The 12 Federal Reserve banks have formed two committees to sharpen and coordinate management of the Fed's financial services in the era of interstate banking.
The panels, known as the Financial Services Policy Committee and the Financial Services Management Committee, will play pivotal roles in developing long-term strategic goals and management structure for the reserve banks in response to the evolution of payment systems.
Fed officials have set as the committees' ultimate goal development of consistent rules and procedures in the Federal Reserve districts.
Such consistency is made necessary by September's passage of the interstate branching measure, which will change the way the banking industry deals with district banks as institutions expand into multiple Fed districts.
These changes include the manner in which banks get accounting and reserve balance information was well as their access to other Fed financial services.
"We want to provide a united front with this structure," said Jack Guynn, first vice president at the Federal Reserve Bank of Atlanta and chairman of the management committee.
"We believe that it is important to be responsive so we can provide appropriate financial services to banks operating on an interstate basis," Mr. Guynn said.
Hayden Watson, executive vice president at First Interstate Bancorp, Los Angeles, called the Fed move "a step in the right direction" and something that the banking industry welcomes.
"This is something that the bank holding companies decided that they needed to do five years ago," Mr. Watson said.
"Ultimately, the Fed, from an operating services standpoint, needs to migrate from a coordinated structure to a unified management structure the same way we are doing with interstate banking."
Mr. Watson pointed out that the two Federal Reserve banks in Missouri provide essentially the same services, calling into question the need to have "two management structures over both reserve banks."
"Banks have already rationalized that to a large part by saying, 'In order to make our industry more efficient, we will try and do away with that infrastructure.' It's something the Fed has to come to grips with," Mr. Watson said.
He noted that, even as the Fed continues to do well in many service areas, "unless they adapted to a structure that makes sense for me as a bank doing business across the entire United States, I'm going to find a way to do it in the private sector."
But Mr. Guynn said that, despite several private-sector developments, which represent "forward thinking with regard to payments," the Fed will continue to play a key role because private arrangements usually involve only 10 or 20 banks, leaving out "thousands of others who still need access to efficient, reliable payments services."
Though management of the Fed's services, such as automated clearing house, Fed Wire, and check clearing, has been handled at various product offices, Mr. Guynn said, "we realize more than ever that there is a lot of interrelationship, particularly as we want to try and help convert more payments in the United States from paper to electronics."
Carol W. Barrett, senior vice president at the Federal Reserve Bank of New York and soon to be wholesale product manager for the management committee, acknowledged the need for change at the Fed.
"Even before we had this new structure, we recognized the need to improve our payments services and to improve our whole infrastructure supporting those payments services," she said.
The five-member policy committee will be chaired by Thomas C. Melzer, president of the Federal Reserve Bank of St. Louis.
The panel will develop a strategic direction for the Fed's financial services.
The structural changes take effect Jan. 1, when responsibilities are to be handed over to the committees. The management committee will report to the policy committee and will have product directors for:
* Wholesale services, such as Fed Wire, funds transfer, and book-entry securities.
* Retail payment services, including check and ACH products.
* Cash and fiscal agency services, which will concentrate on setting policy guidelines for cash services.
* Support services, which include accounting, automation and electronic access services.
Ms. Barrett said the Fed is working on several major automation efforts, such as an enhanced communications network that will be managed on a national basis and an installation of new funds transfer software. The software project has been underway since May and is to be completed by the third quarter of 1995.
Featuring faster throughput and better backup capabilities, the software is expected to ease reserve banks' adaptation to the upcoming expansion of Fed Wire operating hours.
Another automation initiative is the reserve banks' centralization of data processing for payments systems.
"Each Federal Reserve bank has had its own mainframe and software," Ms. Barrett said.
"We are centralizing the operation so there will only be only one software system that supports all 12 banks. We think this leads to greater efficiency and reliability with appropriate backup."
In addition to Mr. Melzer, members of the policy committee are Mr. Guynn; J. Alfred Broaddus Jr., president of the Federal Reserve Bank of Richmond, Va.; William C. Conrad, first vice president at the Federal Reserve Bank of Chicago; and Tony J. Salvaggio, first vice president at the Federal Reserve Bank of Dallas.