Academic journal article ABA Banking Journal

From Fergus to FRBUS: New Fed Governor Mark Olson Draws on Three "Lives" of Experience-Banking in Fergus Falls, Politics, and Consulting-To Handle a Tough Job. (Washington Interview)

Academic journal article ABA Banking Journal

From Fergus to FRBUS: New Fed Governor Mark Olson Draws on Three "Lives" of Experience-Banking in Fergus Falls, Politics, and Consulting-To Handle a Tough Job. (Washington Interview)

Article excerpt

Early last December, Mark Olson got to do something that few bankers ever dream of doing.

It started late one night--Thursday, Dec. 6--when the Senate confirmed Olson, and Susan Schmidt Bies, to seats on the Federal Reserve Board.

The next morning, Olson and Bies (pronounced "buys") dutifully reported to the imposing Fed headquarters on Constitution Avenue, expecting to spend Friday filling out paperwork, making the rounds of introductions, and little else.

Instead, a senior staffer poked his head in, with a message. The staff planned to try to get the White House to finalize things so that the pair could be "officially official"--something that wouldn't happen until the President signed the formal documents and the two were sworn in.

That sounded fine to Olson and Bies.

Then the aide underscored the significance of what he was saying (as recalled by Olson):

"If we can get you both sworn-in today, your first Federal Open Market Committee meeting will be on Tuesday."

In the midst of a history-making series of Fed rate adjustments, the two newcomers would be participants in the much-watched Federal Open Market Committee (FOMC) meeting--and voting participants, mind you--after only two business days on the job.

"So it was baptism by total immersion," says Olson. But he says this was actually a good way to start.

"We met all the Federal Reserve District Bank presidents and some of the banks' staffers from around the country," he recalls. "We got a look at the information that goes into providing the background for an FOMC meeting and had our first briefing on the subject."

Olson, 59, a former community banker, congressional staffer, and Big Five consultant, says he was impressed by the vast amount of data and analysis brought to the table.

"The process starts by hearing from each of the Fed presidents," Olson explains, "and that gives you a good sense of the economy in the various regions that complements the overall view seen from the Fed."

Nevertheless, considering the ripple effects that FOMC meetings can have, "it's a very humbling experience," he says, "when you are asked to make a decision that reverberates immediately throughout the economy--in fact, throughout the world."

Olson and Bies voted with the majority that day, opposed only by one district Fed president. The FOMC therefore cut both the Fed funds and discount rates by 25 basis points.

Not too shabby a start for a former Minnesota banker who used to keep a sailboat christened M-1B. (An acquaintance once quipped to the future governor that he hoped M-1B wouldn't go down, Olson recalls.) Nowadays the new governor keeps a powerboat on the Chesapeake. That vessel is called the Uffda. Olson says "uffda" is the Scandinavian equivalent of the Yiddish oy vey--both terms of wonderment, either positive or negative.

It's not all market-moving action

As one might expect, Fed governors hear about the economy more often than on the occasion of FOMC meetings. Indeed, for all but lovers of econometric data, "uffda" might be a suitable summing up of the volume of numbers Olson now sees.

"I'll bet half of the information flow that comes across my desk is economic data--we're getting updates daily," he says. "You need to take in incremental information that way, to get a sense of the movement of the economy."

One of the econometric models the governors monitor is FRBUS--Federal Reserve Board United States, which models the domestic economy. Olson likes to joke that he has no trouble remembering that system's name, as it rhymes with "Fergus"--common shorthand for Fergus Falls, the upper Minnesota town where he was born and where he ran Security State Bank (see Olson's bio in brief, next page).

Now that he's been in office for a few months, Olson believes he's beginning to gain a sense of the economy's flow. …

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