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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.”

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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