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FEDERAL RESERVE
BANK OF ST. LOUIS
QUIETLY BUT ASSUREDLY
PLAYING AN ECONOMIC ROLE
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By Brian R. Hook
Words spoken by Bill Poole often make national headlines. Reporters
from Dow Jones, Bloomberg and Reuters news services follow the
Federal Reserve Bank of St. Louis President’s every word looking
for potential clues to monetary policy.
While local media often overlook the daily activities of the
St. Louis Fed itself, the bank plays a significant role in the
St. Louis economy. It helps manage the nation’s supply of money
and credit, regulates banking institutions to ensure safety
and soundness, and serves as a bank for depository institutions
and the federal government.
With an annual budget of $150 million, the St. Louis Fed employs
a total of 1,100 employees across its district, including three
branches in Little Rock, Ark., Memphis, Tenn., and Louisville,
Ky. Around 1,000 work at its headquarters downtown.
The St. Louis Fed serves the Eighth Federal Reserve District,
including Arkansas, eastern Missouri, southern Illinois, southern
Indiana, western Kentucky, western Tennessee and northern Mississippi.
The bank is one of 12 regional Reserve Banks that comprise the
Federal Reserve System along with the Board of Governors in
Washington D.C.
The man behind the operations at the St. Louis Fed is Dave Sapenaro.
He was named first vice president and chief operating officer
in 2005. He first started at the St. Louis Fed in 1995 following
10 years with the Federal Reserve Bank of Kansas City.
Payment Processing
The biggest issue currently facing the operations at the St.
Louis Fed is the decline in the amount of check processing performed
at the bank, Sapenaro says.
Check operations have been on the decline as consumers move
away from checks to electronic forms of payments. In 2004 banks
were allowed to start collecting checks electronically as opposed
to shipping paper checks. “As a result, over the last five years
the Federal Reserve System has been downsizing its operations,”
Sapenaro says.
The Fed announced in July that the system would consolidate
all check operations in Philadelphia, Cleveland, Dallas and
Atlanta. In the St. Louis Fed district, the check operations
in Memphis, which employs 50, will transition to Atlanta next
year. The St. Louis operation, which employs 100, will move
to Atlanta in 2011. Sapenaro says some of the employees will
be offered other jobs, but he says many will be laid off.
“We saw this coming and we have been talking with employees
for at least five years about how the payment system has been
changing and what the impact will be on their jobs,” Sapenaro
says. “They were very well prepared and knew it was coming.”
Treasury Management
Despite the decline in check processing operations, Sapenaro
says the number of employees has remained fairly consistent
at the bank. While it has experienced downsizing in its check
collecting operations, the bank has grown its operations in
St. Louis for servicing the needs of the U.S. Treasury, employing
over 150 people.
The St. Louis Fed serves as the central point of contact for
the Treasury on behalf of the Federal Reserve System. It provides
cash management services, including helping to collect tax payments,
managing daily cash and investing temporary excess cash.
Each of the 12 banks in the Federal Reserve System has some
work with the Treasury Department. The Fed is considered to
be the Treasury’s banker. The St. Louis Fed is the primary bank
in the system, however, that helps the Treasury collect business
tax payments. It is also the primary bank that provides daily
cash management services.
St. Louis is one of two banks that process Treasury checks.
Plus, it is the only one that processes postal money orders.
“We are the designated bank that manages the overall relationship
with the U.S. Treasury on behalf of the Federal Reserve,” Sapenaro
says.
Monetary Policy
Sapenaro says St. Louis Fed President Bill Poole spends a lot
of his time talking to bankers and business leaders in St. Louis
and throughout the Reserve Bank’s region. “They are very generous
with their time and provide him with very good anecdotal economic
information,” Sapenaro says.
The business executives provide Poole with vital information
not only about where the economy has been, but also where it
is going. “These business leaders are on the front line and
they know what’s going on in their business,” Sapenaro says.
Sapenaro says that much of the anecdotal information gathered
as part of the bank’s monetary responsibilities does not show
up in official statistics until much later.
Community Development
“In addition to our participation in national monetary policy,
the St. Louis Fed is highly involved in activities that support
local economic development,” Sapenaro says.
The St. Louis Fed provides community development related information
to financial institutions, community-based organizations and
government entities.
“We try to get people together to develop productive partnerships,
so that we can support and encourage local economic development,”
Sapenaro says. “We get a lot of participation. We are typically
full when we host programs and conferences.”
The St. Louis Fed also provides a large amount of economic research
focused on issues important to local policy makers. Some topics
include bankruptcies, predatory lending, and information about
what businesses are looking for when relocating.
“We are really trying to be more visible as an organization
in local economic development and local economic and financial
education,” Sapenaro says. “You will likely see us much more
in the news in terms of the kinds of activities we’re involved
in.”
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Reinvestment
in Downtown
By Brian R. Hook
The Federal Reserve Bank of St. Louis is making a major
investment in downtown St. Louis by spending $130 million
to renovate its headquarters.
The renovation project is on track to be completed in the
fourth quarter of 2009, says Dave Sapenaro, St. Louis Fed
vice president and chief operating officer.
The tower addition will be completed by the end of this
year from a mechanical and structural perspective, Sapenaro
says. The St. Louis Fed will spend 2008 and 2009 fitting
out the interior and moving some of the bank’s departments
into the new space.
Renovations started in 2004. The bank was already considering
renovations before the September 11, 2001 terrorist attacks,
Sapenaro says. “When 9-11 hit we were faced with a situation
where we needed more space, but also needed to make some
significant security enhancements to better prepare our
structure for any kind of attack.”
Sapenaro says the St. Louis Fed worked very closely with
the City of St. Louis. which allowed the bank to take a
street in front of the bank and turn it into a walking plaza.
This also allowed the bank to put a vestibule in front of
the building for security screening. The City also allowed
the bank to take a lane of traffic on the three other sides
of the building to increase the distance between the street
and the sides of the building.
“We were outgrowing our existing building,” Sapenaro says.
“We did briefly consider other alternatives, but we just
felt like staying where we are at and adding on and implementing
those security enhancements were better solutions for us.”
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