Thomas Hoenig Will Bring Bank Perspective to Fed Post
The selection of Thomas M. Hoenig to head the Federal Reserve Bank of Kansas City was unusual in at least one respect: Mr. Hoenig, 44, is the district's top bank supervisor, not a research economist.
Mr. Hoenig will assume the post on Oct. 1, district bank chairman Fred W. Lyons Jr. announced on Tuesday. He succeeds Roger Guffey, 61, who is retiring after 15 years with the bank. Typically, district bank presidents are plucked from the economics and research side of the Fed.
Paul Viets, chairman of the Kansas Bankers Association, said he was particularly pleased that the Kansas City Fed made its selection from within the district bank. The fact that Mr. Hoenig comes from the Fed's bank supervision side, he said, is a bonus.
"If there's anything we need today, whether it's at the Fed or in Congress, it's a banker's perspective," said Mr. Viets, who is president of Citizens National Bank, Independence, Kan.
Seat on Open Market Committee
Come January, Mr. Hoenig will rotate into one of the 12 voting slots on the Federal Open Market Committee, joining the seven members of the Federal Reserve Board and the president of the Federal Reserve Bank of New York, who holds a permanent seat.
In an interview on Wednesday, Mr. Hoenig said he will seize the chance to "bring a perspective on financial institutions to the Fed's policymaking group. That's my plan."
But he will jump in as nonvoting participant his very first day on the job: The Open Market Committee has a meeting scheduled for Oct. 1.
Mr. Hoenig has served since 1986 as senior vice president in charge of bank supervision and structure in the 10th district, which sprawls from western Missouri to northern New Mexico to Wyoming. He has spent his entire career at the Kansas City Fed, beginning as an economist in 1973.
But his Fed career hasn't kept him strictly confined to the Midwest. Last year, he was selected by the Federal Reserve Board to lecture at the People's Bank of China, the central bank of the People's Republic.
He spent a week with bank officials on Haikou, an island in Hainan province, off China's south coast. "The Chinese bank wanted to hear about banking in the U.S., how the regulatory system operates," Mr. Hoenig said. "I worked through an interpreter, so it was arduous. But I learned a lot.
Witness to Region's Troubled Economy
As a regulator, Mr. Hoenig was a frontline witness to the economic turmoil that ravaged the region's agricultural and energy sectors in the 1980s. Ushering banks through hard times was a painful but valuable experience. "We gained experience that makes us better able to point out where weaknesses come," he said.
Lending through the discount window - a practice now under congressional scrutiny - was a critical tool for stabilizing the region's banks, he added.
Looking forward, Mr. Hoenig said he expects to see significant consolidation in the seven-state Kansas City district.
"We will be affected by the consolidation, just as the rest of the country is," he said. "Many states in this district have only allowed branching or interstate banking in the last few years. And we have 2,200 banks in this district, so you'll see some mergers coming together."
Mr. Hoenig is a native of Fort Madison, Iowa, a town of 15,000 in the southeastern part of the state. A graduate of Benedictine College, Atchison, Kan., he earned master's and doctorate degrees in economics at Iowa State University.
He has been married for 21 years, and has two teenage sons.