Regional President Speech

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igitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis INTERNS 7/15/87 PAGE 2 II. THE FEDERAL RESERVE SYSTEM IS GOING THROUGH A PARTICULARLY INTERESTING PERIOD A. ALL OF OUR ACTIVITIES GOING THROUGH A PERIOD OF SIGNIFICANT CHANGE 1. AND ON TOP OF THAT, THE BOARD OF GOVERNORS COMPLETELY CHANGED 2. I'LL COMMENT MORE IN A MOMENT - VOLCKER/GREENSPAN B. AND THE ENVIRONMENT IN WHICH WE OPERATE IS ALSO GOING THROUGH A TREMENDOUS CHANGE 1. TREMENDOUS TRANSITION ~[]1M'1-~ 2 . GREAT DE AL AT ST I A t KE ; FR -61! AN ECON OPH C AND d..J / ~ ~ ;,J r2C2--t-U, l.J½ ,..v\lch:.,-,Jv'L\ . STRUCTURAL PERSPE 3. A BIT OF A PLUG - THAT THE FEDERAL RESERVE SYSTEM IS AT THE ABSOLUTE CENTER OF ALL OF THESE 2-Lr~ ""-~ {l~\~- - - - - ~ _o (>"-f'~ ~ ACTIVITIES AND CHANGES ~"'IV$ irf2. -~v-M, lc-N~ A. ADDS GREAT EXCITEMENT AND INTEREST TO OUR JOBS Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis INTERNS 7/15/87 PAGE 3 II I. SUPER VI S ION AND REGULA TI ON - ~ tJtv, ~ ~ t,,,.,.\_,,~( A. THE DEREGULATION PROCESS MOVES FORWARD - ALBEIT SLOWLY AND LARGELY DR I VEN BY MARKET FORCES RATHER THAN LEGISLATION 1. GEOGRAPHIC A. THE CHANGES HAVE BEEN WELL UNDERWAY B. REGIONAL COMPACTS - SOUTHEAST/NORTHEAST 2. OUR DISTRICT - THE SHAPE OF BANKING IN OUR AREA BEGINNING TO EMERGE B. SERVICES - EROSION OF BARRIERS 1. COMMERCIAL BANKING/INVESTMENT BANKING 2. TRADITIONAL COMMERCIAL LENDING ACTIVITIES WANING - U.S. TRUST COMPANY 3. INTERNATIONAL LENDING CURTAILED A. VERY LARGE PROVISIONS IN THE SECOND QUARTER SURELY WILL DAMPEN APPETITES '$~<-- 4. NONBANK COMPETITION "'- Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis INTERNS 7/15/87 PAGE 4 A. SEARS ET AL - ~ C. INTERESTING LEGISLATION MOVING FORWARD - THE CURRENT BANKING BILL 1. THE SENATE-HOUSE JOINT CONFERENCE COMMITTEE DRAFTING THE LEGISLATION, THE VEHICLE FOR THE BILL - FSLIC RECAPITALIZATION -~' ~ / 2. BUT THERE ARE SOME DEREGULATION. REREGULATION ~ i f IMPLICATIONS HERE -- 3'5 A. IF THE BILL IS PASSED BY THE SENATE AND CONGRESS, SIGNIFICANT CHANCE THAT IT WILL BE VETOED B. SOMETHING TO WATCH OVER THE NEXT FEW MONTHS IV. ECONOMIC RESEARCH A. CONDITIONS IN THE DISTRICT - BROAD NATIONAL OUTLOOK - INDEED, INTERNATIONAL RELATING TO OUR FOMC RESPONSIBILITIES - STRUCTURAL QUESTIONS AS THEY RELATE TO THE BANKING INDUSTRY Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis INTERNS 7/15/87 PAGE 5 1. A GREAT DEAL GOING ON IN EACH OF THESE AREAS B. IMPORTANTLY, THE OVERALL ECONOMIC OUTLOOK CONTINUES TO BE FAVORABLE 1. THE RECOVERY STARTED AT THE END OF 1982 - SECOND LONGEST/GOOD CHANCE THAT THIS WILL BECOME THE LONGEST RECOVERY/EXPANSION SINCE WORLD WAR II 2. WON'T SPEND TIME IN A DETAILED FORECAST BUT CERTAINLY THE ECONOMIC EXPERIENCE FOR THE NATION OVER THE LAST 4-1/2 ALMOST 5 YEARS HAS BEEN VERY POWERFUL A. AND THE DISTRICT WHICH HAS BEEN LAGGING CLEARLY IS SHOWING GREATER STRENGTH B. WE ARE FEELING MUCH MORE POSITIVE ABOUT THE OUTLOOK FOR OUR AREA C. BUT WE ARE UNDERGOING SOME VERY SIGNIFICANT STRUCTURAL CHANGES IN OUR ECONOMY AND I THINK HERE AGAIN DURING THE REST OF YOUR TIME HERE AND NEXT Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis INTERNS 7/15/87 PAGE 6 YEAR'S SCHOOL YOU WILL WANT TO KEEP YOUR EYE ON THESE DEVELOPMENTS ,-- ' ~ () _ V. OPERATIONS - MCA 1980 ~~ I - A. TRANSITION NOW COMPLETELY BEHIND US 1. EXCELLENT RESULTS OVER THE PAST FEW YEARS 2. REPEATING THE EXPERIENCE THIS YEAR B. I~ TIIE CHICAGO wA:e~A ~ ~ ~ [C ~ 1. VOLUMES STABILIZED AND SHOWING SIGNS OF INCREASE ~· ~ 2. PAPER BASED PAYMENTS A MATURE BUT WILL ~ CONTINUE FOR QUITE SOME WHILE IN SIZABLE VOLUMES C. ELECTRONIC ACTIVITIES GROWING RAPIDLY 2-z.