituencies: bankers, business leaders, educators, community agencies, employees, the public. This largely involves communicating the Bank's key messages at public or Fed-hosted forums, in columns like this one, in talks with the media, at employee assemblies, in informal gatherings and so on.
The second area of responsibility for a Reserve Bank president is unique to the Fed: Presidents sit on the Federal Open Market Committee (FOMC), the Federal Reserve's chief monetary policymaking body. At FOMC meetings, members debate various prescriptions for monetary policy with the goal of achieving a stable, growing economy. All 12 Reserve Bank presidents participate in FOMC discussions, though only five presidents are voting members at any point in time. (The rest of the Committee consists of the seven-member Federal Reserve Board of Governors.)
To ensure that their participation in FOMC policy debates is well informed, Reserve Bank presidents spend much of their time studying the workings of the economy and becoming knowledgeable about their regions. They are supported in this effort by a team of research economists. Not surprisingly, some Reserve Bank presidents are economists themselves; others typically have banking or financial backgrounds.
Whatever their backgrounds, Reserve Bank presidents often make of their jobs what they will, emphasizing areas in which they have expertise or interest and delegating other responsibilities to their staff.
As our search for a new president narrows, we hope to find a candidate who will extend the successes of the past in both monetary policy and the efficient operation of the St. Louis Fed. Although I think we were particularly lucky to have had Tom Melzer as our president and CEO for more than 12 years, I'm confident that we will find an equally talented individual to perpetuate the fine tradition of this organization.