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100 Years of Tradition and Transition

Charles I. Plosser

On December 23, 2013, the Federal Reserve System marked 100 years from the signing of the Federal Reserve Act by President Woodrow Wilson. This began a centennial period that will run through the 100th anniversary of when the 12 Federal Reserve Banks opened for business on November 16, 1914.

That is why “100 Years of Tradition and Transition” is the subject of this year’s annual report. I have often described the Federal Reserve as a uniquely American form of a central bank — a decentralized central bank. To understand how it came to be, there is no better place to start than in Philadelphia, where just a few blocks from our Bank building you can find the vestiges of two earlier attempts at central banking from the time this city was the nation’s financial and political center.

The cover article provides an overview of the 100-year history of the Federal Reserve System, including a comparison of our present structure with the two prior attempts. In this year’s essay, “A Limited Central Bank,” I take a step back and consider the Federal Reserve’s essential role more broadly and how the Fed might be improved to better fulfill that role.

The annual report includes a message from First Vice President Blake Prichard on “A Century of Service” and “Bank Highlights” of our accomplishments during 2013. One of the past year’s highlights was the Policy Forum in December, which focused on the “History of Central Banking in the United States.” We were extraordinarily pleased to have former Chairman Alan Greenspan and former Vice Chair Don Kohn, among others, participate in the daylong event.

Our institution has been fortunate to have extraordinary citizens who have served on the Bank’s board of directors and advisory councils. As I look back at 2013, I especially thank Jeremy Nowak, president of J Nowak and Associates, LLC, who completed his second year as chairman and his sixth year as a director. I also thank Keith S. Campbell, chairman of Mannington Mills of Salem, NJ, and R. Scott Smith, retired chairman and CEO of Fulton Financial Corporation of Lancaster, PA, who also completed their terms as directors.

James E. Nevels, founder and chairman of The Swarthmore Group, completed his second year as deputy chair and advanced to chairman in January 2014. Michael J. Angelakis, vice chairman and CFO of Comcast Corp., was appointed deputy chairman. Three other citizens joined the board in terms that began January 2014: William S. Aichele, chairman and CEO of Univest Corporation of Pennsylvania; Edward J. Graham, president and CEO of South Jersey Industries; and Brian M. McNeill, president and CEO of Southco Inc.

The Economic Advisory Council includes representatives from diverse industries, manufacturers, and nonprofits in the Third District. In 2013, we welcomed Ernest Dianastasis, managing director and principal, Computer Aid, Inc.; Chris Gheysens, president and CEO, Wawa, Inc.; Patrick Magri, senior vice president of managed markets and policy, Merck & Co., Inc.; and Michael Pearson, president, Union Packaging, LLC, to serve three-year terms.

The Community Depository Institutions Advisory Council (CDIAC) includes representatives from commercial banks, thrift institutions, and credit unions in the Third District. In 2013, members who joined were David E. Gillan, chairman and CEO of County Bank, Rehoboth Beach, DE; Thomas M. Petro, president and CEO of Fox Chase Bancorp, Inc., Hatboro, PA; and Gregory A. Smith, president and CEO of the Pennsylvania State Employees Credit Union (PSECU), Harrisburg, PA. In addition, Dennis D. Cirucci, president, CEO, and director of Alliance Bancorp, Inc. and Alliance Bank, continued to represent our District on the Federal Reserve Board’s CDIAC.

I also thank Bharat Masrani, president and CEO of TD Bank, N.A., for his service as the Third District’s representative to the Federal Advisory Council, which meets quarterly with the Board of Governors in Washington, D.C. His term ended in 2013, and we welcomed Scott V. Fainor, president and CEO of National Penn Bancshares, Inc. and National Penn Bank, as our representative to the council for 2014.

Finally, I offer my sincere thanks to the talented and dedicated employees at the Philadelphia Fed. The 100-year history of our Bank is a story of the people who have contributed to its success through their public service to our many stakeholders. I especially would like to recognize Jeanne Rentezelas, who was promoted to senior vice president and general counsel during 2013.

I would also be remiss if I did not acknowledge that this is the last annual report that will feature Loretta Mester as our Bank’s executive vice president and director of research. She has been the Bank’s director of research since 2000, and I have been extraordinarily fortunate to have Loretta as my chief policy advisor since 2006. While we will miss her here in Philadelphia, we are fortunate that she will remain a colleague and a friend in her new role as the 11th president and chief executive officer of the Federal Reserve Bank of Cleveland, effective June 1, 2014.

Charles Plosser Signature
Charles I. Plosser
President and Chief Executive Officer
May 2014