winter 2006
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you are planning a merger or an acquisition, you shouldmake a new St. Louis Fed website must reading. The site,http://CASSIDI.stlouised.org,went live in August with thegoal o serving as a one-stopshop or inormation on bank-ing competition.“One o the appealingeatures o the site is that itincludes inormation on institu-tions and banking markets or the entire United States,” saidAdam Zaretsky, an economistin the St. Louis Fed’s Researchdivision, who led the eort toget CASSIDI (CompetitiveAnalysis and Structure SourceInstrument or Depository Institutions) started.“This is the only web site where the public can getbanking competition inormation packaged in thisconvenient way or ree.” CASSIDI helps bankers:• view banking market denitions rom acrossthe country;• search or inormation in a user-riendly ormat;• benet rom regular updatesas market structures change;• explore “what i” (proorma) scenarios by seeinghow a potential transactionmight change a bankingmarket’s concentration, or aect HHI;• select whole institutions or individual branches as poten-tial targets;• look up geographic anddepository inormation or all institutions and their branches; and• view maps o many bank-ing markets throughout theUnited States.Other important CASSIDI eatures includebanking market maps, which enable users to zoomin to see what market a city is located in or zoomout to see what market(s) a county is located in;and the ability to select individual branches astargets in potential transactions.
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News and Views for Eighth District Bankers
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he National Association or Business Economics (NABE) honoredBill Poole, president o the Federal Reserve Bank o St. Louis, inSeptember with its prestigious Adam Smith Award.“Bill Poole has made valuable contributions both within theFederal Reserve and on the outside as a strong advocate o clearcommunication and transparency,” NABE President Stuart Homansaid in a related press release. “As an astute observer o monetarypolicy and its impact on the economy over a long period o time, hehas put his experience and his expertise to work at the Fed to helplead the economy on a low-infation, stable growth path.”The NABE president selects the recipient or the Adam SmithAward, the organization’s highest honor, based upon leadershipin the proession and the use o ideas and knowledge in theworkplace and policy arena. In receiving this award, Poole ollowshis close colleagues and mentors Milton Friedman, Karl Brunner andAllan Meltzer.
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St. Louis Fed President Receives Prestigious Adam Smith Award
w w w . s t l o u i s f e d . o r g
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inside:
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Anecdotes Make RawData Breathe
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The Future of WirePayments
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Success of Go DirectCampaign
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RegionalRoundup
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U.S. Mint TurnsPresidents into Gold
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Residential Aspects ofIncome Inequality
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FedFacts
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Calendar
St. Louis Fed Creates One-Stop Shopon Banking Competition
Anecdotal Inormation MakesRaw Data Breathe
By David A. Sapenaro, frst vice president o the Federal Reserve Bank o St. Louis
T
he ollowing is a hypothetical snapshot o sixmonths in a small Midwestern town: A banker decides to open a branch oce in a neighboringtown. A actory has to cut its labor orce. A armer has a mixed growing season. A residential real estaterm reduces prices to sell more o its inventory.Those stories by themselves are mere anecdotes. Butanecdotal inormation rom people who make day-to-day business decisions is extremely useul to the FederalReserve because such inormation helps us clearly seewhat is happening in the economy and understandwhat fuctuations in ormal data may mean.When the Federal Open Market Committee(FOMC) meets, the Fed’s Board o Governors andReserve bank presidents give their views on theeconomic outlook. In crating monetary policy,the FOMC consults several ormal and inormalsources—which include anecdotes. Among thesources we use in the Eighth District are:
Economic forums.
We invite bankers, businessowners, academics, community leaders and othersto these networking orums. While the primaryinternal Fed “audience” is St. Louis Fed President BillPoole, I oten participate in these orums as well togain a better understanding o the communities in our Fed region to ensure that the orums are designed andacilitated in a manner that provides Mr. Poole withthe best inormation possible.
Industry councils.
We established these councilsthis year to acquire high-level reports on the agri-business, health care, real estate and transportationindustries in the Eighth District. Leaders in thoseindustries meet with Mr. Poole to discuss trends andissues in their respective business sectors.
Business leader luncheons.
We oten invitebusiness leaders to a lunch with Mr. Poole and someo our senior ocers and economists. One o thepurposes is a mutual exchange o inormation on thelocal/regional economy.
Beige Book
input.
The
Beige Book
is publishedtwo weeks beore each FOMC meeting. It’s a closelywatched document o economic trends based oninormation and data gathered rom reliable sourcesthroughout the nation, including Mr. Poole’s sourcesin the Eighth District.
