Strategic leadership in a changing economy. Few institutions play as quiet and steady a role in our daily lives as the Federal Reserve, and few leaders bring the combination of experience, humility, and purpose that our next guest embodies. We are truly fortunate to have here today Beth Hammack. Beth has spent her career at the highest levels of finance, and since becoming president and CEO of the Federal Reserve Bank of Cleveland, she has been a tireless advocate for understanding how national economic trends play out in the lives of real people. I'm excited for the opportunity to hear directly from one of the nation's most thoughtful economic leaders and to learn how the work done here in our region shapes policy at the national level. Please join me in welcoming president and CEO of the Federal Reserve Bank of Cleveland, Beth Hammack, and moderating today's conversation, managing partner of the Columbus Office of Baker Hostetler, Mark Hatcher.
If you didn't tell, we were so cool we didn't need walkout music. Also, that's because this is being live streamed and they didn't want to have copyright issues. Very good. Thank you. First and foremost, thank you all for being here. Big thank you to Pat for being able to pull this together and have such a dynamic speaker and opportunity to speak with someone like Beth. So, just starting off, everybody's got your bio. We could read your trajectory, but talk just for a second a little bit about your background and something in there with respect to leadership. What's your perspective on leadership in governing and managing organizations?
Yeah, so thank you so much. It's great to be here. We've had a lot of good trips to Columbus since I've joined the Cleveland Fed. And if you don't know, we cover all of Ohio, western Pennsylvania, eastern Kentucky, and just the very northern panhandle of West Virginia. But Ohio is really a big part of what we do. I come here having spent 30 years in the private sector living in New York. My husband did grow up in Northeast Ohio. He was a Shaker native, and so we're back with his side of the family, which is great. For me, leadership is really about listening. It's about connecting with people and understanding their perspectives. It's about motivating and inspiring them to deliver excellence and greatness every day.
Well, we are here at the Ohio State University, a beacon of education across the country. And everyone might not know and understand what the Fed is and how it operates. So, can you give us a bit of a primer, an Econ 101 on the Federal Reserve and how it impacts our economy?
Sure. And so, I will say when people think of the Federal Reserve, they think of monetary policy, and that is certainly a big part of the job. But our monetary policy meetings are eight times a year. They last for about two days. So, that's 16 days. So, as you will all know, there's an awful lot of days in the year that we have to fill with other things. And we do a lot of other things at the Federal Reserve. So, we have five main functions. And one of the things that surprised me most in coming to the Fed was how little people, even on Wall Street who you would think know everything about the Federal Reserve, really know about what we do day in, day out. So, our five functions, if we start with monetary policy as number one. Number two is financial stability, which was really the reason for our creation in 1913. The US had undergone a number of bank panics. The most recent before that was the panic of 1907. And so the Federal Reserve was created to ensure that we had a safe and sound financial system. So now what we do is we look around to see where are emerging trends, where are things working well, where might there be vulnerabilities. And in the case where things are not working as well as they should in markets, think the pandemic in 2020 or banking stress in 2023, we can put in place facilities to help smooth over those instances. Our third function is we supervise and regulate the banks. So regulation is determined by the board in Washington DC, but we have a team of just over 200 supervisors who spend their time out with the financial institutions across the fourth district, across that region that I talked about, ensuring that you have confidence in the banking system and that the banks are operating as they should because a strong banking system is the foundation of a strong economy. Our fourth responsibility is consumer protection and community development. So looking at different organizations, understanding how are people getting into the workforce, how are people able to afford housing, how are small businesses faring? So connecting with nonprofit partners and understanding what that means. And then our fifth function is that we are the bank for banks and we run the nation's payment system. So whether that's the Fedwire, again, that's why it's called Fed, we're operating that. Whether it's acting as Treasury's fiscal agent, so in Cleveland, we host a website called pay.gov, which if you happen to go to a national park and swipe your credit card, that's being processed in Cleveland, or if you're renewing your passport online, we're managing those payments. But it's to things as everyday as those paper bills in your wallet that some people think of as cash and we call Federal Reserve notes. We have 28 locations across the country where we are making sure that you can have fit currency in your wallet because even though cash payments are down, they're still really important, particularly in crisis. Think the pandemic, there was a huge need for cash, or if you think about when there was that huge power outage in Puerto Rico, we flew in extra plane loads of cash to make sure that people could go buy groceries.
So much more expansive than I guess what people might think.
We're more than just monetary policy, although monetary policy is important.
Sure. So, we're here with a room full of executives and business leaders. How does the Fed engage with local businesses and how does the Fed impact Ohio specifically?
So for me, having a real perspective on what's going on in the economy is critically important for me to be able to represent this region when I go to Washington DC those eight times a year and we talk about policy. So yes, our policy meetings are only 16 days a year, but I spend almost every other day in pursuit of information around what's going on in this local economy. So I can accurately represent how is inflation faring, how are people coping with those issues, what is the employment outlook here, what do we think growth is going to be. I find that by connecting with business leaders, I get a better sense of not just where the economy is today or was a month ago, which the official statistics are excellent at telling us, but it gives me insight into how leaders are weighing those trade-offs in the decisions they're making, which tells me where the economy may be headed. And so when we're setting monetary policy, we need to think about where we're going to be in six months, nine months, 12 months, because as we talk about, monetary policy works with long and variable lags, which means it takes an awful long time to go from our decision to the individual consumer. And so making sure that we're engaging with people across the district is really important.
How do those interactions occur? Are there forums? Are there town hall meetings? How do those one-on-one interactions happen?
Yeah. So, there's lots of different forums. We have a board of directors in Cleveland. We also have regional boards at our branch offices in Pittsburgh and Cincinnati. We host a number, I think it's 11, business advisory councils around the region where we're bringing together leaders to get their perspective on what they're seeing. And we collect information in something called the Beige Book, which is a report that every Federal Reserve Bank puts out on the same cycle as our FOMC meetings. And so if you are not a Beige Book contributor, you should definitely become one. And if you are, thank you so much because that's really critical insights. We in Cleveland have turned our Beige Book narrative into numerical indices which we post on our website clevelandfed.org which anyone can take a look at and get sort of the same up-to-date information as to how the economy is faring as I have.
