Letter from First Vice President Meredith N. Black

The Federal Reserve Bank of Dallas research library houses three volumes of congressional testimony dating from 1913 on the formation of the Federal Reserve System. A key debate of the day was whether to establish the new central bank as a single centralized entity located in Washington, D.C., or as a federated organization in the form of the regional reserve banks that we have today. This debate centered on the historical American fear of vesting too much power in either Washington or Wall Street.

Ultimately, the compromise that resulted in the Federal Reserve we know today also gave the System its greatest strength—12 federated reserve banks working closely with the citizenry and businesses in each region to not only represent their economic interests in Washington, but also meet their needs in times of crisis. We need look no further than the hurricanes that have hit the Texas Gulf Coast, the most recent occurring in August 2017, to see the value of a regional central bank system played out in ways not imagined in 1913.

After Hurricane Harvey made landfall along the Texas Gulf Coast on Aug. 25, it caused widespread damage and broad disruption to the regional economy. The hurricane’s Category 4 winds and storm surge devastated the Texas Coastal Bend area, while its record-breaking rains brought catastrophic flooding throughout the Houston region and eastward to the Beaumont area.

According to the National Hurricane Center, Harvey was the second-costliest hurricane in U.S. history (behind Katrina), the deadliest hurricane to hit Texas since 1919 and the most significant tropical cyclone rainfall event in U.S. history in both scope and quantity of rain.

With much of the Eleventh District in the path of the storm, Dallas Fed employees, especially at our Houston Branch, worked closely with local authorities to meet the needs of people and businesses in affected areas.

As Gulf Coast communities rebuild post-Harvey, we will continue to help residents and businesses address economic challenges, including access to credit, availability of affordable housing and small-business needs. We will also play an ongoing role in measuring and forecasting Harvey’s economic impact on the region and state as a whole.

As chief operating officer and a 35-year employee of this Bank, I am proud of the efforts of my fellow employees to serve the citizens, businesses and financial institutions in our district. They do this on a daily basis, willingly, tirelessly and without fanfare. The actions of our employees in response to Hurricane Harvey highlight the value of our regional System beyond the traditional liquidity-backstop function it performs. I hope the five vignettes in this annual report offer a glimpse of the service we are so honored to provide.

Sincerely,

Meredith N. Black

Annual Report 2017