Boards of directors.
Finally, we have our boardso directors, each o which is amiliar with the eco-nomic and credit conditions in the District and pro-vides Mr. Poole with inormation on a monthly basis.We have the board o directors or the St. Louis oce(nine members), and also or each o our three branchoces (seven members each).Bankers in the Eighth District are integrallyinvolved in these activities including our economiccouncils and our boards o directors. Without theanecdotal inormation that you and others provide,we’re let with raw data—which can tell us onlyso much. Your assistance makes the raw databreathe, and helps the Fed and FOMC makeinormed decisions.
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w w w . s t l o u i s f e d . o r g
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Fed
itorial
T
he Federal Reserve System and the Clearing House Payments Co.recently conducted a joint research study into the wire transerprocess to understand and anticipate the uture o wire payments.(The Clearing House is a company that provides payment servicesand is jointly owned by several U.S. banking afliates.)The study,
Business to Business Wire Transfer Payments: Customer Preferences and Opportunities for Financial Institutions
, examinesthe issues acing organizations that routinely make wire transerpayments, the motivations driving payment decisions and potentialopportunities or growth in wire payments.Among other fndings, the study concludes that most corporatepayments today are paper-based, but they are likely to migrate toelectronic payments such as wire transers and ACH, over time. Smalland large companies are looking or a more streamlined way to makewire transers, and they are willing to pay or a more efcient process.Read the study at www.rbservices.org/Wholesale/pd/wire_transer_research_fnal.pd.
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Joint Study Explores Future of Wire Payments
w w w . s t l o u i s f e d . o r g
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Go diect Campaign succefullyrecuiting diect depoit Ue
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ince 2004, the FederalReserve and the U.S.Department o the Trea-sury have been urgingAmericans to Go Direct with a new campaignto motivate recipientso Social Security touse direct deposit.So ar, their eortshave been successul.Under the Go Direct campaign, more than600,000 people haveswitched rom usingpaper checks to direct deposit or Social Secu-rity. The St. Louis Fed’sMemphis region partici-pated in the pilot programin 2004-05; the programwent nationwide in 2005.Direct deposit isn’t exactly brand new. The government andprivate sector have been oering electronic payroll transer oryears. So why would the Fed and the Treasury be making a bigdeal over an “old” service?There are several reasons. First, there is the money actor.“The Treasury spends $.77 more to issue a check compared to adirect deposit payment,” says Kathy Paese, vice president o theSt. Louis Fed’s Treasury Relations and Support Oice. “With150 million checks issued each year, direct deposit means apotential savings o $120 million. And with the irst baby boomersscheduled to retire beginning in 2008, it is increasingly important that we reduce the number o paper Treasury checks to reducecosts and save taxpayer dollars.”From the Social Security beneiciaries’ point o view, the conve-nience o knowing your money is in your account is important: Forexample, ater Hurricane Katrina, more than 85,000 people werestranded without their Social Security or ederal beneits checksand needed emergency payments, according to the Treasury. But those who already were using direct deposit had immediate accessto their unds rom virtually anywhere.Perhaps most important is security. Direct deposit is a deterrent to identity thet and the possibility o stolen checks. “Direct deposit eliminates the risk ostolen checks and helps protect people rom identity thet. Youare 30 times more likely tohave a problem with your paperederal beneit check than withdirect deposit,” says Paese.
Go Direct successcomes throughpartnerships
Even though our out o ivepeople who receive ederalbeneits checks already use direct deposit, there are holdouts.That’s where local partnershipscome in.Martha Perine Beard, theSt. Louis Fed’s Memphissenior branch executive,has been involved romthe beginning. Sheexplains that the Fed and Treasury haven’t been promoting GoDirect by themselves; national and local organizations, includingbanks, have been the primary reasons or success. Currently,Go Direct works with about 700 partners, including some in theMemphis area. “The Treasury and Federal Reserve banks are col-laborating with groups that recipients know and trust—communityorganizations, aith-based groups, law enorcement, government and local banks—to encourage more people to convert their beneit payments to direct deposit,” she says.“In Memphis, many groups have already accepted the challengeto promote the beneits o direct deposit. For example, the AgingCommission shares inormation with the public about Go Direct through their Inormation and Assistance Hotline. And the MemphisPolice Department is a strong advocate or direct deposit because it is saer or Social Security recipients and helps to prevent criminalactivity,” says Perine Beard.The Go Direct campaign goal is to exceed 1 million sign-ups in2007. For more inormation or or how your bank can get involved,visit www.GoDirect.org.
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