2011 Bank Highlights> > >
Economists and staff in the Philadelphia Fed's Research Department completed a full year of research studies and briefings to President Plosser on monetary policy, financial stability, and regulation. Much of this important and timely research was also published in leading economics and finance journals to share knowledge about the evolving economy.
The department organized several conferences and workshops, including its biennial Philadelphia Fed Policy Forum, which in 2011 focused on “Budgets on the Brink: Perspectives on Debt and Monetary Policy.”
Loretta Mester, executive vice president and director of research, supported the Federal Open Market Committee's (FOMC) Subcommittee on Communications, which included President Plosser, as they worked on proposals to improve the clarity of communications about policy decisions. She also worked with her counterpart at the Chicago Fed to coordinate a briefing on labor market dynamics to the FOMC.
Economists Keith Sill, vice president and director of the Real-Time Data Research Center, and Michael Dotsey, senior policy advisor, helped to coordinate and lead a System work group that developed economic models and forecasts that support the FOMC.
Two other Bank economists, Mitchell Berlin, vice president and head of the Banking and Financial Markets section, and Leonard Nakamura, vice president and head of the Regional and Microeconomics section, coordinated the Bank's semi-annual Financial Stability Report and briefed senior management. The report was also shared with the Office of Financial Stability Policy and Research at the Board of Governors.
Berlin and a colleague from the San Francisco Fed led the Federal Reserve System's Quantitative Surveillance project and completed a report evaluating the arguments for different levels of disclosure of stress test results. Ronel Elul, Wenli Li, and Chenyang (Jason) Wei helped validate models used for the System's bank holding company stress tests and capital reviews mandated by the Dodd-Frank Act.
For more than a decade, the Bank's Payment Cards Center (PCC) has provided meaningful insights into developments in consumer credit and payments. The PCC also coordinates a Bank-wide Program in Consumer Credit & Payments that makes payments-related information available to the industry, businesses, academia, policymakers, and the public at large.
In 2011, the PCC hosted a conference on economic and policy issues related to the use of payment cards by federal and state governments and, in conjunction with staff in the Bank's Research Department, organized the sixth biennial research conference on Recent Developments in Consumer Credit and Payments.
The center also released five new articles on a variety of topics, such as the use of payment cards for business-to-business payments, the management of insolvency risk in prepaid card programs, and the options available to consumers seeking a workout of their unsecured debts.
The implementation of the Dodd-Frank Act (DFA) was the major focus of the Bank's Supervision, Regulation and Credit Department (SRC) in 2011. Bank examiners integrated Dodd-Frank-related changes into the supervisory process, adding approximately 70 new savings and loan holding companies (SLHCs) to the Bank's supervisory responsibilities.
The DFA also requires the Federal Reserve to evaluate whether certain large bank holding companies and nonbank financial institutions supervised by the Fed have sufficient capital to absorb losses under adverse economic conditions. SRC officers also participated in the ongoing work to model potential losses that could cause future risks. Paul Calem is leading a team as part of the 2012 Comprehensive Capital Analysis and Review (CCAR) that is developing models to assess retail credit risk in such areas as mortgages, home equity lines of credit, and student loans. Other staff members from the Retail Risk Analysis unit and the Risk Assessment, Data Analysis, and Research (RADAR) group are instrumental to this effort. In addition, Bill Lang, senior vice president, and other SRC staff have been actively involved in model validation efforts related to the CCAR.
RADAR, a System resource created by the Philadelphia and Kansas City Feds, is a key driver in the Federal Reserve's efforts to optimize the use of data to identify and monitor financial risks. It consists of two major components: the data warehouse and the Securities Evaluation Service, which moved from pilot stage to full operation in 2011. The data warehouse centralizes a wide array of key consumer data sets and provides authorized personnel throughout the Federal Reserve System with direct access to that information, including robust data on more than 30 million active mortgages. The RADAR team also provides securities evaluation expertise to examiners System-wide.
Community Development Studies and Education (CDS&E) hosted 20 events in 2011 on such topics as foreclosure prevention, the housing market for the disabled, and organizational strategies for community development corporations.
