First Chicago Recognizes Economic Forecasting Group
Weiner, Lisabeth, American Banker
CHICAGO -- First Chicago Corp.'s establishment of an economic council for the purpose of forecasting reflects a change in the way the bank holding company plans to approach the task of economic research.
"It reflects a change in emphasis," said William McDonough, chief financial officer of First Chicago is not going out of the economic research business, but reassessing and repositioning itself in that area. "My prime concern is that we have an unusually good forecasting ability in order to manage change," he said.
But indeed it has become rather common for money center banks to abandon their economic units. In fact in the last two years several of the nation's largest banks disbanded their economic research departments as cost-cutting measures. Other money center banks have decentralized their economic research units and fit them into other parts of the bank operation.
While First Chicago is not giving up on economic forecasting,a nd indeed has made it clear that economic forecasting is an essential activity, it is reorganizing both the structure and direction of that group. And, perhaps most importantly, it appears that First Chicago is putting a curb on the independence of theconomic forecasting unit. For instance the economic group will no longer have its own voice on the bank's policy committee, which is the primary forum for review of corporate policy decisions and for communication and implementation of these decisions. The bank's new chief economist, James Annable, said he is not part of the policy committee, whereas the former chief economist Roy Moor was.
And economics is now part of a group, rather than a department as it once was, again another erosion into its autonomy. According to a confidential memo, First Chicago spokespersons have been instructed not to use the phrase "economic forecasting group" because "even though we know there's been no diminution of importance for the economics function at First Chicago, the change from a department to a group could signal the wrong things to the outside world." In the same confidential memo, First Chicago public relations said it would not address the issue of Jim Annable joining the policy committee because "we feel [that] is an internal matter which we simply do not discuss with the press. …