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Our Federal Reserve Bank of Minneapolis

| January 22, 2019
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Unfortunately, on my recent visit, I found out taking pictures isn’t allowed, after a gentle admonishment from security.  So, I’ll try to find some good public ones to help break up this note!

One of the most interesting things that I learned was that the Secret Service was initially created during Lincoln's presidency to combat counterfeit bills. 

At the time, approximately one-third all of all US currency was counterfeit; enter the Secret Service circa 1865.  They didn't start protecting the executive branch until sometime 1901.

The money is stored in palleted cases which are encased in locked steel and plexiglass, so you can see what's in the bins.  I believe they said that each one holds anywhere from $460,000 to $46 million, depending on the denomination.

 

They have three forklift robots that have comical money themed names such as “John Dough”, “Clyde”, etc., and a couple others that go around and move the funds between the counting rooms.

Security was quite tight obviously…  It’s located right near the famous Grain Belt Beer bottle cap sign in Minneapolis. 

They process about $95,000,000.00 a day, and of that about $5,000,000.00 is destroyed.  The workers in the counting room have HEPA air filters to help with the dirt and dust that comes off.  They said it’s a myth that there is a lot of drug residue in the money, but it does smell down there like cash.    

The life expectancy on cash is surprisingly short for smaller denominations — just 22 months for singles, and 9 years for Mr. Benjamin. 

They used to take treasury deposits, T-Bonds, T-Bills, etc., in the lobby before the September 11th terrorist attacks, and this building was completed in 1997.  However, after 9/11 the security protocol was changed, and they no longer will service the notes that mom and pop investors own in person.

Interestingly enough, they now process all of the telephone and internet transactions that take place on the T-Bills which used to take place all across the country. 

While they no longer process checks in this location, they used to have over 400 employees processing paper checks. 

Over 9/11, the paper checks couldn't be transported between the banks for clearing as all flights were grounded.

As a result, the Federal Reserve Bank System floated all the checks, even though they hadn't been formally cashed, and infused that money in the system.  An Act of Congress said that going forward an image of the check will be the same as the check itself, so that solved a lot of the check processing needs. 

It also eliminated the float from three days down to usually one day before a check can be processed.  This helped accelerate the use of alternative payment methods since the float was one of the primary reasons that a lot of people were still writing checks.  Now, it's usually quicker to just send money electronically.  The Atlanta Federal Reserve Bank is the one that is doing all the digital check processing, now.

 

The main branch to the Minneapolis office is in Helena, Montana, and that helps districts including part of northern Wisconsin, North Dakota, South Dakota, and Montana.  The current president is Neel Kashkari, and he is quite open about communicating with the public on his thoughts and dissenting when he thinks it makes sense.  Currently, he seems to be arguing to slow down interest rate hikes from the current pace, but it still seems like we are close to done with the rate hike cycle. 

Thank you for taking a look!

 

Tom

 

 

This article represents opinions of the authors and not those of their firm and are subject to change from time to time, and do not constitute a recommendation to purchase and sale any security nor to engage in any particular investment or legal strategy. The information contained here has been obtained from sources believed to be reliable but cannot be guaranteed for accuracy.

 

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