Working at a Regional Fed Bank
By David Dykes
The Wall Street Journal reported recently that, in a little-known renomination process, all 12 Federal Reserve regional bank presidents and their current second-in-commands were approved for new five-year terms.
As the central bank of the United States, the Federal Reserve System conducts the nation’s monetary policy and helps maintain a stable financial system.
Three key components of the system — the Federal Reserve Board of Governors, the Federal Reserve Banks and the Federal Open Market Committee (FOMC) — interact to accomplish those goals.
Each of the 12 regional banks is supervised by a nine-member board of directors. Directors are divided into three classes — Class C, Class B and Class A — of three directors each. Most regional banks have at least one branch, and each branch has its own board of directors.
The board of governors appoints Class C directors to represent the public with due, but not exclusive, consideration to the interests of agriculture, commerce, industry, services, labor and consumers.
Class B and A directors are elected by the member banks in their respective Federal Reserve districts. Class B directors are elected to represent the public, and Class A directors are elected to represent member banks.
In January, the Richmond Fed, one of the 12 regional banks whose district includes Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia, announced its director appointments. It also acknowledged - and thanked – directors completing their service.
The latter included Mike Crapps, president and CEO of First Community Bank in Lexington, S.C.; Robert R. Hill, Jr., executive chairman of the board of South State Corp.; and Susan J. Ganz, CEO of Lion Brothers Company Inc. in Owings Mills, Md.
Crapps served on the Richmond Fed’s Charlotte branch board as a Class A director, representing member banks, from 2015 to the end of 2020.
Directors play a critical role in the effective functioning of the Federal Reserve. They provide a link between the system and the public, and their insights help to inform the FOMC’s deliberations.
In addition, regional bank directors perform an important corporate governance function and are responsible for maintaining an effective system of internal auditing procedures and controls.
Directors are not involved, however, in any matters related to banking supervision, including specific supervisory decisions.
And branch directors such as Crapps don’t have a corporate governance role, as that responsibility resides with the Richmond board.
“For me personally, I’ve had the privilege of serving on other boards and other organizations and a
lot of great work that we’ve done,” he says. “Serving on the Federal Reserve board has been one of the highlights of my career and board service and it speaks, I think, to some of my own personal interests but also speaks to the work of that group and the quality of the work that’s done by the Federal Reserve.”
He was paid a branch-director retainer of $1,500 annually, and a daily fee of $200 and travel expenses to attend directors’ meetings.
But for him, it marked the perfect intersection of his academic background (an undergraduate degree in economics), his lifelong interest in continuing to learn in that field and elements of public policy.
At the Fed, “What they’re really looking for us to provide is anecdotal information about what’s going on in the economy, and from our personal observations in our businesses and, then in my case, from interactions I have with our customers and to bring those anecdotal stories to them,” Crapps says.
Meeting about eight times a year, he and other board members would prepare a roundtable report and then discuss it.
“The staff doesn’t just passively listen,” Crapps says. “They actively are engaged in the conversation where they push back when they hear something that’s really interesting or maybe counterintuitive to the current data. Because what they are looking for is things that are going on on the ground, in the economy, that hadn’t shown up in the data. The data sometimes is a lagging indicator of activity. What they’re really trying to figure out, discern, is leading information – information that’s going to ultimately show up in the data.”
A year ago, as the pandemic was beginning to take hold of businesses and the private sector, Fed officials leaned on Crapps and other directors for insight.
“One of the things that they (Fed officials) would have been really looking for us to comment on is what things are really like with your customers as this pandemic is beginning to break,” Crapps says. “Are people shutting down? Is everybody laying people off? Are people borrowing money?”
The pandemic’s impact, he says, wasn’t showing up in the data then “so they (Fed officials) were trying to understand what that effect was beginning to look like and might ultimately become way before it showed up in data.”
South Carolina, he adds, has been performing “pretty well” and faring better than North Carolina during the pandemic, especially in manufacturing.
He worries about the impact on the state’s tourism and hospitality industries but is confident they will fully rebound, although the timetable is uncertain.
“But my personal belief,” Crapps says, “is that as the vaccine becomes more widely available, and accepted as effective, and people gain that confidence back to aggregate and congregate and travel, that our economy will fully recover.”
Crapps is a lifelong resident of Lexington County and a 1976 graduate of Lexington High School. He received a bachelor’s degree in economics in 1980 from Clemson University, an MBA degree
from the University of South Carolina in 1984 and is a graduate of the LSU Graduate School of Banking of the South.
He is a founder of First Community Bank and has served as its president and chief executive officer, as well as on its board of directors, since opening the bank in 1995.
The bank has more than $1 billion in assets with 21 banking offices in the Midlands and Upstate as well as Augusta, Ga.
Crapps has been involved with the South Carolina Bankers Association (SCBA), having been its chairman and on its board of directors. The SCBA selected Crapps as the 1997 Young Banker of the Year.
Now that he’s left the Federal Reserve Bank of Richmond’s Charlotte branch board, others are stepping in.
In action by the Richmond Fed’s state member banks announced in January:
Robert M. Blue, president and chief executive officer of Dominion Energy in Richmond, was elected a Class B director.
Jennifer LaClair, chief financial officer of Ally Financial in Charlotte, was elected a Class A director.
In addition, the Federal Reserve System’s board of governors and the Richmond Fed’s board of directors announced:
Brenda Galgano, executive vice president and chief financial officer of Perdue Farms in Salisbury, Maryland, was appointed by the Richmond board of directors to the Baltimore board.
James F. Goodmon Jr., president and chief operating officer of Capitol Broadcasting Company in Raleigh, North Carolina, was appointed by the Board of Governors to the Charlotte board.
Leslie D. Hale, president and chief executive officer of RLJ Lodging Trust in Bethesda, Maryland, was appointed by the Board of Governors to the Baltimore board.
Sepi Saidi, president and chief executive officer of SEPI Engineering and Construction in Raleigh, North Carolina, was reappointed by the Richmond Board of Directors to the Charlotte board.
R. Glenn Sherrill Jr., chairman and chief executive officer of SteelFab Inc., in Charlotte, was reappointed by the Board of Governors to the Charlotte board.
And the system’s board of governors appointed the Richmond Fed’s board chair and deputy chair for 2021.
Eugene A. Woods, president and chief executive officer of Atrium Health in Charlotte, was appointed chair.
Jodie W. McLean, chief executive officer of EDENS in Washington, D.C., was appointed deputy chair.
David Dykes is editor of Greenville Business Magazine, Columbia Business Monthly and Charleston Business Magazine.