Looking back at 2018: Eric S. Rosengren, President & CEO, and Kenneth C. Montgomery, First Vice President & COO
The Federal Reserve Bank of Boston is pleased to release audited financial statements for 2018, along with a brief overview of the ways in which the Reserve Bank has had an impact on the regional and national economy this past year.
This year’s financial statements show that the Boston Fed remitted $1.35 billion to the U.S. Treasury—part of the $65.3 billion the Federal Reserve System as a whole remitted to the U.S. Treasury during 2018. Every year, the Federal Reserve remits excess earnings to the U.S. Treasury after expenses, dividends, and reservation of an amount to maintain surplus.
In 2018, Boston Fed economists and analysts explored issues that pose both major challenges to local communities in our region and are at the center of national economic debates—including the fiscal impact of the opioid crisis in the New England states, the supply of housing for the chronically homeless in Massachusetts, and participation in the gig economy.
At the Reserve Bank’s annual economic conference in September, participants discussed the consequences of long spells of low interest rates. A Boston Fed research team also studied whether the Federal Reserve should regularly review the ways policymakers conduct monetary policy, including its goals, instruments, targets, and other facets. Their findings were published in the fall edition of the Brookings Papers on Economic Activity and helped shape the “Fed Listens” initiative taking place in 2019.
Throughout 2018, Boston Fed President Eric Rosengren was an influential voice among U.S. monetary policymakers as a contributing member of the Federal Open Market Committee. In more than 15 public talks, Rosengren offered his insight on the national and global economy, the ethics and economics of lessening the severity of economic downturns, and perspectives on revitalizing New England’s post-industrial cities, among other topics.
The Boston Fed made a community impact in 2018 by expanding to new geographies and introducing new policy priorities. The Reserve Bank’s Working Cities Challenge continued its work in Massachusetts, Rhode Island, and Connecticut, helping post-industrial cities address chronic challenges like poverty, workforce development, and affordable housing. Now we’re adapting the model to address issues in more rural areas. In the coming months, we’re planning to expand the challenge to New England’s northern region.
In the fall, the Boston Fed took eight Federal Reserve presidents from across the country to the Working City of Lowell, Mass., to demonstrate the power of cross-sector collaboration and the ways it could help communities in their districts. We also partnered with Living Cities philanthropic collaborative to convene more than 300 representatives from a range of public, private, philanthropic, and nonprofit entities—including representatives from six Reserve Banks and the Federal Reserve Board of Governors—for a forum designed to surface strategies and partnerships to increase economic opportunity and mobility for struggling Americans.
The Boston Fed sharpened its focus on increasing the quality of jobs, so fewer fulltime workers struggle to meet basic needs. As part of that initiative, community development staff hosted “Raising the Floor: Strategies that Make Jobs Work for All,” a conference that drew businesses, academics, nonprofits, and public sector representatives to explore the challenges and opportunities associated with providing better quality jobs to residents.
The Reserve Bank also considered the ways technology can help underserved populations get more access to banking and financial services. Bank experts believe there are answers in FinTech that can improve the economic health of individuals and, by extension, their communities.
Impact: Federal Reserve System
We were out front on a number of initiatives that span the Federal Reserve System, including efforts on behalf of the Fed to build an increasingly secure U.S. payments system in collaboration with payments industry stakeholders. In 2018, a team of Boston Fed payments experts established a comprehensive overview of payments fraud in the United States and prioritized actions to improve payments security.
The Boston Fed also continued to lead explorations of emerging technologies that could impact not just the Fed, but the entire financial system. We’re deeply involved in testing the capabilities of blockchain so we can understand its true potential, and experimenting with and identifying use cases for robotic process automation.
The Bank continued to deliver on System-level responsibilities. We performed services on behalf of the U.S. Treasury Bureau of Fiscal Service through our stored value card program, which provides offline smart cards for military personnel. We conducted research and analysis on the ever-growing mobile financial services field; directed financial management strategies, operations, and support for the Federal Reserve System; and contributed to advancing the resiliency of systemically important financial firms.
Impact: Diversity & Inclusion
As part of the Boston Fed’s ongoing effort to build an increasingly diverse workforce and promote a culture that engages and empowers employees, last year the Bank increased gender and ethnicity diversity on the board of directors, advisory councils, and among officers of the Bank. What’s more, the organization doubled-down on efforts to bring more women and minority candidates into the hiring pipeline by appointing an employee recruiter specifically focused on diversity. Lastly, nearly 40 percent of employees participated in employee resource groups that are designed to celebrate the Bank’s diverse workforce and community partnerships.
We are proud that the Boston Fed had a strong year in 2018 serving the public interest. Our work as part of the U.S. central bank takes vigilance and constant innovation, a deep commitment to local communities, and a willingness to take the right risks to achieve the Boston Fed vision. We’re grateful to our Bank colleagues and regional stakeholders. They support our vision and help us achieve it.
Eric S. Rosengren
President and CEO
Kenneth C. Montgomery
First Vice President and COO
The Federal Reserve Board engaged KPMG to audit the 2018 combined and individual financial statements of the Reserve Banks.1
In 2018, KPMG also conducted audits of internal controls over financial reporting for each of the Reserve Banks. Fees for KPMG services totaled $7.0 million. To ensure auditor independence, the Board of Governors requires that KPMG be independent in all matters relating to the audits. Specifically, KPMG may not perform services for the Reserve Banks or others that would place it in a position of auditing its own work, making management decisions on behalf of the Reserve Banks, or in any other way impairing its audit independence. In 2018, the Bank did not engage KPMG for any non-audit services.