Financial Update Focus
Moderator: Hello, this is Ed English with the Federal Reserve Bank of Atlanta. Welcome to this podcast and Financial Update, an online publication produced by the Atlanta Fed. Our topic today is hurricane preparedness and we're talking with Patrick Barron, first vice president and chief operating officer of the Federal Reserve Bank of Atlanta. Welcome, Pat. With the arrival of hurricane season, what can you tell us about how the Fed prepares for contingencies caused by severe weather?
Patrick Barron: Great question, Ed. First of all, we, the Atlanta Fed, and for that matter the entire Federal Reserve System, have had extensive experience with natural disasters and in particular, in our region, hurricanes. Based upon our experience, I think the key advice that I would provide to all financial institutions is to have a thoughtful, well-documented plan in place involving the key components of their organization as well as the key leaders. So, to me, that provides a baseline for any solid preparedness plan going forward, and one that needs to be tested, quite honestly, before the hurricane season actually arrives.
Moderator: You mentioned contingency plans. What are some of the key elements financial institutions should include in those?
Barron: As I alluded to, in response to the earlier question, my focus would be on identifying key components of your organization. For example, in a financial institution, you're both accepting deposits, you're of course paying out cash and other activities—how do you support your customers? What will your customers be looking for with regard to services? What would happen if you're unable to access all of your computer files, your information that would update your customer records?
In most cases, we've requested that banks provide offsite storage of their key components of their overall organization, be it documented records with regard to customers, be it the location that they might have a backup contingency site in place.
And then, most significantly, how will you communicate to the key members of your staff if the cell phones are inoperable during a particular hurricane?...which actually did happen during Hurricane Katrina in 2005. So, again, having a plan in place that not only has critical information stored in backup files, but knowing where those files are stored, knowing where your staff will meet in the event that they cannot verbally communicate, be it cell phones or landlines. And having all of those in place well in advance of the hurricane are absolutely fundamental to having a successful contingency plan that will meet the needs of not only your customers but your staff in such a natural disaster.
Moderator: Now, if weather knocks out telephone or data networks, how will people know if the Fed is open or has made any operational changes?
Barron: Well, of course, we try to send out bulletins as much as we possibly can with regard to the current status of the Fed operations. In addition to that, you can access the FRB Atlanta Web site that will provide you with clear guidelines with regard to the current status of the head office or any of the other offices that might be impacted by a hurricane. We, of course, will be tracking the hurricanes, be it one of our coastal areas like New Orleans, Miami, or Jacksonville, and providing updates as best we can with the potential impact of that storm. But banks need to be prepared in advance, because there's simply insufficient time to put a plan in place and activate that plan once the hurricane is tracking toward a particular coastal area.
Moderator: Should the transportation sector be heavily affected, what accommodations can the Fed make on deadlines?
Barron: The Federal Reserve has, in prior natural disasters, made accommodations with regard to deadlines as best we can. That said, though, there's no guarantee that we'll be able to alter all of the deadlines, so each of the banks need to be thinking well in advance of the storm's arrival as to what they will do to facilitate both the electronic deposits as well as physical deposits of items to their local Federal Reserve. If there is some reason they cannot make those check deposits or electronic deposits, or if they need cash deposited, we will do our best to facilitate an orderly transition during these critical time periods.
Moderator: Are there Fed resources outside this region that can help if local Fed resources are unavailable?
Barron: With regard to natural disasters, or for that matter, any event involving the Federal Reserve, all of our Reserve banks and branches are able to assist customers with their issues as they arise during these periods of crisis. So I would not hesitate, if I were a financial institution, to call upon the Dallas Reserve Bank or any of the local adjacent Reserve Banks. We have what we refer to as a "buddy bank" arrangement with those organizations. So they would be anticipating a call in the event that we could not be responsive to an initial call from a depositor institution within our zone.
Moderator: Thanks, Pat, for joining us today. You've been listening to Patrick Barron, first vice president and chief operating officer of the Federal Reserve Bank of Atlanta. For more information please visit our website at www.frbatlanta.org. Click on the link for 2007 Prehurricane Preparations and Contacts to see the Atlanta Fed's letter to financial institutions about contingency preparations for hurricanes.
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