Kansas City Fed's new chief is a veteran banking executive (updated)

American National Bankshares

02/08/2023 19:08

(Adds background in paragraphs 3-4, analyst comment in
paragraph 5, further background in paragraphs 6-7)
    By Ann Saphir
       Aug 2 (Reuters) - After more than a year of search, the
Kansas City Federal Reserve Bank has a new leader: Jeffrey
Schmid, a former banking executive who ran three different
financial institutions over a four-decade-plus career that also
included a stint in bank supervision. 
    Schmid, who for the last two years has led the Southwestern
Graduate School of Banking Foundation, will fill one of 19 seats
at the nation's monetary-policy-setting table setting interest
rates for the world's biggest economy. 
    He starts Aug. 21, the Kansas City Fed said on Wednesday,
the week that central bankers from around the world convene at
Jackson Hole, Wyoming for the regional Fed bank's influential
annual monetary policy symposium. 
        His first rate-setting meeting in Washington will be the
Fed's next one, in September, where policymakers are expected to
debate whether their ongoing inflation fight requires any
further increase in the policy rate that's already up 5.25
percentage points since the campaign began a year and a half
earlier.
    His inclusion "will hopefully make their policy
deliberations richer as they come into a period where there is a
lot of uncertainty," says LHMeyer's Derek Tang, noting that the
Fed's next big decisions will include how long to hold policy
tight and when to start easing. "It helps to have people from
different backgrounds to contribute."
    Schmid, who has a bachelor's degree in business
administration from the University of Nebraska-Lincoln and is a
graduate of a training program he now oversees, is the first
Kansas City Fed leader to be picked from outside of its own
ranks in more than 80 years. 
    He will also be the fourth new Fed president in the 12-bank
Fed system in just over a year. Two of the other newcomers to
policysetting are PhD economists with academic backgrounds; the
third is a longtime Fed staffer with years of work in monetary
policy operations. 
    A search for a new president at a fifth regional Fed bank,
in St. Louis, began last month when its longtime leader, James
Bullard, left for a job as dean of a business school. 
    The Fed's Washington-based Board is also in the midst of a
personnel makeover, with three of its current six members new
since last year, and one of those three, Philip Jefferson, in
the middle of a Senate confirmation process to become the Fed's
vice chair. 
    Lawmakers are expected next month to approve Jefferson's
elevation to the central bank's No. 2 job, and will consider the
renomination of another Fed governor who joined last year, Lisa
Cook, and the nomination of economist Adriana Kugler to the Fed
Board's seventh and last seat. 
    The Kansas City Fed's most recent president was Esther
George, who departed in January after hitting the mandatory
retirement age of 65. Schmid is 64, and under the Fed's
age-based rules can serve a maximum of 10 years. 
    The bank's presidents have typically been hawkish voices on
monetary policy. Under the Fed's regular rotation for regional
Fed presidents, Schmid won't have a vote on U.S. interest rates
until 2025, though he will take part in the Fed's regular
rate-setting meetings.
    Schmid began his career as a bank examiner for the Federal
Deposit Insurance Corporation, before becoming the president of
the American National Bank in Omaha and then running the Mutual
of Omaha Bank for 12 years as its CEO. 
    He was CEO of Susser Bank in Dallas for two years before
taking his current job where he oversees bank management
training programs.
    As part of his job at the Kansas City Fed, Schmid will
oversee the bank's economic research, community outreach, and
its supervision of banks in the district, which covers Colorado,
Kansas, Nebraska, Oklahoma, Wyoming, and parts of New Mexico and
Missouri.

 (Reporting by Ann Saphir; Editing by Andrea Ricci and Diane
Craft)
 ((Ann.Saphir@thomsonreuters.com; 312-593-8342;
www.twitter.com/annsaphir; Reuters Messaging:
ann.saphir.thomsonreuters.com@reuters.net))