CDS&E also introduced a quarterly Community Outlook Survey, which assesses the needs of low-and moderate-income households. The results of this survey are analyzed by staff for emerging trends and compared with similar results from other Reserve Banks to assess broader conditions. Map Your Community, an interactive mapping widget available on the Bank's website, has become a popular national destination for those seeking community profiles of current and historical economic and demographic trends. Information is available for many socioeconomic variables, including poverty levels, census tract income levels, lending activity, and educational attainment. The widget enables community developers and others to create custom maps with data from The Reinvestment Fund's PolicyMap service.
CDS&E researchers served as co-editors for two new publications released in 2011 by Penn Press. Harriet Newburger co-edited Neighborhood and Life Chances: How Place Matters in Modern America, and Marvin Smith co-edited The American Mortgage System: Crisis and Reform. Both books contained research presented at past Reinventing Older Communities conferences hosted by the Bank. They were also the result of our partnership with the University of Pennsylvania's Institute for Urban Research. In addition, the department published three papers on Federal Housing Administration lending.
Bank officers and staff continued to share the Bank's information with stakeholders during 2011. The Bank's senior officers briefed the District's bankers and their boards of directors during the 66th Annual Field Meetings, organized by the Bank's Financial Institutions Relations Department.
Anthony Scafide and Tom Lombardo, both assistant vice presidents in the department, also met with senior executives at more than 90 percent of Third District financial institutions to discuss current business trends, credit conditions, legislation, and the national and regional economy. In addition, Scafide and Lombardo orchestrated the establishment of the Bank's Community Depository Institutions Advisory Council (CDIAC), which includes representatives from commercial banks, thrift institutions, and credit unions. The new council met with Bank executives twice in 2011 and then sent a representative to the Board of Governors' CDIAC to share banking and business conditions in the Third District with the Governors and representatives from other Federal Reserve Districts.
The Bank's economic education staff reached more than 600 Third District teachers with courses and programs designed to help K-12 teachers understand economic concepts, the Federal Reserve System, monetary policy, and personal financial education.
As President Plosser and Federal Reserve leaders focus on ways to increase transparency and improve communications, the Philadelphia Fed's Public Affairs Department set strategies for supporting and leveraging policy communications to our observers, constituents, and the public. Marilyn Wimp, media relations manager, set up numerous interviews for President Charles Plosser with the Wall Street Journal, the Financial Times, and CNBC, among others. Links to many of these interviews have been posted on the Bank's website along with the president's public speeches, which help provide perspectives on monetary policy, Fed independence and accountability, financial and policy risks, and alternatives for enhancing communications from the FOMC.
The Bank is fortunate to reside in Philadelphia's historic area, which helps provide context in educating the public about the role of banking in Philadelphia's history and the purposes and functions of the Federal Reserve. The Bank published the third booklet in its series on the history of U.S. central banking: The State and National Banking Eras: A Chapter in the History of Central Banking, written by Sally Burke, publications manager. Last year, the Bank's free Money in Motion exhibit about the Fed, monetary policy, currency and coin, and the payments system welcomed more than 26,000 visitors, including school groups and tourists visiting the Independence Mall area.
As the nation's central bank, the Fed acts as the fiscal agent for the U.S. Treasury. The Philadelphia Fed's Treasury Services Department provides support in two main areas, collateral management and payments, building on the expertise the Bank has developed over the years in these areas. The Bank developed and implemented a new Treasury Collateral Management and Monitoring (TCMM) application to track all collateral posted for U.S. Treasury programs. Additionally, an on-site support team monitors collateral eligibility and assists federal agencies, financial institutions, and the Treasury with collateral activities.
Philadelphia leveraged its leadership in managing a similar Collateral Management System (CMS), which tracks all collateral posted for Federal Reserve credit risk programs. The Bank also enhanced the CMS in 2011 to support the Board of Governors' revised Payment System Risk policy.
The Philadelphia Fed also oversees the Treasury Check Information System (TCIS), which manages the Treasury's checkbook and reconciles approximately 160 million checks yearly and processes over 1.5 million check claims and inquiries per year. In 2011, TCIS completed two upgrades that allowed the Treasury to retire an older application and gave government agencies increased capabilities to view paperless transactions.
Robin Myers, assistant vice president, and Ken Benton, senior specialist/consumer regulations, received the William Taylor Award for Excellence in Bank Supervision from the Board of Governors for their contributions to Consumer Compliance Outlook, a Federal Reserve System publication, published here in Philadelphia.
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