Working Behind the Scenes
With hurricane Sandy devastating the Northeastern U.S., Tom Larsen, senior vice president of EQECAT, a catastrophe risk modeling firm used by insurance companies and others forecast economic losses from Hurricane Sandy at $10-20 billion, and insured damage at somewhere from $5 to $10 billion (not including what would be covered by federal flood insurance.)
John Carney of CNBC.com talks about some unsung heroes that you might not have considered – the Federal Reserve:
The offices of the Federal Reserve banks of New York and Philadelphia are nearly empty. But the staffs of the banks, as well as the Board of the Federal Reserve in New York, are working from home to keep the U.S. financial system flowing smoothly.
In addition to creating liquidity in the economy as a stop gap against unemployment while Congress squabbles instead of hammering out a fiscal compromise, the Fed does a lot of other things to help keep the economy on track.
In a storm, people tend to withdrew more cash than usual in a storm for fear that power outages may restrict access to ATMs, bank tellers and credit card purchases. In preparation for a storm, the Fed moves in to help banks anticipate and meet an unusual demand for cash by:
- Extending their hours to allow commercial banks more time to pick up cash.
- Allowing banks to withdraw cash from other parts of the Fed if the branch they use is inaccessible. (a Northern New Jersey bank that would normally be served by the FRBNY can withdraw cash from the Philadelphia or Boston Fed if needed.)
I know it isn’t very exciting, but it’s nice to know that they’re doing their part.