For a Federal Reserve Bank president, Michael H. Moskow is different.
The head of the Federal Reserve Bank of Chicago hasn't spent his life pondering the future of monetary policy and he never worked for the central bank.
Rather he's pried open foreign markets to U.S. exports, run a large manufacturer of consumer products, and taught graduate business courses at Northwestern University.
"I'm the outsider," he said in a recent interview. "I have to build on my outside experience. This gives me a different perspective on the Fed, which is the value I can add to the reserve bank."
Mr. Moskow's corporate background shines through in several initiatives he's instituted since joining the Chicago Fed in September 1994.
First, he's started Fresh Look, a customer satisfaction program. As part of the effort, an advisory group of bankers recommends improvements to reserve bank products and services.
"This is just like any other business," he said. "We have hundreds of millions of dollars in revenue, and we had been losing market share."
The decline started in 1980, when Congress required the Fed to raise check clearing and related prices to include the taxes the central bank would have to pay if it were a private institution. This opened the door for other banks and clearing houses to compete more vigorously against the Fed for business.
In response, the Fed reduced its staff devoted to check clearing operations by 132, down from a high of 740.
"The fact that we lost volume isn't necessary bad," he said. "It has forced us to become more efficient. That is beneficial to the people we are trying to serve."
The Chicago Fed also revised its timing for the delivery and acceptance of checks after members of the advisory group complained about the schedule. Also, bankers in central Illinois griped that the Chicago service center was too far away. So, the Fed opened a new office in Peoria, Ill., the first new Fed facility in 19 years.
So far, Fresh Look is getting rave reviews from bankers.
"They have asked for our input on just about every area prior to decision time, and they have taken our feedback and utilized our expertise," said John D. Schneider Jr., chief executive officer of Independent Bankers' Bank of Illinois. "They are making a genuine effort to change an image of being uncooperative that has been hurting them for many years."
Ed Furticella, vice president at Peoples Bank in Munster, Ind., said the Chicago Fed promptly established a discussion group for users of the Fed's wire transfer and automated clearing house services after he recommended it last year.
"They are not just going through the motions," he said. "They are making legitimate efforts."
Mr. Moskow also is trying to bring his business perspective to bank regulation. He is a big fan of incentive-based rules, which reward well- managed banks with less oversight.
For example, he is a proponent of the precommittment approach for market risk capital standards. This would allow a bank to estimate ahead of time how much capital it should reserve against changes in the value of its trading portfolio. Banks that underestimate their capital needs would pay a penalty. Gone would be detailed reviews of the models banks use to estimate capital requirements.
"When banks are performing well there is less need for close supervision," he said. "This lets you focus your resources on banks with potential problems."
Rather than a hard-and-fast rule, Mr. Moskow envisions examiners using their judgment to determine which institutions would qualify.
He also says bankers and examiners should work together more closely. "We have a common interest. ... We all want a safe and sound banking system."
But he knows bankers won't view him as their ally unless he can make exams less burdensome. That's one reason he's had the Chicago Fed pioneer Examiner Workstation, a computerized tool that allows supervisors to conduct much of their review off-site.
He also said he is studying a proposal by Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, to allow some banks to opt out of deposit insurance and the rest of the safety net in exchange for less oversight. "These are the ideas and concepts we have to think about in the future," he said.
Mr. Moskow also doesn't want to jump too quickly into the business of regulating stored-value cards, even though the products will hurt the Fed's profitable check clearing business as more people begin using plastic cards instead of paper checks.
"Our interest is to serve the public, and it is in the public interest to eliminate paper checks," he said. "They are very inefficient."
Checks normally require personnel at two banks and at least one reserve bank for processing, he said. But stored-value card transfers don't have to pass through human hands at all. That is faster and more efficient, he said.
There's little reason to regulate the products, he said, comparing them to traveler's checks, which are covered by few rules.
Mr. Moskow began his career in 1965 teaching economics and labor relations - at Temple University, Lafayette College, and then Drexel University. He joined the government in 1969, working as an economist in the Department of Labor. After hop-scotching among executive branch agencies for several years, he wound up as Labor's No. 2 official, responsible for the agency's day-to-day management.
He left government in 1977, becoming president and chief executive officer of Velsicol Chemical Corp. He later worked for Dart and Kraft Inc., which makes Tupperware, restaurant equipment, and household appliances.
President Bush tapped Mr. Moskow as deputy U.S. trade representative in 1991, vaulting him into the world of international negotiations.
He spent more than a year working out a trade deal to open the Japanese government market for computers to U.S. firms. This included several all- nighters - the custom in Japan for tough negotiations. He also battled with the Europeans over state subsidies for Airbus, a competitor to Boeing.
"These are real negotiations," he said. "It is similar to negotiating an agreement to buy a company or even a collective bargaining agreement."
He joined Northwestern in 1993, and took the Chicago Fed job the following year.
Mr. Moskow said it was an easy choice to leave Northwestern's campus for the banking post. "This was a rare opportunity to be heavily involved in extremely important national policy decisions while at the same time having responsibility for running an extremely important organization," he said. "You don't get many opportunities to combine those two factors in one job."
He says he'll serve for five more years, until the mandatory retirement age of 65. In the interim, he said, he wants to make the historically secretive Fed more open.
"Obviously when we are making monetary policy there are some limits," he said. "But in our day-to-day operations we should be open."
That means frequent public appearances by Fed officials at local and regional economic and development conferences. Mr. Moskow estimates that he spends about a third of his time giving speeches and meeting community leaders.
Openness also means expanding the opportunity for the public to tour the building, and providing pamphlets explaining the Fed to the schools. "We should take the mystery out of what is admittedly a very confusing organization," he said.
