December 12, 2005
Tell it to the Fed | A chat with Peter Blyberg, CEO of Union Trust Co., about his role as a director of the Federal Reserve Bank of Boston
By Michaela Cavallaro
When most Americans think of the Federal Reserve, they think of Alan Greenspan. What's less well known is that the Fed is made up of 12 regional banks across the country, each with its own board of directors, as well as its own staff of banking overseers, regulators, economists and analysts, whose information on regional economic trends gets forwarded to the Fed's board of governors, of which Greenspan is, at least until next month, the chair.
What's even less well known than the Fed's structure is the fact that Peter Blyberg, CEO of Ellsworth-based Union Trust Co., has been on the board of directors for the Federal Reserve Bank of Boston since January 2004. So in addition to his regular duties at the bank, which has branches from Jonesport to Waldoboro, Blyberg travels to Boston once a month to meet with fellow board members including Patriots owner Bob Kraft, Fairchild Semiconductor CEO Kirk Pond and Orit Gadiesh, chairman of Bain & Co., the management consulting firm in Boston.
Mainebiz spoke to Blyberg just after Thanksgiving about his role on the board, recent initiatives the Boston Fed has put forth and his relationship with his fellow directors. An edited transcript of that conversation follows.
Mainebiz: I imagine that part of your role as a director of the Boston Fed is to bring a sense of the Maine business climate to the group. Is that the case?
Blyberg: One of the purposes of the board, aside from the normal role of corporate governance, is really to provide local, anecdotal, street-level information about what we're seeing. The Federal Reserve system and each of the banks have a tremendous group of people who are world-class economists, and they're using a lot of data that's generated [throughout the country] and they're analyzing that. But, as you know, a lot of data has a time lag, so one of the things they want us to do is give them updates ˆ what's happening this week, what's happening today? What are you seeing, whether it's in the real estate market or manufacturing? What's happening with prices in your local market, what's happening with the blueberry business, what's happening with the lobster business, what's happening with the tourists?
That all gets fed into the people in Boston, and in turn it gets down to Washington, so when they need to talk about the economy and make decisions in Washington, they not only have the benefit of a lot of hard data from economic reports that are generated throughout the country, but also a lot of this local, anecdotal flavor of what's happening in different parts of the country.
I understand you've been involved with a project related to check processing at the Fed. Was that related to the Check 21 law that went into effect in October 2004?
It was a combination of Check 21 and also check consolidation. For decades, people have been talking about the demise of checks, that checks are going to go away. I heard that in 1970 when I started my banking career. Well, it never did, and the check volumes kept rising and rising and rising until about two or three years ago. What the Fed saw in 2004 was that the number of checks written nationally dropped 12%. That's accelerated again in 2005, and we're largely expecting that will continue for a number of years. At some point it will stabilize, because there will always be people who write checks. But clearly the amount of transactions that are financed by check is dropping.
One of the things the Fed has been doing to anticipate that ˆ and they welcome the fact that this is happening ˆ is to consolidate all of the check processing operations around the country. Up until now, banks in Maine have been having to ship their checks to Boston. As part of this, they're moving the [regional] check processing to Windsor Locks, Conn. Effective Feb. 24, we have to get our checks to Windsor Locks. The Fed is doing this nationwide [both] because the number of checks is going down nationwide and just to improve efficiency.
Will consumers in Maine see a difference?
The consumers won't, but the banks in Maine will. Most of the checks that are written between banks in Maine are cleared in Maine, but if we get a check for someone in California, [in the past] we had to ship it out there, because the way the old law was written, there had to be a physical presentment of that check to the bank before they would pay it. What Check 21 basically did was it made the use of a substitute check the legal equivalent of the original check, so you could create an electronic image and present that and that would be acceptable. You could speed up the collection of checks nationwide.
One of your fellow directors is Bob Kraft, the owner of the Patriots. So do you have really great seats at Pats games?
[Laughter] It's strictly business.
What's even less well known than the Fed's structure is the fact that Peter Blyberg, CEO of Ellsworth-based Union Trust Co., has been on the board of directors for the Federal Reserve Bank of Boston since January 2004. So in addition to his regular duties at the bank, which has branches from Jonesport to Waldoboro, Blyberg travels to Boston once a month to meet with fellow board members including Patriots owner Bob Kraft, Fairchild Semiconductor CEO Kirk Pond and Orit Gadiesh, chairman of Bain & Co., the management consulting firm in Boston.
Mainebiz spoke to Blyberg just after Thanksgiving about his role on the board, recent initiatives the Boston Fed has put forth and his relationship with his fellow directors. An edited transcript of that conversation follows.
Mainebiz: I imagine that part of your role as a director of the Boston Fed is to bring a sense of the Maine business climate to the group. Is that the case?
Blyberg: One of the purposes of the board, aside from the normal role of corporate governance, is really to provide local, anecdotal, street-level information about what we're seeing. The Federal Reserve system and each of the banks have a tremendous group of people who are world-class economists, and they're using a lot of data that's generated [throughout the country] and they're analyzing that. But, as you know, a lot of data has a time lag, so one of the things they want us to do is give them updates ˆ what's happening this week, what's happening today? What are you seeing, whether it's in the real estate market or manufacturing? What's happening with prices in your local market, what's happening with the blueberry business, what's happening with the lobster business, what's happening with the tourists?
That all gets fed into the people in Boston, and in turn it gets down to Washington, so when they need to talk about the economy and make decisions in Washington, they not only have the benefit of a lot of hard data from economic reports that are generated throughout the country, but also a lot of this local, anecdotal flavor of what's happening in different parts of the country.
I understand you've been involved with a project related to check processing at the Fed. Was that related to the Check 21 law that went into effect in October 2004?
It was a combination of Check 21 and also check consolidation. For decades, people have been talking about the demise of checks, that checks are going to go away. I heard that in 1970 when I started my banking career. Well, it never did, and the check volumes kept rising and rising and rising until about two or three years ago. What the Fed saw in 2004 was that the number of checks written nationally dropped 12%. That's accelerated again in 2005, and we're largely expecting that will continue for a number of years. At some point it will stabilize, because there will always be people who write checks. But clearly the amount of transactions that are financed by check is dropping.
One of the things the Fed has been doing to anticipate that ˆ and they welcome the fact that this is happening ˆ is to consolidate all of the check processing operations around the country. Up until now, banks in Maine have been having to ship their checks to Boston. As part of this, they're moving the [regional] check processing to Windsor Locks, Conn. Effective Feb. 24, we have to get our checks to Windsor Locks. The Fed is doing this nationwide [both] because the number of checks is going down nationwide and just to improve efficiency.
Will consumers in Maine see a difference?
The consumers won't, but the banks in Maine will. Most of the checks that are written between banks in Maine are cleared in Maine, but if we get a check for someone in California, [in the past] we had to ship it out there, because the way the old law was written, there had to be a physical presentment of that check to the bank before they would pay it. What Check 21 basically did was it made the use of a substitute check the legal equivalent of the original check, so you could create an electronic image and present that and that would be acceptable. You could speed up the collection of checks nationwide.
One of your fellow directors is Bob Kraft, the owner of the Patriots. So do you have really great seats at Pats games?
[Laughter] It's strictly business.
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