Ouachita Speaker Series

The Federal Reserve: These are words heard often on the news, usually in connection with interest rates, but what does the Federal Reserve actually do? Who makes the decisions about interest rates, and how do they make those decisions?

Matuschka Lindo Briggs, senior vice president and regional executive of the Little Rock branch of the Federal Reserve Bank of St. Louis, answered these questions and many more in her presentation to a full house at the first Fall session of the Ouachita Speaker Series on Sept. 9.

Briggs has a bachelor's degree in journalism and communication, with a minor in political science, as well as an MBA from Washington University.

Prior to her stint at the Federal Reserve, Briggs worked as a reporter, a television/radio host, and as press secretary for a gubernatorial candidate.

Briggs joined the Treasury Division of the St. Louis Federal Reserve in 2015 before becoming director of the community development department's special projects and strategic support team. She has been in her current position since 2022, where, according to the St. Louis Fed website, "she supports the Bank's mission of promoting a healthy economy, financial stability and community development by building durable, two-way relationships with business and community leaders across the state of Arkansas to help the St. Louis Fed gain a real-time, on-the-ground understanding of economic conditions on all corners of Main Street."

Briggs began her talk by answering the big question: What is the Federal Reserve?

"It's America's central bank," she said, "created by Congress in 1913 to promote financial stability," after a series of financial panics led to bank runs and other economic crises.

The key functions of the Federal Reserve follow the "dual mandate" handed down by Congress: keeping prices low and stable, and promoting maximum employment.

The Fed conducts monetary policy in keeping with these goals, while managing short-term interest rates and working toward moderate long-term rates.

Another key function is to promote financial stability by ensuring that financial institutions and market structures are resilient and facilitating links between borrowers and savers.

The Fed also supervises and regulates financial institutions (per direction from Congress) by monitoring, inspecting and examining bank and savings and loan holding companies, state member banks, and various other entities.

The Fed is also charged with fostering payment and settlement system safety and efficiency, including the FedNow Service, which went live in 2023 and allows businesses and individuals to make instant payments.

The Federal Reserve is also tasked with promoting consumer protection and community development.

The Federal Reserve System is governed by a Board of Governors (also called the Federal Reserve Board) and is an independent agency of the federal government consisting of seven governors, including the chair, appointed by the president and confirmed by the Senate.

There are 12 Federal Reserve Banks, which receive their mandate from the Board of Governors and serve as the operating arm of the Federal Reserve System.

Briggs explained that the Banks are decentralized, in order to reflect economic conditions in all sectors of the U.S. economy and population.

Arguably the most important part of the Federal Reserve System is the Federal Open Market Committee (FOMC), consisting of the seven governors, the president of the New York Fed, and four of the other Federal Reserve Bank presidents, who serve rotating one-year terms. They meet at least eight times a year to review reports prepared by staff on economic and financial developments, including trends in prices and wages, employment, investment and other key indicators.

The St. Louis Fed covers all or part of seven states, including Arkansas, and serves approximately 14.6 million people in four zones (Little Rock, Louisville, Memphis and St. Louis). Briggs said the St. Louis Fed is a leader in economic research, data collection and analysis, bank supervision, and economic education, and serves as a fiscal agent for the U.S. Treasury.

Briggs discussed FRED (Federal Reserve Economic Data), a database maintained by the St. Louis Fed, which contains economic data on banking, employment, interest rates, etc. and is available on the St. Louis Fed website (free of charge).

Briggs' focus is on active community engagement, and she discussed how the Fed exchanges information and builds relationships in the communities it serves.

Her group conducts outreach into rural communities, accepts speaking engagements, has one-on-one meetings with business leaders, airs podcasts, reaches out to past directors, and supports business activities. She said they learned a lot from the Covid 19 pandemic about the impact of global issues and have extended their reach to healthcare experts.

Briggs said she is always looking at the workforce in Arkansas, in all industries, collecting real-time data. And this is where Briggs' journalism background comes in handy - she actively engages with people and institutions throughout Arkansas, asking questions and listening to concerns. "We want everyone to participate in the economy," she said.

Directors on her staff travel all over the state, gathering information on agribusiness, healthcare, real estate, transportation, and other key industries. Economists then work with the data and research to establish trends, and this information, along with survey results, informal outreach, and "soft" data, is compiled in the Beige Book, or "Summary of Commentary on Current Economic Conditions," which is published eight times a year, in advance of meetings of the FOMC. The Beige Book for the St. Louis Fed summarizes trends in the labor market, prices, consumer spending, manufacturing, nonfinancial services, real estate and construction, banking and finance, agriculture and natural resources.

In discussing the latest edition, Briggs said, "Uncertainly is the new buzzword."

She added that most businesses are trying to pass their costs down to consumers, and her industry contacts have indicated they are holding off on capital investment and new projects. She added that real estate listings and sales have started to increase, although commercial real estate projects and construction are slowing down; agribusiness remained "strained," with poor crop conditions worrying Arkansas farmers (although cattle prices are at a record high); and the banking industry remains stable, with good credit quality.

Beige Books from each district are available on the excellent Federal Reserve website, which has information about every aspect of the Federal Reserve System.

Briggs stressed that the Fed is apolitical, which is essential for monetary policy, and extensively audited - internally; externally by KPMG; and independently by the Board of Governors, the Government Accountability Office, and the Office of Inspector General.

Their goal is to be open and transparent, which they accomplish through regular reports and testimony to Congress; statements, minutes, and transcripts; press conferences, media events and speeches; economic forecasts; and by setting and publicizing inflation targets.

Briggs fielded several questions after her lively and interesting presentation regarding mortgage interest rates ("indirect correlation" to the fed rate) and current policies/politics (which she deftly deferred under the "blackout period" before a FMOC meeting).

The next session of the Ouachita Speaker Series will be Oct. 14 and will feature Ken Goodman's "So You Thought You Knew Hot Springs!"