~ 1. ENORMOUS VOLUMES - $1 TRILLION PER DAY/25% GNP 2. THE GROWING RISKS - WEAK LINK ~ ..DMU£HL ::fil/ ER l) RM i I S ,. 4. THE FEDERAL RESERVE SYSTEM IS GIVING EARLY THOUGHT TO THE ELECTRONIC SYSTEM THAT WILL BE APPROPRIATE TO THE 1990S Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis INTERNS 7/15/87 PAGE 7 A. ANOTHER AREA THAT YOU CAN WATCH DEVELOP IN THE COMING DAYS VI. LET ME SHIFT TO SOME COMMENTS ABOUT THE BOARD OF/ ,.a_ ,., J ~ -----------"'Al~ )\..)aXr...e) ~ . ·-~ I GOVERNORS - 7/14 YEAR TERMS/PROVIDE FOR CONTINUITY • ~~~ A. BECAUSE OF UNACCEPTED DEVELOPMENTS HASN'T WORKED OUT 1. MARTHA SEGER - OUR REPRESENTATIVE - NOW THE GOVERNOR WITH THE LONGEST SERVICE - 3 YEARS B. VOLCKER/GREENSPAN 1. CONFIRMATION HEARINGS SCHEDULED FOR LATER THIS 2. GREENSPAN CERTAINLY THE #1 CHOICE ON EVERYONE'S LIST 3. WOULD NOT ANTICIPATE SIGNIFICANT CHANGES REGARDING THE ATTITUDE TOWARD MONETARY POLICY 4. BUT ON THE REGULATORY SIDE, CLEARLY THERE ARE DISTINCTIONS BETWEEN THE TWO CHAIRMEN - Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis INTERNS 7/15/87 PAGE 8 C. THE INDEPENDENCE OF THE FED 1. WE ARE, AS YOU KNOW, AN INDEPENDENT GOVERNMENT AGENCY ~ · ~ # 2. STOCK OWNED BY THE MEMBER BANKS IN THE DISTRICT 3. 6 OF OUR DIRECTORS ELECTED BY THE MEMBER BANKS, 3 . APPOINTED BY THE BOARD OF GOVERNORS 4. PRESIDENTS APPOINTED BY THE BOARD OF DIRECTORS AND CONFIRMED BY THE BOARD OF GOVERNORS 5. IN THAT SENSE, I AM A PRIVATE INDIVIDUAL 6. HISTORICALLY, THE BALANCE OF PRIVATE PARTICIPATION IN THE FEDERAL RESERVE SYSTEM AND IN MONETARY POLICY DELIBERATIONS HAS BEEN AN IMPORTANT CONSIDERATION D. THE MELCHER CASE 1. LEGALLY QUESTIONS THE CONSTITUTIONALITY OF THE PRESIDENTS SERVING ON THE FOMC Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis INTERNS 7/15/87 PAGE 9 2. VERY IMPORTANT CONSIDERATION - WE WON THE FIRST ROUND ON THIS ONE 3. WE ARE IN THE APPEALS PROCESS 4. I ONLY MENTION IT BECAUSE OF THE INDEPENDENCE QUESTION WHICH IS SO TERRIBLY IMPORTANT 5. ANOTHER ISSUE THAT WILL BE INTERESTING FOR YOU TO WATCH NEXT FALL AS THE LEGAL PROCESS GOES FORWARD VII. AGAIN, A VERY GREAT PLEASURE TO HAVE YOU WITH US THIS SUMMER A. YOU ARE AN OUTSTANDING GROUP REPRESENTING A BROAD ~~ NUMBER OF INSTITUTIONS AND ACADEMIC CONCENTRATIONS /A.. 1. WE HOPE THAT THE REST OF YOUR SUMMER IS ENJOYABLE AND INTERESTING 2. MOST IMPORTANTLY FROM OUR PERSPECTIVE, WE HOPE zJ: ~ ,.,cl fo bP 'i t,v,µ2µ fl?<~~ THAT YOU WI[L HAVE ENJOYED YOURSELF ~ND WILL CONSIDER A CAREER AT THE FED AFTER YOU GRADUATE Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis INTERNS 7/15/87 PAGE 10 THANK YOU * * * * * Digitized for FRASER https://fraser.stlouisfed.org Federal Reserve Bank of St. Louis

Silas Keehn (1987, July 14). Regional President Speech. Speeches, Federal Reserve. https://whenthefedspeaks.com/doc/regional_speeche_19870715_silas_keehn

@misc{wtfs_regional_speeche_19870715_silas_keehn,
  author = {Silas Keehn},
  title = {Regional President Speech},
  year = {1987},
  month = {Jul},
  howpublished = {Speeches, Federal Reserve},
  url = {https://whenthefedspeaks.com/doc/regional_speeche_19870715_silas_keehn},
  note = {Retrieved via When the Fed Speaks corpus}
}