Central Banker - Summer 2008
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Summer 2008 News and Views for Eighth District Bankers By Michelle Neely Eighth District banks a nd their national peers continu e to ace pressure on earning s amid r is- ing asset qual ity problems and weakness in the regional and national ec onomies. First-quarter results il lustrate these pressures, yet indicate that banks in the Distr ict have be en remarkably resilient thus ar. Return on average assets (ROA ) increased slightly in th e rst q uarter at District banks. They posted an average ROA o 0.96 percent compared with 0.94 percent at year- end 2007 . The Distr ict’s rst-quarter perormance substantially exceeded that o U .S. peer banks (ba nks with average assets o less than $15 billion), which, as a group, recorded an average ROA o 0.81 percent. RO A or both sets o banks is down markedly rom year-ago levels, though the drop at peer banks is more subs tantial at 36 basis points. Dstrct Banks: Profts Steady , But Problem Loans Mount w w w . s t l o u i s f e d . o r g 1 inSide : 2 •What We’re Learning from the Subprime Mortgage Crisis •St. Louis Fed’s Check Restructuring Speeds Up 3 • The Past, Present and Future of the U.S. Mortgage Market 5 •Housing and the ‘R’ Word 6 •Central Banker Coverage Is Expanding Online •Subscribe to Central Banker New Presdent Bullard Bullsh on Economcs continued on Page 4 T oo oten, says new St. Louis Fed President Jim Bullard, economics is regarded as a mere college subject. “Many people think economics is too com- plicated. Not everyone goes to co llege ; so, not everyone gets it—even though they live with the consequences o supply and demand every day, ” Bulla rd says. “We live in a market system, and people need to understand how that system works. ” Bullard, who succeeded Bill Poole as presi - dent April 1, is an advocate o the power o eco- nomic ideas and nanc ial literacy. He pursued those ideals through 18 years o study in the St. Louis Fed’s Research division, as well as through proessio nal a ssociatio ns and speaking engagements. Since joining th e Fed, Bullard has al ready spread this message to many groups in the Eighth District. He’s also well-versed on monetary policy, hav- ing worked closely with Poole on briengs beore each Federal Open Market Committee meeting. Bullard ’s expertise in monetar y policy and amil- iarity with FOMC procedures are among the many reasons why he was tapped or the job. “I’ve seen many o the events o the recent years rom the inside out, including the Asian cur- rency crisis, the bursting o the tech bubble and the S&L predi cament. By in timately kno wing monetary policy, I’m not coming in cold during a time when the situation is very tense,” he says. “It’ s act ual ly the most tense it’s been since 1980. ” The key thing or commercial bankers to keep in mind, Bullard says, is that the U.S. economy is resilient and has weathered many shocks over the years. “We’ll get throug h this one as well. The economy continues to surprise at how it adapts and comes back,” he says. Bullard, 47, was appointed president by the St. Louis Fed’s Board o Directors ater an extensive search and was approved by the Fed’s Board o Gov- ernors. T o read Bul- lard’s ull biography, see www.stlouised.org/ news/press_room/ bios.html#bullard. n
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